ITT Corporation

ITT Industries' 1998 Income Up 52 Percent, Before One-Time Items

    1/28/1999

        - EPS from Continuing Operations $0.59 for 4th Quarter, $1.25 for Year
        - Operational improvements seen across business segments
        - Share repurchase, structural cost reduction programs on track
    
        WHITE PLAINS, N.Y., Jan. 28 /PRNewswire/ -- ITT Industries, Inc.
    (NYSE: IIN) today announced full year 1998 income from continuing operations
    rose 52 percent to $146.0 million, excluding non-recurring items such as the
    gain on the sale of automotive assets, and restructuring and other charges,
    most of which were taken in the fourth quarter.  Full year Earnings per Share
    (EPS) of $1.25 was $0.46 per share ahead of the comparable $0.79 from ongoing
    segments in 1997.  Full year operating income from ongoing segments, excluding
    the one-time items, reached $387.0 million, up $43.9 million or 12.8 percent.
    Sales from ongoing segments were $4.4 billion, up 13 percent from $3.9 billion
    in 1997.
        In the fourth quarter, before one-time items, income from continuing
    operations was $62.1 million, or $0.59 per share, an increase of $23.9 million
    or $0.27 per share from the period last year.  Fourth quarter operating income
    from continuing operations was $112.4 million, up $6.1 million or 5.7 percent
    from the period last year.  Sales from ongoing segments in the fourth quarter
    were $1.2 billion, an increase of 8.3 percent from the same period in 1997.
        "We achieved a number of high priority goals in 1998, resulting in the
    refinement of our portfolio in favor of higher growth, higher margin
    businesses," said Travis Engen, chairman and chief executive of ITT
    Industries.  "With the $2.7 billion in net proceeds from the sale of our
    automotive assets, today we have more financial flexibility to invest in
    growth opportunities, both internally and through acquisitions where they can
    add value.  We also announced an aggressive structural cost reduction program
    to rationalize assets and overhead that is designed to further improve our
    operational performance across the company."
        "We will enhance and support our businesses that offer the best platforms
    for growth and value creation," Engen continued.  "Under ITT Industries'
    president and chief operating officer Lou Giuliano, we will focus on growth
    and operational improvements that will help position us to deliver another
    solid year in 1999."
        The company reported several significant one-time items in 1998, including
    a gain on the sale of the company's automotive assets, and restructuring and
    other one-time charges.  In anticipation of a relatively flat economic
    environment, the company in the fourth quarter began implementing a plan to
    reduce its structural costs.  Actions include plant and overhead
    rationalizations across its businesses, especially in the Pumps and Connectors
    segments.  Restructuring and other non-recurring charges in the fourth quarter
    amount to $243.3 million after tax or $2.38 per share.  Including these
    one-time items and the gain on the sale of the company's automotive
    businesses, the company reported 1998 full year earnings of $13.55 per share,
    and a fourth quarter loss of ($1.77) per share.
    
        During 1998, the company achieved several significant milestones including
    the following:
    
        -- The company launched and completed a strategic review of its automotive
           businesses.  Its Brake and Chassis business was sold to Continental AG
           of Germany and its automotive Electrical Systems business was sold to
           Valeo SA of France for a total of $3.7 billion.  The company received
           after-tax cash proceeds of $2.7 billion, and earmarked the funds for
           reducing debt, funding acquisitions, investing in its remaining
           businesses and repurchasing shares on the open market.
    
        -- In July, the Board of Directors approved and the company began a
           $1.1 billion share repurchase program, using some of the proceeds from
           the sale of two automotive businesses.  As of January 25, 1999,
           approximately 25 million shares had been repurchased at an average
           price of approximately $35.25 per share.
    
        -- Throughout the year, the company continued to make acquisitions that
           could strengthen market positions and presented the highest potential
           for creating value.  Most notably, ITT Industries acquired Rule Marine,
           Sinton, and A.G. Johansons in its Specialty Products segment, and Great
           American Gumball Company in the Connectors segment.
    
        -- In the fourth quarter, the board named Louis J. Giuliano to the
           position of President and Chief Operating Officer of the corporation.
           In addition, Heidi Kunz and Richard J. Labrecque were elected as
           Executive Vice Presidents of the corporation.  Ms. Kunz, in addition to
           her role as Chief Financial Officer of ITT Industries, was given
           operational responsibilities for the company's fluid handling systems,
           shock absorber and friction materials businesses.
    
        -- In the third quarter, the company realigned its businesses into four
           new reporting segments discussed below.  The four new segments
           highlight the diversity and balance of the company's portfolio, and
           better define each of the company's continuing businesses.
    
    
                               Primary Business Results
    
        Connectors and Switches
        Despite softness in some of its key markets, the company's Connectors and
    Switches segment increased its full year operating income by more than
    25 percent, to $52.7 million, excluding one-time items.  The increase is
    linked to ongoing operational improvements, and the segment saw its full year
    operating margin increase 2.2 percentage points.  Full year sales were off
    1.8 percent at $527.9 million due primarily to lower demand in Asia and in the
    mobile communications market.  This reduction was partially offset by a
    significant revenue increase in the company's Network Systems and Switches
    units.
    
        Defense Products and Services
        ITT Industries' defense businesses reported full-year operating income of
    $97.9 million, up 20.3 percent from 1997, excluding one-time items.  Full year
    sales for this segment increased 18 percent to $1.29 billion, due to the
    acquisition of Kaman Sciences and an increase in international sales.  The
    company has experienced six consecutive years of double digit growth in sales
    outside the United States.  Full-year operating margins for this segment were
    up for the third consecutive year.
    
    
        Pumps and Complementary Products
        ITT Industries' reported 1998 operating income of $145.5 million in its
    pumps and complementary products segment, an increase of $15.3 million or
    11.8 percent over 1997, excluding one-time items, due primarily to the
    acquisition of Goulds Pumps.  Full-year revenue was $1.77 billion, up
    $309.8 million or 21.2 percent, due to the addition of Goulds.  This segment
    continues to be challenged by weaknesses in a number of key markets, and is
    undergoing an aggressive restructuring to ensure margin expansion in a mixed
    market.
    
        Specialty Products
        ITT Industries' Specialty Products businesses reported 1998 operating
    income of $90.9 million, up $1.3 million or 1.5 percent from the prior year,
    excluding one-time items.  Total sales for the year were $849.3 million, up
    $26.1 million or 3.2 percent, due to increased sales volume in the aerospace
    controls, friction material and shock absorber businesses, and the acquisition
    of Sinton, Rule, and A.G. Johansons.
    
         ITT Industries Fourth Quarter and Full-Year Financial Results, 1998
                              (in millions, except EPS)
    
                                  Fourth Quarter                 Full-Year
    
                                1998*         1997+         1998*         1997+
    
        Total Sales
        From Continuing
        Operations            $1,220.2      $1,180.6     $4,492.7      $4,207.6
    
        Operating Income
        From Continuing
        Operations              $112.4        $106.3       $387.0        $343.1
    
        Income
        From Continuing
        Operations               $62.1         $38.2       $146.0         $95.9
    
        Shares, Diluted          105.4         121.5        116.4         121.0
    
        Diluted EPS
        From Continuing
        Operations               $0.59         $0.32        $1.25         $0.79
    
        The above amounts exclude ITT Industries' discontinued operations.
    
        * Fourth quarter 1998 figures adjusted to exclude one-time charges related
          to continuing operations of $224.9 million after-tax or $2.20 per share.
          Full-year figures for 1998 are adjusted to exclude one-time charges of
          $243.6 million after-tax, or $2.15 per share, and a $13.68 per share
          gain on the sale of automotive assets.  Additionally, EPS reflects
          diluted average common shares outstanding of 105.4 million for the
          fourth quarter and 116.4 million for the full year.  Had the company
          used basic average common shares outstanding of 102.1 million and
          113.1 million respectively, EPS would have been $0.61 and $1.29
          respectively.
    
        + Excludes restructuring charges of $84.0 million related to continuing
          operations, or $0.69 per diluted share, and excludes the cumulative
          effect of accounting change, net of tax.
    
        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 1998
    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 a leading supplier of sophisticated military
    defense systems, and provides advanced technical and operational services to a
    broad range of government agencies.  ITT Industries is a leading provider of
    connectors, switches and cabling used in telecommunications, computing,
    aerospace and industrial applications, as well as network services.  Further,
    ITT Industries provides industrial components for a number of other markets,
    including transportation, construction and aerospace.  Based in White Plains,
    NY, ITT Industries employs approximately 34,000 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, 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
tel +1 914-641-2030
jason.moss@itt.com

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Laurent Lawrence
tel +1 914-304-1809
laurent.lawrence@itt.com

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