ITT CORP /NV/, 10-Q, 1996-08-13

ITT CORP /NV/
10-Q, 1996-08-13
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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<PAGE> 1

================================================================================

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 1996

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to _________________

COMMISSION FILE NUMBER 1-13960

------------------

ITT CORPORATION

<TABLE>
<S> <C>
NEVADA 88-0340591
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
</TABLE>

1330 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-5490
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

TELEPHONE NUMBER: (212) 258-1000

------------------

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 (or such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----

As of August 5, 1996 there were outstanding approximately 117.1 million
shares of common stock, no par value, of the registrant.

================================================================================
<PAGE> 2

ITT CORPORATION

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM PAGE
------ ----
<C> <C> <S> <C>
PART FINANCIAL INFORMATION:
I 1 Financial Statements:
Consolidated Income -- Second Quarter and Six Months Ended June 30,
1996 and 1995........................................................ 2
Consolidated Balance Sheet -- June 30, 1996 and December 31, 1995...... 3
Consolidated Cash Flow -- Six Months Ended June 30, 1996 and 1995...... 4
Notes to Financial Statements.......................................... 5
Business Segment Information........................................... 7
2 Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................ 8
PART OTHER INFORMATION:
II 4 Submission of Matters to a Vote of Security Holders.................... 12
6 Exhibits and Reports on Form 8-K....................................... 12
Signature.............................................................. II-1
Exhibit Index.......................................................... II-2
</TABLE>

1
<PAGE> 3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The following unaudited 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, the results of
operations and cash flow for the periods presented. For a description of
accounting policies, see notes to financial statements in the Corporation's 1995
Annual Report on Form 10-K.

ITT CORPORATION AND SUBSIDIARIES

CONSOLIDATED INCOME
(IN MILLIONS EXCEPT PER SHARE)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SECOND QUARTER JUNE 30,
--------------- ---------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues................................................. $1,752 $1,673 $3,140 $2,934
Costs and expenses:
Salaries, benefits and other operating................. 1,242 1,207 2,260 2,168
Selling, general and administrative.................... 203 195 410 373
Depreciation and amortization.......................... 65 72 128 128
------ ------ ------ ------
1,510 1,474 2,798 2,669
------ ------ ------ ------
242 199 342 265
Interest expense, net.................................... (54) (90) (118) (157)
Miscellaneous income, net................................ 10 3 8 9
------ ------ ------ ------
198 112 232 117
Income tax expense....................................... (85) (51) (100) (55)
Minority equity.......................................... (17) (15) (16) (9)
------ ------ ------ ------
Net income............................................... $ 96 $ 46 $ 116 $ 53
====== ====== ====== ======
Earnings per share (Pro Forma for 1995 -- See Notes to
Financial Statements).................................. $ .81 $ .39 $ .97 $ .45
====== ====== ====== ======
Weighted average common equivalent shares (Pro Forma for
1995 -- See Notes to Financial Statements)............. 119.0 117.2 119.0 117.2
====== ====== ====== ======
</TABLE>

The accompanying notes to financial statements are an integral part of the above
statement.

2
<PAGE> 4

ITT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(IN MILLIONS EXCEPT FOR SHARES)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 185 $ 177
Receivables, net................................................ 646 784
Inventories..................................................... 92 86
Prepaid expenses and other...................................... 129 96
------ ------
Total current assets....................................... 1,052 1,143
Plant, property and equipment, net................................... 4,189 3,979
Investments.......................................................... 1,555 1,757
Goodwill, net........................................................ 1,323 1,332
Long-term receivables, net........................................... 197 150
Other assets......................................................... 327 331
------ ------
$8,643 $8,692
====== ======
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable................................................ $ 255 $ 309
Accrued expenses................................................ 614 695
Notes payable and current maturities of long-term debt.......... 293 265
Other current liabilities....................................... 179 161
------ ------
Total current liabilities.................................. 1,341 1,430
Long-term debt....................................................... 3,473 3,575
Deferred income taxes................................................ 148 141
Other liabilities.................................................... 356 350
Minority interest.................................................... 288 260
------ ------
5,606 5,756
------ ------
Stockholders Equity:
Common stock: authorized 200,000,000 shares, no par or stated
value, outstanding 117,074,447 and 117,196,370 shares,
respectively................................................... 2,931 2,944
Cumulative translation adjustment............................... (2) --
Retained earnings/(accumulated deficit)......................... 108 (8)
------ ------
Total stockholders equity.................................. 3,037 2,936
------ ------
$8,643 $8,692
====== ======
</TABLE>

The accompanying notes to financial statements are an integral part of the above
statement.

3
<PAGE> 5

ITT CORPORATION AND SUBSIDIARIES

CONSOLIDATED CASH FLOW
(IN MILLIONS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------
1996 1995
---- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income................................................................ $116 $ 53
Adjustments to net income:
Depreciation and amortization........................................... 128 128
Provision for doubtful receivables...................................... 23 25
Changes in working capital:
Accounts receivable..................................................... 43 (28)
Inventories............................................................. (7) (4)
Accounts payable........................................................ (58) 57
Accrued expenses........................................................ (42) (31)
Accrued and deferred taxes................................................ 13 20
Other, net................................................................ (32) 14
---- -------
Cash from operating activities....................................... 184 234
---- -------
INVESTING ACTIVITIES
Additions to plant, property and equipment................................ (239) (207)
Proceeds from divestments................................................. 219 --
Acquisitions, net of acquired cash........................................ (65) (2,208)
Other, net................................................................ 5 (4)
---- -------
Cash used for investing activities................................... (80) (2,419)
---- -------
FINANCING ACTIVITIES
Short-term debt, net...................................................... 31 (19)
Long-term debt issued..................................................... 146 64
Long-term debt repaid..................................................... (260) (129)
Change in investments and advances from ITT Industries, Inc.*............. -- 2,459
Other, net................................................................ (12) (2)
---- -------
Cash (used for)/from financing activities............................ (95) 2,373
---- -------
EXCHANGE RATE EFFECT ON CASH AND CASH EQUIVALENTS......................... (1) 5
---- -------
Increase in cash and cash equivalents..................................... 8 193
Cash and Cash Equivalents -- Beginning of Period.......................... 177 191
---- -------
Cash and Cash Equivalents -- End of Period................................ $185 $ 384
==== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest................................................................ $115 $ 167
==== =======
Income Taxes............................................................ $ 85 $ 28
==== =======
</TABLE>

- ---------------

* Investments and advances from ITT Industries, Inc. represents the means by
which ITT was funded by ITT Corporation, a Delaware corporation (which has
been renamed ITT Industries, Inc. and reincorporated in Indiana; "Old ITT"),
prior to the distribution on December 19, 1995 of the outstanding shares of
common stock of ITT to shareholders of Old ITT on that date and consisted of
both equity and interest bearing advances.

The accompanying notes to financial statements are an integral part of the above
statement.

4
<PAGE> 6

NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE)

1) BASIS OF PRESENTATION

ITT Corporation ("ITT" or the "Corporation") is the world's largest hotel
and gaming company. ITT's principal lines of business are hotels, gaming and
information services. The hotels segment is comprised of a worldwide hospitality
network of over 400 full-service hotels serving three markets: luxury, upscale
and mid-price. ITT's hotel operations are represented in nearly every major
world market. ITT's gaming operations are located in several key domestic
jurisdictions. ITT also operates various hotel/casino ventures outside the
United States. ITT's information services segment publishes telephone
directories in many countries outside the United States and provides
post-secondary career education in the United States.

On December 19, 1995 (the "Distribution Date"), ITT Corporation, a Delaware
corporation ("Old ITT", which has been reincorporated in Indiana and renamed ITT
Industries, Inc.), distributed to its shareholders of record at the close of
business on such date all of the outstanding shares of common stock of ITT, then
a wholly owned subsidiary of Old ITT (the "Distribution"). In such Distribution,
holders of common stock of Old ITT received one share of ITT common stock for
every one share of Old ITT common stock held. In connection with the
Distribution, ITT, which was then named "ITT Destinations, Inc.", changed its
name to ITT Corporation.

2) GAMING OPERATIONS

Casino revenues represent the net win from gaming wins and losses. Revenues
exclude the retail value of rooms, food, beverage, entertainment and other
promotional allowances provided on a complimentary basis to customers. The
estimated retail value of the promotional allowances was $41 and $34 for the
second quarter of 1996 and 1995 and $83 and $58 for the six months ended June
30, 1996 and 1995, respectively. The estimated cost of such promotional
allowances was $28 and $21 for the second quarter of 1996 and 1995 and $56 and
$39 for the six months ended June 30, 1996 and 1995, respectively, and have been
included in costs and expenses.

Revenues and costs and expenses of the Gaming operations are comprised of
the following:

<TABLE>
<CAPTION>
SIX MONTHS
SECOND ENDED
QUARTER JUNE 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Gaming............................................ $264 $247 $526 $426
Rooms............................................. 18 17 36 32
Food and beverage................................. 19 17 39 32
Other operations.................................. 30 23 54 38
---- ---- ---- ----
Total..................................... $331 $304 $655 $528
==== ==== ==== ====
Cost and Expenses
Gaming............................................ $151 $139 $302 $235
Rooms............................................. 7 8 13 12
Food and beverage................................. 19 17 35 32
Other operations.................................. 12 15 25 25
Selling, general and administrative............... 48 55 105 95
Depreciation and amortization..................... 18 21 39 39
Provision for doubtful accounts................... 7 4 14 18
---- ---- ---- ----
Total..................................... $262 $259 $533 $456
==== ==== ==== ====
</TABLE>

5
<PAGE> 7

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE)

3) ACQUISITIONS

On January 30, 1995, the Corporation acquired Caesars World, Inc.
("Caesars") for approximately $1.76 billion and on March 10, 1995, the
Corporation acquired a 50% interest in the businesses which comprise Madison
Square Garden ("MSG") for approximately $.6 billion.

The following pro forma summary for the six months ended June 30, 1995
presents information as if the acquisitions of Caesars and MSG had occurred as
of January 1, 1995:

<TABLE>
<S> <C>
Net revenues................................................................ $3,016
Net income.................................................................. $ 38
======
Income per share............................................................ $ .32
======
</TABLE>

The pro forma information is not necessarily indicative of the results that
would have occurred had such acquisitions taken place at the beginning of the
year.

4) EARNINGS PER SHARE

Earnings per share in the 1995 second quarter, six months and through the
Distribution Date were computed based upon the number of ITT common shares that
were outstanding on the Distribution Date.

5) RECEIVABLES

Current receivables of $646 and $784 at June 30, 1996 and December 31,
1995, including current maturities of notes receivable, are reported net of
allowances for doubtful accounts of $114 and $106.

Long-term receivables of $197 and $150 at June 30, 1996 and December 31,
1995, are net of allowances for doubtful accounts of $92 and $98, exclude
current maturities of $28 and $21 and approximate fair value.

6) PLANT, PROPERTY AND EQUIPMENT

Plant, property and equipment consists of the following:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
Land and improvements............................................ $1,210 $1,178
Buildings and improvements....................................... 2,418 2,311
Machinery, furniture, fixtures and equipment..................... 842 789
Construction work in progress.................................... 334 250
Other............................................................ 94 97
------ ------
4,898 4,625
Less -- accumulated depreciation and amortization................ (709) (646)
------ ------
$4,189 $3,979
====== ======
</TABLE>

7) RECLASSIFICATIONS

Certain amounts in the 1995 financial statements have been reclassified to
conform to the current year presentation.

6
<PAGE> 8

BUSINESS SEGMENT INFORMATION
(IN MILLIONS)

Business segment information is as follows:

<TABLE>
<CAPTION>
INCOME
REVENUES -----------------------------
- -------------------------------
SECOND
SECOND QUARTER SIX MONTHS QUARTER SIX MONTHS
- -------------- -------------- ------------- -----------
1996 1995 1996 1995 1996 1995 1996 1995
- ------ ------ ------ ------ ---- ---- ---- ----
<C> <C> <C> <C> <S> <C> <C> <C> <C>
$1,120 $1,067 $2,086 $2,012 Hotels......................... $102 $ 73 $158 $104
331 304 655 528 Gaming......................... 69 45 122 72
301 302 399 394 Information Services........... 97 90 110 100
- ------ ------ ------ ------ ---- ---- ---- ----
1,752 1,673 3,140 2,934 Total Segments................. 268 208 390 276
-- -- -- -- Other.......................... (26) (9) (48) (11)
- ------ ------ ------ ------ ---- ---- ---- ----
1,752 1,673 3,140 2,934 242 199 342 265
Interest expense, net.......... (54) (90) (118) (157)
Miscellaneous income, net...... 10 3 8 9
Income tax expense............. (85) (51) (100) (55)
Minority equity................ (17) (15) (16) (9)
- ------ ------ ------ ------ ---- ---- ---- ----
$1,752 $1,673 $3,140 $2,934 $ 96 $ 46 $116 $ 53
====== ====== ====== ====== ==== ==== ==== ====
</TABLE>

The accompanying notes to financial statements are an integral part of the above
statement.

7
<PAGE> 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

(DOLLARS IN MILLIONS UNLESS OTHERWISE STATED)

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995

Revenues of $1,752 in the 1996 second quarter increased 5% compared with
$1,673 in 1995, reflecting higher average room rates in owned and leased
properties in Hotels and increased volumes in Gaming. Revenues at ITT World
Directories, Inc. ("ITT World Directories") were basically unchanged as
operational increases were offset by the impacts of foreign exchange. ITT
Educational Services, Inc. ("ITT Educational Services") revenues increased 16%
due to tuition price increases, an expanded curriculum and increased census.

Salaries, benefits and other operating costs increased 3% in the quarter to
$1,242 from $1,207 in 1995 reflecting minor increases in the cost of services.
Overall, salaries, benefits and other operating costs represented 71% of
revenues in 1996, down from 72% in the 1995 quarter. This decrease reflects
management's ongoing cost containment programs as well as significant increases
in average room rates at the Corporation's owned and leased hotels outpacing the
increase in costs.

Selling, general and administrative expenses increased 4% to $203 in 1996
compared with $195 in 1995 due primarily to the 1995 quarter including a benefit
of $26 representing the reimbursement of overhead expenses related to world
headquarters by the entities that comprised Old ITT prior to the Distribution
("service fee income"). Excluding the impact of the service fee income, selling,
general and administrative expenses declined 8% from the prior period,
reflecting management's continuing commitment to cost containment.

The Corporation generated earnings before interest, taxes, depreciation and
amortization ("EBITDA") of $307 in the 1996 quarter compared with $271 in the
1995 quarter, a 13% improvement, while operating income rose 22% in the quarter.
These increases reflect the operational improvements discussed previously as
well as the impact of higher average room rates in owned and leased properties.
Depreciation and amortization decreased 10% compared with the prior period due
primarily to the method of allocating such costs prior to the Distribution.

Net interest expense decreased significantly in the 1996 second quarter.
However, during 1995 Old ITT allocated certain indebtedness between ITT and ITT
Industries, Inc. in anticipation of the Distribution. As a result of such
allocation, the interest expense reflected in the 1995 second quarter is not
necessarily indicative of the interest expense that ITT would have incurred if
ITT was an independent entity during such period.

Income tax expense increased in 1996 on higher pretax earnings. The
minority equity expense represents the net income attributable to the minority
shareholders of Ciga S.p.A., ITT World Directories and ITT Educational Services.

BUSINESS SEGMENTS

Revenues, EBITDA and operating income (excluding the effect of overhead and
minority equity) for each of ITT's three major business segments were as
follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1996 THREE MONTHS ENDED JUNE 30, 1995
- --------------------------------- ---------------------------------
OPERATING OPERATING
REVENUES EBITDA INCOME REVENUES EBITDA INCOME
- -------- ------ --------- -------- ------ ---------
<C> <C> <C> <S> <C> <C> <C>
$1,120 $140 $ 102 .............Hotels............. $1,067 $104 $73
</TABLE>

Hotels' 1996 second quarter results reflect a significant increase in
revenue per available room in the Corporation's owned and leased properties from
$98 in 1995 to $109 in 1996, a 10% increase. This increase was the primary
contributor to an overall 12% revenue increase in these properties from the 1995
period. Improvements in the owned and leased properties have a greater impact on
the Hotels segment results than do improvements in managed properties, where the
majority of the improvements are realized by those property owners. Despite
strong rate gains, managed property revenues increased

8
<PAGE> 10

by only 2% from the prior period due to the termination of several hotel
management contracts. EBITDA and operating income growth were generated
primarily in the major geographic areas in which the Corporation has invested
most heavily, most notably North America. Management continues to aggressively
pursue profitable expansion opportunities while optimizing cost saving
initiatives in each of its market segments.

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1996 THREE MONTHS ENDED JUNE 30, 1995
- --------------------------------- ---------------------------------
OPERATING OPERATING
REVENUES EBITDA INCOME REVENUES EBITDA INCOME
- -------- ------ --------- -------- ------ ---------
<C> <C> <C> <S> <C> <C> <C>
$331 $ 87 $69 .............Gaming............. $304 $ 66 $45
</TABLE>

Gaming's second quarter results reflect increased slot play, reduced costs
and operating efficiencies at several properties. Especially strong EBITDA
improvements were registered at Caesars Las Vegas and Atlantic City properties.
The 1996 results also reflect the impact of the opening of two additional
casinos in Halifax and Sydney, Nova Scotia during the second and third quarters
of 1995, respectively.

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1996 THREE MONTHS ENDED JUNE 30, 1995
- --------------------------------- ---------------------------------
OPERATING OPERATING
REVENUES EBITDA INCOME REVENUES EBITDA INCOME
- -------- ------ --------- -------- ------ ---------
<C> <C> <C> <S> <C> <C> <C>
$301 $104 $97 .......Information Services....... $302 $ 96 $90
</TABLE>

Revenues at ITT World Directories were basically unchanged as operational
increases were offset by the impacts of foreign exchange. EBITDA and operating
income continued to improve due mainly to continuing cost controls throughout
the organization.

ITT Educational Services revenues increased 16% due to tuition price
increases, expanded curriculum and increased census which more than offset the
cost of newly opened schools and increased marketing efforts.

SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995

Revenues of $3,140 in the 1996 period increased 7% compared with $2,934 in
1995, reflecting higher average room rates in owned and leased properties in
Hotels and increased volumes in Gaming. Revenues at ITT World Directories were
basically unchanged as operational increases were offset by the impacts of
foreign exchange. ITT Educational Services revenues increased 14% due to tuition
price increases, an expanded curriculum and increased census.

Salaries, benefits and other operating costs increased 4% in the six months
to $2,260 from $2,168 reflecting minor increases in the cost of services.
Overall, salaries, benefits and other operating costs represented 72% of
revenues in 1996, down from 74% in the 1995 period. This decrease reflects
management's ongoing cost containment programs as well as significant increases
in average room rates at the Corporation's owned and leased hotels outpacing the
increase in costs.

Selling, general and administrative expenses increased 10% to $410 in 1996
compared with $373 in 1995 due primarily to the 1995 period including a benefit
of $52 representing service fee income. Excluding the impact of the service fee
income, selling, general and administrative expenses declined 4% from the prior
period, reflecting management's continuing commitment to cost containment.

The Corporation generated EBITDA of $470 in the 1996 six months compared
with $393 in the 1995 period, a 20% improvement, while operating income rose 29%
in the period. These increases reflect the operational improvements discussed
previously as well as the impact of higher average room rates in owned and
leased properties. Depreciation and amortization was flat in the 1996 six months
compared with the prior period.

Net interest expense decreased significantly in the 1996 period. However,
during 1995, Old ITT allocated certain indebtedness between ITT and ITT
Industries, Inc. in anticipation of the Distribution. As a result of such
allocation, the interest expense reflected in the 1995 six months is not
necessarily indicative of the interest expense that ITT would have incurred if
ITT was an independent entity during such period.

9
<PAGE> 11

BUSINESS SEGMENTS

Revenues, EBITDA and operating income (excluding the effect of overhead and
minority equity) for each of ITT's three major business segments were as
follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996 SIX MONTHS ENDED JUNE 30, 1995
- --------------------------------- ---------------------------------
OPERATING OPERATING
REVENUES EBITDA INCOME REVENUES EBITDA INCOME
- -------- ------ --------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
$2,086 $230 $ 158 ............... Hotels ............. $2,012 $166 $ 104
</TABLE>

Hotels' 1996 six months results reflect a significant increase in revenue
per available room in the Corporation's owned and leased properties from $94 in
1995 to $103 in 1996, a 10% increase. This increase was the primary contributor
to an overall 12% revenue increase in these properties from the 1995 period.
Despite strong rate gains, managed property revenues were unchanged from the
prior period due to the termination of several hotel management contracts.
EBITDA and operating income growth were generated primarily in the major
geographic areas in which the Corporation has invested most heavily, most
notably North America. Management continues to aggressively pursue profitable
expansion opportunities while optimizing cost saving initiatives in each of its
market segments.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996 SIX MONTHS ENDED JUNE 30, 1995
- --------------------------------- ---------------------------------
OPERATING OPERATING
REVENUES EBITDA INCOME REVENUES EBITDA INCOME
- -------- ------ --------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
$655 $161 $ 122 .............. Gaming ............ $528 $111 $ 72
</TABLE>

Gaming's 1996 six month results reflect the impact of the January 30, 1995
acquisition of Caesars as well as the impact of opening two additional casinos
in Halifax and Sydney, Nova Scotia during the second and third quarters of 1995,
respectively. Gaming's 1996 results reflect increased slot play, reduced costs
and operating efficiencies, with especially strong improvements recorded at
Caesars Las Vegas and Atlantic City properties.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996 SIX MONTHS ENDED JUNE 30, 1995
- --------------------------------- ---------------------------------
OPERATING OPERATING
REVENUES EBITDA INCOME REVENUES EBITDA INCOME
- -------- ------ --------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
$399 $124 $ 110 ........ Information Services ...... $394 $113 $ 100
</TABLE>

ITT Educational Services revenues increased 14% due to tuition price
increases, expanded curriculum and increased census which more than offset the
cost of newly opened schools and increased marketing efforts.

LIQUIDITY AND CAPITAL RESOURCES

The Corporation's EBITDA increased 20% in the 1996 six months reflecting
earnings growth in all business segments as well as the continuing benefits of
management's cost rationalization strategies and the accretive impact of the
Caesars acquisition. These cash flows are expected to be sufficient to service
indebtedness, satisfy tax obligations and cover maintenance capital expenditures
and other liquidity needs. Additional liquidity needs would be funded through
traditional debt or equity financing, asset sales or any combination thereof.

Cash from operating activities, as defined by Statement of Accounting
Standards No. 95 ("SFAS 95"), decreased to $184 in the 1996 six months from $234
in the 1995 period due primarily to changes in working capital requirements. The
SFAS definition of cash from operating activities differs from EBITDA largely
due to the inclusion of interest, income taxes and changes in working capital.

10
<PAGE> 12

On May 2, 1996, the Corporation sold 2.1 million shares, or about 22%, of
its holdings in Alcatel Alsthom for approximately $200. Proceeds from this sale
were used for general corporate purposes, including debt reduction. After giving
effect to this sale, the Corporation owns approximately 7.3 million, or
approximately 4.8%, of the outstanding capital shares of Alcatel Alsthom.

On June 27, 1996, the Corporation announced the details of its planned
gaming expansion program. The program consists of a combination of casino
expansion and new construction in both Las Vegas, NV and Atlantic City, NJ as
well as the construction of a riverboat casino in Harrison County, IN.
Construction on certain of these projects has commenced with capital spending
estimated to be approximately $400, $1,300 and $1,000 in 1996, 1997 and 1998,
respectively. Management anticipates funding this program through operating cash
flow, debt or equity financing, asset sales or any combination thereof.

Capital expenditures totaled $239 in the 1996 six months, 51% and 34% at
the Hotels and Gaming segments, respectively, compared with $207 in the 1995
period, with 74% and 22% attributable to the Hotels and Gaming segments,
respectively. In addition, the Corporation completed the acquisitions of Caesars
($1.76 billion) and a 50% interest in businesses which comprise Madison Square
Garden ($.6 billion) in January and March, 1995, respectively.

External borrowings were $3.8 billion at June 30, 1996 and December 31,
1995 as capital requirements were offset by funds generated from operations and
the sale of a portion of the Corporation's Alcatel Alsthom stock holdings.
Additionally, on July 1, 1996, the Corporation, in partnership with Dow Jones &
Company, paid $105 in connection with its acquisition of WBIS+ (formerly
WNYC-TV). This transaction was funded through existing debt facilities.

11
<PAGE> 13

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At ITT's annual meeting of shareholders held on May 14, 1996, the persons
whose names are set forth below were elected as directors. The relevant voting
information for each person is set forth opposite his or her name:

<TABLE>
<CAPTION>
VOTES CAST
-------------------------- BROKER
FOR WITHHELD NONVOTES
------------ ---------- --------
<S> <C> <C> <C>
Bette B. Anderson............................. 100,356,137 288,619 0
Rand V. Araskog............................... 100,252,115 392,641 0
Nolan D. Archibald............................ 100,371,192 273,564 0
Robert A. Bowman.............................. 100,362,713 282,043 0
Robert A. Burnett............................. 100,292,935 351,821 0
Paul G. Kirk, Jr.............................. 99,268,346 1,376,410 0
Edward C. Meyer............................... 100,352,869 291,887 0
Benjamin F. Payton............................ 100,322,553 322,203 0
Vin Weber..................................... 100,314,063 330,693 0
Margita E. White.............................. 100,364,851 279,905 0
Kendrick R. Wilson III........................ 98,631,832 2,012,924 0
</TABLE>

In addition to the election of directors, the following matters were acted
upon:

(a) The reappointment of Arthur Andersen LLP as independent auditors for
1996 was ratified by a vote of 100,303,354 shares in favor, 147,156 shares
against and, 194,246 shares abstained.

(b) The ITT Corporation Annual Performance-Based Incentive Plan for
Executive Officers was approved by a vote of 97,258,454 shares in favor,
2,716,953 shares against and, 669,348 shares abstained.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) See the Exhibit Index for a list of exhibits filed herewith.

(b) There were no reports on Form 8-K filed by the Corporation during the
quarter for which this report is filed.

12
<PAGE> 14

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 CORPORATION

By /s/ J. F. DANSKI
---------------------------------------
J. F. DANSKI
SENIOR VICE PRESIDENT AND CONTROLLER
(CHIEF ACCOUNTING OFFICER)

August 13, 1996

II-1
<PAGE> 15

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
<C> <S> <C>
3.1 Restated Articles of Incorporation....... Incorporated by reference to Exhibit 3.1
to the Registrant's Amendment No. 1 to
Form 10/A dated November 13, 1995 (File
No. 1-13960).

3.2 Certificate of Amendment of Articles of
Incorporation.......................... Incorporated by reference to Exhibit No.
1 to the Registrant's Current Report on
Form 8-K dated December 22, 1995 (File
No. 1-13960).

3.3 Amended and Restated By-Laws............. Filed herewith.

4.1 Specimen common share certificate........ Incorporated by reference to Exhibit 4.1
to the Registrant's Amendment No. 1 to
Form 10/A dated November 13, 1995 (File
No. 1-13960).

4.2 Rights Agreement dated as of November 1,
1995 between the Registrant and The
Bank of New York....................... Incorporated by reference to Exhibit 4.4
to the Registrant's Amendment No. 1 to
Form 10/A dated November 13, 1995 (File
No. 1-13960).

4.3 Form of Certificate of Voting Powers,
Preferences and Relative Participating,
Optional and Other Special Rights and
Qualifications, Limitations or
Restrictions of Series A Participating
Cumulative Preferred Stock............. Incorporated by reference to Exhibit 4.4
(attached as Exhibit A thereto) to the
Registrant's Amendment No. 1 to Form
10/A dated November 13, 1995 (File No.
1-13960).

4.4 Form of Right Certificate................ Incorporated by reference to Exhibit 4.4
(attached as Exhibit B thereto) to the
Registrant's Amendment No. 1 to Form
10/A dated November 13, 1995 (File No.
1-13960).

4.5 Other instruments defining rights of
security holders, including
indentures............................. The Registrant hereby agrees to file with
the Commission a copy of any instrument
defining the rights of long-term debt
holders of the Registrant and its
consolidated subsidiaries upon the
request of the Commission.

10.1 Distribution Agreement among ITT
Industries, Inc., the Registrant and
ITT Hartford Group,Inc................. Incorporated by reference to Exhibit 10.1
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).

10.2 Intellectual Property License Agreement
between and among ITT Industries, Inc.,
the Registrant and ITT Hartford Group,
Inc.................................... Incorporated by reference to Exhibit 10.2
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).

10.3 Trademark Assignment Agreement between
ITT Industries, Inc. and the
Registrant............................. Incorporated by reference to Exhibit 10.3
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).
</TABLE>

II-2
<PAGE> 16

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
<C> <S> <C>
10.4 License Assignment Agreement between ITT
Industries, Inc. and the Registrant.... Incorporated by reference to Exhibit 10.4
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).

10.5 License Assignment Agreement among the
Registrant, ITT Hartford Group, Inc.
and Nutmeg Insurance Company........... Incorporated by reference to Exhibit 10.5
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).

10.6 License Assignment Agreement among the
Registrant, Nutmeg Insurance Company
and Hartford Fire Insurance Company.... Incorporated by reference to Exhibit 10.6
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).

10.7 Tax Allocation Agreement among ITT
Industries, Inc., the Registrant and
ITT Hartford Group, Inc................ Incorporated by reference to Exhibit 10.7
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).
10.8 Employee Benefit Services and Liability
Agreement among ITT Industries, Inc.,
the Registrant and ITT Hartford Group,
Inc.................................... Incorporated by reference to Exhibit 10.8
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).
10.9 Form of ITT Corporation 1996 Restricted
Stock Plan for Non-Employee
Directors.............................. Incorporated by reference to Exhibit 10.9
to the Registrant's Annual Report on Form
10-K for the year ended December 31,
1995 (File No. 1-13960).
10.10 Form of indemnification agreement with
members of the Board of Directors...... Incorporated by reference to Exhibit
10.10 to the Registrant's Form 10 dated
September 18, 1995 (File No. 1-13960).
10.11 Form of 1995 ITT Corporation Incentive
Stock Plan............................. Incorporated by reference to Exhibit
10.11 to the Registrant's Form 10 dated
September 18, 1995 (File No. 1-13960).
10.12 Form of ITT Corporation Senior Executive
Severance Pay Plan..................... Incorporated by reference to Exhibit
10.12 to the Registrant's Form 10 dated
September 18, 1995 (File No. 1-13960).
10.13 Form of R.V. Araskog employment
agreement.............................. Incorporated by reference to Exhibit
10.13 to the Registrant's Form 10 dated
September 18, 1995 (File No. 1-13960).
10.14 364-Day Competitive Advance and Revolving
Credit Facility Agreement dated as of
November 10, 1995 among the Registrant,
the lenders parties thereto and
Chemical Bank, as administrative
agent.................................. Incorporated by reference to Exhibit
10.14 to the Registrant's Annual Report
on Form 10-K for the year ended
December 31, 1995 (File No. 1-13960).
</TABLE>

II-3
<PAGE> 17

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
<C> <S> <C>
10.15 Five-Year Competitive Advance and
Revolving Credit Facility Agreement
dated as of November 10, 1995 among the
Registrant, the lenders parties thereto
and Chemical Bank, as issuing bank and
administrative agent................... Incorporated by reference to Exhibit
10.15 to the Registrant's Annual Report
on Form 10-K for the year ended
December 31, 1995 (File No. 1-13960).

11 Statement re computation of per share
earnings............................... None.

12 Statement re computation of ratios....... 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.
</TABLE>

II-4

<PAGE> 1

Exhibit 3.3
------------------------------------------------------------

(As amended through July 23, 1996)

AMENDED AND RESTATED

BY-LAWS

ITT CORPORATION

------------------------------------------------------------

<PAGE> 2
Table of Contents

<TABLE>
<CAPTION>
Section Page
------- ----

<S> <C>
1. STOCKHOLDERS................................................................... 1
1.1 Place of Stockholders' Meetings............................................ 1
1.2 Day and Time of Annual Meetings of
Stockholders............................................................... 1
1.3 Purposes of Annual Meetings................................................ 1
1.4 Special Meetings of Stockholders........................................... 2
1.5 Notice of Meetings of Stockholders......................................... 2
1.6 Quorum of Stockholders..................................................... 3
1.7 Chairman and Secretary of Meeting.......................................... 3
1.8 Voting by Stockholders..................................................... 4
1.9 Proxies.................................................................... 4
1.10 Inspectors................................................................. 4
1.11 List of Stockholders....................................................... 5
1.12 Confidential Voting........................................................ 5
1.13 Action by Written Consent.................................................. 6
2. DIRECTORS...................................................................... 6
2.1 Powers of Directors........................................................ 6
2.2 Number, Method of Election, Terms of
Office of Directors........................................................ 6
2.3 Vacancies on Board......................................................... 7
2.4 Meetings of the Board...................................................... 8
2.5 Quorum and Action.......................................................... 8
2.6 Presiding Officer and Secretary of Meeting................................. 9
2.7 Action by Consent without Meeting.......................................... 9
2.8 Standing Committees........................................................ 9
2.9 Other Committees........................................................... 11
2.10 Compensation of Directors.................................................. 11
</TABLE>

<PAGE> 3

<TABLE>
<CAPTION>
Section Page
------- ----

<S> <C>
2.11 Independent Directors.................................................... 11
3. OFFICERS..................................................................... 12
3.1 Officers, Titles, Elections, Terms....................................... 12
3.2 General Powers of Officers............................................... 13
3.3 Powers and Duties of Chairman............................................ 13
3.4 Powers and Duties of the President....................................... 14
3.5 Powers and Duties of Executive Vice Presidents,
Senior Vice Presidents and Vice Presidents............................... 14
3.6 Powers and Duties of the Chief Financial Officer......................... 14
3.7 Powers and Duties of the Controller and
Assistant Controllers.................................................... 14
3.8 Powers and Duties of the Treasurer and
Assistant Treasurers..................................................... 15
3.9 Powers and Duties of the Secretary and
Assistant Secretaries.................................................... 15
4. INDEMNIFICATION.............................................................. 16
4.1 Right to Indemnification and Effect of
Amendments............................................................... 16
4.2 Insurance, Contracts and Funding......................................... 17
4.3 Indemnification; Not Exclusive Right..................................... 17
4.4 Advancement of Expenses; Procedures;
Presumptions and Effect of Certain
Proceedings; Remedies.................................................... 17
4.5 Indemnification of Employees and Agents.................................. 22
4.6 Severability............................................................. 22
5. CAPITAL STOCK................................................................ 23
5.1 Stock Certificates....................................................... 23
5.2 Record Ownership......................................................... 23
5.3 Transfer of Record Ownership............................................. 24
5.4 Lost, Stolen, or Destroyed Certificates.................................. 24
</TABLE>

<PAGE> 4

<TABLE>
<CAPTION>
Section Page
------- ----

<S> <C>
5.5 Transfer Agent; Registrar; Rules
Respecting Certificates.................................................. 24
5.6 Fixing Record Date for Determination of
Stockholders of Record................................................... 24
6. SECURITIES HELD BY THE CORPORATION........................................... 25
6.1 Voting................................................................... 25
6.2 General Authorization to Transfer
Securities Held by the Corporation....................................... 25
7. DEPOSITARIES AND SIGNATORIES................................................. 26
7.1 Depositaries............................................................. 26
7.2 Signatories.............................................................. 26
8. SEAL ........................................................................ 27
9. FISCAL YEAR.................................................................. 27
10. WAIVER OF DISPENSING WITH NOTICE............................................. 27
11. POLITICAL CONTRIBUTIONS BY
THE CORPORATION.............................................................. 28
12. TRANSFER OF SHARES TO ALIENS................................................. 28
13. AMENDMENT OF BY-LAWS......................................................... 29
14. OFFICES AND AGENT............................................................ 29
</TABLE>

<PAGE> 5
AMENDED AND RESTATED BY-LAWS

ITT CORPORATION

(A NEVADA CORPORATION WHICH WAS ORIGINALLY INCORPORATED
AS ITT DESTINATIONS, INC., THE "CORPORATION")

(AS AMENDED THROUGH JULY 23, 1996)

1. STOCKHOLDERS.

1.1 Place of Stockholders' Meetings. All meetings of the stockholders
of the Corporation shall be held at such place or places, within or outside the
state of Nevada, as may be fixed by the Corporation's Board of Directors (the
"Board", and each member thereof a "Director") from time to time or as shall be
specified in the respective notices thereof.

1.2 Day and Time of Annual Meetings of Stockholders. An annual meeting
of stockholders shall be held at such place (within or outside the state of
Nevada), date and hour as shall be determined by the Board and designated in the
notice thereof. Failure to hold an annual meeting of stockholders at such
designated time shall not affect otherwise valid corporate acts or work a
forfeiture or dissolution of the Corporation.

1.3 Purposes of Annual Meetings. (a) At each annual meeting, the
stockholders shall elect the members of the Board for the succeeding year. At
any such annual meeting any business properly brought before the meeting may be
transacted.

(b) To be properly brought before an annual meeting, business must be
(i) specified in the notice of the meeting (or any supplement thereto) given by
or at the direction of the Board, (ii) otherwise properly brought before the
meeting by or at the direction of the Board or (iii) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given written
notice thereof, either by personal delivery or by United States mail, postage
prepaid, to the
<PAGE> 6
2

Secretary, not later than 90 days in advance of the anniversary date of the
immediately preceding annual meeting meeting. Any such notice shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting and in the event that
such business includes a proposal to amend either the Articles of Incorporation
or By-laws of the Corporation, the language of the proposed amendment, (ii) the
name and address of the stockholder proposing such business, (iii) a
representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to propose such business, and (iv) any material interest
of the stockholder in such business. No business shall be conducted at an annual
meeting of stockholders except in accordance with this Section 1.3(b), and the
chairman of any annual meeting of stockholders may refuse to permit any business
to be brought before an annual meeting without compliance with the foregoing
procedures.

1.4 Special Meetings of Stockholders. Except as otherwise expressly
required by applicable law, special meetings of the stockholders or of any class
or series entitled to vote may be called for any purpose or purposes by the
Chairman or by a majority vote of the entire Board, to be held at such place
(within or outside the state of Nevada), date and hour as shall be determined by
the Board and designated in the notice thereof. Only such business as is
specified in the notice of any special meeting of the stockholders shall come
before such meeting.

1.5 Notice of Meetings of Stockholders. Except as otherwise expressly
required or permitted by applicable law, not less than ten days nor more than
sixty days before the date of every stockholders' meeting the Secretary shall
give to each stockholder of record entitled to vote at such meeting written
notice stating the place, day and time of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Except
as provided in Section 1.6(d) or as otherwise expressly required by applicable
law, notice of any adjourned meeting of stockholders need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken. Any notice, if mailed, shall be deemed to be given when deposited in the
United States mail, postage prepaid, addressed to the stockholder at the address
for notices to such stockholder as it appears on the records of the Corporation.

<PAGE> 7
3

1.6 Quorum of Stockholders. (a) Unless otherwise expressly required by
applicable law, at any meeting of the stockholders, the presence in person or by
proxy of stockholders entitled to cast a majority of votes thereat shall
constitute a quorum for the entire meeting, notwithstanding the withdrawal of
stockholders entitled to cast a sufficient number of votes in person or by proxy
to reduce the number of votes represented at the meeting below a quorum. Shares
of the Corporation's stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in an election of the
directors of such other corporation is held by the Corporation, shall neither be
counted for the purpose of determining the presence of a quorum nor entitled to
vote at any meeting of the stockholders.

(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of those present in person or by proxy may adjourn the
meeting from time to time without notice other than announcement at the meeting.
In the absence of a quorum, the officer presiding thereat shall have power to
adjourn the meeting from time to time until a quorum shall be present. Notice of
any adjourned meeting other than announcement at the meeting shall not be
required to be given, except as provided in Section 1.6(d) below and except
where expressly required by applicable law.

(c) At any adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called, but only those stockholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the Board.

(d) If an adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in the manner specified in Section 1.5 to
each stockholder of record entitled to vote at the meeting.

1.7 Chairman and Secretary of Meeting. The Chairman or, in his or her
absence, another officer of the Corporation designated by the Chairman, shall
preside at meetings of the stockholders. The Secretary shall act as secretary of
the meeting, or in the absence of the Secretary, an Assistant Secretary shall so
act, or if neither is present, then the presiding officer may appoint a person
to act as secretary of the meeting.
<PAGE> 8
4

1.8 Voting by Stockholders. (a) Except as otherwise expressly required
by applicable law, at every meeting of the stockholders each stockholder shall
be entitled to the number of votes specified in the Articles of Incorporation,
in person or by proxy, for each share of stock standing in his or her name on
the books of the Corporation on the date fixed pursuant to the provisions of
Section 5.6 of these By-laws as the record date for the determination of the
stockholders who shall be entitled to receive notice of and to vote at such
meeting.

(b) When a quorum is present at any meeting of the stockholders, all
questions shall be decided by the vote of a majority in voting power of the
stockholders present in person or by proxy and entitled to vote at such meeting,
unless a question is one upon which by express provision of law, the Articles of
Incorporation or these By-laws, a different vote is required, in which case such
express provision shall govern and control the decision of such question.

(c) Except as required by applicable law, the vote at any meeting of
stockholders on any question need not be by ballot, unless so directed by the
chairman of the meeting. On a vote by ballot, each ballot shall be signed by the
stockholder voting, or by his or her proxy, if there be such proxy, and shall
state the number of shares voted.

1.9 Proxies. Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by his or her attorney-in-fact. Every
proxy shall be in writing and shall be subscribed by the stockholder or his or
her duly authorized attorney-in-fact, but need not be sealed, witnessed or
acknowledged.

1.10 Inspectors. (a) The election of Directors and any other vote by
ballot at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the Chairman before or at the
meeting. If the Chairman shall not have so appointed such inspectors or if one
or both inspectors so appointed shall refuse to serve or shall not be present,
such appointment shall be made by the officer presiding at the meeting. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.

<PAGE> 9
5

(b) The inspectors shall (i) ascertain the number of shares of the
Corporation outstanding and the voting power of each, (ii) determine the shares
represented at any meeting of stockholders and the validity of the proxies and
ballots, (iii) count all proxies and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors, and (v) certify their determination of the
number of shares represented at the meeting, and their count of all proxies and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.

1.11 List of Stockholders. (a) At least ten days before every meeting
of stockholders, the Chief Financial Officer shall cause to be prepared and made
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder.

(b) During ordinary business hours for a period of at least ten days
prior to the meeting, such list shall be open to examination by any stockholder
for any purpose germane to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the Corporation's registered office.

(c) The list shall also be produced and kept at the time and place of
the meeting during the whole time of the meeting, and it may be inspected by any
stockholder who is present.

(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 1.11 or the books of the Corporation, or to vote in person or by proxy
at any meeting of stockholders.

1.12 Confidential Voting. (a) Proxies and ballots that identify the
votes of specific stockholders shall be kept in confidence by the tabulators and
the inspectors of election unless (i) there is an opposing solicitation with
respect to the election or removal of Directors, (ii) disclosure is required by
applicable law, (iii) a stockholder expressly requests or otherwise authorizes
disclosure, or (iv) the Corporation concludes in good faith that a bona fide
dispute exists as to the authenticity of one or more proxies, ballots or votes,
or as to the accuracy of any tabulation of such proxies, ballots or votes.
<PAGE> 10
6

(b) The tabulators and inspectors of election and any authorized agents
or other persons engaged in the receipt, count and tabulation of proxies and
ballots shall be advised of this By-law and instructed to comply herewith.

(c) The inspectors of election shall certify, to the best of their
knowledge based on due inquiry, that proxies and ballots have been kept in
confidence as required by this Section 1.12.

1.13 Action by Written Consent. Any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special stockholders' meeting and may not be effected by consent in
writing by such stockholders.

2. DIRECTORS.

2.1 Powers of Directors. The business and affairs of the Corporation
shall be managed by or under the direction of the Board, which may exercise all
the powers of the Corporation except such as are by applicable law, the Articles
of Incorporation or these By-laws required to be exercised or performed by the
stockholders.

2.2 Number, Method of Election, Terms of Office of Directors. The
number of Directors which shall constitute the whole Board shall be such as from
time to time shall be determined by resolution adopted by a majority of the
entire Board, but the number shall not be less than one nor more than
twenty-five, provided that the tenure of a Director shall not be affected by any
decrease in the number of Directors so made by the Board. Each Director shall
hold office until the next annual meeting of stockholders and until his or her
successor is elected and qualified or until his or her earlier death,
retirement, resignation or removal. Directors need not be stockholders of the
Corporation or citizens of the United States of America.

Nominations of persons for election as Directors may be made by the
Board or by any stockholder entitled to vote for the election of Directors. Any
stockholder entitled to vote for the election of Directors may nominate a person
or persons for election as Directors only if written notice of such
stockholder's intent to make such nomination is given in accordance with the
procedures for bringing business before the meeting set forth in Section 1.3(b)
of these By-laws, either by personal delivery or by United States mail, postage
prepaid, to the
<PAGE> 11
7

Secretary not later than (i) with respect to an election to be held at an annual
meeting of stockholders, 90 days in advance of the anniversary date of the
immediately preceding annual meeting and (ii) with respect to an election to be
held at a special meeting of stockholders for the election of Directors, the
close of business on the seventh day following the date on which notice of such
meeting is first given to stockholders. Each such notice shall set forth: (a)
the name and address of the stockholder who intends to make the nomination and
of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had each nominee been nominated,
or intended to be nominated, by the Board; and (e) the consent of each nominee
to serve as a Director if so elected. The chairman of any meeting of
stockholders to elect Directors and the Board may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.

At each meeting of the stockholders for the election of Directors at
which a quorum is present, the persons receiving the greatest number of votes,
up to the number of Directors to be elected, shall be the Directors.

2.3 Vacancies on Board. (a) Any Director may resign from office at any
time by delivering a written resignation to the Chairman or the Secretary. The
resignation will take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.

(b) Any vacancy and any newly created Directorship resulting from any
increase in the authorized number of Directors may be filled by vote of a
majority of the Directors then in office, though less than a quorum, and any
Director so chosen shall hold office until the next annual election of Directors
by the stockholders and until a successor is duly elected and qualified or until
his or her earlier death, retirement, resignation or removal. If there are no
Directors in
<PAGE> 12
8

office, then an election of Directors may be held in the manner provided by
applicable law.

2.4 Meetings of the Board. (a) The Board may hold its meetings, both
regular and special, either within or outside the state of Nevada, at such
places as from time to time may be determined by the Board or as may be
designated in the respective notices or waivers of notice thereof.

(b) Regular meetings of the Board shall be held at such times and at
such places as from time to time shall be determined by the Board.

(c) The first meeting of each newly elected Board shall be held as soon
as practicable after the annual meeting of the stockholders and shall be for the
election of officers and the transaction of such other business as may come
before it.

(d) Special meetings of the Board shall be held whenever called by
direction of the Chairman or at the request of Directors constituting one-third
of the number of Directors then in office.

(e) Members of the Board or any Committee of the Board may participate
in a meeting of the Board or Committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.

(f) The Secretary, or an Assistant Secretary designated by the
Secretary, shall give notice to each Director of any meeting of the Board by
mailing the same at least two days before the meeting or by telegraphing or
delivering the same not later than the day before the meeting. Such notice need
not include a statement of the business to be transacted at, or the purpose of,
any such meeting. Any and all business may be transacted at any meeting of the
Board. No notice of any adjourned meeting need be given. No notice to or waiver
by any Director shall be required with respect to any meeting at which the
Director is present.

2.5 Quorum and Action. Except as otherwise expressly required by
applicable law, the Articles of Incorporation or these By-laws, at any meeting
of the Board, the presence of at least one-third of the entire Board shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum
<PAGE> 13
9

at any meeting of the Board, a majority of those present may adjourn the meeting
from time to time. Unless otherwise provided by applicable law, the Articles of
Incorporation or these By-laws, the vote of a majority of the Directors present
(and not abstaining) at any meeting at which a quorum is present shall be
necessary for the approval and adoption of any resolution or the approval of any
act of the Board.

2.6 Presiding Officer and Secretary of Meeting. The Chairman or, in the
absence of the Chairman, a member of the Board selected by the members present,
shall preside at meetings of the Board. The Secretary, or an Assistant Secretary
designated by the Secretary, shall act as secretary of the meeting, but in the
absence of the Secretary, or an Assistant Secretary designated by the Secretary,
the presiding officer may appoint a secretary of the meeting.

2.7 Action by Consent without Meeting. Any action required or permitted
to be taken at any meeting of the Board or of any Committee thereof may be taken
without a meeting if all members of the Board or Committee, as the case may be,
consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board or the Committee.

2.8 Standing Committees. By resolution adopted by a majority of the
entire Board, the Board shall elect, from among its members, individuals to
serve on the Standing Committees established by this Section 2.8. Each Standing
Committee shall be comprised of such number of Directors, not less than three,
as shall be elected to such Committee, provided that no officer or employee of
the Corporation shall be eligible to serve on the Audit, Compensation and
Personnel or Nominating Committees and provided further that no officer or
employee of the Corporation, other than the Chairman, shall be eligible to serve
on the Executive and Policy Committee. Each Committee shall keep a record of all
its proceedings and report the same to the Executive and Policy Committee and/or
the Board. One-third of the members of a Committee, but not less than two, shall
constitute a quorum, and the act of a majority of the members of a Committee
present at any meeting at which a quorum is present shall be the act of the
Committee. Each Standing Committee shall meet at the call of its chairman or any
two of its members. The chairmen of the various Committees shall preside, when
present, at all meetings of such Committees, and shall have such powers and
perform such duties as the Board may from time to time prescribe. The Standing
Committees of the Board, and functions of each, are as follows:
<PAGE> 14
10

(a) Executive and Policy Committee. The Executive and Policy Committee
shall, during the intervals between the meetings of the Board, possess and
exercise all of the powers of the Board in the management of the business and
affairs of the Corporation, except as otherwise provided by applicable law, the
Articles of Incorporation or these By-laws.

(b) Compensation and Personnel Committee. The Compensation and
Personnel Committee shall exercise the power of oversight of the compensation
and benefits of the employees of the Corporation, and shall be charged with
evaluating management performance, and establishing executive compensation. This
Committee shall have access to its own independent outside compensation counsel
and shall consist of a majority of independent directors. For purposes of this
Section 2.8(b), "independent director" shall mean a Director who: (i) has not
been employed by the Corporation in an executive capacity within the past five
years; (ii) is not, and is not affiliated with a company or firm that is, an
advisor or consultant to the Corporation; (iii) is not affiliated with a
significant customer or supplier of the Corporation; (iv) has no personal
services contract(s) with the Corporation; (v) is not affiliated with a
tax-exempt entity that receives significant contributions from the Corporation;
and (vi) is not a familial relative of any person described by Clauses (i)
through (v). This By-law shall not be amended or repealed except by a majority
of the voting power of the stockholders present in person or by proxy and
entitled to vote at any meeting at which a quorum is present.

(c) Audit Committee. The Audit Committee shall recommend the selection
of the independent auditors for the Corporation, confirm the scope of audits to
be performed by such auditors, review audit results and internal accounting and
control procedures and policies, review the fees paid to the Corporation's
independent auditors, and review and recommend the approval of the audited
financial statements of the Corporation and the annual reports to stockholders.
The Audit Committee shall also review expense accounts of senior executives.

(d) Capital Committee. The Capital Committee shall have the
responsibility for maximizing the effective utilization of the assets of the
Corporation and its subsidiaries and reviewing capital expenditures and
appropriations.

(e) Legal Affairs Committee. The Legal Affairs Committee shall review
and consider major claims and litigation and legal, regulatory, intellectual
property and related governmental policy matters affecting the Corporation and
its subsidiaries, and review management policies and programs relating to
compliance with legal and regulatory requirements and business ethics.
<PAGE> 15
11

(f) Nominating Committee. The Nominating Committee shall make
recommendations as to the organization, size and composition of the Board and
Committees thereof, select candidates for election to the Board and the
Committees thereof, and consider the qualifications, compensation and retirement
of Directors.

(g) Public Affairs Committee. The Public Affairs Committee shall review
and define the Corporation's social responsibilities, including issues of
significance to the Corporation, its stockholders and its employees.

(h) Gaming Audit Committee. The Gaming Audit Committee shall review
audit results and internal accounting, control and surveillance procedures and
policies employed in connection with the Corporation's casino gaming activities.

2.9 Other Committees. By resolution passed by a majority of the entire
Board, the Board may also appoint from among its members such other Committees,
Standing or otherwise, as it may from time to time deem desirable and may
delegate to such Committees such powers of the Board as it may consider
appropriate, consistent with applicable law, the Articles of Incorporation and
these By-laws.

2.10 Compensation of Directors. Unless otherwise restricted by the
Articles of Incorporation or these By-laws, Directors shall receive for their
services on the Board or any Committee thereof such compensation and benefits,
including the granting of options, together with expenses, if any, as the Board
may from time to time determine. The Directors may be paid a fixed sum for
attendance at each meeting of the Board or Committee thereof and/or a stated
annual sum as a Director, together with expenses, if any, of attendance at each
meeting of the Board or Committee thereof. Nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.

2.11 Independent Directors. (a) Independence of Nominees for Election
as Directors at the Annual Meeting. The persons nominated by the Board for
election as Directors at any annual meeting of the stockholders of the
Corporation shall include a sufficient number of persons who have been, on the
date of their nomination, determined by the Board to be eligible to be
classified as independent directors such that if all such nominees are elected,
the majority of all Directors holding office would be independent directors.
<PAGE> 16
12

(b) Directors Elected to Fill Vacancies on the Board. If the Board
elects Directors between annual meetings of stockholders to fill vacancies or
newly created Directorships, the majority of all Directors holding office
immediately after such elections shall be independent directors.

(c) Definition of Independent Director. For purposes of this Section
2.11, "independent director" shall mean a Director who: (i) has not been
employed by the Corporation in an executive capacity within the past five years;
(ii) is not, and is not affiliated with a company or a firm that is, an adviser
or consultant to the Corporation; (iii) is not affiliated with a significant
customer or supplier of the Corporation; (iv) has no personal services
contract(s) with the Corporation; (v) is not affiliated with a tax-exempt entity
that receives significant contributions from the Corporation; (vi) is not a
familial relative of any person described by clauses (i) through (v); and (vii)
is free of any other relationship which would interfere with the exercise of
independent judgment by such Director.

3. OFFICERS.

3.1 Officers, Titles, Elections, Terms. (a) The Board may from time to
time elect a Chairman, a President, one or more Executive Vice Presidents, one
or more Senior Vice Presidents, one or more Vice Presidents, a Chief Financial
Officer, a Controller, a Treasurer, a Secretary, a General Counsel, one or more
Assistant Controllers, one or more Assistant Treasurers, one or more Assistant
Secretaries, and one or more Associate or Assistant General Counsels, to serve
at the pleasure of the Board or otherwise as shall be specified by the Board at
the time of such election and until their successors are elected and qualified
or until their earlier death, retirement, resignation or removal.

(b) The Board may elect or appoint at any time such other officers or
agents with such duties as it may deem necessary or desirable. Such other
officers or agents shall serve at the pleasure of the Board or otherwise as
shall be specified by the Board at the time of such election or appointment and,
in the case of such other officers, until their successors are elected and
qualified or until their earlier death, retirement, resignation or removal. Each
such officer or agent shall have such authority and shall perform such duties as
may be provided herein or as the Board may prescribe. The Board may from time to
time authorize any officer or agent to appoint and remove any other such officer
or agent and to prescribe such person's authority and duties.
<PAGE> 17
13

(c) No person may be elected or appointed an officer who is not a
citizen of the United States of America if such election or appointment is
prohibited by applicable law or regulation.

(d) Any vacancy in any office may be filled for the unexpired portion
of the term by the Board. Each officer elected or appointed during the year
shall hold office until the next annual meeting of the Board at which officers
are regularly elected or appointed and until his or her successor is elected or
appointed and qualified or until his or her earlier death, retirement,
resignation or removal.

(e) Any officer or agent elected or appointed by the Board may be
removed at any time by the affirmative vote of a majority of the entire Board.

(f) Any officer may resign from office at any time. Such resignation
shall be made in writing and given to the President or the Secretary. Any such
resignation shall take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.

3.2 General Powers of Officers. Except as may be otherwise provided by
applicable law or in Article 6 or Article 7 of these By-laws, the Chairman, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the General Counsel, the Controller, the
Treasurer and the Secretary, or any of them, may (i) execute and deliver in the
name of the Corporation, in the name of any Division of the Corporation or in
both names any agreement, contract, instrument, power of attorney or other
document pertaining to the business or affairs of the Corporation or any
Division of the Corporation, including without limitation agreements or
contracts with any government or governmental department, agency or
instrumentality, and (ii) delegate to any employee or agent the power to execute
and deliver any such agreement, contract, instrument, power of attorney or other
document.

3.3 Powers and Duties of the Chairman. The Chairman shall be the Chief
Executive of the Corporation and shall report directly to the Board. Except in
such instances as the Board may confer powers in particular transactions upon
any other officer, and subject to the control and direction of the Board, the
Chairman shall manage and direct the business and affairs of the Corporation and
shall communicate to the Board and any Committee thereof reports, proposals and
recommendations for their respective consideration or action. He
<PAGE> 18
14

or she may do and perform all acts on behalf of the Corporation and shall
preside at meetings of the Board and the stockholders.

3.4 Powers and Duties of the President. The President shall have such
powers and perform such duties as the Board or the Chairman may from time to
time prescribe or as may be prescribed in these By-laws.

3.5 Powers and Duties of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents. Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents shall have such powers and perform such duties as
the Board or the Chairman may from time to time prescribe or as may be
prescribed in these By-laws.

3.6 Powers and Duties of the Chief Financial Officer. The Chief
Financial Officer shall have such powers and perform such duties as the Board or
the Chairman may from time to time prescribe or as may be prescribed in these
By-laws. The Chief Financial Officer shall cause to be prepared and maintained
(i) a stock ledger containing the names and addresses of all stockholders and
the number of shares held by each and (ii) the list of stockholders for each
meeting of the stockholders as required by Section 1.11 of these By-laws. The
Chief Financial Officer shall be responsible for the custody of all stock books
and of all unissued stock certificates.

3.7 Powers and Duties of the Controller and Assistant Controllers. (a)
The Controller shall be responsible for the maintenance of adequate accounting
records of all assets, liabilities, capital and transactions of the Corporation.
The Controller shall prepare and render such balance sheets, income statements,
budgets and other financial statements and reports as the Board or the Chairman
may require, and shall perform such other duties as may be prescribed or
assigned pursuant to these By-laws and all other acts incident to the position
of Controller.

(b) Each Assistant Controller shall perform such duties as from time to
time may be assigned by the Controller or by the Board. In the event of the
absence, incapacity or inability to act of the Controller, then any Assistant
Controller may perform any of the duties and may exercise any of the powers of
the Controller.

<PAGE> 19
15

3.8 Powers and Duties of the Treasurer and Assistant Treasurers. (a)
The Treasurer shall have the care and custody of all the funds and securities of
the Corporation, except as may be otherwise ordered by the Board, and shall
cause such funds (i) to be invested or reinvested from time to time for the
benefit of the Corporation as may be designated by the Board, the Chairman, the
President the Chief Financial Officer or the Treasurer or (ii) to be deposited
to the credit of the Corporation in such banks or depositories as may be
designated by the Board, the Chairman, the President the Chief Financial Officer
or the Treasurer, and shall cause such securities to be placed in safekeeping in
such manner as may be designated by the Board, the Chairman, the President the
Chief Financial Officer or the Treasurer.

(b) The Treasurer, any Assistant Treasurer or such other person or
persons as may be designated for such purpose by the Board, the Chairman, the
President, the Chief Financial Officer or the Treasurer may endorse in the name
and on behalf of the Corporation all instruments for the payment of money, bills
of lading, warehouse receipts, insurance policies and other commercial documents
requiring such endorsement.

(c) The Treasurer, any Assistant Treasurer or such other person or
persons as may be designated for such purpose by the Board, the Chairman, the
President, the Chief Financial Officer or the Treasurer (i) may sign all
receipts and vouchers for payments made to the Corporation; (ii) shall render a
statement of the cash account of the Corporation to the Board as often as it
shall require the same; and (iii) shall enter regularly in books to be kept for
that purpose full and accurate account of all moneys received and paid on
account of the Corporation and of all securities received and delivered by the
Corporation.

(d) The Treasurer shall perform such other duties as may be prescribed
or assigned pursuant to these By-laws and all other acts incident to the
position of Treasurer. Each Assistant Treasurer shall perform such duties as may
from time to time be assigned by the Treasurer or by the Board. In the event of
the absence, incapacity or inability to act of the Treasurer, then any Assistant
Treasurer may perform any of the duties and may exercise any of the powers of
the Treasurer.

3.9 Powers and Duties of the Secretary and Assistant Secretaries. (a)
The Secretary, or an Assistant Secretary designated by the Secretary, shall keep
the minutes of all proceedings of the stockholders, the Board and the Committees
of the Board. The Secretary, or an Assistant Secretary designated
<PAGE> 20
16

by the Secretary, shall attend to the giving and serving of all notices of the
Corporation, in accordance with the provisions of these By-laws and as required
by applicable law. The Secretary, or an Assistant Secretary designated by the
Secretary, shall be the custodian of the seal of the Corporation. The Secretary
shall affix or cause to be affixed the seal of the Corporation to such
contracts, instruments and other documents requiring the seal of the
Corporation, and when so affixed may attest the same and shall perform such
other duties as may be prescribed or assigned pursuant to these By-laws and all
other acts incident to the position of Secretary.

(b) Each Assistant Secretary shall perform such duties as may from time
to time be assigned by the Secretary or by the Board. In the event of the
absence, incapacity or inability to act of the Secretary, then any Assistant
Secretary may perform any of the duties and may exercise any of the powers of
the Secretary.

4. INDEMNIFICATION.

4.1(a) Right to Indemnification. The Corporation, to the fullest extent
permitted by applicable law as then in effect, shall indemnify any person who is
or was a Director or officer of the Corporation and who is or was involved in
any manner (including, without limitation, as a party or a witness) or is
threatened to be made so involved in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation, any action, suit
or proceeding by or in the right of the Corporation to procure a judgment in its
favor) (a "Proceeding") by reason of the fact that such person is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan) (a
"Covered Entity"), against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such Proceeding; provided, however, that the foregoing
shall not apply to a Director or officer of the Corporation with respect to a
Proceeding that was commenced by such Director or officer prior to a Change in
Control (as defined in Section 4.4(e)(i) of this Article 4). Any Director or
officer of the Corporation entitled to indemnification as provided in this
Section 4.1(a) is hereinafter called an "Indemnitee". Any right of an Indemnitee
to indemnification shall be a contract right and shall include the right to
receive, prior to the conclusion of any
<PAGE> 21
17

Proceeding, payment of any expenses incurred by the Indemnitee in connection
with such Proceeding, consistent with the provisions of applicable law as then
in effect and the other provisions of this Article 4.

(b) Effect of Amendments. Neither the amendment or repeal of, nor the
adoption of a provision inconsistent with, any provision of this Article 4
(including, without limitation, this Section 4.1(b)) shall adversely affect the
rights of any Director or officer under this Article 4: (i) with respect to any
Proceeding commenced or threatened prior to such amendment, repeal or adoption
of an inconsistent provision or (ii) after the occurrence of a Change in
Control, with respect to any Proceeding arising out of any action or omission
occurring prior to such amendment, repeal or adoption of an inconsistent
provision, in either case without the written consent of such Director or
officer.

4.2 Insurance, Contracts and Funding. The Corporation may purchase and
maintain insurance to protect itself and any indemnified person against any
expenses, judgments, fines and amounts paid in settlement as specified in
Section 4.1(a) or Section 4.5 of this Article 4 or incurred by any indemnified
person in connection with any Proceeding referred to in such Sections, to the
fullest extent permitted by applicable law as then in effect. The Corporation
may enter into contracts with any Director, officer, employee or agent of the
Corporation or any director, officer, employee, fiduciary or agent of any
Covered Entity in furtherance of the provisions of this Article 4 and may create
a trust fund or use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article 4.

4.3 Indemnification; Not Exclusive Right. The right of indemnification
provided in this Article 4 shall not be exclusive of any other rights to which
any indemnified person may otherwise be entitled, and the provisions of this
Article 4 shall inure to the benefit of the heirs and legal representatives of
any indemnified person under this Article 4 and shall be applicable to
Proceedings commenced or continuing after the adoption of this Article 4,
whether arising from acts or omissions occurring before or after such adoption.

4.4 Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies. In furtherance, but not in limitation, of the
foregoing provisions, the following procedures, presumptions and remedies shall
apply with respect to the advancement of expenses and the right to
indemnification under this Article 4:
<PAGE> 22
18

(a) Advancement of Expenses. All reasonable expenses incurred by or on
behalf of an Indemnitee in connection with any Proceeding shall be advanced to
the Indemnitee by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Any such statement or statements shall
reasonably evidence the expenses incurred by the Indemnitee and shall include
any written affirmation or undertaking required by applicable law in effect at
the time of such advance.

(b) Procedures for Determination of Entitlement to Indemnification. (i)
To obtain indemnification under this Article 4, an Indemnitee shall submit to
the Secretary of the Corporation a written request, including such documentation
and information as is reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
indemnification (the "Supporting Documentation"). The determination of the
Indemnitee's entitlement to indemnification shall be made not later than 60 days
after receipt by the Corporation of the written request for indemnification
together with the Supporting Documentation. The Secretary of the Corporation
shall, promptly upon receipt of such a request for indemnification, advise the
Board in writing that the Indemnitee has requested indemnification.

(ii) The Indemnitee's entitlement to indemnification under this Article
4 shall be determined in one of the following ways: (A) by a majority vote of
the Disinterested Directors (as hereinafter defined), if they constitute a
quorum of the Board; (B) by a written opinion of Independent Counsel (as
hereinafter defined) if (x) a Change in Control (as hereinafter defined) shall
have occurred and the Indemnitee so requests or (y) a quorum of the Board
consisting of Disinterested Directors is not obtainable or, even if obtainable,
a majority of such Disinterested Directors so directs; (C) by the stockholders
of the Corporation (but only if a majority of the Disinterested Directors, if
they constitute a quorum of the Board, presents the issue of entitlement to
indemnification to the stockholders for their determination); or (D) as provided
in Section 4.4(c) of this Article 4.
<PAGE> 23
19

(iii) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 4.4(b)(ii), a majority
of the Disinterested Directors shall select the Independent Counsel, but only an
Independent Counsel to which the Indemnitee does not reasonably object;
provided, however, that if a Change in Control shall have occurred, the
Indemnitee shall select such Independent Counsel, but only an Independent
Counsel to which a majority of the Disinterested Directors does not reasonably
object.

(c) Presumptions and Effect of Certain Proceedings. Except as otherwise
expressly provided in this Article 4, if a Change in Control shall have
occurred, the Indemnitee shall be presumed to be entitled to indemnification
under this Article 4 (with respect to actions or failures to act occurring prior
to such Change in Control) upon submission of a request for indemnification
together with the Supporting Documentation in accordance with Section 4.4(b) of
this Article 4, and thereafter the Corporation shall have the burden of proof to
overcome that presumption in reaching a contrary determination. In any event, if
the person or persons empowered under Section 4.4(b) of this Article 4 to
determine entitlement to indemnification shall not have been appointed or shall
not have made a determination within 60 days after receipt by the Corporation of
the request therefor together with the Supporting Documentation, the Indemnitee
shall be deemed to be, and shall be, entitled to indemnification unless (A) the
Indemnitee misrepresented or failed to disclose a material fact in making the
request for indemnification or in the Supporting Documentation or (B) such
indemnification is prohibited by law. The termination of any Proceeding
described in Section 4.1 of this Article 4, or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, adversely affect the right
of the Indemnitee to indemnification or create a presumption that the Indemnitee
did not act in good faith and in a manner which the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation or,
with respect to any criminal Proceeding, that the Indemnitee had reasonable
cause to believe that his or her conduct was unlawful.

(d) Remedies of Indemnitee. (i) In the event that a determination is
made pursuant to Section 4.4(b) of this Article 4 that the Indemnitee is not
entitled to indemnification under this Article 4, (A) the Indemnitee shall be
entitled to seek an adjudication of his or her entitlement to such
indemnification either, at the Indemnitee's sole option, in (x) an appropriate
court of the State of Nevada or any other court of competent jurisdiction or (y)
an arbitration to be conducted by
<PAGE> 24
20

a single arbitrator pursuant to the rules of the American Arbitration
Association; (B) any such judicial proceeding or arbitration shall be de novo
and the Indemnitee shall not be prejudiced by reason of such adverse
determination; and (C) if a Change in Control shall have occurred, in any such
judicial proceeding or arbitration the Corporation shall have the burden of
proving that the Indemnitee is not entitled to indemnification under this
Article 4 (with respect to actions or failures to act occurring prior to such
Change in Control).

(ii) If a determination shall have been made or deemed to have been
made, pursuant to Section 4.4(b) or (c) of this Article 4, that the Indemnitee
is entitled to indemnification, the Corporation shall be obligated to pay the
amounts constituting such indemnification within five days after such
determination has been made or deemed to have been made and shall be
conclusively bound by such determination unless (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (B) such indemnification
is prohibited by law. In the event that (x) advancement of expenses is not
timely made pursuant to Section 4.4(a) of this Article 4 or (y) payment of
indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Section 4.4(b) or (c) of this Article 4, the Indemnitee shall be
entitled to seek judicial enforcement of the Corporation's obligation to pay to
the Indemnitee such advancement of expenses or indemnification. Notwithstanding
the foregoing, the Corporation may bring an action, in an appropriate court in
the State of Nevada or any other court of competent jurisdiction, contesting the
right of the Indemnitee to receive indemnification hereunder due to the
occurrence of an event described in Subclause (A) or (B) of this Clause (ii) (a
"Disqualifying Event"); provided, however, that in any such action the
Corporation shall have the burden of proving the occurrence of such
Disqualifying Event.

(iii) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4.4(d) that the
procedures and presumptions of this Article 4 are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Corporation is bound by all the provisions of this Article 4.

(iv) In the event that the Indemnitee, pursuant to this Section 4.4(d),
seeks a judicial adjudication of or an award in arbitration to enforce his or
her rights under, or to recover damages for breach of, this Article 4, the
Indemnitee shall be entitled to recover from the Corporation, and shall be
indemnified by the
<PAGE> 25
21

Corporation against, any expenses actually and reasonably incurred by the
Indemnitee if the Indemnitee prevails in such judicial adjudication or
arbitration. If it shall be determined in such judicial adjudication or
arbitration that the Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred by the
Indemnitee in connection with such judicial adjudication or arbitration shall be
prorated accordingly.

(e) Definitions. For purposes of this Article 4:

(i) "Change in Control" means a change in control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A (or any amendment or
successor provision thereto) promulgated under the Securities Exchange Act of
1934 (the "Act"), whether or not the Corporation is then subject to such
reporting requirement; provided that, without limitation, such a change in
control shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the voting power of
all outstanding shares of stock of the Corporation entitled to vote generally in
an election of Directors without the prior approval of at least two-thirds of
the members of the Board in office immediately prior to such acquisition; (B)
the Corporation is a party to any merger or consolidation in which the
Corporation is not the continuing or surviving corporation or pursuant to which
shares of the Corporation's common stock would be converted into cash,
securities or other property, other than a merger of the Corporation in which
the holders of the Corporation's common stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; (C) there is a sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, the assets of the Corporation, or liquidation or
dissolution of the Corporation; (D) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board thereafter; or
(E) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board (including for this purpose any new
Director whose election or nomination for election by the stockholders was
approved by a vote of at least two-thirds of the Directors then still in office
who were Directors at the beginning
<PAGE> 26
22

of such period) cease for any reason to constitute at least a majority of the
Board.

(ii) "Disinterested Director" means a Director who is not or was not a
party to the proceeding in respect of which indemnification is sought by the
Indemnitee.

(iii) "Independent Counsel" means a law firm or a member of a law firm
that neither presently is, nor in the past five years has been, retained to
represent: (a) the Corporation or the Indemnitee in any matter material to
either such party or (b) any other party to the Proceeding giving rise to a
claim for indemnification under this Article 4. Notwithstanding the foregoing,
the term "Independent Counsel" shall not include any person who, under
applicable standards of professional conduct, would have a conflict of interest
in representing either the Corporation or the Indemnitee in an action to
determine the Indemnitee's rights under this Article 4.

4.5 Indemnification of Employees and Agents. Notwithstanding any other
provision of this Article 4, the Corporation, to the fullest extent permitted by
applicable law as then in effect, may indemnify any person other than a Director
or officer of the Corporation who is or was an employee or agent of the
Corporation and who is or was involved in any manner (including, without
limitation, as a party or a witness) or is threatened to be made so involved in
any threatened, pending or completed Proceeding by reasons of the fact that such
person is or was an employee or agent of the Corporation or, at the request of
the Corporation, a director, officer, employee, fiduciary or agent of a Covered
Entity against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such Proceeding. The Corporation may also advance expenses
incurred by such employee, fiduciary or agent in connection with any such
Proceeding, consistent with the provisions of applicable law as then in effect.

4.6 Severability. If any of this Article 4 shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (i) the validity, legality
and enforceability of the remaining provisions of this Article 4 (including,
without limitation, all portions of any Section of this Article 4 containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby; and (ii) to the fullest extent possible, the provisions of
this Article 4 (including, without limitation, all portions of any Section of
this Article 4
<PAGE> 27
23

containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.

5. CAPITAL STOCK

5.1 Stock Certificates. (a) Every holder of stock in the Corporation
shall be entitled to have a certificate certifying the number of shares owned by
him or her in the Corporation and designating the class and series of stock to
which such shares belong, which certificate shall otherwise be in such form as
the Board shall prescribe and as provided in Section 5.1(d). Each such
certificate shall be signed by, or in the name of, the Corporation by the
Chairman or the President or any Vice President, and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary.

(b) If such certificate is countersigned by a transfer agent other than
the Corporation or its employee, or by a registrar other than the Corporation or
its employee, the signatures of the officers of the Corporation may be
facsimiles, and, if permitted by applicable law, any other signature on the
certificate may be a facsimile.

(c) In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer at the date of issue.

(d) Certificates of stock shall be issued in such form not inconsistent
with the Articles of Incorporation. They shall be numbered and registered in the
order in which they are issued. No certificate shall be issued until fully paid.

(e) All certificates surrendered to the Corporation shall be cancelled
(other than treasury shares) with the date of cancellation and shall be retained
by the Chief Financial Officer, together with the powers of attorney to transfer
and the assignments of the shares represented by such certificates, for such
period of time as such officer shall designate.

5.2 Record Ownership. A record of the name of the person, firm or
corporation and address of such holder of each certificate, the number of shares
represented thereby and the date of issue thereof shall be made on the
<PAGE> 28
24

Corporation's books. The Corporation shall be entitled to treat the holder of
record of any share of stock as the holder in fact thereof, and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
any share on the part of any person, whether or not it shall have express or
other notice thereof, except as required by applicable law.

5.3 Transfer of Record Ownership. Transfers of stock shall be made on
the books of the Corporation only by direction of the person named in the
certificate or such person's attorney, lawfully constituted in writing, and only
upon the surrender of the certificate therefor and a written assignment of the
shares evidenced thereby. Whenever any transfer of stock shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the Corporation for
transfer, both the transferor and transferee request the Corporation to do so.

5.4 Lost, Stolen or Destroyed Certificates. Certificates representing
shares of the stock of the Corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board from time to time may authorize in
accordance with applicable law.

5.5 Transfer Agent; Registrar; Rules Respecting Certificates. The
Corporation shall maintain one or more transfer offices or agencies where stock
of the Corporation shall be transferable. The Corporation shall also maintain
one or more registry offices where such stock shall be registered. The Board may
adopt such rules and regulations as it may deem proper concerning the issue,
transfer and registration of stock certificates in accordance with applicable
law.

5.6 Fixing Record Date for Determination of Stockholders of Record. (a)
The Board may fix, in advance, a date as the record date for the purpose of
determining the stockholders entitled to notice of, or to vote at, any meeting
of the stockholders or any adjournment thereof, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board, and which record date shall not be more than sixty days nor less than
ten days before the date of a meeting of the stockholders. If no record date is
fixed by the Board, the record date for determining the stockholders entitled to
notice of or to vote at a stockholders' meeting shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or
<PAGE> 29
25

to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.

(b) The Board may fix, in advance, a date as the record date for the
purpose of determining the stockholders entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or in order to make a determination of the stockholders for the purpose of any
other lawful action, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which record date
shall not be more than sixty calendar days prior to such action. If no record
date is fixed by the Board, the record date for determining the stockholders for
any such purpose shall be at the close of business on the day on which the Board
adopts the resolution relating thereto.

6. SECURITIES HELD BY THE CORPORATION.

6.1 Voting. Unless the Board shall otherwise order, the Chairman, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the Controller, the Treasurer or the
Secretary shall have full power and authority, on behalf of the Corporation, to
attend, act and vote at any meeting of the stockholders of any corporation in
which the Corporation may hold stock and at such meeting to exercise any or all
rights and powers incident to the ownership of such stock, and to execute on
behalf of the Corporation a proxy or proxies empowering another or others to act
as aforesaid. The Board from time to time may confer like powers upon any other
person or persons.

6.2 General Authorization to Transfer Securities Held by the
Corporation. (a) Any of the following officers, to wit: the Chairman, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the Controller, the Treasurer, any
Assistant Controller, any Assistant Treasurer, and each of them, hereby is
authorized and empowered to transfer, convert, endorse, sell, assign, set over
and deliver any and all shares of stock, bonds, debentures, notes, subscription
warrants, stock purchase warrants, evidences of indebtedness, or other
securities now or hereafter standing in the name of or owned by the Corporation,
and to make, execute and deliver any and all written instruments of assignment
and transfer necessary or proper to effectuate the authority hereby conferred.
<PAGE> 30
26

(b) Whenever there shall be annexed to any instrument of assignment and
transfer executed pursuant to and in accordance with the foregoing Section
6.2(a), a certificate of the Secretary or any Assistant Secretary in office at
the date of such certificate setting forth the provisions hereof and stating
that they are in full force and effect and setting forth the names of persons
who are then officers of the corporation, all persons to whom such instrument
and annexed certificate shall thereafter come shall be entitled, without further
inquiry or investigation and regardless of the date of such certificate, to
assume and to act in reliance upon the assumption that (i) the shares of stock
or other securities named in such instrument were theretofore duly and properly
transferred, endorsed, sold, assigned, set over and delivered by the
Corporation, and (ii) with respect to such securities, the authority of these
provisions of these By-laws and of such officers is still in full force and
effect.

7. DEPOSITARIES AND SIGNATORIES.

7.1 Depositaries. The Chairman, the President, the Chief Financial
Officer and the Treasurer are each authorized to designate depositaries for the
funds of the Corporation deposited in its name or that of a Division of the
Corporation, or both, and the signatories with respect thereto in each case, and
from time to time, to change such depositaries and signatories, with the same
force and effect as if each such depositary and the signatories with respect
thereto and changes therein had been specifically designated or authorized by
the Board; and each depositary designated by the Board or by the Chairman, the
President, the Chief Financial Officer or the Treasurer shall be entitled to
rely upon the certificate of the Secretary or any Assistant Secretary of the
Corporation or of a Division of the Corporation setting forth the fact of such
designation and of the appointment of the officers of the Corporation or of the
Division or of both or of other persons who are to be signatories with respect
to the withdrawal of funds deposited with such depositary, or from time to time
the fact of any change in any depositary or in the signatories with respect
thereto.

7.2 Signatories. Unless otherwise designated by the Board or by the
Chairman, the President, the Chief Financial Officer or the Treasurer, all
notes, drafts, checks, acceptances, orders for the payment of money and all
other negotiable instruments obligating the Corporation for the payment of money
shall be (a) signed by the Treasurer or any Assistant Treasurer and (b)
countersigned by the Controller or any Assistant Controller, or (c) either
signed or countersigned by the Chairman, the President, any Executive Vice
President, any Senior Vice President or any Vice President in lieu of either
the officers designated in Clause (a) or the officers designated in Clause (b)
of this Section 7.2.

<PAGE> 31
27

8. SEAL.

The seal of the Corporation shall be in such form and shall have such
content as the Board shall from time to time determine.

9. FISCAL YEAR.

The fiscal year of the Corporation shall end on December 31 in each
year, or on such other date as the Board shall determine.

10. WAIVER OF OR DISPENSING WITH NOTICE.

(a) Whenever any notice of the time, place or purpose of any meeting of
the stockholders is required to be given by applicable law, the Articles of
Incorporation or these By-laws, a written waiver of notice, signed by a
stockholder entitled to notice of a stockholders' meeting, whether by telegraph,
cable or other form of recorded communication, whether signed before or after
the time set for a given meeting, shall be deemed equivalent to notice of such
meeting. Attendance of a stockholder in person or by proxy at a stockholders'
meeting shall constitute a waiver of notice to such stockholder of such meeting,
except when the stockholder attends the meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting was not lawfully called or convened.

(b) Whenever any notice of the time or place of any meeting of the
Board or Committee of the Board is required to be given by applicable law, the
Articles of Incorporation or these By-laws, a written waiver of notice signed by
a Director, whether by telegraph, cable or other form of recorded communication,
whether signed before or after the time set for a given meeting, shall be deemed
equivalent to notice of such meeting. Attendance of a Director at a meeting
shall constitute a waiver of notice to such Director of such meeting.

(c) No notice need be given to any person with whom communication is
made unlawful by any law of the United States or any rule, regulation,
proclamation or executive order issued under any such law.

<PAGE> 32
28

11. POLITICAL CONTRIBUTIONS BY THE CORPORATION.

The Corporation and its direct and indirect subsidiaries shall be
permitted to make contributions or expenditures (a) in connection with the
election of any candidate for state or local political office in jurisdictions
which permit such contributions, including contributions to any committee
supporting such a candidate, to the extent such contributions or expenditures
are permitted by applicable law, and (b) to the extent necessary to permit in
the United States the expenditure of corporate assets for the payment of
expenses for establishing, registering and administering any political action
committee and of soliciting contributions thereto, all as may be authorized by
federal or state laws.

12. TRANSFER OF SHARES TO ALIENS.

Except as otherwise provided by law, not more than twenty-five percent
of the aggregate number of shares of stock outstanding shall at any time be
owned of record by or for the account of aliens or their representatives, a
foreign government or representative thereof or any corporation organized under
the laws of a foreign country.

Shares of stock shall be transferable on the books of the Corporation
to aliens and their representatives, foreign governments and representatives
thereof, and corporations organized under the laws of foreign countries (or to
any persons holding for the account of aliens and their representatives, foreign
governments and representatives thereof, and corporations organized under the
laws of foreign countries) only, if after giving effect to such transfer, the
aggregate number of shares of voting owned by or for the account of aliens and
their representatives, foreign governments and representatives thereof and
corporations organized under the laws of foreign countries, would be not more
than twenty-five percent of the number of shares of stock then outstanding.

The Board of Directors may from time to time make such rules and
regulations as it may deem necessary or appropriate to enforce the foregoing
provisions of this Section 12.
<PAGE> 33
29

13. AMENDMENT OF BY-LAWS.

Except as otherwise provided in Section 2.8(b) of these By-laws, these
By-laws, or any of them, may from time to time be supplemented, amended or
repealed, or new By-laws may be adopted, by the Board at any regular or special
meeting of the Board, if such supplement, amendment, repeal or adoption is
approved by a majority of the entire Board. These By-laws, or any of them, may
from time to time be supplemented, amended or repealed, or new By-laws may be
adopted, by the stockholders at any regular or special meeting of the
stockholders at which a quorum is present, if such supplement, amendment, repeal
or adoption is approved by the affirmative vote of the holders of at least a
majority of the voting power of all outstanding shares of stock of the
Corporation entitled to vote generally in an election of directors.

14. OFFICES AND AGENT.

(a) Registered Office and Agent. The registered office of the
Corporation in the State of Nevada shall be One East First Street, Reno, Nevada
89501. The name of the registered agent is The Corporation Trust Company. Such
registered agent has a business office identical with such registered office.

(b) Other Offices. The Corporation may also have offices at other
places, either within or outside the State of Nevada, as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.

<PAGE> 1

EXHIBIT 12

ITT CORPORATION AND SUBSIDIARIES

CALCULATION OF RATIO OF EARNINGS TO TOTAL FIXED CHARGES
(MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
---------------
1996 1995
---- ----
<S> <C> <C>
Earnings:
Net Income................................................................. $116 $ 53
Add:
Adjustment for distributions in excess of equity earnings and
losses(a)............................................................. 4 2
Income taxes............................................................. 100 55
Minority equity in net income............................................ 16 9
Amortization of interest capitalized..................................... 2 1
---- ----
238 120
---- ----
Fixed Charges:
Interest and other financial charges..................................... 146 163
Interest factor attributable to rentals.................................. 13 13
---- ----
159 176
---- ----
Earnings, as adjusted...................................................... $397 $296
==== ====
Fixed Charges:
Fixed charges above...................................................... $159 $176
Interest capitalized..................................................... 8 3
---- ----
Total fixed charges...................................................... $167 $179
==== ====
Ratio:
Earnings, as adjusted, to total fixed charges............................ 2.38 1.65
==== ====
</TABLE>

- ---------------
Note:

(a) The adjustment represents distributions in excess of undistributed earnings
and losses of companies in which at least 20% but less than 50% equity is
owned.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1996 FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 185
<SECURITIES> 0
<RECEIVABLES> 760
<ALLOWANCES> 114
<INVENTORY> 92
<CURRENT-ASSETS> 1,052
<PP&E> 4,989
<DEPRECIATION> 709
<TOTAL-ASSETS> 8,643
<CURRENT-LIABILITIES> 1,341
<BONDS> 3,766
0
0
<COMMON> 2,931
<OTHER-SE> 106
<TOTAL-LIABILITY-AND-EQUITY> 8,643
<SALES> 0
<TOTAL-REVENUES> 3,140
<CGS> 0
<TOTAL-COSTS> 2,798
<OTHER-EXPENSES> (8)
<LOSS-PROVISION> 23
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> 232
<INCOME-TAX> 100
<INCOME-CONTINUING> 116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116
<EPS-PRIMARY> .97
<EPS-DILUTED> .97

</TABLE>