EXHIBIT 99.2
A NEW SEGMENT
Why? More Diversity - Ability to Deliver
Consistent Earnings Growth
Characteristics of Search:
- - Strong Fundamental Growth
- - Good Margins
- - Not Capital Intensive
- - Leadership Position
- - Manufacturing and Technology Base
Broadening Our Portfolio Makes Sense
AMP OVERVIEW
Businesses
----------
[SEVEN PHOTOS OF ELECTRICAL Electrical Connection Devices for
CONNECTION DEVICES] the Following Industries:
- Consumer & Industrial
- Telecommunications
- Automotive
- Personal Computers
1998 Statistics Strengths
--------------- ---------
Sales $5.4B - Leading Market Position
Op. Margins ~9% - Global
EPS $1.50 - Diverse Markets
Market Cap ~6.5B - Strong Technical Capabilities
World's Leading Manufacturer of Electrical & Electronic Connection Devices
TERMINALS & CONNECTORS ("T&C") MARKET
Industry Growth Rate
$25B Market 5 Year Average - 9%
[BAR GRAPH SHOWING INDUSTRY GROWTH RATE]
1994 - 13%
1995 - 17%
1996 - 5%
1997 - 8%
1998 - 4%
Source: Bishop & associates, inc.
Large Growing Industry
TERMINALS & CONNECTORS INDUSTRY
Sales by Industry Sales by Region
----------------- ---------------
[PIE GRAPH SHOWING SALES BY INDUSTRY] [PIE GRAPH SHOWING SALES BY REGION]
Industrial & Consumer - 45% North America - 38%
Computer/Peripherals - 25% Asia - 30%
Telecom - 15% Europe - 26%
Automotive - 15% ROW - 6%
$25B Market
- Value Added Market an Additional $25B - $30B
Diverse And Global
AMP'S SHARE OF T&C SALES
[BAR GRAPH SHOWING EACH COMPANY'S SHARE OF
TERMINAL AND CONNECTOR SALES]
AMP 20%
Molex 6%
Framatome 4%
Berg 3%
Thomas & Betts 3%
Amphenol 3%
3M 3%
Leading Global Position In Fragmented Market
AMP'S REVENUE COMPOSITION
1998 = $5.4B
Sales by Industry Sales by Region
- ----------------- ---------------
[PIE GRAPH SHOWING SALES [PIE GRAPH SHOWING SALES
BY INDUSTRY] BY REGION]
Consumer & Industrial - $1.6B Americas - 50%
Automotive - $1.4B Europe - 30%
Telecom - $1.4B Asia/Pacific - 20%
Personal Computer - $1.0B
- 77% T&C; 14% Value Added; 9% M/A - Com
- Over 15,000 Patents Issued or Pending
- 90,000 Customers in 145 Countries
Wide Range Of Product Offerings To Diverse Industries
AMP OPPORTUNITIES
Peer Revenue Comparison
- -----------------------
(1998 Projected Growth)
[BAR GRAPH SHOWING
A COMPARISON OF AMP'S
PROJECTED 1998 GROWTH WITH
THOSE OF OTHER COMPANIES]
AMP (5.8%) Peer Group Margins
------------------
Amphenol 3% 1994 1998 Chg.
---- ---- ----
Berg 5%
AMP 16.1% 9.4% (6.7 pts)
Molex 6%
Peer Avg. 12.1% 14.6% +2.5 pts
Thomas & Betts 8%
Amphenol 15.0% 17.0% +2.0 pts
Peer Avg. 5.5%
Molex 16.3% 16.3% --
Thomas & Betts 9.4% 12.5% +3.1pts
Berg 7.8% 12.6% +4.8pts
Underperforming Its Peers
AMP OPPORTUNITIES
Market Value ($B)
[LINE GRAPH COMPARING THE MARKET CAPITALIZATION OF AMP TO THE SUM OF THE
MARKET CAPITALIZATIONS OF ITS INDUSTRY PEERS AT THREE MONTH INTERVALS
BEGINNING JUNE 1996 AND ENDING JUNE 1998 (ALL DOLLAR AMOUNTS ARE
APPROXIMATE). THE GRAPH ALSO INCLUDES THE COMPOUND ANNUAL GROWTH RATES OF
AMP (-13%) AND OF THE SUM OF ITS INDUSTRY PEERS (11%) OVER THE SAME
PERIOD.]
Peer Group 6.6B 7.5B 7.9B 7.6B 9.3B 10.8B 10.1B 10.1B 8.1B
AMP 8.8B 8.5B 8.4B 7.6B 9.2B 11.8B 9.3B 9.6B 6.6B
6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98
Market Recognizes Need For Change
ALD PERFORMANCE
Earnings Per Share Market Value
- ------------------ ------------
[LINE GRAPH SHOWING GROWTH IN [LINE GRAPH COMPARING ALD'S
ACTUAL EARNINGS PER SHARE FOR MARKET VALUE GROWTH VS. THE S&P
1992 THROUGH 1997, INCLUDING 500 MARKET VALUE GROWTH FOR 1990
AN ESTIMATE FOR 1998. EARNINGS TO 1998. OVER THIS PERIOD, ALD'S
PER SHARE IS EXPECTED TO INCREASE MARKET VALUE HAS INCREASED SIX FOLD
FROM $0.96 IN 1992 TO APPROXIMATELY FROM $4 BILLION $25 BILLION WHILE
$2.30 TO $2.34 IN 1998.] THE MARKET VALUE OF THE S&P 500
HAS INCREASED 3.4 FOLD.]
26 Qtrs of 14%+ Growth
Consistency Drives Market Value
ALD PRODUCTIVITY PERFORMANCE
Total Productivity Cost Productivity
- ------------------ -----------------
[LINE GRAPH SHOWING TOTAL [GRAPH SHOWING THE COMPONENTS OF COST PRODUCTIV-
PRODUCTIVITY AND THE BREAK- ITY FROM 1992 TO 1997. IN 1992, CENSUS, REPO-
DOWN BETWEEN GROWTH PRODUC- SITIONING AND MATERIAL SAVINGS COMPRISED MOST
TIVITY AND COST PRODUCTIVITY OF COST PRODUCTIVITY. OVERTIME COST PRODUCTIVI-
FROM 1992 TO 1997.] TY HAS INCREASINGLY COME FROM SIX SIGMA SAVINGS
COMPARED TO CENSUS, REPOSITIONING AND MATEIRAL
SAVINGS.]
Total Productivity
Average 5.9%
Since '92
1990 1998
---- ----
Sales/Employees $117K $200K [UP ARROW] 71%
Suppliers [MORE THAN] 10,000 [LESS THAN] 3,000 [DOWN ARROW] 70%
Proven Record Of Productivity
ALD SIX SIGMA JOURNEY
Manufacturing Quality vs. COPQ ALD Operating Margins
- ------------------------------ ---------------------
[LINE GRAPH SHOWING IMPROVEMENT [LINE GRAPH SHOWING ALD OPERATING
IN THE DEFECT RATE OF MANUFACTUR- MARGINS INCREASING FROM 5% IN 1991
ING PROCESSES FROM 1992 (2 SIGMA) TO 13% IN 1998, AN INCREASE OF 800
TO 1998 (4+SIGMA), RESULTING IN BASIS POINTS]
COST SAVINGS OF $2 BILLION OVER
THAT PERIOD.]
Significant Progress, Trained Resources
ESTIMATED MARGIN IMPROVEMENT
[BAR GRAPH]
AMP
$4.2B $5.4B +8% Sales Growth After 1999 $6.5B
Op. Income 15% 9% 18% Cost Takeout
$630M $495M $1170M
SG&A 18% 21% - Corporate Overhead 17% $185M
$760M $1130M - Shared Services $1105M
Cost of 67% 70% - Six Sigma/Productivity 65% $280M
Goods Sold $2810M $3775M - Purchasing $4225M
- Plant Rationalization
1993-1995 1998 2001
AVG
Growth & Productivity Will Improve Margins
Beyond Historic Level
AMP OPERATING MARGIN EXPANSION
[BAR GRAPH SHOWING AN ACTUAL AND
PROJECTED OPERATING MARGIN EXPANSION]
Productivity &
Synergies
15% 9% +2% +4% +3% 18%
'93 - '95 1998 Volume/ Manufacturing Corporate 2001
Average Price Productivity Overhead &
Shared Svcs.
Growth & Productivity Will Improve Margins
Beyond Historic Levels
ALD AND AMP
What AMP Brings to ALD What ALD Brings to AMP
- ---------------------- ----------------------
- - High Growth Industry - Strong Management Team
- - Industry Leadership - Productivity
- - Global - Six Sigma
- - Product Differentiation - Size and Scale
- - Technological Leadership - Financial Consistency
Ideal Combination
ALD AND AMP - $21B
1998 Pro-Forma
[PIE GRAPH]
Connectors $5.4
Spec Chem & Electronic Solutions $2.4
Performance Polymers $2.0
Aerospace Systems $4.9
Transportation Products $2.5
Turbine Technologies $3.9
- - Broad Product Offering - High Growth
- - Diverse Customer Base - High Margin Businesses
- - Globally Positioned - Consistency
Breadth Of Products And Geographical Diversity Drives Consistency
THE DEAL STRUCTURE
- - Cash Tender - $44.50 Per Share
- - Funded by:
-- Debt
-- Internally Generated Cash Flow
-- Asset Sales
-- Secondary Equity Offering
- - Anticipated Closing - 12/31/98
Funding Available
EARNINGS PER SHARE
[BAR GRAPH SHOWING THE OVERALL POSITIVE PROJECTED EFFECTS OF EACH OF ALD'S
BUSINESS GROWTH, THE ADDITION OF THE AMP BUSINESS, THE LOSS OF GOODWILL,
THE LOSS DUE TO FINANCING AND THE GAINS ON DISPOSITIONS ON THE EARNINGS PER
SHARE OF A COMBINED ALD/AMP]
Equity
------
Debt
$2.30 - $2.34 +$0.30 - $0.35 +$0.83 -$0.32 -$0.78 +$0.27 $2.60 - $2.65
1998 ALD Business AMP Goodwill Financing Gains on 1999
Growth Business Dispositions
[LINE GRAPH SHOWING A COMPARISON OF THE PROJECTED GROWTH RATE OF EARNINGS
PER SHARE OF ALD AND THE COMBINED ALD/AMP FROM 1998 TO 2001]
Combined Includes
Disposition Gains
ALD $2.30 -$2.34 13% 15% 15%
COMBINED $2.30 -$2.34 13% 15% 18%
1998 1999 2000 2001
No Net Dilution
FREE CASH FLOW
[LINE GRAPH SHOWING A PROJECTED FREE CASH FLOW FOR
ALD AND THE COMBINED ALD/AMP FROM 1998 TO 2001]
Combined ALD
-------- ---
1998 $500 $500
1999 $500 $625
2000 $800 $780
2001 $1,300 $980
Improves Cash Flow
ALD DEBT/CAPITAL
[BAR GRAPH SHOWING A PROJECTION OF ALD'S DEBT-TO-CAPTIAL RATIO
FROM DECEMBER 1998 TO DECEMBER 2001]
67%
[Increase [Decrease resulting from 47%
resulting contemplated 1998 asset
from the sales ($2B), proceeds of 39%
incurrence a contemplated 1998 29%
21% of $10.2B equity offering ($1.5B),
of debt] free cash flow and
suspension of share
repurchase]
12/98 12/98 12/99 12/00 12/01
ALD Combined
Manageable Transaction
PORTFOLIO IMPROVEMENT
1999 1999 2001
(Without AMP) (With AMP) (Includes AMP)
[PIE GRAPH] [PIE GRAPH] [PIE GRAPH]
High Growth 67% High Growth 75% High Growth 85%
High Margin High Margin High Margin
$16.5B $22B $26B
Accelerates Transformation
CONTINUED EVOLUTION OF ALLIED SIGNAL
- - Market Leadership in High Margin Growth Businesses
- - Broader, More Global, More Diverse
- - Breadth of Markets
- - Cost Take-out Opportunities
- - High Margin, High Growth Segments
- - Enhanced Ability For Financial Consistency
ALD And AMP Combine To Form A Premier Company