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ITT sets $400M restructuring
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December 2, 1998: 10:20 a.m. ET
Streamlining, cost-cutting efforts to affect all units, could cost up to 1,200 jobs
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NEW YORK (CNNfn) - Industrial parts maker ITT Industries Inc. is putting the wheels in motion for a massive restructuring that could mean layoffs for up to 1,200 workers and cost the company up to $400 million.
The White Plains, N.Y., maker of heavy-duty products said it expects to take a $370 million to $400 million charge in the fourth quarter to pay for the restructuring that will affect all of ITT's business units. The charge will include other asset write-offs and reserve actions.
Travis Engen, chairman and chief executive officer of ITT, acknowledged, however, that the streamlining measures will mostly target the company's pumps and connector businesses.
"The actions we have taken, and those we will take over the next year, demonstrate clearly the degree to which ITT Industries is committed to increasing shareholder value," Engen said in a statement prepared for his address later Wednesday before the Goldman Sachs Global Capital Goods Conference in New York City.
"Some of the steps mean recognizing today the future potential value creation of a business through its sale. This was the case with the recent divestiture of our automotive businesses. ITT Industries received significant value, and we improved our balance and opportunities for sustained earnings growth," he said.
At the same time, Engen said the company's previously announced stock-buyback program is going better than expected.
Initiated in July, using proceeds from the sale of automotive assets, the program earmarked $1.1 billion to repurchase shares on the open market.
At the end of November, he said, the company had repurchased about 18.5 million shares, representing about 15 percent of the shares outstanding at the time ITT began the buyback.
ITT operates four business segments. The largest is its Pumps and Complementary Products unit, accounting for 39 percent of sales. The Defense Products and Services segment makes up 29 percent of revenue, while Connectors and Switches account for about 13 percent.
Lastly, Specialty Products, which includes businesses in industrial components, specialty valves, and marine markets, makes up 19 percent of sales.
Engen also is expected to review a structural cost-reduction program which the company will implement in the coming months.
"We have conservative economic growth expectations for next year and we want to be able to deliver earnings growth and margin improvement in what will be, at best, a mixed market environment," Engen says. "We anticipate a major restructuring across all of our units, particularly in our pumps business and our connector business.
Shares of ITT (IIN) finished at 37-1/8 Tuesday on the New York Stock Exchange. 
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ITT Industries
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