Page 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from . . . . to . . . .
COMMISSION FILE NUMBER 1-5627
ITT CORPORATION
Incorporated in the State of Delaware 13-5158950
(I.R.S. Employer Identification Number)
1330 Avenue of the Americas
New York, NY 10019-5490
(Principal Executive Office)
Telephone Number: (212) 258-1000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
----- -----
As of May 8, 1995, there were outstanding 105.7 million
shares of common stock ($1 par value) of the registrant.
Page 2
ITT CORPORATION
TABLE OF CONTENTS
Page
----
PART I FINANCIAL INFORMATION:
ITEM 1 Financial Statements:
Consolidated Income - Three
Months Ended
March 31, 1995 and 1994 3
Consolidated Balance Sheet -
March 31, 1995 and 4
December 31, 1994
Consolidated Cash Flow -
Three Months Ended March 31, 5
1995 and 1994
Notes to Consolidated 6
Financial Statements
Business Segments 8
ITEM 2 Management's Discussion and
Analysis of Financial Condition
and Results of Operations:
Three Months Ended March 31,
1995 and 1994 9
PART II OTHER INFORMATION:
ITEM 1 Legal Proceedings 13
ITEM 6 Exhibits and Reports on 13
Form 8-K
Signature 14
Exhibit Index 15
Page 3
PART I. FINANCIAL INFORMATION
FINANCIAL STATEMENTS
ITEM 1
The following unaudited financial statements, in the opinion
of ITT, reflect all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of
the financial position, the results of operations and cash
flow for the periods presented. For a description of
accounting policies, see notes to financial statements in
the 1994 annual report on Form 10-K.
ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME
(In millions except per share)
Three Months
Ended
March 31,
---------------
1995 1994*
---- ----
Sales and Revenues
Insurance $3,005 $2,642
Products 2,226 1,668
Services 1,307 899
------ ------
6,538 5,209
Costs and Expenses
Insurance 2,807 2,452
Products (including selling and
general expenses of $159 and $140) 2,096 1,589
Services (including selling and
general expenses of $175 and $110) 1,241 868
Other 33 16
------ ------
361 284
Interest expense (net of interest
income of $43 and $41) (86) (20)
Miscellaneous income (expense), net 5 (3)
------ ------
280 261
Income taxes (94) (86)
Minority equity 5 (2)
------ ------
Income from Continuing Operations 191 173
Discontinued Operations,
net of tax of $23 and $20 37 40
Cumulative Effect of Accounting Changes,
net of tax benefit of $8 - (11)
------ ------
Net Income $ 228 $ 202
====== ======
Earnings (Loss) Per Share
Income from Continuing Operations
Primary $1.71 $1.39
Fully Diluted $1.59 $1.31
Discontinued Operations
Primary $ .34 $ .34
Fully Diluted $ .32 $ .32
Cumulative Effect of Accounting Changes
Primary $ - $(.10)
Fully Diluted $ - $(.09)
Net Income
Primary $2.05 $1.63
Fully Diluted $1.91 $1.54
Cash Dividends Declared Per Common Share $ .495 $ .495
====== ======
*Restated to reflect the Finance segment as a "Discontinued
Operation".
Page 4
ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
In millions except for shares and per share
March 31, December 31,
1995 1994
--------- ------------
Assets
Cash and Cash Equivalents $ 743 $ 568
Receivables, net 5,125 4,779
Inventories 1,145 1,049
Insurance Investments 34,728 32,453
Reinsurance Recoverables 12,357 12,220
Deferred Policy Acquisition Costs 2,698 2,525
Plant, Property and Equipment, net 6,357 5,346
Other Assets 7,056 5,261
Assets of Discontinued Finance Operations 11,291 13,398
Insurance Separate Account Assets 26,183 23,255
-------- --------
$107,683 $100,854
======== ========
Liabilities and Stockholders Equity
Liabilities --
Policy liabilities and accruals $ 47,204 $ 45,620
Insurance debt 1,502 1,498
Other debt (including ESOP of $541 and $562) 7,768 4,909
Accounts payable and accrued liabilities 3,805 3,523
Other liabilities 4,339 3,856
Liabilities of Discontinued Finance
Operations 10,545 12,734
Insurance separate account liabilities 26,183 23,255
-------- --------
101,346 95,395
-------- --------
Stockholders Equity --
Cumulative preferred stock 652 655
Common stock: Authorized 200,000,000 shares,
$1 par value
Outstanding 105,706,553 and 105,672,252 106 106
Deferred compensation -- ESOP (541) (562)
Cumulative translation adjustments (49) (113)
Unrealized loss on securities, net of tax (737) (1,376)
Retained earnings 6,906 6,749
-------- --------
6,337 5,459
-------- --------
$107,683 $100,854
======== ========
Page 5 ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW
(In millions)
Three Months Ended
March 31,
-----------------
1995 1994*
---- -----
OPERATING ACTIVITIES
Net Income $ 228 $ 202
Discontinued Operations (37) (40)
Cumulative Effect of Accounting Changes - 11
------ ------
Income from continuing operations 191 173
Adjustments to Income
from Continuing Operations:
Depreciation and amortization 186 140
Provision for doubtful receivables 17 5
Gain on sale of portfolio securities
- pretax (20) (62)
Change in receivables, inventories, payables
and accrued liabilities (236) (330)
Accrued and deferred taxes 21 (34)
Increase in liability for policy benefits
and unpaid claims 165 203
Increase in deferred policy acquisition
costs (157) (123)
Decrease in reinsurance and other
related assets 138 178
Other, net 66 (48)
------ ------
Cash from continuing operations 371 102
Cash from discontinued operations - 208
------ ------
Cash from operating activities 371 310
------ ------
INVESTING ACTIVITIES
Additions to plant, property and equipment (169) (110)
Acquisitions, net of acquired cash of $145
in 1995 (2,209) (374)
Purchase of insurance investments (3,188) (7,387)
Sale and maturity of insurance investments 1,926 7,088
Other, net (20) 25
------ ------
Cash used for investing activities (3,660) (758)
------ ------
FINANCING ACTIVITIES
Short-term debt, net 2,483 191
Long-term debt issued 41 -
Long-term debt repaid (50) (150)
Investment life contracts, net 1,007 146
Repurchase of common stock (34) (28)
Dividends paid (66) (140)
Other, net 30 (2)
------ ------
Cash from financing activities 3,411 17
------ ------
EXCHANGE RATE EFFECT ON CASH
AND CASH EQUIVALENTS 53 (1)
------ ------
Increase (decrease) in cash
and cash equivalents 175 (432)
Cash and cash equivalents - beginning of year 568 1,136
------ ------
Cash and cash equivalents - end of period $ 743 $ 704
------ ------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 188 $ 98
------ ------
Income taxes (net of refunds) $ 12 $ 3
------ ------
*Restated to reflect the Finance segment as a "Discontinued
Operation".
Page 6
Notes to Consolidated Financial Statements
- ------------------------------------------
1) Discontinued Operations
-----------------------
In September 1994, the Corporation announced plans to
seek offers for the purchase of its Finance business
segment, comprised primarily of its Financial Corporation
subsidiary. Proceeds of the sale are expected to exceed the
carrying value of the Corporation's investment in this
segment. The net assets, results of operations and cash
flows of the Finance segment have been reflected as
"Discontinued Operations". The Statements of Income and
Cash Flow for the three months ended March 31, 1994 have
been restated to conform with the 1995 presentation.
Summarized financial information for the Finance segment is
as follows (in millions):
Three Months
Ended
March 31,
--------------
1995 1994
---- ----
Income Statement Data
- ---------------------
Revenues $ 383 $ 339
Operating Income 63 44
Income from Finance Operations 37 28
March 31,December 31,
1995 1994
-------- ------------
Balance Sheet Data
- ------------------
Total Assets $11,291 $13,398
Finance Debt 9,272 11,640
Equity 746 664
In January 1995, the holders of $3.4 billion in ITT
Financial term debt consented to a merger of ITT Financial
with the Corporation. The merger was completed on May 1,
1995. ITT Corporation is the surviving corporation and is
the obligor on the debt.
In late March, the Corporation completed the sales of
certain assets of ITT Financial for $4.1 billion. Proceeds
were used to repay Financial debt. The remaining assets of
ITT Financial are expected to be disposed of in the 1995
second quarter.
2) Acquisitions
------------
A cash tender offer for all outstanding shares of Caesars
World, Inc. for approximately $1.7 billion was completed in
late January 1995. The acquisition was accounted for using
the purchase method. Accordingly, the purchase price was
allocated to assets acquired based on their estimated fair
values. The purchase price exceeded the fair value of the
net assets acquired by approximately $1.1 billion. The
Consolidated Income Statement includes the results of
Caesars World from February 1, 1995, the date of
acquisition.
Page 7
Notes to Consolidated Financial Statements (continued)
- ------------------------------------------------------
The following pro forma summary presents information as if
the acquisition of Caesars World had occurred at the
beginning of the respective periods (in millions except per
share):
Three Months
Ended
March 31,
------------
1995 1994
---- ----
Sales and Revenues $6,620 $5,451
Income from Continuing Operations 183 163
Net Income 220 192
Per Share:
Income from Continuing Operations
Primary $ 1.63 $1.30
Fully Diluted 1.52 1.23
Net Income
Primary 1.98 1.54
Fully Diluted 1.84 1.46
The pro forma information is not necessarily indicative
of results that would have occurred had the acquisition
taken place at the beginning of the respective periods.
The Corporation, in a partnership with Cablevision
Systems Corporation, completed the acquisition of Madison
Square Garden Corporation (MSG) on March 10, 1995 for
approximately $1 billion. The acquisition of the
Corporation's 50% interest in MSG required initial funding
of $610 million. The Corporation's share of the results of
MSG are included in the Consolidated Income Statement from
the date of acquisition.
Page 8
BUSINESS SEGMENTS
Sales and
Revenues Income
------------ -------------
Three Months Ended March 31,
---------------------------
1995 1994* 1995 1994*
---- ------ ----- ------
(In millions)
Insurance $3,005 $2,642 $198 $190
Industries
Automotive 1,510 986 96 60
Defense & Electronics 427 418 16 11
Fluid Technology 289 249 18 17
------ ------ ---- ----
2,226 1,653 130 88
------ ------ ---- ----
Hospitality, Entertainment
& Information Services
Sheraton 1,022 798 37 29
Caesars World 171 - 21 -
Communications &
Information Services 92 78 10 3
------ ------ ---- ----
1,285 876 68 32
------ ------ ---- ----
Ongoing Segments 6,516 5,171 396 310
Dispositions and Other 22 38 (2) (10)
------ ------ ---- ----
Total Segments 6,538 5,209 394 300
Interest, net (86) (20)
Other (23) (21)
Income Taxes (94) (86)
---- ----
Income from Continuing Operations 191 173
Discontinued Operations, net of tax of $23
and $20 37 40
Cumulative Effect of Accounting Changes,
net of tax benefit of $8 - (11)
------ ------ ---- ----
$6,538 $5,209 $228 $202
====== ====== ==== ====
*Restated to reflect the Finance segment as a "Discontinued
Operation".
Page 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Net income for the first quarter of 1995 was $228
million or $1.91 per fully diluted share ($2.05 per primary
share) compared with $202 million or $1.54 per fully diluted
share ($1.63 per primary share) in the 1994 first quarter.
After-tax portfolio gains in the 1995 first quarter totaled
$13 million or $0.11 per fully diluted share compared with
$33 million or $0.26 per fully diluted share in the 1994
quarter. Sales and revenues for the first quarter were $6.5
billion, a 26% increase over the $5.2 billion in the 1994
quarter (both periods exclude ITT Financial which has been
treated as a Discontinued Operation).
Income from ongoing segments for the first quarter rose
by $86 million (28%) compared with the 1994 quarter.
Operating results in the Insurance segment rose (4%)
over the 1994 quarter reflecting reduced catastrophe losses.
When excluding the effects of extraordinary catastrophe
losses and capital gains, results were down 10% from 1994.
The 1994 quarter benefited from unusually good results in
the workers compensation line of business, due to
legislative reform and managed care initiatives. Revenues
in the segment rose by 14%. Excluding operations in runoff,
the worldwide combined ratio improved to 102.0% compared
with 104.7% in the 1994 quarter.
Insurance operating costs and expenses were as follows:
First Quarter
-------------
1995 1994
---- ----
Benefits, claims and claim adjustment expenses $1,833 $1,693
Amortization of deferred policy acquisition costs 414 394
Other insurance expenses 560 365
------ ------
$2,807 $2,452
====== ======
ITT Automotive operating income increased 60% in the
quarter, reflecting in part the contribution of the
Electrical Systems, Inc. acquisition which was completed in
the 1994 second quarter. Excluding this acquisition,
operating income rose in the quarter reflecting higher
volume in several product lines and the continuing benefits
from cost reduction programs. The improved results were
registered despite pricing pressure and higher material and
labor costs. Sales increased 53% compared with the 1994
quarter.
Operating income at Defense & Electronics increased 45%
in the quarter reflecting growth in Electronics and higher
margins at a number of Defense units. Sales and revenues
approximated the 1994 quarter. Order backlog was $2.4
billion at March 31, 1995 compared with $2.1 billion at
March 31, 1994.
Operating income at Fluid Technology was up 6% for the
quarter when compared with the prior year, mainly the result
of higher volume at ITT Flygt and lower operating costs.
Sales improved 16% for the period, primarily the result of
higher volume.
Page 10
ITEM 2. (Continued)
At ITT Sheraton, operating income improved
significantly from the 1994 quarter as a 58% improvement at
the hotels was partly offset by a $3 million decline in the
gaming division. Average rate at ITT Sheraton's owned and
leased properties (excluding the newly acquired CIGA hotels)
rose 16% to $124 compared with the 1994 first quarter
accompanied by an occupancy improvement of three percentage
points to 71.5%. ITT Sheraton generated operating cash flow
(earnings before interest, taxes, depreciation and
amortization) of $73 million in 1995 compared with $48
million in the 1994 first quarter.
The results of Caesars World have been included in the
1995 quarter for the two months since the date of
acquisition. Caesars World generated revenues of $171
million, operating cash flow of $35 million and operating
income of $21 million in the months of February and March,
1995.
Operating income and sales and revenues at
Communication and Information Services for the first quarter
were ahead of the 1994 quarter. The improvement in results
was due to the acceleration of the publishing schedule in
Holland and higher royalties in Japan at ITT World
Directories and higher student enrollment and tuition price
increases more than offsetting the operating costs of newly-
opened schools at ITT Educational Services.
Dispositions and Other reflects the sales and operating
losses of companies previously divested as well as ITT
Community Development. The 1994 quarter includes losses on
the sale of several non-strategic Electronics businesses.
Interest expense, net of interest income, increased
from $20 million in 1994 to $86 million in 1995, the result
of higher debt levels related to 1994 and 1995 acquisitions
and share repurchases. "Other" consists of corporate
expenses, minority equity and non-operating income and was
essentially flat when compared with the 1994 quarter.
Income taxes increased in the first quarter of 1995
versus 1994 due to an increase in pretax income from
continuing operations. Income taxes related to Discontinued
Operations and Cumulative Effect of Accounting Changes are
reflected within those captions separately on the income
statement. The Corporation's effective tax rate was 34% in
the quarter compared with 33% in 1994.
Discontinued Operations related solely to the Finance
segment in the 1995 quarter and to both Finance and Forest
Products in 1994. The first quarter results at ITT
Financial were above those of the prior year. The Forest
Products segment (ITT Rayonier) was spun-off to shareholders
on February 28, 1994. Net income for the quarter in 1994
included $12 million ($0.09 per fully diluted share) of
earnings prior to the spin-off.
Page 11
ITEM 2. (Continued)
The comparison of net income with 1994 is impacted by
certain unusual items. While both the 1995 and 1994 quarter
included capital gains in the insurance portfolio, results
for the 1995 quarter are adversely affected $18 million or
$0.15 per fully diluted share for losses on the
Corporation's 70% interest in CIGA, SpA as well as
acquisition financing costs. This is the first full quarter
in which CIGA operated under the Corporation's control and
the losses are not expected to continue. Results for the
1994 quarter included three cumulative catch-up adjustments
for accounting changes; (1) a favorable adjustment of $42
million after tax or $0.33 per fully diluted share for a
change in the discount rate used to determine certain
workers' compensation liabilities at the Insurance
segment,(2) a charge of $36 million after tax or $0.29 per
fully diluted share for the adoption of SFAS No. 115 related
to accounting for certain investments in debt and equity
securities, and (3) a charge of $17 million after tax or
$0.13 per fully diluted share to expense certain marketing
and start-up costs at ITT Educational Services which were
previously deferred. The 1994 quarter was also unfavorably
impacted by $40 million after tax or $0.31 per fully diluted
share for catastrophe losses in excess of expectations at
the Insurance segment related to the California earthquake
and winter freezes. Excluding these items and discontinued
operations, net income and earnings per share rose 9% and
20%, respectively, in the 1995 first quarter compared with
the 1994 first quarter.
Cash Flow
The Corporation completed the acquisitions of Caesars
World and 50% of Madison Square Garden in the first quarter
for $2.3 billion. Temporary financing was provided through
the Corporation's commercial paper program. In addition,
the completion of the sales of certain businesses of ITT
Financial in late March, April and early May generated gross
proceeds of $10.2 billion, all of which was used to repay
Financial debt.
During the 1995 first quarter, the Corporation
generated $371 million of cash from operating activities, up
from $310 million in the 1994 quarter. The increase is due
primarily to the timing of cash flows and lower working
capital requirements. Cash was used for capital additions
($169 million) and to pay dividends to shareholders ($66
million and $140 million for the first three months of 1995
and 1994, respectively). The 1994 dividend payment included
the payment of the 1993 fourth quarter and the 1994 first
quarter. Both quarters also included repurchases of common
stock of $34 million and $28 million, respectively.
Cash expenditures for plant, property and equipment,
including insurance activities, are projected to approximate
last year's level of $727 million for the full year.
Depreciation for the first quarter of 1995 was $138 million
compared with $113 million in the corresponding 1994
quarter. Accumulated depreciation amounted to 36% of gross
plant at March 31, 1995, compared with the 39% at December
31, 1994.
Page 12
ITEM 2. (Continued)
Debt and Liquidity
The Corporation's outstanding debt, with the Insurance
segment reflected on an equity basis and excluding
discontinued operations, was 52% of total capitalization at
March 31, 1995 (before recognition of the unrealized loss on
investment securities as required by SFAS No. 115) compared
with 41% at December 31, 1994. The increase is reflected in
borrowings which total $7.8 billion at March 31, 1995
compared with $4.9 billion at year-end 1994. Borrowings
increased primarily due to the acquisition of Caesars World
and a 50% interest in Madison Square Garden Corporation.
Proceeds from the sale of ITT Financial assets in the second
quarter as well as cash generated from operations are
expected to reduce debt as a percentage of total
capitalization in subsequent quarters. Insurance debt at
March 31, 1995 of $1.5 billion remained unchanged from the
December 31, 1994 level. When fully consolidating the
Insurance segment, debt was 56% of total capitalization at
March 31, 1995 compared with 47% at December 31, 1994.
Stockholders equity increased $.9 billion during the
first quarter of 1995 due principally to a reduction in
unrealized losses on securities of $.6 billion and net
income of $.2 billion. Under its share repurchase program,
the Corporation repurchased approximately 336,000 common
shares in the first quarter of 1995 at an average price of
$91.80 per share for a cash cost, including commissions, of
$31 million.
Page 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 of ITT's Form 10-K Annual
Report for the year ended December 31, 1994, in which ITT
reported that Hartford Fire Insurance Company, a subsidiary
of ITT, together with other companies, associations and
organizations involved in the business of property and
casualty insurance and reinsurance, was named as a defendant
in a group of lawsuits filed by Attorneys General of 20
states and by various private parties in the United States
District Court for the Northern District of California. All
of the suits, which were filed in 1988, 1990 and 1991, were
based upon allegations that the defendants violated federal
and/or state antitrust laws by reason of their activities in
connection with the development of new standard commercial
general liability policy forms by the Insurance Services
Office, an industry organization. In June 1991, the Ninth
Circuit U.S. Court of Appeals reversed the United States
District Court for the Northern District of California which
had granted summary judgment in September 1989 in favor of
all defendants, including ITT Hartford. On June 28, 1993,
the Supreme Court reversed the Ninth Circuit U.S. Court of
Appeals, holding that the domestic insurers, including ITT
Hartford, had not lost their McCarran-Ferguson Act exemption
from the antitrust laws generally, as a result of activities
alleged in the complaints, but remanded the case for further
proceedings to determine if certain of those activities came
within the "boycott" exception to the McCarran-Ferguson Act
exemption. On October 3, 1994, ITT Hartford announced that
it, along with the other 31 defendants, had settled this
lawsuit. The settlement provides for a payment of $36
million, the majority of which funds will be used to create
a public entity risk institute and national public risk
database. It also calls for changes in control of Insurance
Services, Inc., a nationwide organization which develops
standardized policy language and compiles information
insurers use to determine their own insurance rates. The
settlement agreement was given preliminary approval by the
U.S. District Court for the Northern District of California.
Following notice of the settlement to all class members in
the private actions a hearing on final approval of the
settlement was held on March 29, 1995 at which time the
Court granted its approval.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See the Exhibit Index for a list of exhibits filed
herewith.
(b) ITT filed a Form 8-K Current Report dated February 6,
1995 reporting under (i) Item 2 with respect to the
acquisition of Caesars World, Inc. through a tender offer
and (ii) Items 5 and 7 with respect to the receipt by ITT
Financial Corporation of requisite consents to amend certain
covenants of $3.4 billion principal amount of its public
debt securities.
ITT filed a Form 8-K/A Current Report dated March 31,
1995 reporting under Item 7 pro forma financial information
with respect to the acquisition of Caesars World, Inc.
Page 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
ITT Corporation
(Registrant)
By J.F. Danski
--------------------
J.F. Danski
Senior Vice President and Controller
(Chief Accounting Officer)
May 15, 1995
(Date)
Page 15
EXHIBIT INDEX
Exhibit
No. Description Location
- ------- ----------- --------
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession None
(3) Articles of Incorporation and by-laws None
(4) Instruments defining the rights of
security holders, including indentures None
(10) Material contracts None
(11) Statement re: computation of per share
earnings Filed Herewith
(12) Statements re: computation of ratios
Calculation of ratio of earnings to
total fixed charges
Calculation of ratio of earnings to
total fixed charges and preferred
dividend requirements of ITT Filed Herewith
(15) Letter re: unaudited interim financial
information None
(18) Letter re: change in accounting principles None
(19) Report furnished to security holders None
(22) Published report regarding matters
submitted to vote of security holders None
(23) Consents of experts and counsel None
(24) Power of attorney None
(27) Financial Data Schedule Filed Herewith
(99) Additional Exhibits None
Page 16 EXHIBIT 11
ITT CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(In millions except per share)
Three Months
Ended March 31,
--------------
1995 1994
---- ----
PRIMARY BASIS -
Net income $ 228 $ 202
ESOP preferred dividends - net of tax (8) (9)
----- -----
Net income applicable to primary
earnings per share $ 220 $ 193
----- -----
Average common shares outstanding 106 118
Common shares issuable in respect to common
stock equivalents 1 1
----- -----
Average common equivalent shares 107 119
----- -----
Earnings Per Share
Continuing operations $1.71 $1.39
Discontinued operations .34 .34
Cumulative effect of accounting changes - (.10)
----- -----
Net income $2.05 $1.63
----- -----
FULLY DILUTED BASIS -
Net income applicable to
primary earnings per share $ 220 $ 193
ESOP preferred dividends - net of tax 8 9
If converted ESOP expense adjustment-
net of tax benefit (4) (5)
----- -----
Net income applicable to fully diluted
earnings per share $ 224 $ 197
----- -----
Average common equivalent shares 107 119
Additional common shares issuable assuming
full dilution 10 9
----- -----
Average common equivalent shares assuming
full dilution 117 128
----- -----
Earnings Per Share
Continuing operations $1.59 $1.31
Discontinued operations .32 .32
Cumulative effect of accounting changes - (.09)
----- -----
Net income $1.91 $1.54
----- -----
The Series N convertible preferred stock is considered a
common stock equivalent in 1995 and 1994. With respect to
options, it is assumed that the proceeds to be received upon
exercise are used to acquire common stock of the
Corporation. The calculation impact of dilutive securities
is determined quarterly based on the forecast of annual
earnings.
Page 17
EXHIBIT 12
ITT CORPORATION AND SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO TOTAL FIXED CHARGES
AND CALCULATION OF EARNINGS TO TOTAL FIXED CHARGES AND
PREFERRED DIVIDEND REQUIREMENTS OF ITT
(Millions of Dollars)
Three Months
Ended
March 31, 1995
--------------
Earnings:
Income from continuing operations $191
Add (deduct):
Adjustment for distributions in excess of
(less than) undistributed equity earnings
and losses 1
Income taxes 94
Minority equity in net income (5)
Amortization of interest capitalized 1
----
282
----
Fixed Charges:
Interest and other financial charges 149
Interest factor attributable to rentals 21
----
170
----
Earnings, as adjusted, from continuing operations $452
====
Fixed Charges:
Fixed charges above $170
Dividends on preferred stock of subsidiaries
included in minority equity 1
Interest capitalized 2
----
Total fixed charges 173
Dividends on preferred stock of ITT (pre-income
tax basis) 12
----
Total fixed charges and preferred dividend
requirements $185
====
Ratios:
Earnings, as adjusted, from continuing
operations to total fixed charges 2.61
====
Earnings, as adjusted, from continuing
operations to total fixed charges and
preferred dividend requirements of ITT 2.44
====
____________
Notes:
a) The adjustment for distributions in excess of (less
than) undistributed equity earnings and losses represents
the adjustment to income for distributions in excess of
(less than) undistributed earnings and losses of companies
in which at least 20% but less than 50% equity is owned.
b) The interest factor attributable to rentals was
computed by calculating the estimated present value of all
long-term rental commitments and applying the approximate
weighted average interest rate inherent in the lease
obligations and adding thereto the interest element assumed
in short-term cancelable and contingent rentals excluded
from the commitment data but included in rental expense.
c) The dividend requirements on preferred stock of ITT
have been determined by adding to the total preferred
dividends an allowance for income taxes, calculated on the
effective income tax rate.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
CT
1,000,000
QTR-1
DEC-31-1995
MAR-31-1995
107,683
106
0
652
5,579
107,683
6,538
94
191
37
0
0
228
2.05
1.91
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5
1,000,000
QTR-1
DEC-31-1995
MAR-31-1995
0
0
0
0
1,145
0
0
0
0
0
0
0
0
0
0
0
0
3,533
3,003
3,337
0
0
86
0
0
0
37
0
0
0
0
0
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
7
1,000,000
QTR-1
DEC-31-1995
MAR-31-1995
0
0
0
0
0
0
34,728
0
12,357
2,698
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,833
414
560
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
