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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 7, 1995
(Date of earliest event reported)
ITT CORPORATION
(Exact Name of Registrant as Specified in Charter)
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<S> <C> <C>
DELAWARE 1-5627 13-5158950
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification Number)
1330 AVENUE OF THE AMERICAS, NEW YORK, NEW 10019-5490
YORK
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code:
(212) 258-1000
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ITEM 5. OTHER EVENTS.
At a special meeting of the shareholders of ITT Corporation ("ITT") held on
September 21, 1995, the shareholders approved the proposed distribution (the
"Distribution") to ITT's shareholders of all of the shares of common stock of
ITT Destinations, Inc. ("New ITT") and all of the shares of common stock of ITT
Hartford Group, Inc. ("ITT Hartford"). In connection with the proposals approved
at such special meeting, management of ITT included in the Notice of Special
Meeting and Proxy Statement dated August 30, 1995 (the "Proxy") a forecasted
capitalization table at December 31, 1995 and a summary of the significant
capitalization assumptions for each of ITT Industries, Inc. ("ITT Industries"),
New ITT and ITT Hartford. Such capitalization was based on the forecasted net
operating assets of ITT in the aggregate, which, in the Proxy, were forecasted
to be $15.9 billion at December 31, 1995. Differences in the actual operating
results through September 30, 1995 and in the timing of certain asset sales and
working capital needs, along with other changes, resulted in a change to the
forecasted net operating assets of ITT in the aggregate, to $15.7 billion at
December 31, 1995. In response to these changes, forecasted debt and equity
components of ITT Industries, New ITT and ITT Hartford have been revised.
The information set forth below under the captions "ITT Industries Summary
of Significant Capitalization Forecast Assumptions", "ITT Industries Forecasted
Capitalization", "New ITT Summary of Significant Capitalization Forecast
Assumptions", "New ITT Forecasted Capitalization", "ITT Hartford Summary of
Significant Capitalization Forecast Assumptions" and "ITT Hartford Forecasted
Capitalization" supersedes the information contained in the Proxy under such
captions.
ITT INDUSTRIES
SUMMARY OF SIGNIFICANT CAPITALIZATION FORECAST ASSUMPTIONS
The following financial forecast of the capitalization of ITT Industries is
based on ITT management's forecasts and assumptions concerning events and
circumstances which are expected to occur subsequent to the latest historical
balance sheet date but prior to and including December 31, 1995 (the approximate
date of the Distribution), including future results of operations and other
events. For purposes of this forecasted capitalization, net income in the last
three months of 1995 is assumed to approximate the same level as the comparable
1994 period. Assumptions with respect to events that will occur between
September 30, 1995 and December 31, 1995, include the following:
- The sale of certain non-strategic assets resulting in debt reduction of
approximately $175 million, for which negotiations are in progress.
- The exercise of 2.1 million stock options at an average exercise price of
$70 per share resulting in a reduction of debt and an increase to equity
of approximately $150 million.
- Receipt of a dividend from ITT Hartford of approximately $370 million.
- A reduction in deployed working capital of $175 million and the
utilization of those funds to repay existing short-term borrowings.
- The use of $72 million in cash balances at various subsidiaries of ITT
Industries to repay existing short-term borrowings, primarily in Germany.
- Net capital expenditures totaling $190 million in the last three months
of 1995 ($175 million of net capital expenditures was incurred in the
comparable 1994 period). In addition, a $100 million contribution to New
ITT is anticipated.
In ITT management's judgment, the listed assumptions and forecasts reflect
those material events or transactions expected to occur prior to the
Distribution. There have been no changes in accounting principles anticipated in
this capitalization forecast nor are any such changes currently contemplated.
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LIMITATIONS ON PROJECTIONS AND FORECASTS
The assumptions and estimates underlying the projected and forecasted data
and information contained herein are inherently uncertain and, although
considered reasonable by management of ITT, are subject to significant business,
economic and competitive uncertainties, many of which are beyond the control of
ITT and its subsidiaries. Accordingly, there can be no assurance that the
projected and forecasted financial results will be realized. In fact, actual
results in the future usually will differ from the forecasted financial results
and the differences may be material.
ITT INDUSTRIES FORECASTED CAPITALIZATION
The following table sets forth the consolidated capitalization of ITT
Industries as of September 30, 1995 on a historical basis, forecasted as to
December 31, 1995 (the approximate date of the Distribution), and as adjusted to
give effect to the Distribution and the transactions contemplated thereby. The
significant assumptions have been described under "ITT Industries Summary of
Significant Capitalization Forecast Assumptions" above.
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<CAPTION>
(A) (A)(B)
SEPTEMBER 30, FORECASTED PRO FORMA
1995 AT DECEMBER 31, AFTER
ACTUAL 1995 DISTRIBUTION
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($ IN MILLIONS)
<S> <C> <C> <C>
Cash and Cash Equivalents.............................. $ 183 $ 111 $ 111
=========== ============ =========
Debt................................................... 2,275 1,561 1,561
Stockholders Equity --
Common Stock...................................... 116 119 119
Capital Surplus................................... 685 832 705
Cumulative Translation Adjustment................. (36) (36) (36)
Unrealized Loss on Securities, Net of Tax......... (111) (111) --
Retained Earnings................................. 7,296 7,506 --
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Total Equity................................. 7,950 8,310 788
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Total Capitalization......................... $ 10,225 $ 9,871 $ 2,349
=========== ============ =========
</TABLE>
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(a) See "ITT Industries Summary of Significant Capitalization Forecast
Assumptions".
(b) Column gives effect to the distribution of ITT Hartford common stock and New
ITT common stock (book values of $4.4 billion and $3.1 billion,
respectively) and the allocation of amounts of indebtedness contemplated by
the Distribution. The unrealized loss on securities, net of tax, relates
solely to the investment portfolios at ITT Hartford and is included in the
forecasted capitalization of ITT Hartford after the Distribution.
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NEW ITT SUMMARY OF SIGNIFICANT CAPITALIZATION FORECAST ASSUMPTIONS
The following financial forecast of the capitalization of New ITT is based
on ITT management's forecasts and assumptions concerning events and
circumstances which are expected to occur subsequent to the latest historical
balance sheet date but prior to and including December 31, 1995 (the approximate
date of the Distribution), including future results of operations and other
events. For purposes of this forecasted capitalization, net income in the last
three months of 1995 is assumed to approximate the same level as the comparable
1994 period. Assumptions with respect to events that will occur between
September 30, 1995 and December 31, 1995, include the following:
- The use of $275 million in cash balances at various subsidiaries of New
ITT to repay existing short-term borrowings.
- Net capital expenditures totaling $106 million in the last three months
of 1995 ($57 million was incurred in the comparable 1994 period).
- Receipt of a $100 million contribution from ITT Industries.
In ITT management's judgment, the listed assumptions and forecasts reflect
those material events or transactions expected to occur prior to the
Distribution. There have been no changes in accounting principles anticipated in
this capitalization forecast nor are any such changes currently contemplated.
LIMITATIONS ON PROJECTIONS AND FORECASTS
The assumptions and estimates underlying the projected and forecasted data
and information contained herein are inherently uncertain and, although
considered reasonable by management of ITT, are subject to significant business,
economic and competitive uncertainties, many of which are beyond the control of
ITT and its subsidiaries. Accordingly, there can be no assurance that the
projected and forecasted financial results will be realized. In fact, actual
results in the future usually will differ from the forecasted financial results
and the differences may be material.
NEW ITT FORECASTED CAPITALIZATION
The following table sets forth the consolidated capitalization of New ITT
as of September 30, 1995 on a historical basis, forecasted as to December 31,
1995 (the approximate date of the Distribution), and as adjusted to give effect
to the Distribution and the transactions contemplated thereby. The significant
assumptions have been described under "New ITT Summary of Significant
Capitalization Forecast Assumptions" above.
<TABLE>
<CAPTION>
(A) (A)(B)
FORECASTED PRO FORMA
SEPTEMBER 30, 1995 AT DECEMBER 31, AFTER
ACTUAL 1995 DISTRIBUTION
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($ IN MILLIONS)
<S> <C> <C> <C>
Cash and Cash Equivalents...................... $ 470 $ 195 $ 195
============== ============ ==========
Debt from Non-Affiliated Entities(c)........... 832 3,651 3,651
Investments and Advances from ITT
Industries(c)................................ 6,231 3,117 --
Common Shares and Capital Surplus.............. -- -- 3,117
Minority Interest.............................. 264 264 264
------- ------- -------
Total Capitalization........................... $7,327 $7,032 $7,032
============== ============ ==========
</TABLE>
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(a) See "New ITT Summary of Significant Capitalization Forecast Assumptions".
(b) Column gives effect to the distribution of New ITT common stock and the
transfer of certain debt to New ITT.
(c) Prior to the 1995 fourth quarter, New ITT financed its operations with
interest-bearing debt from both external and internal sources. Debt from
non-affiliated entities represents external borrowings, while Investments
and Advances from ITT Industries represents internal sources of capital.
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ITT HARTFORD SUMMARY OF SIGNIFICANT CAPITALIZATION FORECAST ASSUMPTIONS
The following financial forecast of the capitalization of ITT Hartford is
based on ITT management's forecasts and assumptions concerning events and
circumstances which are expected to occur subsequent to the latest historical
balance sheet date but prior to and including December 31, 1995 (the approximate
date of the Distribution), including future results of operations and other
events. For purposes of this forecasted capitalization, net income in the last
three months of 1995 is assumed to approximate the same level as the comparable
1994 period. Assumptions with respect to events that will occur between
September 30, 1995 and December 31, 1995, include the following:
- In connection with the Distribution, 4.3 million shares of Alcatel
Alsthom were sold to ITT Industries and will be contributed to New ITT.
ITT Hartford will dividend a $380 million note in the fourth quarter.
- Payment of a dividend to ITT Industries of approximately $370 million.
- Redemption of the remainder of ITT Hartford's currently outstanding
preferred stock totaling $86 million.
- No change in the unrealized loss on securities, net of tax, or the
cumulative translation adjustment between September 30, 1995 and December
31, 1995.
In ITT management's judgment, the listed assumptions and forecasts reflect
those material events or transactions expected to occur prior to the
Distribution. There have been no changes in accounting principles anticipated in
this capitalization forecast nor are any such changes currently contemplated.
LIMITATIONS ON PROJECTIONS AND FORECASTS
The assumptions and estimates underlying the projected and forecasted data
and information contained herein are inherently uncertain and, although
considered reasonable by management of ITT, are subject to significant business,
economic and competitive uncertainties, many of which are beyond the control of
ITT and its subsidiaries. Accordingly, there can be no assurance that the
projected and forecasted financial results will be realized. In fact, actual
results in the future usually will differ from the forecasted financial results
and the differences may be material.
ITT HARTFORD FORECASTED CAPITALIZATION
The following table sets forth the consolidated capitalization of ITT
Hartford as of September 30, 1995 on a historical basis, forecasted as to
December 31, 1995 (the approximate date of the Distribution), and as adjusted to
give effect to the distribution and transactions contemplated thereby. The
significant assumptions have been described under "ITT Hartford Summary of
Significant Capitalization Forecast Assumptions" above.
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<CAPTION>
(A)
FORECASTED
AT (A)(B)
SEPTEMBER 30, DECEMBER 31, PRO FORMA AFTER
1995 1995 DISTRIBUTION
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($ IN MILLIONS)
<S> <C> <C> <C>
Cash................................................. $ 82 $ 82 $ 82
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Debt from Non-Affiliated Entities.................... 1,511 1,918 1,918
Subsidiary Preferred Stock........................... 86 -- --
Common Stock and Capital Surplus..................... 1,610 1,610 1,610
Cumulative Translation Adjustment.................... 49 49 49
Unrealized Loss on Securities, Net of Tax............ (111) (111) (111)
Retained Earnings.................................... 3,440 2,856 2,856
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Total Capitalization................................. $ 6,585 $6,322 $6,322
====== ====== ======
</TABLE>
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(a) See "ITT Hartford Summary of Significant Capitalization Forecast
Assumptions".
(b) Column gives effect to the distribution of ITT Hartford's common stock.
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ITT INDUSTRIES UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Proxy includes unaudited pro forma consolidated financial statements of
ITT Industries as of June 30, 1995 and for the six months ended June 30, 1995.
The following pro forma consolidated financial statements have been updated
through September 30, 1995. The following Unaudited Pro Forma Consolidated
Balance Sheet of ITT Industries as of September 30, 1995, gives effect to the
Distribution. The Unaudited Pro Forma Consolidated Income Statement of ITT
Industries for the nine months ended September 30, 1995, presents the results of
operations of ITT Industries as if the Distribution and the conversion of
preferred stock to common shares and the termination of the ESOP were completed
at the beginning of the period.
The Unaudited Pro Forma Consolidated Financial Statements are based on the
historical financial statements of ITT Industries and the assumptions and
adjustments set forth in the accompanying Notes to ITT Industries Unaudited Pro
Forma Consolidated Financial Statements.
ITT INDUSTRIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1995
($ IN MILLIONS)
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<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Current assets............................................. $ 2,624 $ -- $ 2,624
Net assets of discontinued operations...................... 7,657 (7,657) --
Other assets............................................... 3,296 102 3,398
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Total assets..................................... $ 13,577 $(7,555) $ 6,022
======= ========= ========
Current liabilities........................................ $ 3,261 $ -- $ 3,261
Other liabilities.......................................... 2,366 -- 2,366
Stockholders equity --
Common stock.......................................... 116 -- 116
Paid-in capital....................................... 685 (370) 315
Cumulative translation adjustments.................... (36) -- (36)
Unrealized gain (loss) on securities.................. (111) 111 --
Retained earnings..................................... 7,296 (7,296) --
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7,950 (7,555) 395
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Total liabilities and equity..................... $ 13,577 $(7,555) $ 6,022
======= ========= ========
</TABLE>
ITT INDUSTRIES
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 1995
($ IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Net sales.................................................. $6,633 $ -- $ 6,633
Cost of sales.............................................. 5,730 -- 5,730
Selling, general, administrative and other operating
expenses................................................. 566 -- 566
Interest expense, net...................................... 92 -- 92
Miscellaneous expense, net................................. 163 -- 163
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82 -- 82
Income tax expense......................................... (45) -- (45)
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Income from continuing operations.......................... 37 -- 37
Discontinued operations:
Results of operations, net of tax..................... 533 (485) 48
Gain on disposition, net of tax....................... 403 -- 403
Extraordinary item -- Early extinguishment of debt, net of
tax benefit of $165...................................... (307) -- (307)
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Net income................................................. $ 666 $(485) $ 181
======= ========= ========
</TABLE>
See accompanying Notes to ITT Industries Unaudited Pro Forma Financial
Statements
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NOTES TO ITT INDUSTRIES UNAUDITED PRO FORMA FINANCIAL STATEMENTS
In addition to the historical results of ITT Industries for the respective
periods presented, the Unaudited Pro Forma Consolidated Financial Statements
reflect the following:
- The distribution of ITT Destinations common stock and ITT Hartford
common stock to the shareholders of ITT Industries. The distribution is
accounted for as a dividend with a corresponding reduction of net assets
of discontinued operations and retained earnings representing the equity
of ITT Destinations and ITT Hartford. In addition, there is a reduction
in the Unrealized Loss on Securities, Net representing the account
balance pertaining to ITT Hartford.
- The elimination of the income, including cumulative effects of
accounting changes, of ITT Destinations and ITT Hartford.
LIMITATIONS ON PRO FORMA FINANCIAL INFORMATION
The pro forma financial information contained herein does not purport to be
indicative of the results of operations that would actually have been reported
had the transactions underlying the pro forma adjustments actually been
consummated on such dates or of the results of operations that may be reported
by ITT Industries in the future. Pro forma information in respect of ITT
Industries assumes that the Distribution and the other referenced events were
completed at the beginning of the relevant reporting period.
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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/ WALTER F. DIEHL, JR.
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Walter F. Diehl, Jr.
Vice President and
Associate General Counsel
Dated: November 7, 1995
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION LOCATION
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<C> <S> <C>
(23) Consent of Arthur Andersen LLP...................................... Filed Herewith
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ITT Corporation:
As independent public accountants, we hereby consent to the incorporation
into ITT Corporation's previously filed Registration Statements on Form S-3
(File Nos. 33-37894 and 33-45756) of our report dated June 13, 1995 on the
consolidated financial statements of ITT Corporation, to be renamed ITT
Industries, Inc., included in ITT Corporation's Proxy Statement for the Special
Meeting of Stockholders on September 21, 1995, and to all references to our Firm
included in or made a part of such Registration Statements.
/s/ ARTHUR ANDERSEN LLP
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Arthur Andersen LLP
New York, NY
November 7, 1995
