<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205490
------------------------
FORM 10-K/A
(AMENDMENT NO. 2)
ANNUAL REPORT
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-13960
------------------------
ITT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0340591
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
</TABLE>
1330 AVENUE OF THE AMERICAS, NEW YORK, NY 10019-5490
(PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER: (212) 258-1000
Securities registered pursuant to Section 12(b) of the Act, all of which are
registered on The New York Stock Exchange, Inc.:
Common Stock, no par value
Series A Participating Cumulative Preferred Stock Purchase Rights
6 1/4% Notes Due November 15, 2000
6 3/4% Notes Due November 15, 2005
7 3/8% Debentures Due November 15, 2015
7 3/4% Debentures Due November 15, 2025
Securities registered pursuant to Section 12(g) of the Act: None.
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 for 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 | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |x|
The aggregate market value of the Common Stock of the registrant held by
non-affiliates of the registrant on March 24, 1997, was approximately $7.0
billion.
As of March 24, 1997, there were outstanding 116,429,113 shares of Common
Stock, no par value, of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None.
The undersigned registrant, ITT Corporation ("ITT", which may also be
referred to as "we" or "us"), hereby amends the following Items of its Annual
Report on Form 10-K for the year ended December 31, 1996 as set forth in the
pages attached hereto:
Item 1. Business
Item 3. Legal Proceedings
================================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
The information contained in "Item 1. Business" of the Annual Report on
Form 10-K for the year ended December 31, 1996, as amended by the Form 10-K/A
dated April 30, 1997 of ITT (the "Form 10-K") is hereby supplemented by adding
the following:
OWNED AND LEASED HOTELS
The following table illustrates, for owned and leased properties classified
by geographic region and hotel type, the average number of years since purchase
or major renovation, total revenues (in millions), average daily occupancy rate,
average daily room rate, average revenue per available room ("REVPAR"), total
number of rooms at period end and the total number of properties at period end.
The amounts shown in the table reflect the U.S. dollar equivalent of all local
currencies; in some cases, currency fluctuations may have an adverse effect on
the comparison of any region or individual property for the periods presented.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 DEC. 31, 1996 DEC. 31, 1995(4)
------------------ ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
NORTH AMERICA - LUXURY:
Average number of years since 5 8 8 7
purchase or major renovation...
Total revenues................... $151.4 $133.8 $193.3 $174.8
Average daily occupancy 78% 77% 75% 72%
rate(1)........................
Average daily rate(2)............ $ 324 $ 304 $ 309 $ 280
REVPAR(3)........................ $ 247 $ 229 $ 231 $ 201
Number of rooms at period end.... 1,152 1,091 1,145 1,091
Number of properties at period 3 3 3 3
end............................
NORTH AMERICA - UPSCALE:
Average number of years since 4 4 4 5
purchase or major renovation...
Total revenues................... $379.3 $ 370 $520.7 $434.2
Average daily occupancy 75% 74% 72% 73%
rate(1)........................
Average daily rate(2)............ $ 149 $ 134 $ 137 $ 120
REVPAR(3)........................ $ 110 $ 99 $ 99 $ 87
Number of rooms at period end.... 7,916 10,180 9,797 9,419
Number of properties at period 13 18 18 16
end............................
NORTH AMERICA - TOTAL:
Average number of years since 5 5 5 5
purchase or major renovation...
Total revenues................... $530.6 $503.8 $714.0 $609.0
Average daily occupancy 75% 75% 72% 73%
rate(1)........................
Average daily rate(2)............ $ 169 $ 151 $ 155 $ 136
REVPAR(3)........................ $ 126 $ 111 $ 112 $ 99
Number of rooms at period end.... 9,070 11,271 10,942 10,510
Number of properties at period 16 21 21 19
end............................
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 DEC. 31, 1996 DEC. 31, 1995(4)
------------------ ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
EUROPE / CIGA - LUXURY:
Average number of years since 3 2 2 1
purchase or major renovation...
Total revenues................... $253.2 $253.2 $263.3 $251.9
Average daily occupancy rate 71% 68% 66% 65%
(1)............................
Average daily rate(2)............ $ 234 $ 228 $ 225 $ 203
REVPAR(3)........................ $ 163 $ 154 $ 149 $ 131
Number of rooms at period end.... 4,085 4,205 3,188 3,290
Number of properties at period 18 18 17 17
end............................
EUROPE / CIGA - UPSCALE:
Average number of years since 5 4 4 3
purchase or major renovation...
Total revenues................... $151.1 $141.8 $218.5 $156.0
Average daily occupancy 75% 73% 72% 73%
rate(1)........................
Average daily rate(2)............ $ 123 $ 125 $ 129 $ 123
REVPAR(3)........................ $ 91 $ 90 $ 93 $ 90
Number of rooms at period end.... 3,829 3,528 4,434 4,113
Number of properties at period 15 15 15 21
end............................
EUROPE / CIGA - TOTAL:
Average number of years since 4 3 3 2
purchase or major renovation...
Total revenues................... $404.3 $ 395 $481.8 $407.9
Average daily occupancy 73% 71% 69% 69%
rate(1)........................
Average daily rate(2)............ $ 169 $ 174 $ 171 $ 160
REVPAR(3)........................ $ 122 $ 121 $ 119 $ 110
Number of rooms at period end.... 7,914 7,733 7,622 7,403
Number of properties at period 33 33 32 38
end............................
AFRICA / MIDDLE EAST - UPSCALE
AND TOTAL:
Average number of years since N/A(5) 16 16 15
purchase or major renovation...
Total revenues................... -- $ 1.7 $ 2.5 $ 1.2
Average daily occupancy -- 65% 67% 58%
rate(1)........................
Average daily rate(2)............ -- $ 11 $ 11 $ 11
REVPAR(3)........................ -- $ 7 $ 7 $ 7
Number of rooms at period end.... -- 164 164 164
Number of properties at period -- 2 2 2
end............................
LATIN AMERICA - LUXURY:
Average number of years since 6 16 6 9
purchase or major renovation...
Total revenues................... $ 25.5 $ 17.0 $ 25.9 $ 22.2
Average daily occupancy 64% 67% 63% 72%
rate(1)........................
Average daily rate(2)............ $ 257 $ 245 $ 238 $ 196
REVPAR(3)........................ $ 160 $ 161 $ 150 $ 141
Number of rooms at period end.... 425 425 425 244
Number of properties at period 2 2 2 1
end............................
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 DEC. 31, 1996 DEC. 31, 1995(4)
------------------ ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
LATIN AMERICA - UPSCALE:
Average number of years since 11 14 14 13
purchase or major renovation...
Total revenues................... $133.5 $122.8 $172.3 $152.8
Average daily occupancy 73% 76% 69% 69%
rate(1)........................
Average daily rate(2)............ $ 104 $ 99 $ 98 $ 96
REVPAR(3)........................ $ 75 $ 74 $ 67 $ 66
Number of rooms at period end.... 4,247 4,008 4,008 44,034
Number of properties at period 9 8 8 8
end............................
LATIN AMERICA - TOTAL:
Average number of years since 10 13 13 12
purchase or major renovation...
Total revenues................... $159.0 $139.9 $198.2 $175.0
Average daily occupancy 72% 76% 68% 69%
rate(1)........................
Average daily rate(2)............ $ 117 $ 107 $ 106 $ 103
REVPAR(3)........................ $ 83 $ 80 $ 73 $ 71
Number of rooms at period end.... 4,672 4,433 4,433 4,278
Number of properties at period 11 10 10 9
end............................
ASIA PACIFIC - LUXURY:
Average number of years since 2 1 1 1
purchase or major renovation...
Total revenues................... $ 36.7 $ 33.6 $ 14.5 $ 33.8
Average daily occupancy 82% 80% 84% 74%
rate(1)........................
Average daily rate(2)............ $ 168 $ 160 $ 173 $ 130
REVPAR(3)........................ $ 135 $ 125 $ 145 $ 97
Number of rooms at period end.... 559 559 559 --
Number of properties at period 1 1 1 --
end............................
ASIA PACIFIC - UPSCALE:
Average number of years since 2 2 2 1
purchase or major renovation...
Total revenues................... $ 24.2 N/A(5) $ 16.1 $ 17.2
Average daily occupancy 72% 77% 76% 76%
rate(1)........................
Average daily rate(2)............ $ 146 $ 145 $ 142 $ 104
REVPAR(3)........................ $ 100 $ 109 $ 108 $ 79
Number of rooms at period end.... 561 567 567 391
Number of properties at period 2 2 2 --
end
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 DEC. 31, 1996 DEC. 31, 1995(4)
------------------ ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
ASIA PACIFIC - TOTAL:
Average number of years since 1 1 1 0
purchase or major renovation...
Total revenues................... $ 60.9 $ 39.9 $ 30.6 $ 51.0
Average daily occupancy 77% 79% 79% 75%
rate(1)........................
Average daily rate(2)............ $ 158 $ 157 $ 154 $ 119
REVPAR(3)........................ $ 117 $ 122 $ 122 $ 89
Number of rooms at period end.... 1,120 1,126 1,126 391
Number of properties at period 3 3 3 --
end............................
</TABLE>
- ---------------
(1) Occupied rooms in the period divided by rooms available for sale in the same
period.
(2) Room revenues for the period divided by rooms occupied for the same period.
(3) Revenue per available room ("REVPAR") was computed as room revenue divided
by rooms available for sale.
(4) Certain hotel property results for 1995 have been reclassified for an
appropriate comparison with 1996.
(5) There were no properties in this geographic region for the period presented.
MANAGED AND JOINT VENTURE HOTELS
Through subsidiaries ITT manages, usually under long-term agreements with
the owner, a number of hotels throughout the world. The following table
illustrates, for managed and joint venture properties, classified by geographic
region, total revenues (in millions), average daily occupancy rate, average
daily rate, average REVPAR, total number of rooms and the total number of
properties. The amounts shown in the table reflect the U.S. dollar equivalent of
all local currencies; in some cases, currency fluctuations may have an adverse
effect on the comparison of any region or individual property for the periods
presented.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 DEC. 31, 1996 DEC. 31, 1995(4)
------------------ ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
NORTH AMERICA:
Total revenues................... $1,034.1 $950.1 $1,231.0 $1,182.6
Average daily occupancy
rate(1)........................ 76% 76% 72% 74%
Average daily rate(2)............ $148 $139 $139 $126
REVPAR(3)........................ $111 $104 $101 $93
Number of rooms at period end.... 23,829 21,785 22,091 21,790
Number of properties at period
end............................ 42 37 37 38
EUROPE / CIGA:
Total revenues................... $274.9 $279.2 $444.9 $385.0
Average daily occupancy
rate(1)........................ 70% 71% 69% 70%
Average daily rate(2)............ $138 $142 $140 $134
REVPAR(3)........................ $95 $99 $97 $93
Number of rooms at period end.... 7,066 7,110 7,339 7,534
Number of properties at period
end............................ 24 23 26 27
AFRICA / MIDDLE EAST:
Total revenues................... $293.7 $268.7 $382.8 $354.5
Average daily occupancy
rate(1)........................ 65% 62% 61% 59%
Average daily rate(2)............ $89 $92 $91 $87
REVPAR(3)........................ $57 $56 $55 $51
Number of rooms at period end.... 9,787 8,999 9,244 8,923
Number of properties at period
end............................ 36 33 34 33
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED YEAR ENDED
NINE MONTHS ENDED ENDED DEC. 31, DEC. 31,
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 1996 1995(4)
------------------ ------------------ ------------ --------------
<S> <C> <C> <C> <C>
LATIN AMERICA:
Total revenues........................... $24.9 $16.2 $21.0 $38.9
Average daily occupancy rate (1)......... 57% 69% 59% 67%
Average daily rate (2)................... $87 $66 $66 $78
REVPAR (3)............................... $49 $45 $39 $52
Number of rooms at period end............ 1,272 890 1,084 890
Number of properties at period end....... 5 3 4 3
ASIA PACIFIC:
Total revenues........................... $524.8 $540.0 $790.9 $737.8
Average daily occupancy rate (1)......... 69% 71% 68% 73%
Average daily rate (2)................... $134 $139 $138 $134
REVPAR (3)............................... $90 $97 $93 $97
Number of rooms at period end............ 12,175 11,788 11,790 10,630
Number of properties at period end....... 37 34 34 33
</TABLE>
- ---------------
(1) Occupied rooms in the period divided by rooms available for sale in the same
period.
(2) Room revenues for the period divided by rooms occupied for the same period.
(3) Revenue per available room ("REVPAR") was computed as room revenue divided
by rooms available for sale.
(4) Certain hotel property results for 1995 have been reclassified for an
appropriate comparison with 1996.
ITEM 3. LEGAL PROCEEDINGS
The information contained in "Item 3. Legal Proceedings" of the Form 10-K
is hereby amended by replacing it in its entirety with the following:
On January 27, 1997, a complaint (the "Hilton Complaint") captioned Hilton
Hotels Corporation and HLT Corporation v. ITT Corporation was filed against us
in the U.S. District Court for the District of Nevada (the "Nevada Federal
Court"). The Hilton Complaint requested the Nevada Federal Court, among other
things: (i) to enjoin us from amending our by-laws "in any way that would impede
the effective exercise of the stockholder franchise in connection with the 1997
annual meeting", from materially delaying our annual meeting, and from
increasing the size of the Board "in order to preserve the position of incumbent
directors", (ii) to require the Board to redeem our preferred stock purchase
rights and to make inapplicable to the Hilton Transaction the Nevada Control
Share Acquisition Statute and the Nevada Business Combination Statute and (iii)
to declare that we do not have standing to institute an action under the Federal
anti-trust laws to block or impede the Hilton Transaction and that, in any
event, the consummation of the Hilton Transaction would not violate such laws.
On January 27, 1997, Hilton and HLT filed a motion in the Nevada Federal
Court for a preliminary injunction (the "Hilton Preliminary Injunction Motion")
seeking to enjoin us (i) from increasing the size of the Board or,
alternatively, requiring us to give Hilton the opportunity to supplement the
individuals it nominates for the Board and (ii) from amending our by-laws "to
impede in any way the effective exercise of the stockholder franchise in
connection with electing directors" at the 1997 annual meeting. Following a
hearing on the preliminary injunction on March 5, 1997, the Nevada Federal Court
issued an order denying the Hilton Preliminary Injunction Motion.
On February 12, 1997, we filed an answer and counterclaims to the Hilton
Complaint denying all material allegations of the Hilton Complaint. The
counterclaims seek injunctive relief prohibiting Hilton from proceeding with the
Hilton Offer which is tainted by Hilton's misappropriation and misuse of our
confidential information and other relief to prevent Hilton from benefitting
from access to our confidential information. These counterclaims also seek
injunctive relief, in the event the Hilton Offer is not enjoined, requiring
Hilton to correct material inadequacies in the Schedule 14D-1 filed by Hilton
with the Securities and Exchange Commission by disclosing and filing the
information required under the Federal securities laws.
6
<PAGE> 7
On February 26, 1997, Hilton filed a motion for a preliminary injunction in
the Nevada Federal Court seeking to require us to hold our annual meeting in May
1997. On March 13, 1997, we filed a memorandum in opposition to Hilton's motion.
On March 25, 1997, Hilton filed a reply memorandum. On April 21, 1997, the
Nevada Federal Court issued an order denying Hilton's motion for a preliminary
injunction. Hilton appealed the denial of its motion to the United States Court
of Appeals for the Ninth Circuit. On June 19, 1997, the appeals court issued an
order affirming the Nevada Federal Court's denial of Hilton's motion.
On February 13, 1997, we filed a motion in the Nevada Federal Court for an
injunction (the "Counsel Motion") requiring Hilton to discharge Latham & Watkins
as its counsel. The Counsel Motion sought (i) an order requiring Hilton to
dismiss Latham & Watkins as its counsel in connection with the Hilton Offer or,
in the alternative, (ii) a preliminary injunction enjoining Hilton from seeking
Latham & Watkins' counsel until the court can review the merits of the Counsel
Motion. On March 12, 1997, the Nevada Federal Court issued an order denying the
Counsel Motion.
On June 12, 1997, Hilton filed a first amended and supplemental complaint
(the "First Amended and Supplemental Hilton Complaint") in the Nevada U.S.
Federal Court. In addition to the relief sought in the Hilton Complaint, the
First Amended and Supplemental Hilton Complaint asked the court, among other
things, (i) to enjoin ITT from further delaying our annual meeting, (ii) to
require ITT to conduct an auction of ITT, (iii) to enjoin ITT from selling any
assets without conducting an auction in which Hilton may participate and without
stockholder approval, (iv) to require ITT to rescind its transaction with
FelCor, (v) to invalidate the change of control provisions in management
agreements with FelCor and (vi) to enjoin ITT from entering into any other
agreement containing change of control provisions and (vii) to enjoin the Board
from taking actions aimed at entrenching themselves in office.
On July 2, 1997, we filed a motion to dismiss certain counts included in
the First Amended and Supplemental Hilton Complaint or, in the alternative, for
partial summary judgment in the Nevada Federal Court. On September 10, 1997, the
court denied in part and granted in part our motion.
On July 16, 1997, we filed a complaint in the Nevada Federal Court seeking,
among other relief, a declaratory judgment that Hilton cannot show that, in
approving the Comprehensive Plan, the Board acted outside its powers or failed
to exercise its powers in good faith with a view to the interests of ITT. We
also filed a motion with the court seeking a speedy hearing on our claims.
On August 5, 1997, Hilton filed in the Nevada Federal Court answers and
counterclaims to our complaint, claiming, among other things, that the Board has
breached its fiduciary duties and that ITT made material misstatements and
omissions.
On August 25, 1997, Hilton filed a motion in the Nevada Federal Court for
injunctive and preliminary relief seeking, among other things, to enjoin us from
proceeding with the Comprehensive Plan. On September 9, 1997, we filed a
memorandum in opposition to Hilton's motion. On September 22, 1997, Hilton filed
a reply memorandum in response to ITT's memorandum in opposition. On September
29, 1997, the Nevada Federal Court ruled that we could not consummate the
Comprehensive Plan before holding an annual meeting of stockholders where Hilton
had an opportunity to nominate a slate of directors.
On November 3, 1997, Hilton filed a complaint with the Nevada Federal Court
against ITT, certain members of the Board, Starwood Lodging Corporation
("Starwood Corporation"), Starwood Lodging Trust ("Starwood Trust") and Chess
Acquisition Corp. ("Chess") seeking monetary damages from the ITT directors, to
rescind the Agreement and Plan of Merger date as of October 19, 1997 among
Starwood Corporation, Starwood Trust, Chess and ITT (the "Merger Agreement"), to
enjoin implementation of the Merger Agreement, to invalidate proxies voted in
favor of the ITT directors at our 1997 annual meeting of stockholders and a
declaration that the ITT directors are not entitled to indemnification or
exculpation from liability under our charter and by-laws.
Following the Hilton Offer, a total of eight purported class action suits
were filed on behalf of individual plaintiffs against ITT and the Board in state
court in Nevada. These complaints were filed in or transferred to the District
Court, Clark County Nevada (the "Nevada State Court") and were captioned as
follows (with their initial filing date in parentheses): Cohen v. ITT Corp.
N.V., et al. (January 28, 1997); Kostick v. Araskog, et al. (January 28, 1997);
Bernstein, et al. v. ITT Corp. N.V., et al. (January 28, 1997); Feuerstein, et
al. v. ITT Corp.
7
<PAGE> 8
N.V., et al. (January 28, 1997); Marks, et al. v. Araskog, et al. (January 28,
1997); Huntley v. ITT Corporation, et al. (January 28, 1997); Steiner v.
Araskog, et al. (January 28, 1997); and Cohen v. Araskog, et al (January 29,
1997). On June 3, 1997, these actions were consolidated under the caption
Fuerstein, et al. v. ITT Corporation, et al. and stayed by stipulation of the
parties. Five purported class action suits were also filed on behalf of
individual plaintiffs against ITT and the Board in the Nevada Federal Court. The
complaints were captioned as follows (with their initial filing date in
parentheses): Collins v. Anderson, et al. (January 28, 1997); Taub, et al. v.
Araskog, et al. (January 29, 1997); Kanarek v. Araskog, et al. (February 5,
1997); Halebian v. Araskog, et al. (February 14, 1997); and Cohen, et al. v.
Araskog, et al. (February 4, 1997). On March 10, 1997, the cases were
consolidated under the caption In re ITT Corporation Securities Litigation. On
September 10, 1997, the plaintiffs in that action filed and amended class action
complaint and on November 5, 1997, they filed a second amended class action
complaint. The first and the second amended class action complaints repeated the
allegations made by Hilton in its complaints and counterclaims filed shortly
before the filing of these amended class action complaints. The second amended
class action complaint was never served on the defendants named therein. On
October 10, 1997, a class action complaint captioned Belman v. Araskog, et al.
was filed in the Nevada Federal Court. It was never served on the defendants
named therein. In addition, four purported class action suits were filed on
behalf of individual plaintiffs against ITT and the Board in the Supreme Court
of the State of New York. The complaints were captioned as follows (with their
initial filing date in parentheses): Siegel v. Araskog, et al. (January 28,
1997); Waltzman v. Anderson., et al. (January 28, 1997); Hack v. ITT
Corporation, et al. (January 28, 1997); and Rand v. ITT Corporation, et al.
(January 28, 1997). On April 15, 1997, the New York actions were consolidated
and dismissed without prejudice to replead. The complaints allege, among other
things, that the defendants have breached their fiduciary duties to ITT's
stockholders by failing to maximize stockholder value. The complaints initially
sought, among other things, to compel the defendants to carry out their
fiduciary duties and to cooperate with any person having a bona fide interest in
proposing a transaction with ITT which would maximize stockholder value. There
have been no other material developments in any of the foregoing actions.
In October 1996, a jury sitting in the California Superior Court, San Diego
County, returned a verdict in Eldredge, et al. v. ITT Educational Services, et
al. against both ITT and ITT Educational. The plaintiffs in Eldredge, seven 1995
graduates of ITT Educational's school in San Diego, alleged, among other things,
misrepresentation and violations of a provision of the California Education
Code. In the aggregate, the plaintiffs were awarded approximately $0.2 million
in compensatory damages and $6.6 million in punitive damages, consisting of $2.6
million against ITT Educational and $4.0 million against ITT. As a result of
post trial motions decided in December 1996 and January 1997, the verdict
against ITT was set aside and ITT Educational was assessed in excess of $0.9
million in counsel fees, so that the judgment, as entered against only ITT
Educational, is in the approximate amount of $3.8 million. All parties have
appealed. We believe that it is probable that the judgment against ITT
Educational will ultimately be reversed, in whole or substantial part, and that
the decision setting aside the verdict against ITT will be affirmed; however,
there can be no assurance that these outcomes will occur. Various purported
class action suits have been filed against ITT and ITT Educational in California
alleging similar claims to those alleged in Eldridge.
In addition to the suits described above, there are various lawsuits
pending against us and our subsidiaries, some of which involve claims for
substantial amounts. However, the ultimate liability with respect to these
lawsuits is not considered material in relation to our consolidated financial
condition.
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
ITT CORPORATION
By /s/ JON F. DANSKI
------------------------------------
Jon F. Danski
Senior Vice President and Controller
January 9, 1998
