ITT Corporation

ITT Industries' Third Quarter Results Show Improved Performance In Continuing Businesses

    10/20/1998

              EPS is $0.52, Excluding Non-Recurring Items and GM Strike;
                                Op Income, Margins Up;
                      Share Repurchase Program Ahead of Schedule
    
        WHITE PLAINS, N.Y., Oct. 20 /PRNewswire/ -- ITT Industries, Inc.
    (NYSE: IIN) today announced third quarter and nine-month 1998 earnings, along
    with details of new financial reporting segments and an update on its ongoing
    share repurchase program.
        The company's net income from operations for the third quarter was
    $62.3 million, or $0.52 per diluted share, excluding non-recurring items such
    as the gain on the sale of its automotive businesses, and the impact of the GM
    strike.  This is up $12.3 million or 24.6 percent from the comparable period
    1997, before non-recurring items.  For the nine months ending September 30,
    net income was $203.5 million, or $1.69 per fully diluted share, before the GM
    strike.  This figure is up 17.7 percent or $30.6 million from the comparable
    $172.9 million, or $1.43 per share reported for the first nine months of 1997.
        "We are encouraged by the improving performance of our continuing
    businesses," said Travis Engen, chairman, president and chief executive of ITT
    Industries.  "Operating income from our ongoing operations is up more than
    8 percent, and operating margins were up 2.1 percentage points in our defense
    businesses and up 1.1 percentage points in our connectors business."
        With the disposition of two automotive units, Brake and Chassis, and
    Electrical Systems, their financial results have been reclassified into
    "Discontinued Operations."  Consequently, third quarter and nine-month Sales
    and Operating Income for ITT Industries are reported excluding the results of
    these two units.  Third quarter operating income from ongoing operations was
    $87.4 million, up 8.4 percent or $6.8 million from the third quarter 1997.
    Total sales from ongoing segments for the quarter were $1.0 billion, up
    1.9 percent or  $19.1 million.  Operating income from continuing operations
    for the first nine months of 1998 reached $276.6 million, up 15.6 percent or
    $37.3 million from the same period last year.  Total sales from continuing
    operations were up 15.7 percent or $433.2 million to $3.2 billion.
        Including the effects of the GM strike, the company reported third quarter
    net income of $41.9 million, or $0.35 per diluted share.  Most of the strike's
    impact was felt in the automotive business units which ITT Industries divested
    during the quarter.  For the nine months, the company reported net income of
    $173.4 million, or $1.44 per fully diluted share.  This figure is up slightly
    from the comparable $172.9 million, or $1.43 per share reported for the period
    in 1997.
    
        Automotive Dispositions Completed
        The completions of the sale of two automotive units were the key events in
    the third quarter.  On September 25, the company closed the sale of its Brake
    and Chassis business unit to Continental AG for $1.9 billion, and on September
    28, completed the sale of its automotive Electrical Systems business to Valeo
    SA for $1.7 billion.  The gain on the sale of these two business units was
    $1.5 billion or $13.10 per share.
        "We've achieved what we set out to do: conduct a strategic review of our
    automotive business options to maximize value.  This resulted in the
    divestiture of two automotive units for an attractive price before the end of
    the third quarter," Mr. Engen said.  "We see our remaining businesses as
    strong platforms for growth, and we are now well positioned to grow these
    businesses through acquisitions and internal growth.  We will continue to
    aggressively pursue all alternatives that offer us the best opportunities to
    strengthen our market positions, accelerate growth and increase shareholder
    value."
        To ensure that the company's profit improvement remains on course, Mr.
    Engen said the company is finalizing a restructuring program in those units
    experiencing weakness in their end markets. Specific actions will be announced
    in the fourth quarter.
    
        Share Repurchase Program Ahead of Schedule
        Mr. Engen said the company's $1.1 billion share repurchase program,
    launched on July 29, is well ahead of schedule.  As of October 19, the company
    had repurchased 13.5 million shares, or approximately 11 percent of the shares
    outstanding as of the second quarter, at an average price of approximately
    $33 per share.
    
        New Reporting Segments
        Effective in the third quarter, the company has begun reporting its
    financial results under new reporting segments: Connectors & Switches, Defense
    Products & Services, Pumps & Complementary Products, and Specialty Products.
    The four new segments highlight the diversity and balance of the company's
    portfolio, and better reflect each of the businesses that will be going
    forward.  The new segments are described in detail under "Primary Business
    Results" below.
    
        Primary Business Results
    
        Connectors & Switches
        This business, formerly included within the "Defense & Electronics"
    segment, consists of the company's products marketed under the Cannon brand.
    These products include connectors, switches and cabling used in
    telecommunications, computing, aerospace and industrial applications, as well
    as network services.  The Connectors & Switches segment represents about
    12 percent of the company's sales and 14 percent of its operating income.
        The company reported operating income for the Connectors & Switches
    segment of $12.8 million, an increase of $1.1 million or 9.4 percent over the
    same period in 1997, while sales for the period were down 3.6 percent to
    $133.0 million, a reflection of lower global demand.  The increase in
    operating income, and an operating margin increase of 1.1 percentage points
    are due primarily to productivity improvements throughout the business.  In
    September, the Cannon business unit identified restructuring projects at
    facilities in North America and Europe that will further enhance productivity.
    The company is taking a $16 million charge in the third quarter to cover these
    moves, offset by a one-time gain realized through the sale of the unit's
    Pomona Electronics business.  Nine-month operating income in Connectors &
    Switches is up 15.5 percent to $38.8 million, with its operating margin up
    1.5 percentage points.  Nine-month revenues are $408.0 million, down 2.3
    percent from the period last year.
    
        Defense Products & Services
        The businesses in this segment are those that directly serve the military
    and government agencies with products and services.  These include air traffic
    control systems, jamming devices that guard military planes against
    radar-guided weapons, digital combat radios, night vision devices and
    satellite instruments.  Approximately 33 percent of the sales in this segment
    are generated through contracts for technical and support services which the
    company provides for the military and other government agencies.  The Defense
    Products & Services segment represents approximately 29 percent of the
    company's sales and approximately 24 percent of its operating income.
        The company reported Defense Products & Services operating income of
    $23.2 million, an increase of 39.8 percent or $6.6 million over the third
    quarter 1997 due to strong performance in the avionics and systems units, and
    the acquisition of Kaman Sciences at year end 1997. Operating margins
    increased 2.1 percentage points due to cost controls and other productivity
    enhancements.  Sales for the quarter increased 4.2 percent over 1997 to
    $278.1 million, due to the doubling of export sales and to the acquisition of
    Kaman Sciences.  During the quarter, ITT Industries was awarded service
    contracts with the U.S. Air Force totaling $298.4 million dollars.
        Nine-month operating income for Defense Products & Services was up
    23.9 percent or $13 million to $67.4 million.  Nine-month sales for this
    segment were $925.9 million, up $134.6 million, due to the acquisition of
    Kaman Sciences and an increase in international sales.
    
        Pumps & Complementary Products
        This segment contains ITT Industries' pump businesses, including brands
    such as Flygt, Goulds, Bell & Gossett, A-C Pump, Lowara and Vogel, making ITT
    Industries the world's largest pump producer.  Businesses within this segment
    also supply mixers, heat exchangers and related products with brands such as
    McDonnell & Miller and ITT Standard brand names in addition to those mentioned
    above.  This segment represents approximately 40 percent of the company's
    sales and approximately 38 percent of its operating income.
        For the third quarter, ITT Industries reported operating income for the
    Pumps & Complementary Products segment of $37.6 million, up $0.7 million or
    1.9 percent from the same quarter 1997, on slightly higher sales of
    $436.9 million.  Operating margin in this segment increased 0.1 percentage
    points, despite difficult conditions in the industrial markets.
        Nine-month operating income for Pumps & Complementary Products was $105.5
    million, an increase of 22.7 percent over the comparable period in 1997.
    Sales for the nine months within this segment were up slightly to
    $1.29 billion, as higher North American demand for improved fresh water supply
    systems and an increase in European spending on wastewater treatment offset a
    slackening industrial market.  The company is continuing to execute its plan
    to consolidate operations in these business areas to enhance productivity and
    reduce costs.
    
        Specialty Products
        Businesses in the Specialty Products segment produce engineered valves and
    switches for industrial and aerospace applications, products for the marine
    and leisure markets, fluid handling materials such as stainless steel and
    flexible tubing for various industrial markets, and specialty shock absorbers
    and brake friction materials for the transportation industry.  This segment
    represents approximately 19 percent of ITT Industries' sales and approximately
    24 percent of its operating income.
        For the third quarter, ITT Industries reported operating income for the
    Specialty Products segment of $13.8 million, down $1.6 million or 10.4 percent
    from the same period last year, on sales that were up 4.9 percent or
    $8.9 million.  Before the GM strike, sales were up in this segment by more
    than 11 percent, with strong volume gains particularly in aerospace controls,
    fluid handling and friction materials.
        Nine-month operating income for the Specialty Products segment is down
    $0.4 million to $64.9 million, which is more than accounted for by costs
    associated with the GM strike.  Nine-month sales for this segment were
    relatively flat at $604.8 million.
    
         ITT Industries Third Quarter and Nine Month Financial Results, 1998
                              (in millions, except EPS)
    
                                       Third Quarter                Nine Months
    
                                  1998          1997         1998          1997
        Total Sales           $1,039.1      $1,067.5     $3,232.5      $2,983.0
    
        Operating Income
         From Ongoing
         Segments                $87.4         $80.6       $276.6        $239.3
    
        Net Income
         Before Non-Recurring
         Items                   $41.9         $50.0       $173.4        $172.9
    
        Shares, Diluted          118.1         118.4        120.3         120.9
    
        Diluted EPS Before
         Non-Recurring Items and
         Gain on Sale of Automotive
         Business Units          $0.35         $0.41        $1.44         $1.43
    
    
        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
    CONTACT: Tom Glover of ITT Industries, 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
tel +1 914-641-2030
jason.moss@itt.com

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