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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
ITT Educational Services, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
45068B 10 9
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(CUSIP Number)
Richard S. Ward
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
(212) 258-1000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 15, 1997
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
(Continued on following pages)
(Page 1 of 6 Pages)
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AMENDMENT NO. 2 TO SCHEDULE 13D
ITT Corporation, a Nevada corporation (formerly known as ITT
Destinations, Inc., "ITT"), hereby amends and supplements its statement on
Schedule 13D relating to the common stock, par value $.01 per share (the "ESI
common stock"), of ITT Educational Services, Inc., a Delaware corporation
("ESI"), as originally filed with the Securities and Exchange Commission (the
"Commission") on October 17, 1995, and Amendment No. 1 thereto, as filed with
the Commission on March 14, 1997. This Schedule 13D of ITT is hereinafter
referred to as the "Statement".
ITT was formerly a wholly owned subsidiary of ITT Corporation, a
Delaware corporation (which has since been reincorporated in Indiana and changed
its name to ITT Industries, Inc., "Old ITT"). On December 19, 1995, Old ITT
distributed to its stockholders of record on such date all of the outstanding
common stock of ITT.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Statement is hereby amended to read in its entirety as
follows:
"The Securities reported on herein were acquired through the
contribution described in Item 3.
On January 31, 1997, a subsidiary of Hilton Hotels Corporation ("Hilton")
announced a tender offer (the "Hilton Tender Offer") for approximately 50.1% of
the outstanding shares of ITT's common stock. Hilton also has announced that, if
the Hilton Tender Offer succeeds, it will merge ITT with Hilton or a subsidiary
of Hilton (such merger, together with the Hilton Tender Offer, the "Hilton
Transaction"). At a meeting held on February 11, 1997, the Board of Directors of
ITT (the "Board") unanimously determined that the Hilton Transaction, including
the Hilton Tender Offer, is inadequate and not in the best interests of ITT. At
a meeting held on July 15, 1997, the Board reassessed the Hilton Transaction in
light of developments since February 11, including the Comprehensive Plan (as
defined below), and unanimously reaffirmed its conclusion that the Hilton
Transaction, including the Hilton Tender Offer, is inadequate and not in the
best interests of ITT.
In addition, at the July 15, 1997 meeting, the Board continued its
implementation of ITT's long-term strategic plan by approving a comprehensive
plan (the "Comprehensive Plan"), which is designed to enhance the
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value of the ongoing investment of stockholders as well as to further the
interests of ITT's employees, creditors, customers and the economies and
communities in which ITT operates.
A major element of the Comprehensive Plan involves the separation of ITT
into three distinct publicly owned companies focused on (a) hotels and gaming,
(b) telephone directories publishing and (c) post-secondary technical education.
The separation will be effected through the distribution or "spin-off" of all
the shares owned by ITT to its stockholders of (i) the new subsidiary of ITT
that was formed to hold ITT's hotels and gaming business (the "Destinations
Distribution") and (ii) ESI, the subsidiary of ITT that operates its
post-secondary technical education business (the "ESI Distribution" and,
together with the Destinations Distribution, the "Distributions"). After the
Distributions, ITT's only business will be its telephone directories publishing
business and it is expected that ITT will change its name to "ITT Information
Services, Inc." ("ITT ISI").
A second major element of the Comprehensive Plan involves the repurchase
through a cash tender offer of up to 30 million shares of ITT common stock, no
par value (approximately 25.7% of the outstanding shares), at a price per share
of $70 (the "Stock Tender Offer"). The Stock Tender Offer will provide ITT
stockholders who wish to sell a portion of their shares an opportunity to do so
at a premium to recent market prices and provide stockholders who wish to
increase their proportionate investment in ITT's three businesses after the
Distributions, and thus in the future earnings and assets of such businesses, an
opportunity to do so. The Stock Tender Offer will also afford to ITT
stockholders the opportunity to dispose of shares without the usual transaction
costs associated with a market sale.
A third element of the Comprehensive Plan is the allocation of the
indebtedness of the combined entity between ITT's hotels and gaming business and
telephone directories publishing business in a manner that is appropriate for
the credit capacity and capitalization requirements of each entity. The Board
believes that the preferred means of making this allocation
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is to replace ITT's existing indebtedness with indebtedness issued by the entity
that ultimately will be liable for such indebtedness. Accordingly, as part of
the Comprehensive Plan, ITT intends to commence a tender offer for the publicly
held debt securities issued by ITT Corporation (the "Debt Tender Offer" and,
together with the Stock Tender Offer, the "Tender Offers") and to repay certain
other indebtedness. The Tender Offers will be consummated prior to the
Distributions. The Distributions, however, are not conditioned upon any minimum
amount of shares or indebtedness being acquired pursuant to the Tender Offers.
The ESI Distribution will be made on a date determined by the Board
(the "Distribution Date") to stockholders of record of ITT at the close of
business on the record date (the "Record Date"). ITT stockholders will not be
required to pay for shares of ESI common stock received in the ESI
Distribution, or to surrender or exchange shares of ITT common stock in order
to receive the shares of ESI common stock. In addition, ITT stockholders will
not vote on the ESI Distribution, nor will they have any appraisal rights in
connection with the ESI Distribution. After the ESI Distribution, ESI will be
an independent public company.
Consummation of the ESI Distribution is subject to certain conditions,
including (a) confirmation of ITT's belief that no approvals by any
governmental or regulatory bodies are needed, or receipt of all necessary
approvals of any governmental or regulatory bodies, including approval by the
required state educational authorities, accrediting commissions and the U.S.
Department of Education, (b) all necessary consents of third parties having
been obtained, (c) final action by the Board of Directors of ITT declaring the
ESI Distribution, (d) the satisfaction of all conditions to the Tender Offers
(other than the conditions to the Distributions set forth herein), including
the financing conditions, (e) there not being in effect any statute, rule,
regulation or order of any court, governmental or regulatory body which
prohibits or makes illegal the transactions contemplated by the Comprehensive
Plan, (f) the consummation of the Destinations Distribution and (g) the receipt
by ITT of an opinion of counsel that the ESI Distribution will be tax-free to
ITT and its stockholders.
ITT may abandon the ESI Distribution
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at any time for any reason, regardless of whether any of the above conditions
are satisfied.
In addition, it is expected that ESI will adopt a rights plan (the "Rights
Plan") and, following the Distributions, declare a dividend of one right (a
"Right", and together, the "Rights") to purchase one one-thousandth of a share
of a new series of preferred stock (the "Preferred Shares") for each outstanding
share of ESI common stock. The Rights are not expected to be exercisable until
(i) a person or group has acquired, or has obtained the right to acquire,
beneficial ownership of more than 15% of the outstanding shares of ESI common
stock, subject to certain limitations, or (ii) such date, if any, as may be
designated by the Board of Directors of ESI following the commencement of, or
the disclosure of an intent to commence, a tender or exchange offer for more
than 15% of the outstanding shares of ESI common stock. At such time as exists a
person or group as described in clause (i) above, it is expected that the Rights
will entitle each holder (other than such person or group) to purchase Preferred
Shares at a significant discount to the market value of ESI common stock. It is
expected that, in the event ESI is acquired in a merger or other business
combination, the Rights Plan will provide each Rights holder the right to
purchase a certain number of shares of common stock in the acquiring
corporation, the surviving corporation or certain other entities based on the
particular circumstances at a significant discount to the applicable market
value. Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of ESI, including, without limitation, the right to vote
or to receive dividends with respect to the Rights or the Preferred Shares
relating thereto.
In addition, it is expected that ESI will adopt certain amendments to
ESI's by-laws that will, among other things, (i) require adherence by
stockholders to certain advance notice procedures and timing requirements for
raising business or making nominations at stockholders' meetings and (ii)
prohibit stockholders from calling a special meeting of stockholders.
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SIGNATURE
After reasonable inquiry and to the best of her knowledge and belief,
the undersigned certifies that the information set forth in this Schedule 13D
is true, complete and accurate.
Dated: July 22, 1997
ITT CORPORATION
by /s/ Elizabeth A. Tuttle
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Name: Elizabeth A. Tuttle
Title: Senior Vice President and
Treasurer
