- 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 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 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
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
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+
Operations $1,220.2 $1,180.6 $4,492.7 $4,207.6
Operations $112.4 $106.3 $387.0 $343.1
Operations $62.1 $38.2 $146.0 $95.9
Shares, Diluted 105.4 121.5 116.4 121.0
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
+ 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