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ITT CORPORATION
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<PAGE>
[ITT Letterhead]
October 16, 1997
Dear Fellow Stockholders:
By now, many of you have had time to consider Hilton's hostile
$70 per share offer, and Hilton may have even asked some of you to
vote your shares for its slate of hand-picked nominees before it has
adequately responded to a number of important questions about its
offer.
Following this letter is the second in a series of advertisements
your company has run relating to Hilton's offer. Before you consider
voting for Hilton, ask them for straight answers to the questions
posed in the ad. We believe Hilton should answer these difficult
questions before it is too late.
Your company continues to take positive strides. This week we
announced a bold new cost-cutting plan that will save $55 million
annually beginning in 1998 on top of the $25 million in savings we
announced earlier this year. Further, we reported quarterly earnings
that surpassed the consensus estimates of stock analysts by 15%. In
addition, we also have announced 23 new hotel contracts, bringing the
number of new hotels we have signed this year to more than 100. That
compares to a handful of new hotels that Hilton has signed.
ITT's strategy is building clear value for stockholders. Do you
believe that Hilton's nominees, whose stated objective is to buy ITT
for $70 per share, will act in your best interests?
Don't let Hilton steal your company! We urge you to vote for the
ITT directors using the BLUE proxy card, and ignore Hilton's white
card.
Sincerely,
/s/ Rand V. Araskog
Rand V. Araskog
Chairman and Chief Executive
<PAGE>
======================================================================
Attention ITT Shareholders:
5 Questions Hilton Doesn't Want You To
Ask About Its Hostile Offer for ITT
Hilton is trying to steal ITT with a hostile $70 per share offer. We
believe this is a low-ball bid that undervalues your ITT shares.
Hilton is asking for your vote to replace ITT's entire Board with its
own handpicked nominees who would rubber stamp an inadequate bid for
your shares.
But Hilton has failed to address some key issues regarding the real
value of its hostile offer. Before you cast your vote, ask Hilton for
straight answers to the following questions:
1. Why has Hilton not disclosed that its own Chief Financial Officer
wrote a memo to Hilton's Board stating that ITT is
"conservatively" worth more than $70 per share?
This document was produced by Hilton in the Nevada lawsuit, yet
Hilton does not disclose it in the proxy statement it is mailing
to you. Why is Hilton hiding this critical information from ITT
shareholders? Is it because they don't want you to realize that
your ITT shares are worth more than $70 -- and Hilton knows it?
2. How long will it really take Hilton to close its hostile offer?
When will they actually pay you?
Hilton says it will get all regulatory approvals within 90 days.
Why should you believe gaming regulators in Nevada and New Jersey
will be so quick to approve this hostile takeover -- when last
year they took 6 months to approve Hilton's friendly acquisition
of Bally? Shouldn't you be concerned about press reports of
investigations into possible activities of a key Hilton executive
and senior gaming executives' possible prior activities in
several states? What happens to you if there is a delay -- or a
problem?
<PAGE>
3. How would a delay in closing affect Hilton's 1998 earnings -- and
the value of the Hilton stock you would receive in the "back-end"
of its offer?
Hilton says acquiring ITT for $70 per share in cash and Hilton
stock would not dilute its 1998 earnings. Yet, its forecasts are
based on a full-year earnings contribution from ITT including the
earnings of ITT World Directories which Hilton previously said it
would sell.
4. How much could the forced sale of a New Jersey casino reduce
Hilton's earnings forecasts?
Hilton and ITT together own four major casinos in Atlantic City.
This could create "undue economic concentration" under New Jersey
gaming regulations -- potentially requiring Hilton to sell one
casino.
5. What are Hilton's real plans for ITT's valuable Sheraton brand?
In January, Hilton boasted it had an agreement to sell the
valuable Sheraton brand to discount franchiser HFS, but has said
nothing since. Meanwhile, HFS has agreed to merge with a third
party. Does Hilton still plan to sell Sheraton to HFS? To another
franchiser? How will Hilton resolve the potential for
competition, cannibalization and conflicts between Hilton and
Sheraton properties?
Hilton doesn't want to address these questions, but if you don't get
answers before you vote for the Hilton "rubber stamp" slate, it will
be too late. Don't put your investment at risk. Vote for the ITT
Board, which is committed to creating economic value superior to
Hilton's inadequate hostile offer.
Don't Let Hilton Steal Your Company
Vote For The ITT Directors On The BLUE Card
You must use the BLUE proxy card to reelect ITT's Directors. Please
sign and return your BLUE card today. Ignore Hilton's white card. If
you have questions, or need information or voting assistance, please
call our proxy firm, GEORGESON & COMPANY INC. toll-free at (800)
223-2064.
[ITT Logo]
======================================================================
<PAGE>
If your ITT shares are held
in the name of a bank or brokerage firm,
only that firm can execute a proxy on your behalf.
Please contact the person responsible for your account and give
instructions for the BLUE PROXY CARD to be voted
with your Board's recommendation.
If you have any questions or need assistance in voting your
shares, please contact our proxy solicitor:
GEORGESON
& COMPANY INC.
Bank and Brokers Call Collect:
(212) 440-9800
or
ALL OTHERS CALL TOLL-FREE:
(800) 223-2064
INTERNET: World Wide Web http://www.georgeson.com
