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ITT Industries' BBB/A-2 Ratings Still Watched

31 July 1998

ITT Industries' BBB/A-2 Ratings Still on Standard & Poor's Watch Developing

    NEW YORK, July 30 -- Standard & Poor's ratings on ITT
Industries Inc. (see list below) remain on CreditWatch with "developing"
implications, where they were placed March 19, 1998.  Developing indicates
that the ratings may be raised, lowered, or affirmed.
    The ratings were initially placed on CreditWatch following the company's
announcement that it had placed a portion of its automotive business under
review, and that the review could culminate in the divestiture of operations
accounting for about $4.1 billion in sales.  On July 27, 1998, ITT Industries
announced the culmination of its strategic review with its announcement that
it had reached a definitive agreement to sell its brake and chassis business
to unrated Continental AG for $1.93 billion ($1.3 billion after taxes).
    This announcement followed the company's June 25, 1998 announcement that
it had reached a definitive agreement to sell its electrical systems business
to unrated Valeo SA for $1.7 billion in cash ($1.3 billion after taxes).  The
sale of the electrical systems business, which generated $1.9 billion in sales
in 1997, is expected to close by the end of the third quarter of 1998.  The
sale of the brake and chassis business, which generated $2.2 billion in sales
in 1997, is expected to close by late third or early fourth quarter 1998.
    Management has indicated that proceeds from asset sales will be used to
repurchase common stock, pay down debt, and finance the further internal and
external growth of its core businesses.  On July 29, 1998, ITT Industries
announced that its board had approved a $1.1 billion stock repurchase program,
to begin immediately.
    Standard & Poor's will meet with management to discuss business and
financial strategies in the wake of the recent announcements, and will resolve
the CreditWatch placement once details regarding ITT Industries' future
business mix and capital structure become available. -- CreditWire

    RATINGS REMAINING ON CREDTIWATCH WITH DEVELOPING IMPLICATIONS
                                  Rating
    Corporate credit ratings        BBB/A-2
    Senior unsecured debt           BBB
    Commercial paper                A-2