Document Em8gXJBg3aGnbDkKpXkxYXeLb

MOODY'S. INDUSTRIAL MANUAL % ' 1975 VOL. 1 A1 ROBERT H. MESSNER, Publisher henry porreca, Asst Publisher ROBERT P. hanson, Editor-in-Chief Editorial Board ROBERT W. BURKE KENNETH W. CLIFFORD BRIAN T. COFFEY RICHARD B. DAVIS ALFRED C. ELLINGHAM ALBERT C. ESOKAIT ERWIN W. KAUFMAN HOWARD C. KIEDAISCII JOSEPH B. LETCH JOSEPH J. NESTO FRANK R. PLATAROTE MICHAEL A. RABBIA MOODY'S INVESTORS SERVICE, INC. 99 CHURCH STREET, NEW YORK, N. Y. 10007 (212) 287-8800 SEE FOLLOWING PAGE FOR COMPLETE LIST OF OFFICES Copvright 1975 bv MOODY'S INVESTORS SERVICE, INC. New York All rights reserved. iiifi'r.ronn ( T irl* i-- 11 < n i i . j n ri'fl'inrTT..... r - y rr-ir r n n~irr ir~~r n n rrr .ii m n n ir r r T r h iih it tt 558 MOODY'S INDUSTRIAL MANUAL INTERNATIONAL TELEPHONE & TELEGRAPH CORPORATION CAPITAL STRUCTURE LONG TERM DEBT Issue 1. I!*''- notes. 1982 ___________ _____________ 2. S.F. aeoenture 3.90s, 1995 .................... 3. 8.30% notes. 1975 ____________________ 4. S. f. deb. 10s. 2000 ......................................... 5. 9%% notes. 1383 ............................................. 6. Conv. subord. deb. 8%s. 2000 ...-----7. Conv. sub. deb. 4%s, 1987 ---------------- Rating A A A A Baa ____ Amount Outstanding SIOO.OCO.OOO' Charges Earned 1974 1973 "75.000,0001 SIOO.OGO.OOO! 50.000.000 Interest Dates J&D 1 JdcD 1 JitD 1 Oct. 1 Call Price 100.00 U. 107.120 2109.375 100 2108.625 0,103% Price 1974 107%-101% 1 04 2* 55 2 101%- 32 * V U3%-:oo% 1064-103% iL .... 8. 8%% notes. 1989 .........................................9. French Franc deb. $.50s. 1979-88 .... 50.000.000 45.000.000 3.18 3.99 10. 12.6% I. t. bank loans. 1976-79 ______ 37.500.000 11. 8.31-9% notes. 1982 ...................................... 12. 4'b% notes. 1973-84 ...................................... 13. L. t. bank loans. 1978 --------------------------14. L. t. bank loans. 1981______ __________ 15. S.F. deb. 4.90s. 1987 .................................... 16.-Other ................................................................... 17. Consolidated Subsidiaries CAPITAL STOCK Issue ` 1. 54 cum. conv. pfd., ser. E____________ 2. 54 cum. conv. pfd.. ser. F___...______ 3. 54 cum. conv. pfd.. ser. H------------------- 4. 14.50 cum. conv. pfd., ser. I 5. 54 cum. conv. pfd.. ser. J____________ 6. 54 cum. conv. pfd., ser. K____________ . 7. S2.25 series N.................................................... 8. 55 series O_______ ______.............. 9. Common Par 37.000.000 35.000.000 . .30.000.000 20 000 000 18.701.000 27.497.000 1.574.379.000 Amount 71.423 shs. Earned per Sh. 1974 1973 . 979.450 shs. 6.033.840 shs. 1.000.000 shs. Si 2 23224.000 shs. 52126 524.90 23.63 5] 4.17 A&O 1 1103.25 78 - 58 82-75 Divs. per Sh. 1974 1973 54.00 54.00 4.00 4.00 4.00 4.00 4.50 4.50 4.00 4.00 4.00 4.00 2.25 2.25 5.00 5.00 1.43 1.28 CaU Price Text Text Text Text Text Text Text Text Price Range iy 4 55 * .8%- 33% 1W*7- 56 - 29 53 - 28% 52*.- 28% 35^*- 13 109 - 50% 103 - Si 10t\r- 47% aW * ( 4 * JUV4 61 U- 36 29 %- 12 ^Subject to change; see text. TJAs reported on average shares including common equivalents. 1973 before extraordinary items; after, 54.222. ^Beginning July 1, 1981. 2Sold in July 1974. SSold June S. 197S. ^Beginning June 1, 1981. HI8TORY , succeeding a company of same name In-1 and 1974 Moody's Industrial Manuals. . I corporated in Maryland. June 16. 1920. i Company reported no ma;or acquisitions Incorporated in Delaware Jan. 31, 1968. | For principal company acquisitions see 1964 I during 1974. - PRINCIPAL SUBSIDIARIES Name % of Voting Name Jurisdiction in Which Organized Parent % of Voting Owned Inti Tel. and Tel. Corp. ("ITT") . Hamilton Management Corp. -ITT Community Development Corp............................................... ........ [EITT Consum. Serv. Corp. riTTCS") ..................................... EITT Continental Baking Co. . ITT Educational Services. Inc. . ITT Gnnnell Corp._____ _________ ITT Gwaltney Inc._______________ ITT Higbie Mfg. Co........................ .. ITT Service Industries Corp. .. ITT Thompson Industries, Inc. . ITT World Directories Inc.____ Josef Reiss. Technische Kunstoffwaren/abrik G.m.b.H.. Howard W. Sams & Co.. Inc.___ The O. M. Scott & Sons Co.___ Elnt'l Standard Elec. Corp. Compagnie Generale de Con. Fabbrica Apparecchiature per Comunicazioni Elettrtche Stand. Electrica. S.A____________ Stand. Electrica. S.A. ..._____ ... Standard Elektrik Lorenz A.G.. Stand. Telephon und Radio AG. Dei. England Del. Del. Del. Del. DeL Del. DeL DeL Del. Dei. Del. Del. Germany Del. DeL DeL. New York Del. Belgium France ITT ITT ITT 100 100 100 ITT 100 ITT ITT ITT ITT ITT ITT ITT ITT ITT 91.65 100 100 100 100 100 100 . 100 100 75 ITT ITT ITT ITT ITT ITT ITT . ,, 100 100 100 100 , 100 100 ITT ISEC 100 99.99 ISEC 99.95 Italy France England Brazil S` pain Germany Switzerland ISEC 100 ISEC 67.96 ITT Indust. Ltd. 100 ISEC 100 ISEC 75.1 ISEC .99.44 ISEC 100 ElntT Standard Elec. Corp. {"ISEC )--Contd Stand. Telephones and Cables - Ltd. .......................................................... England Stand. Telephones and Cables Australia Transelectronics Ltd. Hong Kong ITT Industries. Inc. (TTTT) ..... Grohe Handels G.m.b.H. ________ T'!T <;e*4Hschft fur Beteiligun- gen G.m.b.H. (TTTG") ........ ITT Svenska AB______ ____________ SWF Spezialfabrik fur Autozu- behor Gustav Rau G.m.b.H. . . Alfred Teves G.m.b.H........... ........... U. S. TeL Sc Tel. Corp. C'UST&T") Amer. Cable Sc Radio Corp. C'AC&R") ...................................... -- All Amer. Cables Sc Radio. Inc.. Commercial Cable Co.. The____ ITT World Comm. Inc............. ........ Del. Germany Germany Sweden Germany Germany DeL Del. N. Y. N. Y. Del. ISEC 100 ISEC 100 ITT Far East Limited 100 ISF.C 100 85 irn 100 1TTT ITTG 100 USTStT ACScR 100 100 ("CIVT) .......................................... ...... 'Del. Virgin Islands Tel. Corp. Virgin IsL AC&R CIVI 100 100 IntT TeL Sc Tel. Corp.. Sud Del. ITT IOO Significant Insurance and Finance Subsidiaries--Not Consolidated Abbey IntT Corp Ca. Excess Holdings Ltd. _______________ England Hartford Fire Ins, Co. ....___..... Conn. ITT ITT ITT 100 100 99.9 Intercontinental Asslcurazioni S.p.A.............................................................. Italy IntT Tel. Sc Tel. Credit Corp.____ DeL ITT ITT 100 100 ISE Finance Hlds. S.A......................... Luxembg. ITT Financial Corp. ("ITTFC") .. DeL ISEC IT'l'CS 100 100 ITT Life Ins. Corp. Wise. ITTFC 9? ITT Indus. Credit Co.......................... Nev. Kellogg Credit Corp_______ _________ Del. ITTFC ITT 100 100 Transatlantische Versicherungs A.G. ............................................................ Germany ISEC 99.26 Note: The names of some consolidated wholly-owned subsidiaries of ITT carrying on the same lines of business as other subsidiaries named above, have been omitted. Also omitted from the list are the names of other subsidiaries since, if considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary. ESee appended statements. Joint Ventures In 1973 formed United States Transmission Systems (USTS) with Transcontinental Gas Pipeline Corp.. and filed for FCC approval to operate it. Company plans to provide private-line communication service along a 200-mile-wide corridor from New York to Texas. . . BUSINESS .' General: Engaged directly and through subsidiaries, in development, manufacture, sale, leasing and service of electronic and telecommunication equipment and industrial and'Consumer products and related financial attapulgtte; consumer and business services; activities; in life, fire and casualty insurance: manufacture and distribution of food prod fproduction of chemical cellulose, wood pulp, ucts and automotive parts; and telecommuni umber Sc wood derived chemicals; mining, cation operations. < beneficlating and marketing of silica and Relative contributions to consolidated sales and revenues and income by principal product groups for the five years ended Dec. 31, 1974. are shown below: Principal Product Groups .' -Sales Sc Revenues- 1974 1973 1972 1971 1970 Manufacturing: (Dollar Amounts in Millions) " Telecommunication equipment .......__-__....___ ...__............. 53,037 27% 52.451 24% 51.874 22% 51.541 20% 51.196 18% Industrial products ____________ ___________________________________ _________ 2.453 22 2.022 20 1,573 18 1.418 19 1.336 20 Automotive Sc consumer products ...............................___ Natural resources __________ ____________________________________ __________ 1,441 13 586 5 1.346 13 456 5 1,008 12 355 4 864 11 313 4 7 15 10 305 5 . Defense and space programs ..................__________ .... 443 4 445 4 469 6 469 6 434 6 Total mfg_________ ______ ./ ' Consumer and Business Servicesx- Food processing and services .. Consumer services .____ ... ........... t-'Telecommunication operations*""" .(Business and,.financial services .........I""" TToC^Cona. Sc Bus. Svcs. -- ' ---- ' 7.960 71 6.720 66 1.319 724 161 588 12 7 1 5 1.145 674 139 518 11 7 1 5 2.792 25 ' 2.476 24 5,279 62 1.013 600 122 414 12 7 1 5 2.149 25 4.605 60 971 13 554 7 111 1 388 5 2.024 26 3.986 59 917 14 ' ' 493 7 ::s 1 332, 5 1.837 27 -s " f?; . i. ,c . yV' '*. 1 - 'U --- * M -AT -<'~l Manufacturing (eont'd): Divestible Operations: Under consent decrees . EOther ____________________ 1974 384 3 18 1 ------------- Saies ie Revenues----------------- 1973 ' 1972 1971 (Dollar Amounts in Millions) 877 9 110 1 1,040 12 101 1 937 12 1Q9 1970 856 13 101 1 Total ................................... $11,154 100% $10,183 100% $3,569 100% $7,675 100% S6.7SO 100% Manufacturing: Telecommunication equipment ... Industrial products ...--.......... Automotive & consumer products Natural resources ...--.......___ Defense and space programs_____ 31974 $176 98 28 66 5 39% 22 6 14 I 331973 T1ST2 31971 (Dollar Amounts in Millions) $155 S9 54 54 12 30% 17 10 10 2 $110 61 43 33 11 23% 13 9 8 2 $$S 15% 59 14 36 3 28 7 U2 1970 $46 54 14 32 3 30 8 11 3 Total mfg. ---------------------- ------------iConsumer and Business Services: Food processing and services--------- Consumer services ----------- .......... Telecommunication operations .... Hartford Fire .............................................. Business and ttwanrtai services___ 371 82 _(4) (_1_) 34 8 81 18 61 364 69 (7) (1) (8) (1) 25 5 125 24 28 5 263 55 6i 13 3 22 5 126 26 28 6 199 46 ' 19 4 12 3 15 3 105 25 24 6 173 45 21 6 13 3 16 4 88 23 17 5 Tot. Cons. & Bus. Svces.----------Divestible Operations: Under consent decrees ....--...... UiOther ________________________________ 117 26 (19) (4) (18) (4) 163 32 (S) (1) (1) - 195 41 14 3 51 175 41 33 8 21 5 155 41 - 27 7 27 7 Total ----------------------------------------------- $451 100% $521 100% $477 100% $428 1100% $382 100% ^Includes Puerto Rico Telephone Co. 1970-73. Argentina operations 1970-Sept. 30. 1974 and Chilean companies on an equity basis 1970-71. .. ^Excludes 1973 and 1972 gains on extraordinary divestments under consent decrees of $6.5 and S6.7 million, respectively, or $0.05 per common share in both years, and 1971 provision, for losses on investment in Chilean operations of $70 million or $0.57 per common share. 3 Allocated corporate charges for 1973 have been restated to conform with improved techniques initiated in 1974. S&les and revenues of consolidated United of the work of this Group is done for the Other European Countries: ITT has wholly- States and Canadian operations aggregated United States Government under prune con owned or majority-owned subsidiaries en $4,992,542,000. $4,911,929,000, S4.578.8S3.000. S4.- tracts and subcontracts that are subject to gaged in the manufacture of communication 265.636.000 and $3,972,440,000 for the year3 1974. renegotiation and termination by the Govern and electronic equipment In Austria. Den 1973. 1972, 1971 and 1370. respectively. United ment. Certain of these contracts also contain mark, Finland. Greece, Italy, The Nether States and Canadian operations accounted provisions for price redecermmation based on lands. Norway, Portugal. Spam, Sweden and for approximately 51%. 47% and 55% in 1974. performance and for liquidated- damages in Switzerland. Products of these companies in 1973 and 1972, respectively, and 65% in the favor of the Government in certain circum clude military communication equipment, two preceding years, of consolidated income stances. telephone apparatus, switching systems, before extraordinary items. MANUFACTURING --FOREIGN transmission equipment, mobile radio equip ment and consumer electronic products, ITT MANUFACTURING--U. S. & CANADA The principal foreign manufacturing oper aiso has wholly-owned subsidiaries engaged Manufacturing operations of ITT la United States and Canada, with sales of S2.6 billion ; in 1974, are conducted through divisions and, subsidiaries that may be grouped as follows: | Telecommunication Equipment Group,; which accounted for 10% of the total sales; of United States and Canadian manufactur- j ing divisions and subsidiaries of ITT for 1974. j is principally engaged in the engineering,: manufacture, sale and Installation of tele phone apparatus, switching systems, auto matic toll ticketing and transmission equip ment, postal automation equipment, commer cial microwave systems, private communica tion systems and marine navigational and communication aids. Industrial Products Group, which ac counted for 50% of the total sales of United States and Canadian manufacturing divisions and subsidiaries of ITT for 1974, Is prin cipally engaged in the engineering, manufac ture and sale of equipment for the construc tion and orocess industries and of compo nents for the aviation, computer and construc tion industries. Its principal products Include temperature and process controls and instru ments. pumps and air compressors, heating and air-conditioning equipment, abrasive prodocts, electrical connectors and vacuum I ations of ITT have, as their principal cus tomers. foreign governments, agencies oper ating communication systems and automobile companies. Products of the group are sold directly and through a worldwide network of distributors, field representatives and sales subsidiaries. In 1974. total sales of foreign manufacturing subsidiaries in Western Europe (Including the United Kingdom), Latin America and other areas aggregated $5.4 billion, and such areas accounted for approximately 94%. 3% and 3%, respectively, of the total foreign manu facturing sales of ITT and its subsidiaries consolidated. These foreign manufacturing operations in clude: Germany: Standard Elektrik Lorenz AG (99.44% owned), the largest foreign manufac turing unit of ITT in terms of sales, manufac tures a wide variety of communication and electronic equipment, including telephone appartus, switching systems, transmission equipment, wire ana cable, teleprinters. UHF and VHF wideband radio links, railway sig naling equipment, military communication equipment, data systems and data peripheral equipment, document and material handling equipment, instrumentation controls, components, integrated circuits, 'electron tubes : I I j | . in the manufacture of automotive equipment in Italy. Certain European units have subsidiaries in Africa. Special organizations have been es tablished in Europe to coordinate export of telecommunication equipment and other products to markets in Africa, the Middle East and Eastern Europe. Special manage ment organizations have been established to coordinate the marketing in Europe of a full line of electronic components and of pri vate communication and industrial and con- sumer products. ., Latin America: Standard Electrica. S.A.. (100% owned), one of Brazil's major manufac turers of communication equipment, pro duces telecommunication systems including telephone apparatus, switching systems and transmission equipment. Manufacturing facil ities in Mexico 149% owned) and Peru (60% owned) produce telecommunication equip ment. In March 1975, ITT announced that it plans to sell a majority of its shares in the Brazilian manufacturing subsidiary to Brazilian interests. The terms of this planned sale have not been established. With respect to ITT's manufacturing subsidiaries In Ar gentina. reference is made to "Other Divest ible Operations" below. devices, semiconductors. Integrated circuits and consumer electronic products. Alfred Par East and Pacific: Australia. Standard and wire and cable. Teves G.m.b.H. (100% owned) is engaged pri Telephones & Cables Pty. Ltd. (100% owned) Automotive Products Group, which ac counted for 8% of the total sales of United States and Canadian manufacturing divisions and subsidiaries of ITT for 1974, is engaged in the engineering, manufacture and sale of automotive equipment and accessories for the original equipment market and aftermar ket. Its principal products Include automo tive stampings, mouldings, accessories and pans. Natural Resources Group, which accounted for 22% of the total sales of United States and Canadian manufacturing divisions and subsidiaries of ITT for 1974, is engaged In the production of wood- pulps (chemical cellulose and bleached papermaking pulps) and other marily In the manufacture and sale of auto mobile brakes, hydraulic equipment for air craft and industry and air-conditioning equipment. United Kingdom: Standard Telephones and Cables Limited (100% owned), the second largest foreign manufacturing unit of ITT la terms of sales, manufactures a wide variety of communication and electronic equipment, including telephone apparatus, switching sys tems. transmission equipment, components, land and submarine cable systems and con sumer electronic products. * Franee: Compagnie Generale de Construc tions Telephomques (CGCT) (99.95% owned). produces telecommunication and electronic equipment, including telephone apparatus, switching systems, transmission equipment, radio transmitters and air navigation equip ment; it owns a substantial interest in the largest cable manufacturing company in Aus tralia. Hong Kong. Transeiectronics Ltd. (100% owned) produces certain consumer electronic products for European markets. Investments: ITT has investments in the capital stock of two Japanese companies: Nippon Electric Co.. Ltd. (3.8% owned), which manufactures communication and electronic equipment, and Sumitomo Electric Indus tries, Ltd. (6.7% owned), which principally manufactures wire and cable. . .^ wood products (lumber, plywood, treated Le Materiel Telephonique (67.96% owned) and CONSUMER AND BUSINESS SERVICES V-n wood products, logs and sifvtchemlcals), and in the business of mining, beneficiatlng and marketing silica tused In the manufacture of glass, ceramic tile and porcelain products) and attapulgite (a form of fuller's earth, which is used as an absorbent or carrier in a wide variety of products and processes). Defense and Space Programs Group, which accounted for 10% of the total sales of United States and Canadian manufacturing divisions other smaller companies manufacture an ex tensive line of telephone apparatus, switch ing systems, signaling systems, remote con trol devices, radio transmitters, air naviga tion systems; flight simulators, electronic measurement and indicating instruments, temperature and process controls and instru ments, pumps and plumbing products, con sumer electronic products, heating acceler ators and fluid circulating pumps. ITT's consumer and business services are ,. carried on through divisions and through ;* subsidiaries substantially all of which are wholly-owned. At Dec. 31, 1974, the gross o?* plant Investment in ITT facilities related tOT3T consumer and business services, excluding Hartford Fire Insurance Co., represented ap-4 A proximateiy 30% of the consolidated gross' " plant, property and equipment of ITT. The ' '? more important consumer and business serv- ' and subsidiaries of ITT for 1974, is prin Belgium: Bell Telephone Manufacturing ices are described below. ..... j- - ... cipally engaged In the engineering, manufac Company (99.99% owned) manufactures a Feed Rreeesslng and Services:' ' " ' ' ture. sale, installation, maintenance and op eration of telecommunication, electronic and energy related equipment, including com ponent parts, and in research, development ind training in these and allied fields. Most wide variety of communication and elec tronic equipment, including telephone appa ratus, switching systems, transmission equip ment, components, mail handling equipment and consumer electronic products. ITT Continental Baking Co. is principally < engaged in the manufacturing ana selling at wholesale at bread, cakes and snack foods, frozen foods, candy and related products in the United State*. Continental's baked prod- 560 MOODY1S INDUSTRIAL MANUAL ucts are sold principally under two trade marks. "Wonder" for its bread products, and "Hostess" for its cake products. Continentals frozen food products are sold tinder the "Morton" trademark. ITT Gwaltney Inc. processes a variety of fresh and processed pork products, ranging from fresh pork cuts to the aged and spec ially cured "Genuine Smittifleld" Ham. and including bacon sausage and luncheon meats. ' Consumer Services: The Sheraton Corp. owns and operates, or operates under lease or management agreements, or grants franchises to indepen dent operators of. hotels and motor inns in approximately ISO cities in the United States and 25 foreign countries. ITT Community Development Corp. is en gaged in land development at Paim Coast. Flagler County, Fla., where it is in the pro cess of implementing development plans for approximately 30,000 acres and may develop substantial additional contiguous acreage presently held within ITT. The O. M. Scott Sc Sons Co. is engaged in the sale of lawn grass seed, the manu facture and sale of lawn fertilizers, weed and insect controls and the sale and distribution of other lawn care products. Other ITT subsidiaries operate parking fa cilities at airports, downtown lots and ga rages. hospitals and stadiums in the United States ana Europe, provide cleaning, main tenance and related services for commercial and industrial buildings, publish reference services, magazines and books, and provide post-high school resident and home study training in technical, trade and business sub jects. Hartford and its Insurance company subsid iaries as a group are engaged in the business of writing fire, marine, casualty, life and accident and health insurance, annuity con tracts and surety bonds, and in the invest ment and reinvestment of their assets. Such group is freouently referred to by persons in the ir.sur-r.ee industry and others as the Hartford Insurance Group or The Hartford. For complete description of operations, see Moodys Bank Sc Finance Manual. In March '.974. the U. S. Commissioner of Internal Revenue advised tax counsel for Hartford Fire Insurance Co. that the Internal Revenue Service was revoking retroactively its 1969 rulings relating to ITT's acquisition of Hartford. The rulings related to the "taxfree" nature of the exchange, i.e.. to the right of former Hartford shareholders to de fer payment of any tax on the excess of the value of the ITT stock acquired in exchange for their Hartford stock over the tax base of such Hartford stock, until such time as the ITT stock so acquired was sold or otherwise disposed of in a taxable transaction. The Internal Revenue Service indicated that the rulings were incorrect a3 a matter of law, asserted that performance under a certain contract submitted to the Service by ITT in connection with its ruling request was not in accordance with the contract, and asserted that certain material facts were misstated or omitted in the ruling request submitted by ITT. ITT Is of the opinion that the Internal Revenue Service is in error on all these points, and ITT is taking steps to challenge these contentions in court. In the event that the courts do not sus tain the tax-free nature of the Hartford ex change, it is ITT's intention to reimburse former Hartford shareholders for any net ating results of Avis will not be Included in ITT's financial statements, any net pro ceeds from the sale of such shares will be turned over to ITT. Levitt is principally engaged in the busi ness of acquiring and improving tracts of land in the continental United States. Puerto Rico. Canada. France and Spain and in the planning and constructing thereon of residenual communities and in the sale of com pleted single family dwellings. In Dec. 1973. after pursuing many avenues of divestment possibilities. ITT estimated the value that it could currently anticipate recovering from the divestment of Levitt, and concluded that an after-tax provision of $25,400,000 was necessary to cover probable unrealizable values. At Dec. 31. 1974. ITT's investment in Levitt, net of such provision for probable Unrealizable values, amounted to $136,427,000, including debt of Levitt assumed by ITT in 1974. On Jan. 16. 1975. all of the shares of capital stock of Levitt were transferred to the control of a Court-appointed trustee in accordance with the consent decrees. Al though the operating results of Levitt will not be included in ITT's financial statements, any net proceeds from the sale of such shares will be turned over to ITT. ITT is obligated to provide additional capital that may be required by Levitt prior to disposition by the court-appointed trustee. Whether a gain or loss will be sustained by ITT on the final dispositions of the former fire protection division of Grinnell. Avis, and Levitt will be dependent upon the methods, terms and times of dispositions approved by the Court. - Other Dlvestible Operations ' The financial statements refer to certain Telecommunication Operations: Through ITT World Communications Inc. and other subsidiaries, ITT operates by sub marine cable, satellite and radio in providing international telegraph, telex and other re cord communication services to and from the United States and its principal posses sions, the United Kingdom, the Philippines and several countries m Latin America and the Caribbean, as well as international tele phone services In Indonesia. Puerto Rico, the virgin Islands. Panama and Bolivia. These companies provide their respective services on a worldwide basis through interconnec tion arrangements with each other and with other telecommunication entitles. An ITT subsidiary furnishes telephone service in the Virgin Islands. Business and Financial Services: overall additional Federal income tax which might result from the Internal Revenue Serv ice action, including any Federal Income tax that might be due as a result of such reim bursement. Many complex factors would af fect such shareholders' tax liabilities which would be reimbursed. On the basis of an independent survey of former Hartford shareholders conducted in 1974, based on sta tistical sampling. ITT estimates that it might have a contingent liability of approximately 5100,000.000 for such reimbursement, includ ing interest and tax on the tax liability. If ft were to become apparent that the courts would not uphold ITTs position as to the tax-free nature of the Hartford exchange, ITT would make an extraordinary charge to Income in the amount of the then estimated liability, which charge would have a ma terial effect on net income for the year in companies which have been divested by ITT otherwise than under the consent decrees, or the accounts of which for another reason have ceased to be consolidated with the ac counts of ITT. Reference is made to the Statement of Consolidated Income of ITT and to the first tabulation under "Business" for Information as to sales and revenues and income of such companies. In 1971. the Government of Chile took over the management of ITT's telephone operating subsidiary in that country. In view of that and other developments in Chile during 1971. a reserve of 570,000.000 was provided (with no associated United States income tax bene fits), which was equivalent to the excess of ITT's total investment in all Chilean com panies over amounts receivable from insur- ` ance carried with the Overseas Private Investment Corporation ("OPIC"), an agency . Hamilton Management Corp. is the invest which the charge is made. of the United States Government, with re-' ment adviser and distributor of Hamilton See also Other Legal Proceedings below. spect to such companies, and other recover Funds, Inc.. Hamilton Income Fund. Inc., and ies. Approximately 60% of ITT's original net Hamilton Growth Fund. Inc., open-end in DivestibJe Operations Under Consent Decrees investment of approximately S150.000.000 in - vestment companies registered under the In The consent decrees of Sept. 24. 1971, de the telephone operating subsidiary was in- : vestment Company Act of 1540. In Mar. 1975. scribed under Antitrust Consent Decrees be sured against expropriation with OPIC. In ITT and Oppenheimer Management Corp. low require that ITT (i) within two years Dec. 1974. the Government of Chile formally . reached a preliminary agreement for the sale of the ''date of such decrees divest itself expropriated ITT's interest in the subsidiary of Hamilton to Oppenheimer. The proposed of Canteen Corp. and its subsidiaries, the and entered into a settlement with ITT in sale is subject to various conditions, includ fire protection division of ITT Grinnell Corp. respect of such Interest. In Jan. 1975. ITT ing the negotiation of a formal agreement and Grinnell's 46% interest in Hajoca Corp; and OPIC agreed to a settlement of ITT's . and the approval of the shareholders of the and (ii) within three years of such date divest insurance claim against OPIC. The net re Hamilton investment companies. The direc itself of Avis, Inc.. Levitt and Sons, Inc., suits of these settlements were that ITT re tors of the investment companies have taken and their respective subsidiaries, and ITT ceived $66,000,000 cash from the Government the proposed sale under consideration for Hamilton Life Insurance Co. and ITT Life Of Chile and OPIC, and $59,000,000 principal study and Investigation along with other al Insurance Co. of New York. Each consent amount of 10% promissory notes, maturing ternatives. decree provides that if the divestitures re semi-annually through 1984, Issued by a A broad range of life and accident and quired thereby are not accomplished within Chilean governmental agency and guaran- . health insurance is written throughout the prescribed period, then ITT shall be teed by the Central Bank of Chile and by most of the United States by ITT Life In required, except as the appropriate Court OPIC. and ITT agreed to Invest $25,000,000. surance Corp. In addition. ITT subsidiaries may otherwise direct, to place Its remaining over a 10-year period In a non-profit joint operating in Canada, the United Kingdom, interest in the entities which it has not venture with the Government of Chile for the Bahamas (including Abbey Companies divested in the control of a Court-appointed the construction and maintenance of a lab that operate in all such countries, and Excess trustee, with authority in such trustee to oratory in Chile for nutrition and com Holding Group which operates in the United manage and dispose of such interest, subject munications research. In connection with the Kingdom and which has branches and sub to supervision by the Court. settlements, ITT recorded approximately sidiaries in several countries). The Nether The former fire protection division of ITT lands. Italy and Germany write a broad range of life, accident and health, and casu alty insurance. ____ Subsidiaries of ITT Financial Corp. make direct installment and commercial loans to Grinnell Corp. (now known as Grinnell Fire Protection Systems Co., Inc.), which is en gaged in the business of producing and in stalling automatic fire protection systems and equipment, was transferred in 1973 to the individuals and businesses and purchase re tail installment contracts. Kellogg Credit Corp. renders financial assistance to ITT cus control of a Court-appointed trustee in ac cordance with the consent decrees. tomers. principally the United States, telephone .companies inby extending long and 'On Jan. 8. of Avis still 1975, all of the shares of stock owned by ITT were transferred short-term financing arrangements. to the control of a Court-appointed trustee ITT World Directories Inc. (75% owned), in accordance with the corisent decrees. through subsidiaries and affiliates, compiles Based upon the Dec. 31, 1974 New York Stock and publishes telephone directories providing Exchange closing price per share of Avis classified directory services ("Golden Pages") common stock of $5.00. at that date the mar for telephone subscribers in more than ten ket value of the Avis common stock held foreign countries. by ITT was approximately 520,000.000 less Other ITT companies are engaged in the than ITT's investment in Avis common stock. sale and lease of data communication eauip- ITT invested S5.000.000 in preferred stock of ment to business and industry and in the dis Avis in 1974. and in April 1975 purchased tribution of electrical and automotive re an additional 1.487.000 shares of Avis common Placement parts produced by others. stock for S17.295.000 ($11.63 per share). Such ITT finance subsidiaries in Australia. Bel- shares were similarly transferred to the England, Germany, Luxembourg and trustee. On Mar. 3, 1975. the trustee reported SVues ,hld leases and installment to the Court that unless otherwise ordered fTM3 frelating to products of other by the Court, the trustee would not under ITT companies and otherwise assist such take a public sale of the Avis common shares tomera*1** 10 inariclng sales to their cus- held by the trustee until after Jan. 15, 1976, $28,000,000 of interest income attributable to continuing operations in 1974. of which ap proximately 518.000.000 was related to Interest imputed for the period li.71 through 1974 attributable to such transactions. -. i In July 1974. the Puerto Rico Telephone Authority, a governmental authority of the Commonwealth of Puerto Rico, purchased, as of Jan. 1. 1974, ITT's Interest in Puerto Rico Telephone Co. for $4,999,775 cash. $20,000,000 in 6% subordinated notes maturing in equal installments on Jan. 1. 1975 and 1976. and Si 00,440.000 in 6%% subordinated revenue bonds maturing In installments through 1999. a total principal amount approximately equivalent to the book value of the company, at Dec. 31. 1973. Interest payments on such notes and bonds are exempt from Puerto Rican and United States Income taxation. The net income of Puerto Rico Telephone Co. for the year ended Dec. 31. 1973. was $5,007,- 000. and, as of that date, the gross plant investment in telephone operating facilinw in Puerto Rico represented approximately 7% of the total grosa plant, property and equip^ ment of ITT. At Dec. 31. 1974. ITT had an investment of. approximately $100,000,000 in CompaniaStan-. and prior to that date would not accept any dard Electric Argentina, a 100%.owned sub Hartford Fire Insurance Ceu ' oi the common stock of Hartford 'Fire -Insurance Co. (Hartford"). private offer for such Avis shares at a price less than $11.63 per share. Avis is engaged in the business of renting and leasing vehi cle* to the general public. Although the oper sidiary engaged principally tn the manufac ture of telecommunication equipment for. the telephone company owned by the Gov^ emment of Argentina. Contract disputes ofj; ; i i MOODY'S INDUSTRIAL MANUAL 561 tween the subsidiary and the telephone by persons who allegedly had "inside in MANAGEMENT company were the subjects of negotiations formation" concerning those negotiations. when, in September 1974. the Argentine law ITT has reported pending settlement dis Officers officially approving the contract was re cussions with respect to these suits. H. S. Geneen. Chairman Sc Chief Exec. voked. In Oct. 1974. the President of Ar There is also a class action pending against F. J. Dunieavy, President Sc Chief Oper. gentina made a policy statement regarding ITT and certain of its directors based on Officer "Argentiruzation" of certain companies, in : alleged inadequate disclosure to the former R E. Bennett. Exec. Vice-President--Of cluding the ITT subsidiary. In Feb. 1975, the snareholders of Hartford Fire Insurance Co. fice of the Pres.--Operations President of Argentina decreed the annul of facts relating to the tax consequences to L. C. Hamilton, Jr., Exec. Vice-Pres. 8e ment of the contract between tne subsidiary such holders arising from the acquisition Treasurer and the telephone company and the appoint of their Hanford stock by ITT. Plaintiff in H. C. Knortz, Exec. Vice-Pres. & Comp ment of a commission to promote an Argen this action demands judgment for. among troller tine national company dedicated to the man other things, damages, restitution or rescis J. V. Lester, Exec. Vice-President--Office ufacture of telecommunications equipment. sion. and an accounting for the profits made of the Pres.--Operations Among other things, the commission was di by ITT. There are other suits pending against H. J. Albel, Sen. Vice-Pres. Sc Gen. rected to carry out an adjustment of the ac ITT directors and others which arose out of Counsel counts between the ITT subsidiary and the the Internal Revenue Service's revocation of F. P. Barnes. Senior Vice-Pres. & Product telephone company and to determine the its tax rulings relative to the ITT-Hartford Group Mgr.--Telecom. Prod. Sc Sys. amount of damages allegedly payable to Ar transaction, or which arose out of sales of R L. Brittenham. Sen. Vice-Pres., Law gentina by the subsidiary on the basis of Hartford and ITT stocks in connection with and Counsel a June 1974 report of a special investigating the ITT-Hartford transaction. A. E. Cookson, Senior Vice-Pres. Sc Gen. commission of the Argentine Chamber ot See also "Hartford Fire Insurance Co." un Tech. Dir. Deputies that examined the contract between der "Business" above. E. J. Gerrity. Jr.. Sen. Vice-Pres.--Corp. the subsidiary and the telephone company. There are also various other lawsuits pend Rel. St Adv. ' It. now appears that the extent to which ITT ing against ITT and its subsidiaries, some John Hanway II. Sen. Vice-Pres.--Admin, will realize this investment is dependent upon of which involve <'Uinw for substantial Richard Hodgson, Senior Vice-Pres. the terms of "Argentimzation" and actions amounts. Sc Prod. Group Mgr.--Ind. Prod. Comp. of -the governmental commission, none of Controller which has yet been announced. As ITT has RESEARCH. DEVELOPMENT AND Stanley Luke. Senior Vice-Pres.--Bus. been unable to control effectively the sub PATENTS DeveL sidiary's operations, it ceased to consolidate ITT research and development, centrally the accounts of the subsidiary as of Oct. 1. 1974. . coordinated by the Technical Department at World Headquarters in New York. N. Y.. ANTITRUST CONSENT DECREES is carried out in laboratory and engineering On Sept. 24. 1971, the United States District facilities at most manufacturing divisions and subsidiaries, and in central laboratory Courts for the Northern District of Illinois and for the District of Connecticut approved, signed and entered consent decrees which terminated the Government's antitrust suits challenging ITT's acquisitions of Canteen facilities in England. France and Spain. At Dec. 31, 1974, approximately 22,000 persons were employed in engineering and scientific activities in connection with domestic and foreign laboratory projects. Corp., Grinnell Corp. and Hartford Fire In-, Research, development and engineering ac surance Co. The decrees require that ITT tivities, including product development, spon make certain divestitures, which are de sored by ITT and activities performed by scribed under Divestible Operations Under Consent Decrees" above. Under the decrees, which are effective for 10 years, ITT is pro ITT under contracts for the United States Government involved expenditures aggregat ing approximately $452 million in 1974. 5400 hibited from acquiring any domestic business with assets of over S100 million and from acquiring any leading firm (being one with million in 1973. and S328 million in 1972. Of such amounts. ITT-sponsored research and development accounted for $213 million total annual ia\es ot over $25 million and in 1974. $138 million in 1973 and $145 million holding more than 15% of any market in in 1972. which total annual sales exceed $tQ0 million) ITT owns and controls a substantial num In any concentrated . market within the United States (being one in which the four ber of patents, trademarks and trade names which, in the aggregate, are of material leading firms hold more than 50%) without importance to its business. ITT is licensed the approval of__the Department of Justice to employ patents of others under certain or the Courts. ITT may not. without the ap agreements and has granted licenses to use proval of the Department of Justice or the patents of .ITT. Courts, acquire any domestic automatic ` F. J. McCabe, Senior Vice-President-- Personnel John Seath. Senior Vice-Pres.--Taxes R. H. Smith. Senior Vice-Pres.--Corp. De- vei. _ M. R. Valente. Senior Vice-Pres.. Pres.. ITT Europe, Inc., 8c Senior Group Exec.. Europe. Africa & Middle East J. J. Navin. Vice-Pres. Sc Secretary Directors R. E. Bennett. Englewood Cliffs. N. J. EEugene R. Slack. New York Raymond L. Brittenham. New York EA. J. A. Bryan. Houston, Tex. EPomeroy Day. Hartford. Conn. BF. J. Dunieavy. Blue Bell, Pa. William Elfers, Boston. Mass. EA. E. Friedman, Manhasset. N. Y. EH. S. Geneen, New York L. C. Hamilton, Jr., Upper Montclair. N. J. H. C. Knortz. Ridgefield. Conn. EJ. Patrick Lannan. Chicago ' J. V. Lester. New York. EJohn A. McCone. L03 Angeles, Calif. ERichard S. Perkins. New York EF. G. Rohatyn. New York H. P. Schoen. West Hartford, Conn. QjMember of Executive Committee. sprinkler company or any domestic Insurance company with insurance assets exceeding $10 million: and ITT and its subsidiary compa nies are to continue the ITT policy of not engaging in reciprocity (l.e., using purchasing power to promote sales).. CAPITAL INVESTMENT PROGRAM Gros9 expenditures by ITT for plant, prop erty and equipment were $742,000,000 in 1974 (excluding such expenditures of approxi mately $64,000,000 on properties of divestible companies) and $852,000,000 in 1973, and it is Auditors: Arthur Andersen Sc Co. Annual Meeting: Second Wednesday in May or as otherwise determined by resolu tion of Board {May 7. 1975). No. of Stockholders: Dec- 31, 1974: Pre OTHER LEGAL PROCEEDINGS ITT and certain of its directors are de fendants In several pending law suits based on alleged failures to make appropriate dis closure of the progress of the negotiations which led to the aforementioned antitrust consent decrees, and on sales of ITT stock presently estimated they will be approxi mately $550,000,000 in 1975. It is expected that funds required for current and future capital expenditures will be provided through re tained earnings and other internal sources, from bank borrowings, and from proceeds of sale of additional securities by subsidiaries as well as by the parent company. ferred: $4 conv. (by series': E. 1.145; F. 690: H. 1.754; J, 1.614; K. 36.737: $4.50 series I. 11.895: $2.25 series N, 13,677; $5 series O. 1.799; common. 168.181. No. of Employees: Dec. 31. 1974. 409.000. World Headquarters: 320 Park Ave., New York N. Y. 10022. INCOME ACCOUNTS COMPARATIVE INCOME ACCOUNT. YEARS ENDED DEC. 31 (International Telephone 3c Telegraph. Corp. only) (Thousands of Dollars) Sales and Other Income: Sales-- 1974 1973 Customers _________________ ______ ___ __ _________________ ____ ___ ___ __ Affiliated companies _________________________________________ ' $963,509 75.958 $872,434 56.756 1972 $735,820 39.910 1971 $677,309 26,397 1970 ' $538,886 29.480 Dividends. Interest and other Income- Dividends-- Subsidiaries consolidated ______________________ _____ __ Hartford and Financial__________________________ "____ Interest-- _ Subsidiaries consolidated ______ ___ ....... Other_____ ____ _____ ___________________________ . Other income-- ' Service fee--subsidiaries ' ` ' -, . consolidated _____ _________ _____________ ...--..ji,______________ Miscellaneous Income and - .v " deductions--net ___ _____________________ ____________ _______________ Costs and Expenses: Cost of sales _______ _________________________________ Selling and general expenses_______________________ Interest and other financial barges-- Interest on long-term debt Interest on bank borrowings Other interest charges ___________ _________,, ' Income Taxes: EUnlted States Federal income taxes (credit) __________ Foreign and other income taxes 1,039,467 929,190 775.730 703,706 568X66 276.979 50.793 7.082 9X67 225.549 51X92 3X68 6,033 154.658 52X35 2X32 3,356 141.772 51X45 2,667 4.721 109.184 25.658 . - 4.081 5X03 15.485 19,793 1,413.966 780.078 331X15 13.858 1.269 1X30.S59 707.402 237,680 6.268 1X12.775 206,191 . (14X21) 1X68 (12X53) 25.024 ' 18,725 3.797 992.628 237,931 . \t 1.406 1.943 3X49 8,880 (5.607) 991.584 577.252 197,683 7X16 (344) 911.083 541.863 . 181.110 ' 5.067 . (2,098) 715.761 434X62 . . . 18.778 , 2.061 . . ^ - 1.816 . ' 18.820 , 3X97 1,330 . - 5X29 ,r--.. 643 , 3,647 797.590 - 743,766 612.955 . 193,994 . . .167X17 " , v 102,306 ^ ' (2.676) 2X83 (393) (13.890) 2.851 (11.039) (18,811) 2,195 (16.616) Income before Extraordinary Items______________________ (^Extraordinary items________________________ _______________ 219.044 (3,826) . , 234.582 .. . 194 X87 " 178X56 87.093 - 18.089 . .. _________ 119.422 20,722 Net lacwwi_______________________...._____--_____(________- $215X18 $321,675 $212,476 $178X56 n 40.154