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 September 30, 1996
TRANSACTION 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 INDUSTRIES, INC.
Incorporated in the State of Indiana 13-5158950
(I.R.S. Employer
Identification Number)
4 West Red Oak Lane, White Plains, NY 10604
(Principal Executive Office)
Telephone Number: (914) 641-2000
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 October 23, 1996, there were outstanding 118,160,196 shares of
common stock ($1 par value per share) of the registrant.
ITT INDUSTRIES, INC.
TABLE OF CONTENTS
Page
Part FINANCIAL INFORMATION:
I Financial Statements:
Consolidated Income Statements Three Months
and Nine Months Ended September 30, 1996 and 1995 2
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996
and 1995 4
Notes to Consolidated Financial Statements 5
Business Segment Information 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Three Months and Nine Months Ended September 30,
1996 and 1995 7
Part OTHER INFORMATION:
II Exhibits and Reports on Form 8-K 11
Signature 11
Exhibit Index 12
1
PART I.
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
The following unaudited consolidated financial statements, in the
opinion of management, reflect all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the financial
position, results of operations, and cash flows for the periods presented.
Certain amounts in the prior periods' consolidated financial statements
have been reclassified to conform with the current period presentation.
It is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
1995 Annual Report on Form 10-K and subsequent quarterly filings.
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(In millions, except per share)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Net sales $ 2,045 $ 2,048 $ 6,487 $ 6,633
Cost of sales 1,755 1,776 5,571 5,730
Gross margin 290 272 916 903
Selling, general, and administrative
expenses 179 185 544 568
Other operating (income) expenses 1 (8) 5 (2)
Operating income 110 95 367 337
Interest expense (40) (44) (123) (124)
Interest income 5 11 15 32
Miscellaneous expense, net (4) (133) (5) (163)
Income (loss) from continuing
operations before income taxes 71 (71) 254 82
Income tax (expense) benefit (28) 17 (103) (45)
Income (loss) from continuing
operations 43 (54) 151 37
Discontinued operations:
Operating income, net of tax
of $46 and $208 - 187 - 533
Gain on sale of Financial
operations, net of tax of $264 - - - 403
Extraordinary item, net of tax
benefit of $165 and $165 - (307) - (307)
Net income (loss) $ 43 $ (174) $ 151 $ 666
Earnings (Loss) Per Share:
Income (loss) from continuing
operations
Primary $ .36 $ (.47) $ 1.26 $ .18
Fully diluted $ .36 $ (.46) $ 1.26 $ .23
Discontinued operations
Primary - 1.62 - 8.48
Fully diluted - 1.58 - 7.97
Extraordinary item
Primary - (2.67) - (2.78)
Fully diluted - (2.61) - (2.61)
Net income (loss)
Primary $ .36 $ (1.52) $ 1.26 $ 5.88
Fully diluted $ .36 $ (1.49) $ 1.26 $ 5.59
Cash dividends declared per
common share $ .15 $ - $ .45 $ .99
__________
The accompanying notes to consolidated financial statements are an
integral part of the above statements.
2
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except for shares and per share)
September 30, December 31,
1996 1995
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 103 $ 94
Receivables, net 1,411 1,257
Inventories 862 908
Other current assets 232 243
Total current assets 2,608 2,502
Plant, property, and
equipment, net 2,095 2,235
Deferred U.S. income
taxes 201 218
Goodwill, net 352 363
Other assets 496 561
$ 5,752 $ 5,879
Liabilities and
Shareholders' Equity
Current Liabilities:
Accounts payable $ 629 $ 781
Accrued expenses 919 1,072
Accrued taxes 125 162
Notes payable and current
maturities of long-term
debt 1,152 646
Total current
liabilities 2,825 2,661
Pension and postretirement
costs 1,059 1,101
Long-term debt 628 961
Deferred foreign, state and
local income taxes 121 121
Other liabilities 398 408
5,031 5,252
Shareholders' Equity:
Common stock:
Authorized 200,000,000
shares, $1 par value
per share Outstanding
118,113,324 shares and
117,068,833 shares 118 117
Capital surplus 413 399
Cumulative translation
adjustments 92 111
Retained earnings 98 -
721 627
$ 5,752 $ 5,879
__________
The accompanying notes to consolidated financial statements are an
integral part of the above balance sheets.
3
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(unaudited)
Nine Months Ended
September 30,
1996 1995
Operating Activities
Net income $ 151 $ 666
Discontinued operations:
Operating income - (533)
Gain on sale of Financial
operations - (403)
Extraordinary item - 307
Income from continuing
operations 151 37
Adjustments to income from
continuing operations:
Depreciation 301 296
Amortization 25 26
Reserves for divestments
-pretax - 172
Change in receivables,
inventories,accounts payable,
and accrued expenses (395) (173)
Change in accrued and
deferred taxes 65 (68)
Other, net (8) (74)
Cash from continuing operations 139 216
Cash used for discontinued
operations (142) (519)
Cash used for operating
activities (3) (303)
Investing Activities
Additions to plant, property,
and equipment (265) (276)
Proceeds from sale of assets 124 12,474
Acquisitions - (15)
Other, net - (4)
Cash from (used for)
investing activities (141) 12,179
Financing Activities
Short-term debt, net 342 (182)
Long-term debt repaid (161) (25)
Repayment of Financial
obligations - (11,640)
Repurchase of common stock - (38)
Dividends paid (36) (193)
Other, net 16 40
Cash from (used for)
financing activities 161 (12,038)
Exchange Rate Effects on
Cash and Cash Equivalents (8) 23
Increase (decrease) in cash
and cash equivalents 9 (139)
Cash and cash equivalents
beginning of period 94 322
Cash and cash equivalents
end of period $ 103 $ 183
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the period
for:
Interest $ 105 $ 92
Income taxes $ 31 $ 121
__________
The accompanying notes to consolidated financial statements are an integral
part of the above statements.
4
ITT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share, unless otherwise stated)
1) Receivables
Receivables consist of the following:
September 30, December 31,
1996 1995
Trade $ 1,422 $ 1,254
Accrued for completed work 25 41
Less reserves (36) (38)
$ 1,411 $ 1,257
2) Inventories
Inventories consist of the following:
September 30, December 31,
1996 1995
Finished goods $ 391 $ 417
Work in process 461 421
Raw materials and supplies 308 333
Less reserves (79) (85)
progress payments (219) (178)
$ 862 $ 908
3) Plant, Property, and Equipment
Plant, property, and equipment consist of the following:
September 30, December 31,
1996 1995
Land and improvements $ 100 $ 115
Buildings and improvements 845 888
Machinery and equipment 3,430 3,425
Construction work in progress 312 297
Other 310 330
4,997 5,055
Less accumulated
depreciation and
amortization (2,902) (2,820)
$ 2,095 $ 2,235
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In millions, except per share, unless otherwise stated)
[CAPTION]
4)Discontinued Operations
The accompanying financial statements for the three months and nine months
ended September 30, 1995, reflect the results of ITT Corporation, a Delaware
corporation ("ITT Delaware"). Discontinued Operations include the results of
ITT Delaware's interests in the insurance business segment ("ITT Hartford"),
ITT Delaware's interests in the hospitality and entertainment, and
information services businesses ("ITT Corporation"), and a wholly-owned
Finance business segment ("ITT Financial"). ITT Hartford and ITT Corporation
were distributed to ITT Delaware's shareholders on December 19, 1995 (the
"Distribution") and ITT Delaware was merged into ITT Industries, Inc. (the
"Company"). ITT Delaware realized gross proceeds totaling $12.4 billion
through September 30, 1995 from the sale of the businesses comprising ITT
Financial. Proceeds from these transactions were used primarily to repay ITT
Financial debt. ITT Delaware recognized an after tax gain of $403 ($667
pretax) or $3.44 per fully diluted share in the second quarter of 1995,
including a provision for the final asset sales and close down costs of ITT
Financial. Included in Other in the three months ended September 30, 1995
was $36 million after-tax of severance and other costs related to the
rationalization of headquarters operations in connection with the
Distribution.
Net income (loss) of the Company's Discontinued Operations, excluding the
gain of $403 on the sale of ITT Financial, was comprised of the following:
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
ITT Corporation $ 50 $ 103
ITT Hartford 173 418
ITT Financial and Other (36) 12
$ 187 $ 533
[CAPTION]
5) Early Extinguishment of Debt
In July 1995, the Company announced the successful completion of a tender
offer for an aggregate of $4.1 billion of its debt securities, with $3.4
billion, or 82% of the aggregate principal amount, having been tendered.
The tender offer was financed with the proceeds of commercial paper
borrowings of approximately $3.7 billion. The tender offer resulted in the
Company paying a tender premium of $307 after tax ($472 pretax) or $2.61 per
fully diluted share in the third quarter of 1995 which has been recorded as
an extraordinary loss on the early extinguishment of debt.
6
BUSINESS SEGMENT INFORMATION
(In millions)
(unaudited)
Business segment information excluding "Discontinued Operations" is as follows:
Net Sales Operating Income/(Loss)
Three months Nine months Three months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995 1996 1995 1996 1995
$1,269 $1,231 $4,137 $4,193 Automotive $ 74 $ 72 $ 251 $ 279
Defense &
375 395 1,107 1,157 Electronics 25 23 75 68
327 305 954 910 Fluid Technology 26 28 78 75
Dispositions
74 117 289 373 & other (1) (3) 4 (11)
2,045 2,048 6,487 6,633 Total Segments 124 120 408 411
Corporate expenses
- - - - & other (14) (25) (41) (74)
$2,045 $2,048 $6,487 $6,633 $ 110 $ 95 $ 367 $ 337
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months ended September 30, 1996 compared with three months ended
September 30, 1995
The Company reported net income of $43 million or $.36 per fully diluted
share compared to a net loss from continuing operations of $54 million or
$.46 per fully diluted share, reported in the 1995 third quarter. The 1995
third quarter results include an after-tax charge of $86 million associated
with the disposition of non-strategic assets. Excluding these charges, the
1995 third quarter earnings would have been $32 million or $.27 per share.
The increase in net income from continuing operations, in the current
quarter, was attributable primarily to lower headquarters expenses and the
absence of charges related to ITT Semiconductors and ITT Community
Development Corporation recorded in the prior year. In the 1995 third
quarter, a net loss of $174 million or $1.49 per fully diluted share was
reported, including $187 million of net income from Discontinued Operations
and a $307 million extraordinary loss on the early retirement of debt.
Net sales, excluding Dispositions & Other, for the third quarter of 1996,
exceeded the third quarter of 1995, due to increases in sales at Automotive and
Fluid Technology offset by a slight decline in sales at Defense and Electronics.
Operating income for the third quarter of 1996 of $110 million was slightly
higher than the $95 million in the third quarter of 1995. The increase in
operating income was attributable to slightly higher earnings at Automotive and
Defense & Electronics along with significantly lower headquarters expenses. The
decrease in headquarters expenses reflects the lower expenses of ITT Industries
as an independent entity in 1996 compared to its apportioned share of
headquarters expenses off ITT Delaware in 1995. Other operating income/expenses,
which include gains and losses from foreign exchange translations and other
charges, was expense of $1 million in the current quarter compared with income
of $8 million in the 1995 third quarter. Operating margins were 5.4% in the
third quarter of 1996 compared to 4.6% in the third quarter of 1995, a result
of the factors discussed above.
7
Net interest expense was $35 million for the third quarter of 1996 and $33
million in 1995. Interest expense in the 1996 quarter reflects actual interest
expenses incurred on debt assumed by ITT Industries on, or subsequent to, the
Distribution, while interest expense in the 1995 quarter reflected an allocation
of total ITT Delaware's interest between the continuing operations and
Discontinued Operations, based on debt outstanding at that time. Interest
income decreased from $11 million in the third quarter of 1995 to $5 million in
the third quarter of 1996. This decrease is a result of maintaining lower cash
balances by using available cash to reduce debt.
The effective income tax rate, excluding the charges in 1995 for disposition
of non-strategic assets and the related tax, approximated 39% in the 1996 third
quarter and 48% in the 1995 third quarter. The 1995 period was impacted by
certain domestic losses for which no tax benefit was realized. Income tax
expense, excluding $46 million of tax benefit on charges related to the
disposition of non-strategic assets, decreased by $1 million, to $28 million in
the 1996 third quarter, due to the lower effective tax rate as discussed above
offset by higher pretax earnings.
Business Segments--Sales and operating income for each of the Company's three
major continuing business segments were as follows for the three months ended
September 30, 1996, and 1995 ($ in millions):
Sales Operating Income
Three months Three months
1996 1995 1996 1995
$1,269 $1,231 Automotive $ 74 $ 72
ITT Automotive's third quarter sales were higher than the 1995 sales level,
primarily due to increased market penetration and vehicle production volumes,
partially offset by the strength of the U.S. dollar, production mix and lower
selling prices. The $2 million increase in operating income was primarily
attributable to cost reduction actions in excess of price reductions.
Sales Operating Income
Three months Three months
1996 1995 1996 1995
$ 375 $ 395 Defense & $ 25 $ 23
Electronics
ITT Defense & Electronics revenue was down 5.0%, from the prior year third
quarter, due to the timing of shipments at the defense segment and unfavorable
foreign exchange translation in the electronics segment. However, operating
income was 4.6% higher in the 1996 period due to operating improvements at the
interconnect business.
Sales Operating Income
Three months Three months
1996 1995 1996 1995
$ 327 $ 305 Fluid $ 26 $ 28
Technology
ITT Fluid Technology's 1996 third quarter sales increased over the comparable
1995 period as a result of growth in emerging markets and strong order input
from the industrial, commercial, and aerospace sectors. Operating income for the
third quarter of 1996 had a slight decrease from the 1995 third quarter. This
decrease in operating income was due primarily to unfavorable foreign exchange
and the absence of income from a unit divested earlier this year.
8
Nine months ended September 30, 1996 compared with nine months ended September
30, 1995
Net income of $151 million or $1.26 per fully diluted share exceeded the $37
million or $.23 per fully diluted share, of income from continuing operations,
reported in the 1995 period. The increase was caused by an after-tax provision,
recorded in the nine months of 1995, of $115 million or $1.06 per fully diluted
share for the expected loss on the disposal of ITT Semiconductors, a portion of
ITT Community Development Corporation, and certain other non-strategic assets.
Excluding this provision and its related impact on the effective tax rate, 1995
net income from continuing operations would have been $152 million or $1.29 per
fully diluted share. Net income, for the first nine months of 1995, was $666
million or $5.59 per fully diluted share including income from Discontinued
Operations of $936 million (including $403 million reflecting the gain on the
sale of ITT Financial) and a $307 million extraordinary loss for the early
retirement of debt.
Net sales totaling $6.5 billion, for the first nine months of 1996, were
slightly below the $6.6 billion for the 1995 period. This decrease is
attributable to price reductions at Automotive and unfavorable foreign exchange
translation and the timing of shipments at Defense & Electronics, partially
offset by an increase in ITT Fluid Technology's sales. Operating income for the
first nine months of 1996 was $367 million, which included the impacts of the GM
strike and the restructuring charge at ITT Automotive in the first and second
quarters of 1996, compared with $337 million reported in the 1995 period. The
increase in operating income was attributable to higher earnings at Defense &
Electronics and Fluid Technology, along with significantly lower headquarters
expenses. The decrease in headquarters expenses reflects the lower expenses of
ITT Industries as an independent entity in 1996 compared to its apportioned
share of headquarters expenses of ITT Delaware in 1995. Other operating
income/expenses, which includes gains and losses from foreign exchange
translations and other charges, was expense of $5 million in the 1996 period,
compared with income of $2 million in the 1995 period. Operating margins rose
to 5.7% in the first nine months of 1996, up from 5.1% in the comparable period
of 1995, a result of the factors discussed above.
Net interest expense increased to $108 million compared with $92 million in
1995. Interest expense for 1996 reflects actual interest expense incurred on
debt assumed by ITT Industries on, or subsequent to, the Distribution, while
interest expense in 1995 reflected an allocation of ITT Delaware's total
interest expense between the continuing operations and Discontinued Operations,
based on debt outstanding in 1995. Interest income for the first nine months of
1996 decreased to $15 million from $32 million in the first nine months of 1995,
as a result of maintaining lower cash balances by using available cash to reduce
debt.
Miscellaneous expense, for the first nine months of 1995, includes the
aforementioned provision for the expected loss on the disposal of ITT
Semiconductors, a portion of ITT Community Development Corporation and certain
other non-strategic assets. The effective income tax rate, excluding the
charges in 1995 for disposition of non-strategic assets and the related tax,
approximated 40% in 1996 and 38% in 1995. Income tax expense, excluding $48
million of tax benefit on charges related to the disposition of non-strategic
assets, increased by $10 million, to $103 million in the 1996 period, due to the
higher pretax earnings and higher effective tax rate.
Business Segments -- Sales and operating income for each of the Company's three
major continuing business segments were as follows for the nine months ended
September 30, 1996, and 1995 ($ in millions):
Sales Operating Income
Nine months Nine months
1996 1995 1996 1995
$ 4,137 $ 4,193 Automotive $ 251 $ 279
ITT Automotive's revenues, for the first nine months of 1996, were lower than
the 1995 nine month period, due primarily to price reductions and unfavorable
foreign exchange translation partially offset by increased market penetration
and vehicle production volumes. Operating income was reduced in the first nine
months of 1996 by the GM strike and a restructuring charge in the first half of
1996. This decrease was partially offset by net cost reduction actions in
excess of price reductions.
9
Sales Operating Income
Nine months Nine months
1996 1995 1996 1995
$ 1,107 $ 1,157 Defense & $ 75 $ 68
Electronics
ITT Defense & Electronics revenue was down from the prior year nine month
period, due to the timing of shipments at the defense segment and unfavorable
foreign exchange translation in the electronics segment. Despite lower sales,
operating income was 9.8% higher due to operating efficiencies which enabled
improved margins in both the defense and electronics businesses.
[CAPTION]
Sales Operating Income
Nine months Nine months
1996 1995 1996 1995
$ 954 $ 910 Fluid $ 78 $ 75
Technology
ITT Fluid Technology's 1996 nine month sales were 4.8% higher than the
comparable 1995 period due to higher sales volume, despite weak market
conditions in France and Germany and the sale of ITT General Controls product
line. Operating income increased slightly over the first nine months of 1995.
This improvement was attributable to strong performances from several business
lines, as well as continued growth in emerging markets and cost control actions,
partially offset by the loss of operating income due to the sale of ITT General
Controls product line.
[CAPTION]
Liquidity and Capital Resources
Operating cash flow from continuing operations was $139 million in the first
nine months, offset by payments of $142 million related to Discontinued
Operations, principally prior year's tax payments and expenses related to the
Distribution. Operating cash flow, including Discontinued Operations, in the
first nine months of 1995 was an outflow of $303 million.
Many of the Company's businesses require substantial investment in plant
and tooling in order to produce competitively superior products. Expenditures
for plant additions totaled $265 million in the first nine months of 1996, with
approximately 69% of that total incurred at Automotive, primarily in ABS,
electric motors, and brake and wiper systems. Spending for the first nine
months of 1995 was $276 million, 61% of which was also at Automotive. Cash
expenditures for plant, property, and equipment are projected to approximate
last year's level of $450 million for the full year.
Cash inflows in the first nine months of 1996 included $124 million from the
sale of land and other assets, including a portion of ITT Community Development
Corporation and ITT General Controls product line.
The increase in working capital (receivables, inventory, payables, and accrued
liabilities) required a cash outflow of approximately $395 million. This was due
largely to an increase in receivables due to seasonality and the timing of a
payment to Automotive from a major customer and a reduction of accounts payable
at Automotive and Defense & Electronics.
External borrowings were $1,780 million at September 30, 1996, compared with
$1,607 million at December 31, 1995. Cash and cash equivalents were $103
million at September 30, 1996, compared to $94 million at year end 1995. The
higher debt level at September 30, 1996, reflects the cash flows discussed
above.
Shareholders' equity increased $94 million during the first nine months of
1996, due primarily to growth in retained earnings. The Company paid dividends
of $.15 per share for each of the first three quarters of 1996. A fourth
quarter dividend of the same amount will be paid on January 1, 1997.
10
Part II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See the Exhibit Index for a list of exhibits filed herewith.
(b) ITT Industries did not file any Form 8-K Current Reports during
the quarter for which this Report is filed.
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 INDUSTRIES, INC.
(Registrant)
By /s/ Heidi Kunz
Heidi Kunz
Senior Vice President and
Chief Financial Officer
(Principal financial officer)
October 25, 1996
(Date)
11
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 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
12
EXHIBIT 11
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CALCULATION OF EARNINGS (LOSS) PER SHARE
(In millions, except per share)
Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1995 1996 1995
PRIMARY BASIS
Net income (loss) $ 43 $ (174) $ 151 $ 666
ESOP preferred dividends
net of tax - - - (17)
Net income (loss) applicable
to primary earnings per share $ 43 $ (174) $ 151 $ 649
Average common shares outstanding 118 113 118 109
Common shares issuable in respect
to common stock equivalents 2 2 2 1
Average common equivalent shares 120 115 120 110
Earnings (Loss) Per Share
Continuing operations $ .36 $( .47) $1.26 $ .18
Discontinued operations - 1.62 - 8.48
Extraordinary item - (2.67) - (2.78)
Net income (loss) $ .36 $(1.52) $1.26 $5.88
FULLY DILUTED BASIS
Net income (loss) applicable to
primary earnings per share $ 43 $ (174) $ 151 $ 649
ESOP preferred dividends
net of tax - - - 17
If converted ESOP expense
adjustment net of tax benefit - - - (10)
Net income (loss) applicable to
fully diluted earnings per share $ 43 $ (174) $ 151 $ 656
Average common equivalent shares 120 115 120 110
Additional common shares issuable
assuming full dilution - 3 - 8
Average common equivalent shares
assuming full dilution 120 118 120 118
Earnings (Loss) Per Share
Continuing operations $ .36 $ (.46) $1.26 $ .23
Discontinued operations - 1.58 - 7.97
Extraordinary item - (2.61) - (2.61)
Net income (loss) $ .36 $(1.49) $1.26 $5.59
In 1995, the Series N convertible preferred stock was considered a common
stock equivalent. With respect to options, it is assumed that the proceeds to be
received upon exercise are used to acquire common stock of the Company. The
calculation impact of dilutive securities is determined quarterly based on the
forecast of annual earnings.
13
EXHIBIT 12
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO TOTAL FIXED CHARGES
AND CALCULATION OF EARNINGS TO TOTAL FIXED CHARGES AND
PREFERRED DIVIDEND REQUIREMENTS
(Dollars in millions)
Nine Months Ended
September 30, Years Ended December 31,
1996 1995 1995 1994 1993 1992 1991
Earnings:
Income from continuing
operations $151 $ 37 $ 21 $202 $ 135 $655 $231
Add(deduct):
Adjustment for
distributions in
excess of (less
than)undistributed
equity earnings
and losses a) 2 1 1 - (2) (31) (146)
Income taxes 103 45 50 147 65 311 84
Amortization of
interest capitalized - - 2 1 4 3 2
256 83 74 350 202 938 171
Fixed Charges:
Interest and other
financial charges 123 124 175 114 153 180 125
Interest factor
attributable
to rentals b) 22 17 29 22 24 25 25
145 141 204 136 177 205 150
Earnings, as adjusted,
from continuing
operations $401 $224 $278 $486 $379 $1,143 $321
Fixed Charges:
Fixed charges above $145 $141 $204 $136 $177 $ 205 $150
Interest capitalized 1 2 3 7 8 12 11
Total fixed
charges 146 143 207 143 185 217 161
Dividends on preferred
stock (pre-income tax
basis) c) - 24 24 48 50 63 78
Total fixed
charges and
preferred
dividend
requirements $146 $167 $231 $191 $235 $280 $239
Ratios:
Earnings, as
adjusted, from
continuing
operations
to total
fixed charges 2.75 1.57 1.34 3.40 2.05 5.27 1.99
Earnings, as
adjusted, from
continuing
operations
to total
fixed charges and
preferred
dividend
requirements 2.75 1.34 1.20 2.54 1.61 4.08 1.34
_________
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 dividends on preferred stock have been determined by adding to the
total preferred dividends an allowance for income taxes, calculated on the
effective income tax rate.
14
5
1,000,000
9-MOS
DEC-31-1996
SEP-30-1996
$ 103
0
1,447
36
862
2,608
4,997
2,902
5,752
2,825
628
0
0
118
603
5,752
6,487
6,487
5,571
5,571
549
3
123
254
103
151
0
0
0
151
1.26
1.26
