EX-99.1 2 v091460_ex99-1.htm
 
 
ITT Corporation, Inc.
 
Press Release
 
HOLD FOR RELEASE AT 7:00 AM EDT, OCT. 26, 2007
  

Andy Hilton
914-641-2160
andy.hilton@itt.com
 
ITT reports strong third quarter earnings of 92 cents per share from continuing operations, raises full-year guidance

 
·
Earnings per share from continuing operations up 19 percent, excluding special items, on strong international sales and improved margins
 
·
Portfolio realignment continues with completed purchase of International Motion Control and announced acquisition of EDO Corp.
 
·
Discontinued operations contribute 33 cents to total EPS of $1.25, primarily from gain on Switches sale
 
·
ITT raises full-year 2007 adjusted earnings guidance to $3.50-$3.53 per share

WHITE PLAINS, N.Y., October 26, 2007 - ITT Corporation (NYSE: ITT) today reported third quarter 2007 earnings from continuing operations of $169 million or 92 cents per share, on revenue of $2.2 billion, driven by balanced top-line growth across most business segments and customer end-markets. Special item offsets in the quarter resulted in adjusted earnings equal to the reported 92 cents per share earnings. ITT’s adjusted earnings, which increased 19 percent over the comparable quarter a year earlier, also benefited from strong international sales and margin improvements generated by productivity initiatives, including the continued adoption of lean manufacturing processes. In addition, ITT recognized a $64 million gain from the sale of its Switches business, which was announced in July. The gain and other discontinued operations contributed 33 cents per share to ITT’s total reported earnings of $1.25 per share.

As a result of its continued strong performance, ITT is raising its full-year 2007 earnings per share guidance, excluding special items, to $3.50-$3.53 on projected revenue of $8.75 billion.

“This was an exciting quarter for our business, marked by a number of major strategic portfolio moves and transforming customer wins,” said Steve Loranger, chairman, president and chief executive officer, ITT Corp. “Through it all, our teams have remained focused on our operating plan and on continuous improvement initiatives, resulting in high-quality results for our shareholders again this quarter.”
 
 

On September 17, ITT announced an agreement to acquire EDO Corp. (NYSE: EDO) for $56 per share pending satisfaction of customary closing conditions, including EDO shareholder approval. EDO operates in markets complementary to ITT’s defense business and is a leading producer of advanced technologies serving military and commercial customers. The acquisition, if approved, would be ITT’s largest since becoming an independent company in 1995.

Also during the quarter, ITT completed the acquisition and began the integration of International Motion Control (IMC), a global leader in the design and manufacture of standard and customized energy absorption, control systems, and hydraulic and pneumatic components.

Loranger noted, “These strategic portfolio moves are enabled by the strong overall performance of our business and are expected to position ITT for continued growth in the future. These significant actions, in addition to the smaller acquisitions we’ve announced, demonstrate our disciplined approach to creating value for our shareholders by expanding from our strong core businesses and entering attractive adjacent markets.”

Primary Business Highlights

Defense Electronics & Services
 
·
The Defense segment reported third quarter revenues of $1.01 billion, representing six percent growth over the same quarter in 2006. Growth in the segment was led by ITT’s services businesses, including Advanced Engineering & Sciences, which recorded revenue growth of 37 percent, and Systems, up 16 percent. On the product side, ITT’s Night Vision business also grew 16 percent, while its Aerospace/Communications Division and Electronic Systems businesses were essentially flat.
 
·
Operating income for the segment grew to $137 million and improved 21 percent compared to prior year, excluding special items, on strong margin performance. This operating margin expansion was driven by productivity gains in ITT’s fixed price contracts for products including SINCGARS battlefield radios.
 
·
During the quarter, the Federal Aviation Administration (FAA) awarded ITT the first contract for its air traffic modernization program, known as Automatic Dependent Surveillance-Broadcast, or ADS-B. ITT brought together each of its core defense capabilities to win the contract, which positions the company as the prime systems integrator for the next generation air traffic control program.
 
 

Fluid Technology
 
·
Third quarter revenue for the Fluid Technology segment was $858 million, a 10 percent increase over the comparable quarter last year, including the impact of foreign currency exchange.
 
·
Top-line growth was led by organic revenue growth of six percent resulting from strong international and project sales in the group’s Industrial Process business.
 
·
Operating income for the segment of $111 million, or $117 million excluding restructuring costs, grew 13 percent on a comparable basis.

Motion & Flow Control
 
·
The Motion & Flow Control segment reported third quarter revenues of $315 million, up 18 percent over the same period last year, including the impacts of foreign currency exchange and the integration of IMC.
 
·
The segment recorded a nine percent increase in organic revenue in the quarter, driven in part by 26 percent organic growth at Aerospace Controls. In addition, sales to commercial original equipment manufacturers (OEMs) contributed to a strong quarter for Friction Materials, which was up 14 percent organically.
 
·
Operating income for the quarter grew to $44 million. Operating income was $45 million excluding restructuring, up 24 percent on a comparable basis, benefiting from volume and cost-saving initiatives.

Investor Call Today
ITT's senior management will host a conference call for investors today at 9:00 a.m. Eastern Daylight Time to review third quarter performance and answer questions. The briefing can be monitored live via webcast at the following address on the company's Web site: www.itt.com/ir.

About ITT Corporation
ITT Corporation (www.itt.com) supplies advanced technology products and services in several growth markets. ITT is a global leader in water and fluid transport, treatment and control technology. The company plays a vital role in international security with communications and electronics products; space surveillance and intelligence systems; and advanced engineering and services. It also serves a number of growing markets—including marine, transportation and aerospace—with a wide range of motion and flow control technologies. Headquartered in White Plains, N.Y., the company employs approximately 35,000 people and generated $7.8 billion in 2006 sales.
 
 

"Safe Harbor Statement" under the Private Securities Litigation Reform Act of 1995 ("the Act"):
Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include statements that describe the Company's business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. Whenever used, words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target" and other terms of similar meaning are intended to identify such forward-looking statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed in, or implied from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated by the Company include general global economic conditions, decline in consumer spending, interest and foreign currency exchange rate fluctuations, availability of commodities, supplies and raw materials, competition, acquisitions or divestitures, changes in government defense budgets, employment and pension matters, contingencies related to actual or alleged environmental contamination, claims and concerns, intellectual property matters, personal injury claims, governmental investigations, tax obligations, and changes in generally accepted accounting principles. Other factors are more thoroughly set forth in Item 1. Business, Item 1A. Risk Factors, and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements in the ITT Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and other of its filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

ITT believes that investors' understanding of the Company's operating performance is enhanced by the use of certain non-GAAP financial measures, including adjusted GAAP net income and adjusted GAAP EPS, which Management considers useful in providing insight into operating performance, as it excludes the impact of special items that cannot be expected to recur on a quarterly basis. Management also believes that investors can better analyze the Company's revenue and order growth by utilizing organic revenue and organic order growth measures that exclude the effect of foreign exchange translation and the effect of recent acquisitions. In addition, Management considers the use of free cash flow to be an important indication of the Company's ability to make acquisitions, fund pension obligations, buy back outstanding shares and service debt. Free cash flow, adjusted net income, adjusted EPS, organic revenue and organic orders are not financial measures under GAAP, should not be considered as substitutes for cash from operating activities, EPS, net income or revenue as defined by GAAP, and may not be comparable to similarly titled measures reported by other companies. A reconciliation to the GAAP equivalents of these non-GAAP measures is set forth in the attached unaudited financial information.

# # #
 
 
ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS
(In millions, except per share)
(Unaudited)
 
   
Three Months Ended
  
 Nine Months Ended
  
   
September 30,
  
 September 30,
 
 
  
2007 
  
2006 
  
 2007 
  
2006 
  
               
Sales and revenues
  
$
2,181.2
  
$
2,001.1
  
$
6,474.6
  
$
5,756.6
  
                           
Costs of sales and revenues
    
1,540.1
    
1,437.8
    
4,606.9
    
4,159.5
  
Selling, general and administrative expenses
    
327.6
    
296.9
    
978.5
    
844.2
  
Research and development expenses
    
46.8
    
41.7
    
129.9
    
119.6
  
Restructuring and asset impairment charges, net
    
7.2
   
9.8
   
31.1
    
32.0
  
Total costs and expenses
    
1,921.7
    
1,786.2
    
5,746.4
    
5,155.3
  
                           
Operating income
    
259.5
    
214.9
    
728.2
    
601.3
  
Interest expense
    
25.8
    
19.4
    
68.7
    
60.8
  
Interest income
    
12.6
    
6.3
    
31.0
    
14.8
  
Miscellaneous expense, net
    
4.6
    
4.1
    
10.6
    
13.6
  
Income from continuing operations before income taxes 
    
241.7
    
197.7
    
679.9
    
541.7
  
Income tax expense
    
73.1
    
57.3
    
175.3
    
163.9
  
Income from continuing operations
    
168.6
    
140.4
    
504.6
    
377.8
  
Discontinued operations, net of tax
   
61.5
    
3.1
    
79.2
    
62.5
  
Net income
  
$
230.1
  
$
143.5
  
$
583.8
  
$
440.3
  
                           
Earnings Per Share:
                          
Income from continuing operations:
                          
Basic
  
$
0.94
  
$
0.76
  
$
2.79
  
$
2.05
  
Diluted
  
$
0.92
  
$
0.75
  
$
2.74
  
$
2.02
  
Discontinued operations:
                          
Basic
  
$
0.34
  
$
0.02
  
$
0.44
  
$
0.34
  
Diluted
  
$
0.33
  
$
0.02
  
$
0.43
  
$
0.33
  
Net income:
                          
Basic
  
$
1.28
  
$
0.78
  
$
3.23
  
$
2.39
  
Diluted
  
$
1.25
  
$
0.77
  
$
3.17
  
$
2.35
  
                           
                           
Average Common Shares — Basic
    
180.2
    
184.1
    
180.7
    
184.3
  
Average Common Shares — Diluted
    
183.7
    
186.7
    
184.0
    
187.2
  

 
ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)

 
  
September 30,
  
December 31,
  
 
  
2007
  
2006
  
   
 
      
Assets
          
Current Assets:
          
Cash and cash equivalents
  
$
1,440.1
  
$
937.1
  
Receivables, net
    
1,493.9
    
1,288.9
  
Inventories, net
    
779.1
    
726.5
  
Assets of discontinued businesses held for sale
    
5.9
    
183.2
  
Deferred income taxes
    
87.7
    
79.8
  
Other current assets
    
131.1
    
102.8
  
Total current assets
    
3,937.8
    
3,318.3
  
 
              
Plant, property and equipment, net
    
875.3
    
833.0
  
Deferred income taxes
    
196.0
    
136.1
  
Goodwill, net
    
2,600.1
    
2,336.8
  
Other intangible assets, net
    
298.2
    
213.2
  
Other assets
    
689.9
    
563.2
  
Total assets
  
$
8,597.3
  
$
7,400.6
  
               
Liabilities and Shareholders' Equity
              
Current Liabilities:
              
Accounts payable
  
$
1,016.4
  
$
929.4
  
Accrued expenses
    
860.5
    
839.4
  
Accrued taxes
    
73.2
    
105.6
  
Notes payable and current maturities of long-term debt
    
1,143.8
    
597.0
  
Pension and postretirement benefits
   
68.9
    
68.9
  
Liabilities of discontinued businesses held for sale
    
1.5
    
96.7
  
Deferred income taxes
    
1.9
    
0.2
  
Total current liabilities
    
3,166.2
    
2,637.2
  
               
Pension and postretirement benefits
    
716.8
    
735.5
  
Long-term debt
    
491.4
    
500.4
  
Other liabilities
    
771.9
    
658.1
  
Total liabilities
    
5,146.3
    
4,531.2
  
               
Shareholders' equity
    
3,451.0
    
2,869.4
  
Total liabilities and shareholders' equity
  
$
8,597.3
  
$
7,400.6
  

 
ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

   
Nine Months Ended
  
 
  
September 30,
  
 
  
2007
  
2006
  
Operating Activities              
Net income
  
$
583.8
  
$
440.3
  
Less: Income from discontinued operations
    
(79.2
)
  
(62.5
)
Income from continuing operations
    
504.6
    
377.8
  
               
Adjustments to income from continuing operations:
              
Depreciation and amortization
    
134.7
    
127.1
  
Stock-based compensation
    
26.6
    
16.7
  
Restructuring and asset impairment charges, net
    
31.1
    
32.0
  
Payments for restructuring
    
(35.8
)
  
(36.2
)
Change in receivables
    
(116.4
)
  
(68.5
)
Change in inventories
    
17.7
    
(76.9
)
Change in accounts payable and accrued expenses
    
70.2
    
176.3
  
Change in accrued and deferred taxes
    
(62.7
)
  
14.0
  
Change in other current and non-current assets
    
(84.9
)
  
(82.9
)
Change in other non-current liabilities
    
(1.4
)
  
9.3
  
Other, net
    
6.4
    
(1.3
)
Net cash — operating activities
    
490.1
    
487.4
  
               
Investing Activities              
Additions to plant, property and equipment
    
(108.2
)
  
(95.2
)
Acquisitions, net of cash acquired
    
(395.7
)
  
(75.2
)
Proceeds from sale of assets and businesses
    
232.4
    
223.7
  
Other, net
    
1.5
    
(6.4
)
Net cash — investing activities
    
(270.0
)
  
46.9
  
               
Financing Activities              
Short-term debt, net
    
532.8
    
(157.2
)
Long-term debt repaid
    
(7.2
)
  
(2.2
)
Long-term debt issued
    
0.4
    
-
  
Repurchase of common stock
    
(299.0
)
  
(136.4
)
Proceeds from issuance of common stock
    
55.2
    
53.0
  
Dividends paid
    
(71.3
)
  
(57.3
)
Tax benefit from stock option exercises
    
13.0
    
13.6
  
Other, net
    
(2.4
)
  
—
  
Net cash — financing activities
    
221.5
    
(286.5
)
               
Exchange Rate Effects on Cash and Cash Equivalents
    
70.7
    
29.8
  
Net Cash — Discontinued Operations:
              
Operating Activities
    
(2.7
)
  
71.2
  
Investing Activities
    
(5.6
)
  
(7.2
)
Financing Activities
   
(1.0
)
  
(0.1
)
               
Net change in cash and cash equivalents
    
503.0
    
341.5
  
Cash and cash equivalents — beginning of year
    
937.1
    
451.0
  
Cash and Cash Equivalents — end of period
  
$
1,440.1
  
$
792.5
  

 
ITT Corporation Non-GAAP Reconciliation
Reported vs. Organic Revenue / Orders Growth
Third Quarter 2007 & 2006

($ Millions)
 
   
(As Reported - GAAP)
  
       
   
Sales &
 
Sales &
 
Change
 
 % Change
  
   
Revenues
 
Revenues
 
2007 vs.
  
2007 vs.
  
   
3M 2007
  
3M 2006
  
2006
  
2006
  
                   
ITT Corporation - Consolidated
    
2,181.2
    
2,001.1
    
180.1
    
9.0
%
                           
Defense Electronics & Services
    
1,011.5
    
957.4
    
54.1
    
5.7
%
ACD - Tactical Radios
    
198.3
    
196.5
    
1.8
    
0.9
%
Space Systems
    
144.7
    
186.4
    
(41.7)
  -22.4 %
Advanced Engineering & Sciences
    
120.4
    
87.0
    
33.4
    
38.4
%
Electronic Systems
    
105.6
    
105.5
    
0.1
    
0.1
%
Night Vision
    
129.1
    
111.1
    
18.0
    
16.2
%
Systems
    
316.4
    
273.0
    
43.4
    
15.9
%
                           
Fluid Technology
    
858.4
    
780.3
    
78.1
    
10.0
%
Industrial Process
    
173.4
    
147.4
    
26.0
    
17.6
%
Residential and Commercial Water
                          
Group
    
305.8
    
279.4
    
26.4
    
9.4
%
Water & WasteWater
    
389.2
    
359.4
    
29.8
    
8.3
%
Motion & Flow Control
    
314.6
    
267.0
    
47.6
    
17.8
%
Aerospace Controls
    
26.1
    
20.3
    
5.8
    
28.6
%
Marine & Leisure
    
58.8
    
55.4
    
3.4
    
6.1
%
Friction Materials
    
88.7
    
72.1
    
16.6
    
23.0
%
Koni Shocks
    
22.8
    
19.4
    
3.4
    
17.5
%
IMC
    
11.1
    
0.0
    
11.1
    
0.0
%
Connectors
    
107.1
    
99.8
    
7.3
    
7.3
%

   
 
          
%
  
               
Change
  
   
 
  
 
  
Change
  
2007
  
   
Orders
  
Orders
 
.2007 vs.
  
 vs
  
   
3M 2007
  
3M 2006
  
2006
  
2006
  
                   
Defense Electronics & Services
    
1,126.1
    
1,056.5
    
69.6
    
7
%
                           
Fluid Technology
    
929.8
    
821.3
    
108.5
    
13
%
                           
Motion & Flow Control
    
325.7
    
274.9
    
50.8
    
18
%
                           
Total Segment Orders
    
2,378.4
    
2,150.8
    
227.6
    
11
%
 
 
   
(As Adjusted - Organic)
  
                   
   
 
 
Acqui-
          
   
 
  
sition
  
FX
  
Adj
  
   
Sales &
  
Contri-
 
Contri-
  
Sales &
  
   
Revenues
 
bution
  
bution
 
Revenues
  
   
3M 2007
 
3M 2007
 
3M 2007
 
3M 2007
  
                   
ITT Corporation - Consolidated
    
2,181.2
    
(12.8
)
  
(44.0
)
  
2,124.4
  
                           
Defense Electronics & Services
    
1,011.5
    
(1.2
)
  
(0.1
)
  
1,010.2
  
ACD - Tactical Radios
    
198.3
    
0.0
    
0.0
    
198.3
  
Space Systems
    
144.7
    
0.0
    
(0.1
)
  
144.6
  
Advanced Engineering & Sciences
    
120.4
    
(1.2
)
  
0.0
    
119.2
  
Electronic Systems
    
105.6
    
0.0
    
0.0
    
105.6
  
Night Vision
    
129.1
    
0.0
    
0.0
    
129.1
  
Systems
    
316.4
    
0.0
    
0.0
    
316.4
  
                           
Fluid Technology
    
858.4
    
0.0
    
(31.9
)
  
826.5
  
Industrial Process
    
173.4
    
0.0
    
(1.3
)
  
172.1
  
Residential and Commercial Water
                          
Group
    
305.8
    
0.0
    
(8.0
)
  
297.8
  
Water & WasteWater
    
389.2
    
0.0
    
(22.9
)
  
366.3
  
                           
Motion & Flow Control
    
314.6
    
(11.6
)
  
(12.1
)
  
290.9
  
Aerospace Controls
    
26.1
    
(0.5
)
  
0.0
    
25.6
  
Marine & Leisure
    
58.8
    
0.0
    
(1.9
)
  
56.9
  
Friction Materials
    
88.7
    
0.0
    
(6.5
)
  
82.2
  
Koni Shocks
    
22.8
    
0.0
    
(1.3
)
  
21.5
  
IMC
    
11.1
    
(11.1
)
  
0.0
    
0.0
  
Connectors
    
107.1
    
0.0
    
0.0
    
107.1
  

 
   
Orders
3M 2007  
  
Acquisition
3M 2007
  
FX
Contribution
3M 2007  
  
Adj.
Orders
3M 2007
 
                   
Defense Electronics & Services
    
1,126.1
    
(1.2
)
  
(0.1)
    1,124.8  
                           
Fluid Technology
    
929.8
    
0.0
    
(33.0
)
  
896.8
  
                           
Motion & Flow Control
    
325.7
    
(1.0
)
  
(13.1
)
  
311.6
  
                           
Total Segment Orders
    
2,378.4
    
(2.2
)
  
(46.2
)
  
2,330.0
  
 
   
(As Adjusted - Organic)
  
               
   
Sales &
  
Change
  
% Change
  
   
Revenues
  
Adj. 07
  
Adj. 07
  
   
3M 2006
  
vs. 06
  
vs. 06
  
               
ITT Corporation - Consolidated
    
2,001.1
    
123.3
    
6.2
%
                     
Defense Electronics & Services
    
957.4
    
52.8
    
5.5
%
ACD - Tactical Radios
    
196.5
    
1.8
    
0.9
%
Space Systems
    
186.4
    
(41.8
)
  
-22.4
%
Advanced Engineering & Sciences
    
87.0
    
32.2
    
37.0
%
Electronic Systems
    
105.5
    
0.1
    
0.1
%
Night Vision
    
111.1
    
18.0
    
16.2
%
Systems
    
273.0
    
43.4
    
15.9
%
                     
                     
Fluid Technology
    
780.3
    
46.2
    
5.9
%
Industrial Process
    
147.4
    
24.7
    
16.8
%
Residential and Commercial Water
                    
Group
    
279.4
    
18.4
    
6.6
%
Water & WasteWater
    
359.4
    
6.9
    
1.9
%
                     
                     
Motion & Flow Control
    
267.0
    
23.9
    
9.0
%
Aerospace Controls
    
20.3
    
5.3
    
26.1
%
Marine & Leisure
    
55.4
    
1.5
    
2.7
%
Friction Materials
    
72.1
    
10.1
    
14.0
%
Koni Shocks
    
19.4
    
2.1
    
10.8
%
IMC
    
0.0
    
0.0
    
0.0
%
Connectors
    
99.8
    
7.3
    
7.3
%
 
   
Change
  
% Change
      
   
Orders
  
Adj. 07
  
Adj. 07
  
   
3M 2006
  
vs. 06
  
vs. 06
  
               
Defense Electronics & Services
    
1,056.5
    
68.3
    
6.5
%
                     
Fluid Technology
    
821.3
    
75.5
    
9.2
%
                     
Motion & Flow Control
    
274.9
    
36.7
    
13.4
%
                     
Total Segment Orders
    
2,150.8
    
179.2
    
8.3
%

Note: Excludes intercompany eliminations.
 
 
ITT Corporation Non-GAAP Reconciliation
Segment Operating Income & OI Margin Adjusted for Restructuring
Third Quarter of 2007 & 2006

($ Millions)
 
                   
Adjust
  
         
%
      
for
  
   
Q3 2007
  
Q3 2006
 
Change
  
Q3 2007
  
2007
  
   
As
  
As
  
07 vs.
  
As
  
Restruc-
  
   
Reported
  
Reported
 
06
  
Reported
 
turing
  
Sales and Revenues:
                      
Defense Electronics & Services
    
1,011.5
    
957.4
           1,011.5        
Fluid Technology
    
858.4
    
780.3
           858.4        
Motion & Flow Control
    
314.6
    
267.0
           314.6        
Intersegment eliminations
    
(3.3
)
  
(3.6
)
         (3.3 )      
Total Sales and Revenues
    
2,181.2
    2,001.1           2,181.2        
                                 
Operating Margin:
                                
Defense Electronics & Services
    
13.6
%
  
11.8
%
         13.6 %      
Fluid Technology
    
12.9
%
  
12.5
%
         12.9 %      
Motion & Flow Control
    
14.1
%
  
12.6
%
         14.1 %      
Total Ongoing Segments
    
13.4
%
  
12.2
%
         13.4 %      
                                 
                                 
Income:
                                
Defense Electronics & Services
    
137.1
    
112.6
    21.8 %  
137.1
    (0.1 )
Fluid Technology
    
110.7
    
97.8
    13.2 %  
110.7
     6.6  
Motion & Flow Control
    
44.4
    
33.7
    31.8 %  
44.4
     0.6  
Total Segment Operating Income
    
292.2
    
244.1
    19.7 %  
292.2
     7.1  

 
   
Q3 2007
As
Reported
  
Q3 2006
As
Reported
  
Adjust
for 2006 Restructering
  
Q3 2006
As
Reported
  
%
Change
Adj. 07
vs. 06
  
                       
Sales and Revenues:
                      
Defense Electronics & Services
    
1,011.5
    
957.4
           957.4        
Fluid Technology
    
858.4
    
780.3
           780.3        
Motion & Flow Control
    
314.6
    
267.0
           267.0        
Intersegment eliminations
    
(3.3
)
  
(3.6
)
         (3.6 )      
Total Sales and Revenues
    
2,181.2
   
2,001.1
           2,001.1        
                                 
Operating Margin:
                                
Defense Electronics & Services
    
13.5
%
  
11.8
%
        
11.9
%
   160 BP  
Fluid Technology
    
13.7
%
  
12.5
%
        
13.3
%
   40 BP  
Motion & Flow Control
    
14.3
%
  
12.6
%
        
13.6
%
   70 BP  
Total Ongoing Segments
    
13.7
%
  
12.2
%
        
12.7
%
   100 BP  
                                 
                                 
Income:
                                
Defense Electronics & Services
    
137.0
    
112.6
    
1.0
    
113.6
    
20.6
%
Fluid Technology
    
117.3
    
97.8
    
5.6
    
103.4
    
13.4
%
Motion & Flow Control
    
45.0
    
33.7
    
2.6
    
36.3
    
24.0
%
Total Segment Operating
                                
Income
    
299.3
    
244.1
    
9.2
    
253.3
    
18.2
%
 
ITT Corporation Non-GAAP Reconciliation
Reported vs. Adjusted Net Income & EPS
Third Quarter of 2007 & 2006

($ Millions, except EPS and shares)
 
     
Q3 2007
    
 
    
Q3 2007
    
Q3 2006 
  
     
As
    
Q3 2007  
    
As
    
As
  
     
Reported  
    
Adjustments 
    
Reported  
    
Reported  
  
                           
Segment Operating Income
    
292.2
    
7.1
 #A
  
299.3
    
244.1
  
             
 
            
                           
Interest Income (Expense)
    
(13.2
)
  
-
    
(13.2
)
  
(13.1
)
Other Income (Expense)
    
(4.6
)
  
-
    
(4.6
)
  
(4.1
)
Corporate (Expense)
    
(32.7
)
  
0.1
#A
  
(32.6
)
   (29.2 )
                         
Income from Continuing Operations before Tax
    
241.7
    
7.2
    
248.9
    
197.7
  
                           
Income Tax Items
    
4.4
    
(4.4)
#B
  
-
    
2.6
  
Income Tax Expense
    
(77.5
)
  
(2.3)
#C
  
(79.8
)
   (59.9 )
                           
Total Tax Expense
    
(73.1
)
  
(6.7)
 
  
(79.8
)
   (57.3 )
                           
Income from Continuing Operations
    
168.6
    
0.5
    
169.1
    
140.4
  
                           
Diluted EPS from Continuing Operations
    
0.92
    
0.00
    
0.92
    
0.75
  


   
 
          
Percent
  
   
 
    
Change
  
Change
  
   
Q3 2006
  
Q3 2006
  
2007 vs.
  
2007 vs.
  
   
Adjust-
  
As
  
2006 As
  
2006 As
  
   
ments
  
Adjusted
  
Adjusted
  
Adjusted
  
                   
                   
Segment Operating Income
    
9.2
#D
  
253.3
              
                           
                           
Interest Income (Expense)
    
-
    
(13.1
)
            
Other Income (Expense)
    
-
    
(4.1
)
            
Corporate (Expense)
    
0.5 #D
    
(28.7
)
            
                           
                         
Income from Continuing Operations before Tax
    
9.7
    
207.4
              
                           
                           
Income Tax Items
    
(4.2)
#E
  
(1.6
)
            
Income Tax Expense
    
(3.0)
#F
  
(62.9
)
            
       
 
                  
Total Tax Expense
    
(7.2)
 
  
(64.5
)
            
                           
Income from Continuing Operations
    
2.5
    
142.9
              
                           
                           
                           
Diluted EPS from Continuing Operations
    0.02  
0.77
   $
0.15
 
  
19.5
 %

#A - Remove Restructuring Expense of $7.1M and $0.1M.
#B - Remove Tax Benefit - special items of ($4.4M).
#C - Remove Tax Benefit on restructuring of ($2.3M).
#D - Remove Restructuring Expense of $9.2M and $0.5M.
#E - Remove Tax Refund of ($2.6M) and apply structural tax rate impact in Q3.
#F - Remove Tax Benefit on restructuring of ($3.0M).
 
 
ITT Corporation Non-GAAP Reconciliation
Cash From Operating Activities vs. Free Cash Flow
Third Quarter of 2007 & 2006

($ Millions)
 
   
3rd Qtr.07
  
3rd Qtr.06
  
           
Cash from Operations
    
490.1
    
487.4
  
               
Capital Expenditures
    
(108.2
)
  
(95.2
)
               
Pension Pre-funding, net of tax
    
50.0
    
87.0
  
               
Free Cash Flow
    
431.9
    
479.2