- Engen outlines transformation of ITT Industries
- Structural cost reduction program discussed
WHITE PLAINS, N.Y., Dec. 2 /PRNewswire/ -- Travis Engen, chairman and
chief executive of ITT Industries, Inc. (NYSE: IIN) today will address the
Goldman Sachs Global Capital Goods Conference in New York City. In his
remarks prepared for delivery this morning, Engen recaps the transformation
that ITT Industries has undergone in the last two years, and outlines steps
the company will take in the coming months to further improve its financial
"The actions we have taken, and those we will take over the next year,
demonstrate clearly the degree to which ITT Industries is committed to
increasing shareholder value," Engen says. "Some of the steps mean
recognizing today the future potential value creation of a business through
its sale. This was the case with the recent divestiture of our automotive
businesses. ITT Industries received significant value, and we improved our
balance and opportunities for sustained earnings growth, while reducing our
Engen's remarks outline the company's new reporting structure with four
operating segments. The largest of these segments is Pumps and Complementary
Products, accounting for 39 percent of sales. The Defense Products and
Services segment now makes up 29 percent of revenues, while Connectors and
Switches account for 13 percent. A final segment, Specialty Products,
includes businesses in industrial components, specialty valves, and marine
markets, together accounting for 19 percent of sales.
Engen is also expected to review a structural cost reduction program which
the company will implement in the coming months.
"We have conservative economic growth expectations for next year and we
want to be able to deliver earnings growth and margin improvement in what will
be, at best, a mixed market environment," Engen says. "We anticipate a major
restructuring across all of our units, particularly in our pumps business and
our connector business. This will result in a fourth quarter charge in the
range of $370 to $400 million, with a cash impact of approximately half of the
total, and could affect as many as 1,200 positions at the company."
Engen says that the restructuring efforts will focus on rationalization of
production facilities, product lines and overhead, and will impact all of the
company's four segments. The fourth quarter charge would include other asset
write-offs and reserve actions.
The company has continued an aggressive share repurchase program.
Initiated on July 30, 1998 using proceeds from the sale of automotive assets,
the program earmarks $1.1 billion to repurchase shares on the open market.
"As of the end of November, we have repurchased approximately 18.5 million
shares, which represents about 15 percent of the shares outstanding at the
time we initiated the buyback," Engen says. "We have been able to purchase
shares more quickly than we had originally anticipated, and we intend to
complete the program on a timely basis."
Looking ahead, Engen reiterates the company's interest in making strategic
acquisitions where they can create shareholder value and strengthen the
company's positions in its chosen markets. Engen notes many positive
attributes of the company's more balanced group of businesses.
"These are important times for ITT Industries," he says. "We are in a
good financial position to take advantage of the current global economic
environment. We want to maximize this financial advantage while finding the
best ways to grow our existing businesses in an efficient manner. We think
our leadership positions in these important markets will provide significant
opportunities for growth."
About ITT Industries
ITT Industries, Inc. (http://www.ittind.com) is a global industrial manufacturing
company with leading positions in the markets that it serves, generating
annual global sales of $4.4 billion. ITT Industries is the world's largest
producer of pumps and also produces systems and services to move and control
water and other fluids. The company is also a leading supplier of
sophisticated military defense systems, including night vision devices, secure
communication systems and avionics, and provides advanced technical and
operational services to a broad range of government agencies. ITT Industries
is a leading provider of electrical interconnects for cellular telephones,
aerospace, network communications, "smart cards" for personal data storage,
and PC cards for laptop computers. Further, ITT Industries provides products
for highly-focused industrial markets, such as shock absorbers serving high-
end, specialized auto needs, trains and bridges, fluid handling products such
as brake and fuel line tubing, engineered valves, aerospace controls and brake
friction materials. Based in White Plains, NY, ITT Industries employs
approximately 35,000 people around the world.
In addition to the New York Stock Exchange, ITT Industries' common stock
is traded under the symbol ("IIN") on the Midwest, Pacific, London, Frankfurt
and Paris exchanges.
Certain material presented herein consists of forward-looking statements
which involve known and unknown risks, uncertainties and other important
factors that could cause actual results to differ materially from those
expressed in or implied from such forward-looking statements. Such factors
include those set forth in Item 1. Business and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Forward-Looking Statements in the ITT Industries, Inc. Form 10-K Annual Report
for the fiscal year ended December 31, 1997, and other of its filings with the
Securities and Exchange Commission.
ITT Industries and its subsidiaries' news releases are available at no
charge via fax and the Internet. For ITT Industries news and information on
the Internet, visit http://www.ittind.com. To receive releases by fax, call
800-758-5804, extension 110006.
SOURCE ITT Industries, Inc.
Web site: http://www.ittind.com
Company News On-Call: http://www.prnewswire.com/comp/110006.html
or fax, 800-758-5804, ext. 110006
CONTACT: Tom Glover of ITT Industries, 914-641-2160
NOTE TO EDITORS: ITT Industries and its subsidiaries' news
releases are available at no charge via fax and the Internet.
For ITT Industries news and information on the Internet, visit
http://www.ittind.com. To receive releases by fax, call
800-758-5804, extension 110006.