ITT Corporation

ITT Industries Announces Third Quarter Results and Profit Improvement Program

    10/16/1997

                  - Earnings Up 25 Percent, Before Special Charges -
                   - Automotive to Save $115 Million/Year by 1999 -
    
        WHITE PLAINS, N.Y., Oct. 16 /PRNewswire/ -- ITT Industries, Inc.
    (NYSE: IIN) today announced results for the third quarter, along with details
    of an extensive program designed to improve financial performance.  The main
    elements of this program are:
        -- a long-term cost reduction program for the company's automotive
    business which will help the company to achieve its 8 percent operating profit
    margin milestone;
        -- an integration plan for the company's fluid technology business,
    designed to accelerate the combination benefits of the recent acquisition of
    Goulds Pumps;
        -- disposition of additional non-core businesses in the company's
    continuing program to refine its portfolio in order to maximize shareholder
    value.
    
        With these actions, along with a decision to modestly increase
    environmental reserves, the company will take an after-tax charge of
    $145.8 million, or $1.20  per share, in the third quarter.  On a pre-tax
    basis, the cash impact is $73 million.  The company anticipates that annual
    savings from the automotive restructuring will be approximately $115 million
    by 1999.
        Following these restructuring actions, employment at the company will be
    reduced by approximately 1900, around 3 percent of a worldwide workforce of
    60,000, with most of the reduction within the automotive unit.  Approximately
    half of these positions are in general and administrative, and factory
    overhead areas, and the remainder are in manufacturing roles.  Total
    employment will be further reduced by the sale of some operations, employees
    of which will generally transfer with the businesses to the buyers.
        "The actions we are announcing today are part of our long-standing
    commitment to shareholders to take decisive measures in order to continue
    creating true economic value throughout our company," said Travis Engen,
    Chairman, President and Chief Executive.  "Through the streamlining of our
    manufacturing operations, and the sale of non-core assets, we will achieve
    annualized savings that will put us in a better position to improve operating
    margins and deliver value to both customers and shareholders.  It is essential
    that we remain competitive on a global basis, and these actions will make us
    that much stronger."
        Third quarter 1997 net income, before special charges, was $54.7 million,
    or $.45 per fully diluted share, for a gain of 25 percent over the period last
    year.   Operating income for the third quarter of 1997, excluding the special
    charges, was $115.1 million, up from $109.4 million in 1996.  Sales from
    ongoing segments rose to $2.02 billion, up from $1.97 billion in the third
    quarter of 1996.  After special charges, the company reported a third quarter
    loss of $91.1 million, or a loss of $.75 per fully diluted share.
        The company also reported that net income for the first nine months of
    1997, before special charges, was $181.6 million, or $1.49 per fully diluted
    share.  Earnings increased 19.9 percent over the $151.4 million or $1.26 per
    share reported in 1996.  Operating income reached $375.6 million, up
    $9.0 million or 2.4 percent over the 1996 figure.  Total sales from ongoing
    segments of $6.33 billion were essentially flat compared to the first nine
    months of 1996.  After special charges, third quarter year to date earnings
    are $35.8 million or $.29 per fully diluted share.
    
        Automotive Restructuring Will Bring Greater Operating Efficiency
        The restructuring actions announced during the quarter result from a
    far-reaching program begun in early 1997 that has accelerated under the
    direction of Frank Macher, president of ITT Automotive.  This program is aimed
    at automotive's manufacturing operations, reducing the cost base through
    improved process, reduced infrastructure and plant capacity rationalization.
    During the quarter, the company announced to employees the closing of its
    automotive plant in Mississauga, Ontario, and the downsizing of automotive
    facilities in Asheville, North Carolina; Kettering, Ohio; Frankfurt, Germany
    and other locations.  The plan also includes actions to streamline and
    optimize overhead and administrative cost structures.  The automotive program
    will take approximately 15 months to complete and the company anticipates that
    it will generate annual savings of $115 million by 1999.   The total cash
    impact of this charge will be $53 million during implementation.
        In addition, ITT Automotive expects to dispose of a body parts
    manufacturing operation in Bergneustadt, Germany this year.  Other
    dispositions in 1997 have included the North American aftermarket operations
    and the seat subsystems unit.   Together these three businesses have annual
    sales of approximately $560 million.
        ITT Automotive recorded operating income, without the impact of the
    special charges, of $61.6 million, down from $73.6 million in the prior year.
    Sales were $1.11 billion for the third quarter 1997, down from $1.27 billion
    last year, which is more than explained by foreign exchange translation and
    product price reductions.   During the period, global vehicle production was
    relatively flat, but ITT Automotive benefited from content and mix gains.  ITT
    Automotive recorded an operating margin of 5.5 percent, down from 5.8 percent
    last year, excluding special charges.  Operating margins continue to be under
    pressure from price declines and the movement of customers to the lower cost
    MK20 anti-lock brake system.
    
        Goulds Integration on Schedule
        The company completed its purchase of Goulds Pumps in late May and has
    been integrating its operations throughout the third quarter.  The integration
    team has initiated a wide range of manufacturing, distribution and sales
    facility consolidations, product rationalizations, and sales and marketing
    reorganizations to accelerate the realization of benefits from the
    acquisition.  The team's efforts will enable the company to leverage the
    mutual strengths of the combined operations, increase higher margin
    after-market sales, and increase the efficiency of the production and sales
    organization.  As part of these actions, ITT Fluid Technology will record
    restructuring charges in the third quarter.  In addition, there are special
    charges primarily associated with changing Goulds' accounting policies to
    conform with the company's.  The cash impact of these charges is approximately
    $8 million.
        As part of its portfolio management, and in light of the Goulds Pumps
    acquisition, ITT Fluid Technology has also announced to employees its
    intention to sell its Barton fluid measurement business.  Barton had 1996
    sales of $73 million.
        ITT Fluid Technology reported third quarter sales of $504.5 million, up
    54.5 percent from the prior year, primarily due to the revenue addition from
    Goulds. Third quarter operating income was $42.9 million, up 65.0 percent from
    last year, excluding the special charge. Operating margin rose to 8.5 percent
    for the quarter excluding special charges, up from 8.0 percent for the period
    in 1996.
    
        Defense Shows Strong International Growth
        ITT Defense & Electronics announced in the third quarter that it had
    completed the formation and staffing of a joint venture with Siemens-Plessey
    and Racal on a tactical communications project for the British Ministry of
    Defense, which could ultimately result in joint venture sales of $6 billion
    over the life of the project.  This major award continued a trend of strong
    international sales, which now account for 15 percent of defense revenues.
    The quarter also included announcements of contract awards from the Republic
    of Korea for $40 million in radar equipment, and a $41.4 million award from
    Boeing for an electronic countermeasures system for the B1-B aircraft.  ITT
    Cannon, a manufacturer of electrical connectors, showed strong revenue and
    income growth during the quarter with large orders from Boeing, Motorola,
    Nokia and IBM.
        ITT Defense & Electronics reported operating income of $28.4 million for
    the third quarter, which was up 14.0 percent from 1996.  Sales were
    $404.8 million for the quarter, up 7.9 percent from 1996.  Operating margin
    improved to 7.0 percent, up from 6.6 percent for the period in 1996.
    
        Company Continues Effort to Build  Portfolio Balance
        Since it was launched as an independent company in December of 1995, ITT
    Industries has undertaken a strategy of building its market leadership
    position in key sectors.  Approximately 75 percent of the company's revenue is
    generated by products that hold number one or number two positions in their
    respective markets.
        As part of this effort, the company has divested businesses not considered
    integral to the core strategy.  In early October, the company completed the
    sale of its European semiconductor business.  Combined with asset writedowns
    for the Bergneustadt and Barton divestitures, third quarter charges related to
    these portfolio actions total $55.6 million after tax.
    
                                3rd Quarter Highlights
                                (millions, except EPS)
    
                               Q3 97*      Q3 96
        Revenue               $2,060.4    $2,044.8
        Net Income               $54.7       $43.7
        EPS                      $0.45       $0.36
        Shares Fully Diluted     121.9       120.4
    
        *All figures adjusted to exclude special charges.
    
        ITT Industries ( http://www.ittind.com ) is a leading worldwide
    diversified manufacturing company, with 1996 sales of $8.4 billion in its
    three primary business segments: Automotive, Defense and Electronics, and
    Fluid Technology.  ITT Automotive is one of the largest independent suppliers
    of systems and components to automotive manufacturers. ITT Defense and
    Electronics is a leader in the design, manufacture and support of high
    technology electronic systems and components for defense and commercial
    markets.  ITT Fluid Technology is one of the world's leading manufacturers of
    products, systems and services for the movement, measurement and control of
    fluids.
        In addition to the New York Stock Exchange, ITT Industries' stock is
    traded under the symbol ("IIN") on the Midwest, Pacific, London, Frankfurt and
    Paris exchanges.
    
    SOURCE  ITT Industries, Inc.
    
    

    CONTACT: Thomas R. Martin, 914-641-2157, or Thomas E. Glover,
    914-641-2160, both of ITT Industries

About ITT

ITT is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and oil and gas markets. Building on its heritage of innovation, ITT partners with its customers to deliver enduring solutions to the key industries that underpin our modern way of life. ITT is headquartered in White Plains, N.Y., with employees in more than 35 countries and sales in a total of approximately 125 countries. The company generated 2016 revenues of $2.4 billion.

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