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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 28, 2003
ITT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 1-5627 13-5158950
--------------- -------------- ----------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
organization)
4 West Red Oak Lane
White Plains, New York 10604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 641-2000
(Former name or former address if changed since last report)
ITEM 9. Regulation FD Disclosure
The following information is furnished pursuant to Item 9 "Regulation FD
Disclosure" and Item 12 "Results of Operations and Financial Condition." This
information shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or incorporated
by reference into any filing under the Securities Act of 1933, as amended, or
the Exchange Act, except as shall be expressly set forth by specific reference
in such filing.
On July 28, 2003 ITT Industries, Inc. issued a press release announcing its
earnings for the second quarter of 2003. This press release is attached and
incorporated by reference herein as Exhibit 99.1.
Exhibit Index
(99.1) Press release dated: July 28, 2003 issued by ITT Industries, Inc.
SIGNATURES
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 hereunto duly authorized.
ITT INDUSTRIES, INC.
By: /s/ Vincent A. Maffeo
-----------------------------
Vincent A. Maffeo
Its: Senior Vice President
and General Counsel
Date: July 28, 2003
Exhibit 99.1
ITT Industries Reports Second Quarter EPS of $1.06 with Revenues Up 9 Percent
* Defense, Water/Wastewater growth trends continue
* Cash from operations exceeds expectations for the quarter; on track for
another strong year
* Company raises full-year 2003 earnings per share guidance to
$3.77-$3.97 (GAAP)
WHITE PLAINS, N.Y., July 28 /PRNewswire-FirstCall/ -- ITT Industries, Inc.
(NYSE: ITT) today announced second quarter 2003 net income of $99.9 million
and diluted earnings per share of $1.06, up $7 million and $0.07 respectively
over the second quarter 2002. Reported EPS contains an $0.08 per share
positive impact from a benefits claim settlement and a tax settlement, and
($0.04) per share for restructuring actions taken during the second quarter,
for a net $0.04 per share impact.
"We're pleased to deliver another quarter of earnings growth, with
revenues and cash flow exceeding expectations. Our management team continues
to do an excellent job in a demanding environment," said Lou Giuliano,
Chairman, President, and Chief Executive Officer of ITT Industries. "Our
Defense segment posted a 9 percent gain in revenues and strong margin
improvement, continuing a long-term growth trend. Our Fluid Technology and
Motion & Flow Control businesses each turned in higher revenues and strong
performances, thus helping to more than offset continued weakness in our
Electronic Components business."
"Our Electronic Components segment continues to face difficult market
conditions, impacted this quarter particularly by a falloff in demand for our
handset connectors and switches in Asia," Giuliano added. "Newly appointed
president Brenda Reichelderfer and her team understand the issues facing
Electronic Components. The next two quarters will see the introduction of
several major new products and improvements in service offerings. Going
forward, we believe Electronic Components presents ITT with a real opportunity
to boost earnings growth."
Financial Highlights
* Second quarter 2003 revenues rose 9 percent to $1.44 billion, due
mainly to growth in Defense and Fluid Technology. Organic revenue
growth was 5 percent.
* Operating income for the quarter was $141.5 million, including the
($5.9) million impact of restructuring charges.
* During the quarter, the company recorded a ($0.04) per share charge for
restructuring, primarily within the Electronic Components and
Motion & Flow Control segments. This was more than offset by an $0.08
per share impact from a benefits claim settlement and a tax settlement.
* The company continues to see the benefit from improvements implemented
through its Value-Based Six Sigma program, with a significant impact in
increased sales and savings over the last two years.
* Cash from operations significantly exceeded expectations, with the
company's second quarter 2003 cash from operations totaling
$182.3 million. The company expects continued strong cash flow through
the full year.
"Overall, we're facing a very mixed set of business conditions, and this
actually plays to the strength of our multi-industry portfolio," Giuliano
said. "We know that our continuous efforts to improve our competitive stance
put us in an excellent position to take advantage of any broad upturn in the
economy. Based on our reported results so far this year, including the
effects of one-time items, we are raising our full-year (GAAP) EPS guidance to
$3.77 - $3.97 per share."
Second Quarter Segment Highlights
Fluid Technology
* Second quarter 2003 FTC revenues rose 13 percent or $65.9 million to
$570.6 million, driven by growth in water/wastewater. Operating income
was up 12 percent or $7.7 million to $74.1 million, while operating
margin declined 20 basis points, reflecting the impact of acquisition
integration.
* Activity remains strong in the water/wastewater business, with revenues
up 24 percent and orders up 27 percent, including acquisitions. Orders
realized in the second quarter include an $800K order for wastewater
treatment plant equipment in Italy, a $500K order in Sweden and a
$1.1 million service contract in Denmark.
* In its water business, ITT is positioned to capture new global growth
opportunities. The company has entered the high-growth desalinization
market, securing in the second quarter a $4.9 million order for a
private water system in the United Arab Emirates and a $1.7 million
municipal order in Virginia.
Defense Electronics & Services
* Revenues for Defense Electronics & Services were $452.4 million in the
second quarter, up 9 percent or $36.5 million over the second quarter
2002. Operating income rose 15 percent to $46.7 million, and operating
margin increased 50 basis points.
* The company's Systems and Advanced Engineering & Sciences units
continue to gain new service contracts, notably an equipment
maintenance contract in Qatar and a facility service contract in
Eastern Europe, and additional work on the Spacelift Range Systems and
SENSOR contracts.
* Contracts won during the second quarter include a $43 million contract
to provide communications support to U.S. Air Force locations in
Northern Europe, a $31 million contract to upgrade Global Positioning
Satellites (GPS), and $21 million in international SINCGARS radio
orders.
* The company sees long-term growth opportunities in its defense services
businesses as the U.S. military repositions its forces around the
world.
Motion & Flow Control
* Despite a downturn in certain key markets, second quarter MFC revenues
increased 4 percent or $11 million to $262.7 million, and operating
income rose 5 percent to $37.1 million. Operating margin remained
flat, due to charges for restructuring.
* ITT's automotive businesses see strength amid a sluggish OEM
environment, gaining market share in Europe. The Motion Control
businesses saw revenues increase 30 percent over the period last year,
and the Auto Tubing business secured new platform wins for '05 and '06
models.
* The company's Leisure Marine unit realized a 9 percent revenue increase
in the quarter, helped by new products and market share gains in the
Marine business, and is well positioned to leverage positive market
conditions in the recreation, beverage and industrial markets.
Electronic Components
* EC revenues rose $5.1 million in the quarter to $153.7 million.
Operating income fell $16.7 million to $1.9 million, with a
corresponding decline in margin, attributable to unfavorable changes in
product mix, ongoing price pressures and the impact of restructuring
charges taken during the quarter.
* Restructuring actions taken in the first half will have the effect of
reducing SG&A expenses, increasing Lean Manufacturing initiatives and
outsourcing, and accelerating migration of production to lower-cost
regions.
* ITT has seen revenues within its high-margin mobile handset business
decline 30 percent from the period last year due to price pressures,
SARS-related inventory buildup in Asia and late product introductions.
* A number of new ITT products are now available or are being qualified
with customers that will have an impact later in 2003:
- KSM switch, the successor to the KSS miniature switch, for mobile
telephones
- High speed connectors with fiber optic inserts for military and
industrial applications
- New keypad design for mobile handsets
- New interface control for the transportation market
ITT Industries Third Quarter and Full Year 2003 Outlook
(in millions, except EPS)
2003 2003
Third Quarter Full Year
Revenues +8-10% +7-9%
Segment Operating Margin 10.9% - 11.3% 11.0% - 11.5%
Diluted EPS $0.92 - $0.98 $3.77 - $3.97
About ITT Industries
ITT Industries, Inc. (www.itt.com) supplies advanced technology products
and services in key markets including: electronic interconnects and switches;
defense communication, opto-electronics, information technology and services;
fluid and water management and other specialty products. Headquartered in
White Plains, NY, the company generated $4.99 billion in 2002 sales.
In addition to the New York Stock Exchange, ITT Industries stock is traded
on the Midwest, Pacific, Paris and Frankfurt 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 general economic conditions, foreign currency exchange rates,
competition and other factors all as more thoroughly 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, 2002, and other of its filings with the Securities and Exchange
Commission.
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS
(In millions, except per share)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Sales and revenues $1,438.2 $1,320.1 $2,734.6 $2,505.9
Costs of sales and
revenues 949.6 866.0 1,796.0 1,636.6
Selling, general and
administrative
expenses 198.6 179.2 398.9 352.5
Research, development
and engineering
expenses 142.6 129.8 272.2 256.1
Restructuring and other
asset impairments 5.9 -- 16.3 --
Total costs and
expenses 1,296.7 1,175.0 2,483.4 2,245.2
Operating income 141.5 145.1 251.2 260.7
Interest expense
(income), net 5.8 10.0 (9.3) 21.9
Miscellaneous expense
(income) 2.1 (1.6) 2.8 (3.0)
Income from continuing
operations before income
taxes 133.6 136.7 257.7 241.8
Income tax expense 41.5 43.8 78.9 77.4
Income from continuing
operations 92.1 92.9 178.8 164.4
Discontinued operations,
including tax expense
of $0.2 in each period 7.8 -- 7.8 --
Net income $99.9 $92.9 $186.6 $164.4
Earnings Per Share:
Income from continuing
operations:
Basic $1.00 $1.02 $1.94 $1.82
Diluted $0.98 $0.99 $1.90 $1.76
Discontinued operations:
Basic $0.08 $ -- $0.08 $ --
Diluted $0.08 $ -- $0.08 $ --
Net income:
Basic $1.08 $1.02 $2.02 $1.82
Diluted $1.06 $0.99 $1.98 $1.76
Average Common Shares
- Basic 92.0 91.0 92.0 90.3
Average Common Shares
- Diluted 94.0 93.9 93.9 93.2
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
June 30, December 31,
2003 2002
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $236.0 $202.2
Receivables, net 1,073.3 868.3
Inventories, net 592.9 552.9
Other current assets 106.3 77.1
Total current assets 2,008.5 1,700.5
Plant, property and equipment, net 838.3 841.2
Deferred income taxes 531.1 546.3
Goodwill, net 1,602.5 1,550.5
Other intangible assets, net 74.2 74.4
Other assets 875.7 676.7
Total assets $5,930.3 $5,389.6
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $542.5 $484.0
Accrued expenses 707.8 725.3
Accrued taxes 277.7 221.3
Notes payable and current maturities of
long-term debt 465.0 299.6
Total current liabilities 1,993.0 1,730.2
Pension and postretirement benefits 1,639.7 1,629.0
Long-term debt 509.5 492.2
Other liabilities 404.0 400.9
Total liabilities 4,546.2 4,252.3
Shareholders' equity 1,384.1 1,137.3
Total liabilities and shareholders' equity $5,930.3 $5,389.6
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
June 30,
2003 2002
Operating Activities
Net income $186.6 $164.4
Discontinued operations, net (7.8) --
Income from continuing operations 178.8 164.4
Adjustments to income from continuing operations:
Depreciation and amortization 93.4 85.1
Restructuring and other asset impairments 16.3 --
Payments for restructuring (10.2) (22.6)
Change in receivables (132.4) (115.8)
Change in inventories (8.4) 7.3
Change in accounts payable and accrued expenses (3.2) 67.1
Change in accrued and deferred taxes 49.8 42.7
Change in other current and non-current assets (214.6) 2.9
Change in other non-current liabilities (8.9) 2.5
Other, net 6.0 2.7
Net Cash - operating activities (33.4) 236.3
Investing Activities
Additions to plant, property and equipment (57.7) (52.1)
Acquisitions (42.5) (38.8)
Proceeds from sale of assets and businesses 9.5 6.8
Other, net 0.1 1.1
Net Cash - investing activities (90.6) (83.0)
Financing Activities
Short-term debt, net 181.1 (168.4)
Long-term debt repaid (17.0) (1.6)
Long-term debt issued 0.3 0.3
Repurchase of common stock (16.8) (13.6)
Proceeds from issuance of common stock 19.9 79.4
Dividends paid (28.5) (26.8)
Other, net 0.1 (0.2)
Net Cash - financing activities 139.1 (130.9)
Exchange Rate Effects on Cash and Cash Equivalents 8.9 4.5
Net Cash - Discontinued Operations 9.8 20.3
Net change in cash and cash equivalents 33.8 47.2
Cash and cash equivalents - beginning of year 202.2 121.3
Cash and Cash Equivalents - End of Year $236.0 $168.5
SOURCE ITT Industries, Inc.
-0- 07/28/2003
/CONTACT: Tom Glover of ITT Industries, +1-914-641-2160,
tom.glover@itt.com/
/Web site: http://www.itt.com/
(ITT)