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ITT Industries Senior, Subordinated, Commercial Paper Ratings Affirmed; Off S&P Watch

24 July 1997

ITT Industries Senior, Subordinated, Commercial Paper Ratings Affirmed; Off S&P Watch

    NEW YORK, July 24 -- Standard & Poor's today has affirmed its
ratings of ITT Industries Inc. and related entities (see list below).
    The ratings have been removed from CreditWatch, where they initially were
placed April 21, 1997 following the company's announcement that it was
acquiring Goulds Pumps, Inc. for approximately $934 million.
    About $2.3 billion of debt is outstanding.
    The rating affirmations are based on the expectation that the company's
debt leverage will decline over the near to intermediate term and that
management will adhere to more moderate financial policies in the future.  ITT
Industries participates in three business segments: automotive components,
defense and electronics, and fluid technology.  It has good geographic,
customer and end market diversity, an experienced management team, strong
technical capabilities, and leading market positions, which translate into an
above-average business profile.  ITT Industries is one of the largest
independent automotive suppliers worldwide with an especially strong position
in anti-lock brake/traction control systems and motors.  Although a smaller
player in the defense and electronics industry, it enjoys a solid position as
a leading producer of night vision goggles and combat radios.  With its
acquisition of Goulds Pumps, ITT Industries is now the largest participant in
the fragmented fluid technology industry.
    Offsetting the company's strong business risk profile is an aggressive
capital structure.  Total debt (adjusted to include capitalized operating
leases) is now about $2.6 billion and adjusted total debt/capital is about
74%.  Funds from operations/total debt is estimated to be in the mid-30% area.
Significant non-debt liabilities heighten the financial risk of the company.
Management has indicated that it wants to reduce debt levels.  It should be
aided in these efforts by continuing healthy end market demand and ongoing
cost reduction efforts.  However, markets remain very competitive and pricing
pressures could limit profit improvement. In addition, investment requirements
are expected to remain fairly high given the expected robust demand for
certain product lines and the company's plans to pursue growth opportunities
in each of its business segments.

    OUTLOOK:  Stable.
    Healthy end market demand and proceeds from asset sales should translate
into significant free cash flow generation over the near to intermediate term.
This should enable the company to bolster financial flexibility through debt
reduction while continuing to invest in existing operations. -- CreditWire

    RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH

    ITT Industries Inc.
      Corp credit rtg                            BBB
      Sr debt                                    BBB
      CP                                         A-2
      ITT Financial Corp.
      Counterparty credit rtg                    BBB
      Sr unsecd debt                             BBB
      Sub debt                                   BBB-
    ITT Gesellschaft fur Beteiligungen mbH
      CP (gtd: ITT Industries Inc.)              A-2
    International Telephone & Telegraph Corp.
      Corp credit rtg                            BBB
      Sr unsecd debt                             BBB

SOURCE  Standard & Poor's CreditWire