ITT Corporation

ITT Industries Reports Second Quarter Net Income Before Non-Recurring Items of $75.8 Million

    7/21/1998

          Company sees strong productivity gains across all business areas;
         operating income up sharply in fluid, defense & electronics segments
    
         Diluted EPS of $0.62, excluding non-recurring items, reflects impact
                          of GM strike on automotive segment
    
        WHITE PLAINS, N.Y., July 21 /PRNewswire/ -- ITT Industries, Inc.
    (NYSE: IIN) today reported second quarter 1998 net income, before
    non-recurring items, of $75.8 million.  Diluted Earnings per Share, excluding
    non-recurring items, was $0.62, down from the comparable $0.65 EPS, in 1997.
    The decline is more than accounted for by the General Motors (GM) strike,
    which had an ($0.08) per diluted share impact in the quarter.  Operating
    income from ongoing segments, before the impact of the GM strike, was
    $185.7 million, up 8.0 percent or $13.8 million from the second quarter 1997,
    due to productivity gains across the business and the acquisition of Goulds
    Pumps and Kaman Sciences during 1997.  Total sales for the period were
    $2.2 billion, down 4.3 percent from last year due to divestitures, foreign
    currency translation and the GM strike.
        During the quarter, the company recorded non-recurring expenses of
    $10.7 million.  This was comprised of restructuring reserves to close its pump
    manufacturing facility in Cincinnati, Ohio, partially offset by a gain related
    to the sale of the Barton fluid measurement unit.  Including these
    non-recurring items, the company reported second quarter net income of
    $69.3 million, or $0.57 per share.
        "We're seeing strong productivity gains across all of our business areas,"
    said Travis Engen, chairman, president and chief executive of ITT Industries.
    "Excluding the impact of the GM strike, our operating margin from ongoing
    operations increased 0.8 percentage points over the period last year to
    8.6 percent.  We continue to press hard in this area to realize further margin
    opportunity in all of our businesses.  These gains, and our strategy to
    tightly focus on our higher growth, higher margin businesses, will help us to
    ensure we're continuing to add value for our shareholders."
        "In addition to gains in our operating results, we made progress in our
    strategic review of two of our automotive businesses.  Last month, we reached
    an agreement to sell the automotive Electrical Systems business to Valeo S.A.
    for $1.7 billion in cash," Mr. Engen said.  "This sale will enable us to
    re-deploy these assets to areas that create the most value for our
    shareholders by repurchasing stock, paying down debt and/or financing further
    growth of the business."
        The sale of Electrical Systems could close in the third quarter, pending
    regulatory approvals and customary closing conditions.  The strategic review
    of the Brake and Chassis business continues on schedule and the company
    expects an announcement by the end of July.  The strategic review does not
    include the company's automotive components business.
        The company also reported that net income, before non-recurring items, for
    the first six months of 1998 was $131.5 million or $1.08 per diluted share, up
    $0.06 per share or $8.6 million over the comparable $1.02 EPS for the period
    in 1997, despite the GM strike in the second quarter.  Operating income from
    ongoing segments reached $310.5 million, up $15.6 million or 5.3 percent over
    the first six months last year.  Total sales for the first six months of
    $4.3 billion were down slightly compared to 1997, the decline more than
    accounted for by divestitures and foreign currency translation.  After
    non-recurring items, six months year to date earnings are $124.9 million or
    $1.03 per diluted share.
    
                               Primary Business Results
    
        Automotive
        ITT Industries' automotive businesses reported second quarter operating
    income of $84.4 million, down $16.4 million from last year, primarily due to
    the GM strike.  Sales for the quarter were $1.2 billion, down $204.5 million
    from the period last year.  The decline is more than accounted for by
    businesses divested over the last year, and the impact of the GM strike.  The
    automotive businesses saw significant productivity gains during the quarter,
    with operating margin improvement, prior to the GM strike, of 0.9 percentage
    points over the period last year.  This gain is a reflection of the
    manufacturing rationalization and other cost-cutting programs instituted in
    the third quarter 1997.  Prior to the GM strike, unit sales volume was up;
    this was partially offset by unfavorable foreign currency translation.  During
    the quarter, the company began production on the award of the complete brake
    systems for the all-new 1999 Jeep(R) Grand Cherokee.  Targeted marketing
    programs have supported ABS sales volume in North America.  The company's
    worldwide ABS sales unit volume has increased 13% year to date over last year.
    
        Defense & Electronics
        Operating income at ITT Industries' defense & electronics segment was
    $40.2 million, up 18.6 percent, due to higher volume at its Avionics and
    GaAsTek (Gallium Arsenide) units, productivity gains at the company's Cannon
    electrical connectors unit, and the acquisition of Kaman Sciences.  Operating
    margins across the business increased 0.6 percentage points over the period
    last year.  Sales were $449.3 million, up $39.8 million over 1997, reflecting
    international sales growth and the acquisition of Kaman Sciences at the end of
    the fourth quarter 1997.  Contract wins announced across the defense business
    during the quarter totaled more than $230 million, bringing the backlog in
    this segment to $2.3 billion.  In the electrical connectors area, Cannon
    reported a 2.4 percent decline in sales, but nonetheless increased operating
    income by 9.3 percent, due to cost reductions and better operational
    performance.
    
        Fluid Technology
        ITT Industries' fluid technology business reported operating income of
    $45.3 million during the second quarter, $8.1 million or 21.8 percent above
    the figure for the quarter last year.  Operating margins were up by
    0.6 percentage points, excluding the impact of the Goulds Pumps acquisition.
    An increase in total sales of $118.3 million to $515.5 million was more than
    accounted for by the acquisition of Goulds Pumps.  This was partially offset
    by weakness in many of the company's end markets due, in large part, to the
    economic situation in Asia.  The fluid technology business continues to
    improve productivity and grow market share in the face of challenging market
    conditions.  In its ongoing commitment to improve productivity, the company
    has decided to phase out its pump manufacturing facility in Cincinnati, Ohio
    over the next twelve months.  Additionally, the fluid technology business
    continues to make niche acquisitions to enhance its market position,
    including, during the quarter, Rule Industries' marine business and the
    UK-based Sinton Engineering Group in the pharmaceutical and bioprocessing
    markets.
    
         ITT Industries Second Quarter and Six Month Financial Results, 1998
                              (in millions, except EPS)
    
                                   Second Quarter                Six Months
                                 1998*        1997**        1998*          1997
    
        Total Sales           $2,154.4      $2,250.9     $4,297.9      $4,417.5
    
        Operating Income
        From ongoing Segments   $169.9        $171.9       $310.5        $294.9
    
        Net Income Before
         non-recurring items     $75.8         $78.6       $131.5        $122.9
    
        Shares, Diluted         $122.1        $120.5       $121.8        $120.5
    
        Diluted EPS before
        Non-recurring items      $0.62         $0.65        $1.08         $1.02
    
         * Adjusted to exclude non-recurring charges of $6.5 million after-tax or
           $0.05 per share
        ** Adjusted to exclude non-recurring gains of $4.0 million after tax or
           $0.04 per share
    
        ITT Industries (http://www.ittind.com) is a leading global diversified
    manufacturing company, with 1997 sales of $8.8 billion in its three primary
    business segments:  automotive, defense & electronics, and fluid technology.
    ITT Industries' automotive business is one of the world's largest independent
    suppliers of systems and components to automotive manufacturers.  In the
    defense & electronics area, ITT Industries is a leader in the design,
    manufacture and support of high technology electronic systems and components,
    including Night Vision, tactical communications and mobile telecommunications.
    In fluid technology, ITT Industries is the world's leading manufacturer of
    pumps, systems and services for the movement, measurement and control of
    fluids.  Headquartered in White Plains, NY, ITT Industries employs more than
    58,000 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 or fax,
    800-758-5804, ext. 110006
    CONTACT: Tom Glover of ITT Industries, Inc., 914-641-2160

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.

Investors

Jason Moss
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