ITT Corporation

ITT Industries Reports First Quarter EPS of $0.45 - Up from Comparable $0.17 - on Revenue of $1.09 Billion

    4/21/1999

        * Income from Continuing Operations is $42.5 Million - up from Comparable
          $20.3 Million, Before Nonrecurring Items
    
        * Leaner Cost Structure, Operating Improvements Drive Margin Growth
    
        * $1.1 Billion Stock Repurchase Completed, Reducing Shares Outstanding by
          25 Percent
    
        WHITE PLAINS, N.Y., April 21 /PRNewswire/ -- ITT Industries, Inc.
    (NYSE: IIN) today reported first quarter 1999 diluted earnings per share (EPS)
    from continuing operations of $0.45, an increase of $0.28 per share before
    nonrecurring items from the comparable figure in the first quarter 1998.
    Income from continuing operations for the first quarter was $42.5 million, up
    from the comparable $20.3 million before nonrecurring items in the period last
    year.  Operating income from ongoing segments was $89.7 million, up
    $8.1 million or 9.9 percent over the period last year, resulting from an
    operating margin increase of 0.6 percentage points.  The margin expansion was
    attributable to operating improvements and cost-saving moves that the company
    began implementing last year.  Revenues from ongoing segments for the first
    quarter were $1.09 billion, up $15.1 million or 1.4 percent from 1998.  Due to
    the disposition of the company's automotive business, treated as a
    discontinued operation in 1998, reported net income for the first quarter is
    off $13.1 million from the reported net income in the period last year.
        "We are especially pleased to see the margin gains we're making across our
    businesses, particularly in the Connectors & Switches and Specialty Products
    segments; it is clear that we have taken effective steps to improve our
    profitability," said Travis Engen, chairman and chief executive of ITT
    Industries.  "The restructuring initiative we began in the fourth quarter is
    progressing on schedule.  With this and other ongoing improvements in our
    operations, we foresee that margin improvements will continue through the
    remainder of 1999 and help us deliver another year of solid earnings growth."
        Engen said the company's $1.1 billion stock repurchase program was
    completed late in the first quarter.  During the course of the program
    initiated last July, ITT Industries repurchased 30.5 million of its shares on
    the open market, at an average price of approximately $36 per share.  As a
    result, the current number of ITT Industries shares outstanding has been
    reduced to 87.9 million.
        "We have been and will continue to be selective in how we invest the
    proceeds from the 1998 sale of our automotive business," Engen said.  "The
    investment in our own stock has proved to be a good one, since we were able to
    complete the program ahead of schedule, and at an attractive average price.
    Other investments include our acquisition of Water Pollution Control
    Corporation, enhancing our wastewater treatment business, and our recently
    announced investment in EarthWatch, a company developing a global satellite
    imaging network that allows us to increase our involvement in the growing
    commercial satellite market."
        Engen said that proceeds from the automotive sale have also enabled the
    company to increase its financial flexibility by paying off debt.  He said the
    company remains interested in acquisitions where they can add economic value
    and strengthen existing market positions.
        "Over the last two years, through a series of actions, we've redirected
    our focus toward our businesses with higher potential for value creation,"
    Engen said.  "We continue to look inside the company, as well as at potential
    acquisition candidates, seeking investment opportunities that will enhance
    value for our shareholders."
    
        Primary Business Results
    
        Specialty Products
        Operating margins for the first quarter in the Specialty Products segment
    were up sharply over the period last year, an improvement of 1.6 percentage
    points due to increased sales and improved operating performance.  Operating
    income for the first quarter was $31.2 million, up $7.9 million or
    33.9 percent over the first quarter 1998, due to cost reductions and higher
    volume.  First quarter revenue was $240.0 million, up $35.6 million or
    17.4 percent, due to strong revenue gains within the Friction Materials, Fluid
    Handling and Shock Absorber businesses, and the acquisition of Rule Marine.
    Ongoing operational improvements should expand margins in this segment through
    the remainder of the year.
    
        Connectors & Switches
        ITT Industries' Connectors & Switches segment saw first quarter operating
    margins increase 0.7 percentage points over the period last year, due to the
    cost saving measures taken in conjunction with its restructuring and continued
    manufacturing improvements.  These measures will help fuel significant margin
    expansion through 1999.  First quarter operating income was relatively flat at
    $10.5 million, despite revenues that were down $10.9 million from last year to
    $121.2 million.  The revenue decline reflects weak demand in some major
    markets, particularly military/aerospace.  ITT Industries expects that weak
    market conditions in this segment will be partially offset by strong growth in
    the Switches business through the remainder of the year, with new products
    introduced for customers such as Ericsson, Nokia, Motorola and Alcatel.
    
        Defense Products & Services
        The Defense Products & Services segment reported operating margin
    increases of 0.2 percentage points from the first quarter 1998.  First quarter
    operating income was flat at $18.6 million, on revenue of $326.6 million.
    Revenue for the quarter was off $10.3 million, or 3.0 percent, from the period
    last year, which is due to shipments in the aerospace/communications division
    that were delayed until the second quarter.  Sales were up within the
    segment's Avionics, Night Vision and Gilfillan units.  ITT Industries expects
    margin expansion to continue in the defense segment in 1999, and full-year
    revenue to grow, primarily due to continued strong increases in international
    sales and growth within the government services business.
    
        Pumps & Complementary Products
        Aggressive restructuring within the Pumps & Complementary Products segment
    allowed the business to maintain its margins in a weak environment.  Excluding
    period costs from restructuring, margins in this segment would have increased
    0.8 percentage points.  Operating income for the first quarter was
    $29.4 million, up slightly from the period last year.  Revenue for the quarter
    was $401.5 million, up $0.3 million from the first quarter 1998; lower sales
    in the industrial pump process industries were offset by increases in the
    construction and wastewater businesses, and by the acquisition of Water
    Pollution Control Corporation in January 1999.  Though some key end markets
    are expected to remain weak through the remainder of the year, ITT Industries
    expects continued growth in operating margin for this segment.
    
                    ITT Industries First Quarter Financial Results
                              (in millions, except EPS)
                                        1999                    1998*
    
        Total Sales and Revenues     $1,091.7                $1,099.2
    
        Operating Income
        from Ongoing Segments           $89.7                   $81.6
    
        Income from
         Continuing Operations          $42.5                   $20.3
    
        Shares, Diluted                  95.3                   121.6
    
        Diluted EPS
        from Continuing Operations      $0.45                  $ 0.17
    
        * 1998 figures exclude nonrecurring items of $12.3, after tax, or
          $0.10 per share.
    
        ITT Industries, Inc. (http://www.ittind.com) is a global industrial
    manufacturing company with leading positions in the markets that it serves,
    generating 1998 global sales of $4.5 billion.  ITT Industries is the world's
    premier and largest producer of pumps and produces other systems and services
    to move and control fluids.  The company is also 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
    33,000 people around the world.
        In addition to the New York Stock Exchange, ITT Industries' common stock
    is traded 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, 1998, 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,
    tglover@hq.ittind.com

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

Media

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

MEDIA