Document ga38NBe2nDXqkO77pnRR9VdE3

MOODY'S. % MWMP^OB**********^*********1**^MM INDUSTRIAL ' MANUAL - ROBERT H. siESSiVER, Publisher HENRY PORRECA, /tfw'i Publisher Robert p. hanson, d<?r*n-C^ie/ Editorial Board ROBERT W. BURKE KENNETH W. CLIFFORD BRIAN T. COFFEY RICHARD B. DAVIS ALFRED G. ELLIN GUAM ALBERT C. ESOKAIT ERWIN \V. KAUFMAN HOWARD C. KIEDAISCH JOSEPH B. LEIGH JOSEPH J. NESTO FRANK R. PLATAROTE MICHAEL A. RABBIA MOODY'S INVESTORS SERVICE, INC. 99 CHURCH STREET, NEW YORK, N. Y. 10007 (212) 267-8800 SEE FOLLOWING PAGE FOR ^COMPLETE LIST OF OFFICES Coprrighl 1975 bv MOODY'S INVESTORS SERVICE, INC New York All rights reserved. - -*&? ,4*5 " J" llTS i!30 r.T3 1173 lliJ C SI .?*o ' .,, ^10 zoo ZZ3 SC-ELEC-06152 558 MOODY'S INDUSTRIAL MANUAL INTERNATIONAL TELEPHONE & TELEGRAPH CORPORATION CAPITAL STRUCTURE LONG TERM DEBT Issue Hating Times Amount Charges Earned Outstanding 1374 1973 Interest Dates Call Price Price Range 1974 L973 1. 11% notes. 1982 .......................................2. S.F. debenture 3.90s. 1995 ---------------- 3. 8.30% notes. 1975 ------------------------------4. S. f. deb. 10s. 2900...................... -........... 5. 9h's% notes. 1383......................................... 6. Conv. subord. deb. 8a$s, 2000 ........... 7. Conv. sub. deb. 4^s, 1937----------------- 8. 83A% notes. 1989.................................... 9. French Franc deb. S.50s. 1979-38____ 10. 12.6% 1. t. bank loans, 1976-79 ______ 11. 8.31-9% notes, 1932 ................................... 12. 4"r$% notes. 1975-84................................... 13. L. t. bank loans. 1978 -----------------------14. L. t, bank loans. 1981--------- -------- ------ 15. S.F. deb. 4.90s. 1987 ................................. 16.* Other .............................................. ............. 17. Consolidated Subsidiaries_-__- A A A A A Baa 100.000,000^ IvO.ColF.OOvi 50.000.000 j LT73.OOQ.OOOf 175.000.0001 1100.000.000! 50.000.000 50.000.000 45.000.000 37.500.000 37.000.000 35.000.000 30.000.000 20.000.000 18.701.000 27.497.000 1.574.379.000. 3.18 3.99 J8cD 1 JScD 1 JAD 1 Oct. X 100.00 q;;o7.:2c 2109.375 T100 2108.625 l02*i 107*4-101*i 104*2* 552 10 U$- 32 5 T: 1 T I13'a-:6ol/4 10612-103*$ 5 __ _ 5' T A&O 1 103.25 78 - 58 82-75 CAPITAL STOCK Issue ' 1. 4 cum. conv. pfd,, ser. E ,,------------ 2. 4 cum. conv. pfd.. ser. F -------- 3. S4 cum. conv. pfd.. ser. H,,,,_,,--------- 4. 4.50 cum. conv. pfd., ser, I 5. 4 cum. conv. pfd., ser. J_............ 6. $4 cum. conv. pfd., ser. K_____....__ . 7. S2.25 series N............................................... 8. $5 series O............... 9, Common Par Amount Earned per Sh, Value Outstanding 1974 1973 No par 71.423 sfas.l No par 70,337 shs. No par 557,167 shs. | No par 2.156.487 shs. I 521^6 24,90 No par 979,450 shsA No par 6.033,840 shs. No par 10,053.244 shs. No par 1.000. 000 shs. $1 2123,224.000 shs. E3.63 14,17 Divs. per Sh. 1974 1973 '$4.00 4.00 4.00 4.00 4.00 4.00 4.50 4.50 4.00 4.00 4.00 4.00 2.25 2.25 5.00 5.00 1.43 1.28 Call Price Text Text Text Text Text Text Text Text Price Range 1974 1973 85*2- 38 ITS?;- 79 78*2- 3Si,a 168*4-- 73 56 - 29 109 - 50i a 58*2* 313$ 103 - SI 53 - 2S*a 47l,i 52U- 233$ 100 - 46 353$- 13 '74 - 30*4 61 U- 36 983;- 53 29*a- 12 60?$- 25 ^Subject to change: see text. lAs reported on average shares including common equivalents. 1973 before extraordinary items; after, 4.22. SBeguming July 1, 1981. ISold in July 1974. ISold June 5, 1975. 1Beginning June 1, 1981. uiArrmv msTUMT I succeeding a company of same name in- f and 1974 Moody's Industrial Manuals. I corporated in Maryland, June 16, 1920. 1 Company reported no major acquisitions Incorporated in Delaware Jan. 31, 1968, | For principal company acquisitions see 1964 I during 1974. - PRINCIPAL SUBSIDIARIES % of Jurisdiction Voting Name in Which Secur. Organised Inti TeL and Tel. Corp. {"ITT") Del, _Parent Owned England ` ITT 100 Del. ITT 100 Hamilton Management Corp. DeL ITT 100 ITT Community Development Corp. .................................................. DeL ITT 100 EC ITT Consrnn. Serv. Corp. Del. ITT 91,65 EITT Continental Baking Co, _ DeL ITT 100 ITT Educational Services, Inc, _ DeL ITT 100 ITT Grinnell Corp.......................... DeeLL. ITT ' 100 ITT Gwaitney Inc.______________ *D* eL' ITT 100 DeL ITT 100 DeL nr 100. ITT Service Industries Corp. __ DeL ITT 100 ITT Thompson Industries, Inc. _ DeL ITT 100 ITT World Directories Inc. -__ DeL. ITT 75 Josef Reiss, Technische Kunstoffwarenfabrik G.m.b.H,- Germany ITT ' 100 DeL ITT 100 Canada ITT ^ 100 Howard W. Sams Sc Co.. Inc. ... Del. ITT 100 , The O. M. Scott Sc Song Co. ... Del. ITT 100 DeL. ITT 100 Transp. Displays, Inc.......... New York ITT 100 Elnt'l Standard Elec. Corp. riSEC") __________________ Del. ITT 100 Belgium ISEC 99.99 Compagnie Generale de Con. France LSEC 99.95 Fabbrica Apparecchiature per Comunicazioni Elettriche Standard S.p.A. .......................-- Italy ISEC 100 France ISEC 67.96 England ITT Indust. Ltd. 100 Brazil ISEC 100 Spain ISEC 75.1 Standard Eiektrik Lorenz A,G._ Germany ISEC . 99.44 Stand, Telephon und Radio AG. Switzerland ISEC 100 % of Jurisdiction Voting Name in Which Organized Secur. Owned Elntl Standard Elec. Corp. {"ISEC")--Cont'd Stand. Telephones and Cables -Ltd. ..................................................... England ISEC 100 Stand. Telephones and Cables Pty. Ltd. __________________ _ Transelectronics Ltd. ______ _-- Australia ISEC 100 Hong Kong ITT Far East Limited 100 ITT Industries. Inc. (TITT')-------- DeL Grohe Handels G.m.b.H. ----------- Germany ISF.C ITTI 100 85 ITT Gesellschaft fur BeteiligunGermany ITTI 100 Sweden ITTI 100 SWF Spezialfabrik. fur Autozubehor Gustav Rau G,m.b,H. Alfred Teves G.m.b.H. V. S. TeL <Sc Tel, Corp. ("UST&T") Germany Germany DeL rm ITTG _ ITT LOO ; 100 100 Amer. Cable Sc Radio Corp. CACScR") ...................................... All Amer. Cables & Radio. Inc,, Commercial Cable Co., The -___ ITT World Comm. Inc._____ Del. N. Y. N.Y, Del. USTScT AC5tR AC8iR AC&R 100 100 ' 100 100 ITT Comm., Inc.--Virgin Isl. C'CIVT') ............................................ -Del. Virgin Islands Tel, Corp,_____ Virgin IsL AC&R CIVI 100 . :oo Inti Tel. 5c Tel. Corp., Sud Del. ITT 100 Subsidiaries--Not Consolidated Ca. England ITT ITT 100 100 Hartford Fire Ins. Co. ..._______ Conn. ITT 99.9 Intercom,tinentale Assicuraziord Italy ITT 100 IntTTel. 5c Tel. Credit Corp. .. ISE Finance Hlds. S.A................ .. Del. Luxembg. ITT ISEC 100 100 DeL ITTCS 100 Wise. 1TTFC 97 ITT Indus. Nev. ITTFC 100 Del. ITT 100 Transatlantasche Versicherung3 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. Cl See appended statements. Joint Venture: 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 20Amiie-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 attapulgite; consumer and business services: activities; in life, fire and casualty insurance; manufacture and distribution of food prod ?production of chemical cellulose, wood pulp, ucts and automotive parts; and telecommuni umber 5c 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 5c Revenues- 1974 1973 1972 1971 Manufacturing: {Dollar Amounts In Millions) Telecommunication equipment____ 3,037 27% $2,451 24% 1.874 22% $1,541 20% SI.196 1#% Industrial products ............................... 2.453 22 2.022 20 1,573 18 1.418 19 1.336 20 Automotive 5c consumer products - 1,441 13 1*346 13 1,008 12 864 11 715 10 Natural resources _________________ 586 s 456 5 355 4 313 4 305 5 Defense and space programs______ 443 4 445 4 469 6 469 6 434 6 Total mfg. __ _________ ________ _ Consumer and Business Services: Food processing and services_ . Consumer services -_______ LTelecommunication operations ""II " w - .and,.financial services ,,,, 7,960 71 1,319 12 724 7 161 1 568 6,720 66 1.145 11 674 7 139 1 518 5 5,279 62 1.013 12 600 7 122 1 414 5 4.605 60 971 13 554 7 111 1 388 5 3.986 59 917 14 493 7 : JS 1 322, 5 2*792 25 * 2.476 24 ' 2,149 25 2,024 26 1.837 27 . 1- ri ' ri _7 ;} * ` ` .. --i /- L - : .. --i -> Manufacturing (cont'd): Divestible Operations: Under consent decrees ^Other ------- -------------------- Total ............................... 1974 334 3 18 1 $11,154 100% -- Sales Sc Revenues--------------- 1973 ' 1972 1971 (Dollar Amounts in Millions) 877 9 110 1 1,040 12 101 1 937 12 109 2 $10,133 100% $3,569 100% S7.675 100% 1970 356 13 101 1 S6.7SO 100% Ma n.ufacturin g: Telecommunication equipment__ Industrial products ------------------------ Automotive dc consumer products Natural resources -- Dciense and space programs------- 31974 $176 95 28 66 5 39% 22 6 14 231973 T1972 ^19' (DoLlar Amounts Ln Millions) $155 S9 54 54 12 30% 17 10 10 2 $110 61 43 23 11 23% 13 9 3 2 $65 15% 59 14 36 3 2S 7 a2 1970 $46 5 2% 54 14 32 a 30 3 11 3 Total mfg. -------------------- ------------ ^Consumer and Business Services: Food processing and services -------- Consumer services---------------------- Telecommunication operations .... Hartford Fire ------------------- - Business and services .... 371 S2 _(4) a) 34 3 81 IS 61 364 69 m (i) (81 (1) 25 S 125 24 28 5 263 35 61 13 3 22 5 126 26 23 6 199 46 ' 19 4 12 3 15 3 105 25 24 6 173 45 21 6 13 3 16 4 && 23 17 5 Tot. Cons. Sc Bus. Svces. ______ Divestible Operations: Under consent decrees EOther ________ ----- ...---------------------- 117 26 (19) US) (4) 163 32 (S) (1) U) - 195 41 14 3 31 175 41 33 8 21 5 IS5 41 - 27 7 27 7 . Total ------- --------- -------------------------- $451 100% $521 100% $477 100% $423 10C% $332 100% rrIncludes 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 $6.7 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, ^Allocated corporate charges for 1973 have been restated to conforin with improved techniques initiated in *974. 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 pnme con owned or majority-owned subsidiaries en* S4.992.542.000. S4.911.929.000, $4,378,853,000, $4, tracts and subcontracts that are subject to jaged Ln the manufacture of communication 265.535.000 and $3,972,440,000 for the yearn 1974. renegotiation, and termination by the Govern and electronic equipment In Austria. Den 1973. 1973, 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 redetermination based on lands. Norway, Portugal. Spam, Sweden and for approximately 51%, 47% and 35% 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 also has wholly-owned subsidiaries engaged Manufacturing operations of ITT in United States and Canada, with sales of $2.6 billion in 1974, are conducted through divisions and subsidiaries that may be grouped as follows: Telecommunication Equipment Croup, which accounted for 10% of the total sales of United States and Canadian manufactur ing divisions and subsidiaries of ITT for 1974, 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 process 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 prodQcts, electrical connectors and vacuum devices, semiconductors, integrated circuits and wire and cable. 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 apparnis, switching systems, transmission equipment, wire and 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, com ponents, integrated circuits, "electron tubes and consumer electronic products. Alfred Teves G.m,b.H. (100% owned) is engaged pri 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 roducts to markets la Africa, the Middle ast and Eastern Europe. Special manage ment organizations have been established to coordinate the marketing ui 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 (49% owned) and Peru (60% owned) produce telecommunication equip ment. In March 1975, ITT announced that It plans to sell a majority of its shares ln 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 Dlveatible Operations" below. Far East and Pacific: Australia. Standard Telephones Sc Cables Pty. Ltd. (100% owned) Automotive Products Croup, 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 in 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. Fmitee; Compagnie General 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 ln the largest cable manufacturing company In Aus tralia. Hong Kong. Transelectronics Ltd. (100% owned) produces certain consumer electronic products for European markets. , Investments: ITT haa 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. ($.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^y- wood products, logs and sifvichemtcals), and in the business of mining, beneficiating and marketing silica {used in the manufacture of glass, ceramic tile and porcelain products) and attapulgite fa 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 grosser plant Investment in ITT facilities related toq^ consumer and business services, excluding Hartford Fire Insurance Co., represented ap-i 2'. proximately 30% of the consolidated gross plant, property and equipment of ITT, The ' t more important consumer and business serv- ' and subsidiaries of ITT for 1974, is prin Belgium: Bell Telephone Manufacturing ices are described below. -* ... cipally engaged In the engineering, manufac Company (99.99% owned) manufactures a Food Pretesting and Services: * ' ture. sale, installation, maintenance and op eration of telecommunication, electronic and energy related equipment. Including com ponent parts, and in research, development and 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 of bread, cakes and snack foods, frozen foods, candy and related products in the United States. Continental's baked prod- . 560 MOODY'S INDUSTRIAL 'MANUAL ucts are sold principally under two trade marks. "Wonder" for its bread products, and "Hostess" for its cake products. Continental's frozen food products are sold under the "Morton" trademark in' Gwaltney Inc. processes a variety of fresh and processed pork products, ranging from fresh pork cuts to the aged and spec ially cured "Genuine Smithfieid" 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 & 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 frequently referred to by persons in the ir.sunr.ee industry and others as the Hartford Insurance Group or The Hartford. For complete 'description of operations, see Moody's Bank <k Finance ManuaL In March 1974. 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 as 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 Ls 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 Hanford 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 resi dential communities and in the sale of com pleted single family dwellings. In Dec. 1973, after pursuingmany 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 535.400,000 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 5136.427.000, 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 pnor to disposition by the court-appouited 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 Divestible Operations ' The financial sGitements refer to certain Telecommunication Operations: overall additional Federal income tax which companies which have been divested by ITT 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 entities. An ITT subsidiary furnishes telephone service in the Virgin Islands. Business and Financial Services: 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 it 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 otherwise than tinder 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 Proceeding* below. speet to such companies, and other recover- . Funds, Inc., Hamilton Income Fund, Inc., and Hamilton Growth Fund, Inc., open-end in OivfttJbJ# Operations Under Consent Decrees ies. Approximately 60% of ITT's original net investment of approximately S150.000.0CK) in - vestment companies registered under the In The consent decrees of Sept. 24. 1371, de the telephone operating subsidiary was in- : vestment Company Act of 1940. 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; ano OPIC agreed to a settlement of ITT's J and the approval of the shareholders of the and (li) 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 566.000,000 cash from the Government the proposed sale under consideration for Hamilton Life Insurance Co. and ITT Life of Chile and OPIC, and 559.000.000 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 525,000.000, 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 entitles 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- j Holding Group which operates m the United manage and dispose of such interest, subject munlcations research. In connection with the t Kingdom and which has branches and sub to supervision by the Court. settlements, ITT recorded approximately ^ sidiaries in several countries). The Nether 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 individuals and businesses and purchase re tail installment contracts, Kellogg Credit Corp, renders financial assistance to ITT cus The former fire protection division of ITT Grinnell Corp. (now known as Grinnell Fire Protection Systems Co., Inc.), which i3 en gaged in the business of producing and in stalling automatic fire protection systems and equipment, was transferred in 1973 to the control of a Court-appointed trustee in ac cordance with the consent decrees. tomers. principally the United States, telephone companies lns by 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 HT World Directories Inc. (75% owned), in accordance with the consent 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 Avia classified directory services ("Golden Pages") common stock of 55.00. 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 equip- ITT invested 55,000,000 in preferred stock of IHw Jto business and industry and In the dis Avis in 1974, and in April 1975 purchased tribution of electrical and automotive re- an additional 1.437,000 shares of Avis common i-f.einerU Part produced by others. finance subsidiaries in Australia, Bel- stock for 517.295,000 ($11.63 per share). Such shares were similarly transferred to the ^nf Germany, Luxembourg and trustee. On Mar. 3, 1975. the trustee reported the United States hold leases and installment to the Court that unless otherwise ordered IT-r* rel**inS to products of other companies and otherwise assist such by the Court, the trustee would not under take a public sale of the Avis common shares 528.000,000 of interest income attributable to y continuing operations in 1974, of which ap- i proximately 518,000,000 was related to Interest. Imputed for the period ;',,7l through 1974 ' attributable to such transactions. - --ITi 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 54.999,775 cash, $20,000,000 in 6% subordinated notes maturing In equal installments on Jan. 1, 1975 and 1976. and $100,440,000 In 6*y% 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 SS.OOT,-'' 000. and. as of that date, the gross plant Investment In telephone operating facilities in Puerto Rico represented approximately 7% of the total gross plant, property and' equip^ ment of ITT. :* At Dec. 31. 1974. ITT had an Investment <rf tomet*11* 10 sales to their cua- held by the trustee until after Jan. 15, 1976, approximately 5100.000.000 in Compania Stan and prior to that date would not accept any dard Electric Argentina, a 100%.owned sub Fire Insurance Co.: ' 39-9^ of the common stock of HArtford 'Fire-Insurance Co. (Hartford"). private offer for such Avis shares at a price less than 511.63 per share. Avis is engaged In the business of renting and leasing vehi cles to the general public. Although the oper sidiary engaged principally in the manuia^^ ture of telecommunication equipment_forv the telephone company owned by the Gov^' eminent of Argentina. Contract dispute* 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 1914, 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, 1374. the President of Ar There is also a class action pending against F. J. DunUavy, 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. Vlce-Pres. Sc ment of the contract between the subsidiary such holders arising from the acquisition Treasurer and the telephone company and the appoint of their Hartford stock by ITT. Plaintiff in H. C. Knortz, Exec. Vlce-Pres. Sc 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 accounung 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. Aibel. Sen. Vice-Prea, 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. Bames. Senior Vice-Freg. St Product telephone company and to determine the its tax rulings relative to the ITT-Hartford. Group Mgr.--Telecom. Prod. 8c Sys- amount of damages allegedly payable to Ar transaction, or which arose out of sales of R. L. Brittenham, Sen. Vlce-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. St 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 a3so various other lawsuits pend Re). St Adv. '' Ik now appears that the extent to which I1T ing against ITT and its subsidiaries, some John Hanway H. Sen. Vice-Pres.--Admin, wiU realize this investment Is dependent upon of which involve giaimg for substantial Richard Hodgson, Senior Vice-Pres. the terms of "Argentimzation" and actions amounts. c 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 contra! effectively the sub sidiary's operations, it ceased to consolidate the accounts of the subsidiary as ol Oct. 1, 1974. . ANTITRUST CONSENT DECREES On Sept. 24. 1971, the United States District 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 Corp., Grinneli Corp. and Hartford Fire In surance Co. The decrees require that ITT make certain divestitures, which are de scribed under Divestible Operations Under Consent Decrees1' above. Under the decrees, which are effective for 10 years, ITT Is pro hibited from acquiring any domestic business with assets of over $100 million and from acquiring any leading firm (being one with total annual ^ales ot over $25 million and holding more than 15% of any market in which total annual sales exceed $100 million) in any concentrated - market within the United States (being one in which the four leading firms hold more than 50%) without the approval of the Department of Justice or the Courts. ITT may not, without the ap proval of the Department of Justice or the Courts, acquire any domestic automatic PATENTS ITT research and development, centrally coordinated by the Technical Department at World Headquarters in New York, N. Y., is carried out in laboratory and engineering facilities at most manufacturing divisions and subsidiaries, and in central laboratory 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. Research, development and engineering ac tivities, including product development, spon sored by ITT and activities performed by ITT under contracts for the United States Government involved expenditures aggregat ing approximately $452 million in 1974. $400 million in 1975, and $328 million in 1972, Of such amounts, ITT-sponsored research and development accounted for $213 million in 1974, $188 million in 1973 and $145 million in 1972. ITT owns and controls a substantial num ber of patents, trademarks and trade names which, in the aggregate, are of material importance to its business. ITT is licensed to employ patents of others under certain agreements and has granted licenses to use patents of .ITT. DeveL ` 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 Vlce-Pres.. Pres.. ITT Europe, Inc., Sc Senior Group Exec., Europe. Africa St Middle East J. J, Navin, Vice-Pres. St Secretary Director* R. E. Bennett. Englewood Cliffs, N. J. Eugene R- Black. New York Raymond L. Brittenham. New York EA. J. A. Bryan, Houston, Tex. U-Pomeroy Day, Hartford. Conn. 0F. J. Dunleavy. Blue Bell. Pa. EDWilliam Elfers, Boston. Mass. QA. E. Friedman, Manhasset, N. Y. (T}H, S. Geneen, New York L. C. Hamilton, Jr., Upper Montclair, N. J. K. C. Knortz. Ridgefield, Conn, , (TJ. Patrick Lannan. Chicago ' J. V. Lester. New York. QiJohn A. McCone. Los Angeles, Calif. Richard S, Perkins. New York EF. G. Hohatyn. New York H, P. Schoen. West Hartford, Conn. Member of Executive Committee. sprinkler company or any domestic insurance company with insurance assets exceeding S10 million: and ITT and Its subsidiary compa nies are to continue the ITT policy of not engaging In reciprocity (i.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 preseiyiy 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 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. 16S.181, No, of Employees: Dec. 31, 1974. 409,000. which led to the aforementioned antitrust sale of additional securities by subsidiaries consent decrees, and. on. sales of ITT stock as well as by the parent company. World Headquarters: 320 Park Ave,, New York N, Y. 10022. INCOME ACCOUNTS Sales and Other Income: Sales-- Customers ....______ Affiliated companies COMPARATIVE INCOME ACCOUNT, YEARS ENDED DEC. 3L (International Telephone Sc Telegraph Corp. only) (Thousands of Dollars) 1974 1973 1972 $963,509 75,958 *872.434 56,756 *735.820 39.910 3971 $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 ........................ ......... ..... Miscellaneous income and deductions--net _________ ___ ______ Costs and Expenses; Cost of sales ............................ ...... Selling and general expenses Interest and other financial charges-- Interest on long-term debt Interest on bank borrowings Other interest charges ...___ Income Taxes: CEUnited States Federal , income taxes (credit)------------- Foreign and other income taxes ,, - 1,039,467 929,190 775,730 703,706 5 S3.366 276,979 50,793 7,082 9,367 225,549 51292 3.368 6,033 154.653 52,235 . 2.332 3,356 141,772 51,245 2.667 4,721 109.234 25,658 - 4.081 5503 15,485 19,793 1,413.966 780.078 331,215 13.858 1.269 11230.639 707.402 237,680 ' s.sso (5.607) 991.584 577.252 197,683 7,316 (344) 911,083 541.863 . 181,110 ' 5,067 (2.098) 715,761 434.262 . 161.120 38 767 56.447 6.263 1.212.775 206,191 .- (14.221) . 1.36S / ' (12,853) - - 25.024 ' 18,725 3.797 992.628 237,931 . 1,406 1.943 * 3.349 , ' - .. 18.778 , 2,061 . ^ 1,816 . * .. 797,590 193,994 . . ' 18,820 . 1,330 643 743.766 .167^317 (2.676) ' 2,283 (393) . ' ' (13,890) " 2.8*1 (11.039) .. . , -v "3,397 - 5.529 3,647. 612,955 102,806 (13,811) 2,195 (16.616) Income before Extraordinary Items____ (^Extraordinary Item*____________________ 229,044 - . . 234.583 .. . 194387 " I7S,3Se . (3,826) . 87.093 - 18,089 . __-_____ 119.422 20,732 M*t lnam__ *215,219 *321.675 *212,476 *176,354 *140.154