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ITT Industries' Ratings Placed on S&PWatch With 'Developing' Implications

19 March 1998

ITT Industries' Ratings Placed on S&PWatch With 'Developing' Implications

    NEW YORK, March 19 -- Standard & Poor's today placed its
triple-'B' senior debt and corporate credit ratings on ITT Industries Inc. as
well as the company's 'A-2' commercial paper rating on CreditWatch with
"developing" implications (See list below for associated debt placed on
CreditWatch).  Developing implications indicate ratings may be raised,
lowered, or affirmed.
    The CreditWatch placement follows the company's announcement that it has
placed a portion of its automotive business under review, and that the review
could culminate in the divestiture of operations accounting for about
$3.9 billion in sales.  The operations being reviewed by the company include
those involved in the production of brakes, chassis modules, and electrical
systems in the U.S. and abroad.  The review does not include the company's
fluid handling, friction and shock absorber, and switch businesses, which
currently account for about 20% of automotive segment sales.  ITT Industries
has indicated that if it decides to sell the businesses under review, proceeds
could be used to finance internal or external growth initiatives, repurchase
stock, pay down debt, or some combination of these uses.
    If the operations under review are sold, Standard & Poor's will assess
the impact of reduced product diversity on the company's business profile, as
well as the financial implications of the sale.  If assets are sold and
proceeds are used to pay down debt, ratings could be raised.  If proceeds are
used for share repurchases, ratings could be lowered.  If proceeds are used
for acquisitions, ratings could be affirmed, raised, or lowered depending upon
what is acquired and how the acquisition is financed.  Standard & Poor's will
monitor ITT Industries' review process and will evaluate the impact of the
company's decisions on its business and financial risk profiles as details
become available. -- CreditWire

    RATINGS PLACED ON CREDITWATCH WITH DEVELOPING IMPLICATIONS

                                                   Rating

    ITT Industries Inc.
      Corporate credit rating                       BBB
      Senior debt rating                            BBB
      Commercial paper                              A-2

    ITT Financial Corp.
      Corporate credit rating                       BBB
      Senior debt rating                            BBB
      Subordinated debt                             BBB-

    International Telephone & Telegraph Corp.
      Corporate credit rating                       BBB
      Senior debt rating                            BBB

SOURCE  Standard & Poor's Rating Services