ITT Corporation (NYSE: ITT) today reported fourth quarter 2007
income from continuing operations of $128 million, or 70 cents per
share. Excluding special items and restructuring costs, income from
continuing operations was $172 million, or 94 cents per share, up
29 percent on strong profit performance from each business segment.
Fourth quarter revenue was up 23 percent year-over-year to $2.5
billion on continued robust growth in the Defense segment and
strong international sales in ITT�s commercial segments. Improved
full-year 2007 margin performance across all segments led to record
income from continuing operations of $633 million, or $3.44 per
share. Excluding the impact of special items and restructuring,
income rose to $650 million, or $3.53 per share, up 24 percent over
the prior year. For the full-year 2007, ITT reported record
revenues of $9.0 billion, a 15 percent improvement, driven by
strong double-digit organic revenue growth. This marks the fourth
straight year of double-digit organic revenue growth. �We are proud
of our performance this quarter and for 2007 on the whole � we set
a high bar and cleared it. On top of outstanding operational
performance, we made significant progress on our strategic plan and
effectively realigned and enhanced our portfolio for long-term
success,� said Steve Loranger, ITT�s chairman, president and chief
executive officer. �Our strong operational capability, combined
with a portfolio that is built to weather economic cycles, gives us
confidence heading into 2008. Despite the uncertainty facing the
U.S. market, we believe our team has effectively positioned the
company to have another strong year and meet our goals.� 2008
Outlook ITT is confirming its full-year 2008 earnings forecast in
the range of $3.80 to $3.95 per share, reflecting anticipated 16 to
20 percent earnings growth over 2007 on a comparable basis. The
company expects top-line revenue to be $11.1 billion to $11.3
billion in 2008, approximately 25 percent higher than 2007 revenue.
Revenue growth expectations include mid-single digit organic growth
and full-year revenues of recent acquisitions, including EDO
Corporation and International Motion Control. In November 2007, ITT
announced that effective with its first quarter 2008 earnings
report it would no longer present restructuring costs within
adjusted earnings figures. In anticipation of this change,
projected restructuring costs of $35-45 million are included in
this earnings forecast. Fourth Quarter and Full-Year Business
Segment Results Defense Electronics & Services Fourth quarter
revenue for the Defense segment was up 24 percent to $1.2 billion,
on strong organic growth from the segment�s services businesses.
Fourth quarter operating income for the segment grew to $125
million. Excluding restructuring, operating income was up 32
percent to $129 million. Full-year 2007 revenue for the segment
reached $4.2 billion, up 14 percent over 2006, led by the strong
year-over-year growth of ITT�s Advanced Engineering & Sciences
and Systems businesses. For the full year, operating income for the
segment was $503 million. Excluding restructuring, operating income
was up 25 percent to $512 million, attributable to high performance
on fixed-price contracts and continued focus on operational
efficiency. On Dec. 20, 2007, ITT closed its acquisition of EDO
Corporation. The agreement to purchase EDO was announced in
September 2007 and approved by EDO shareholders at a special
meeting held two days prior to closing. The acquisition was ITT�s
largest in its history and makes ITT a top 10 U.S. defense
contractor, as measured by revenue. Fluid Technology ITT�s Fluid
Technology segment reported fourth quarter revenue of $985 million,
up 18 percent year-over-year and 11 percent organically. Growth in
the segment was driven by strong international sales in commercial
and industrial end markets, which offset weakness in the U.S.
residential market. Fourth quarter segment operating income was
$125 million. Excluding restructuring, operating income grew 18
percent to $145 million year-over-year. For the full-year 2007, the
segment grew 14 percent on revenues of $3.5 billion and generated
operating income of $433 million. Excluding restructuring,
operating income improved 19 percent to $473 million, driven by
ongoing deployment of operational and productivity improvement
initiatives. Motion & Flow Control Fourth quarter revenue for
the segment was up 41 percent to $370 million, which includes
full-quarter revenues of the recently acquired International Motion
Control. Organic growth for the quarter was also strong at 12
percent, on continued strength in the Aerospace Controls and
Friction Technologies businesses. The segment reported fourth
quarter operating income of $38 million. Excluding restructuring
expenses, operating income improved 37 percent to $50 million.
Full-year 2007 revenue for the Motion & Flow Control segment
was $1.3 billion, up 22 percent over 2006. Operating income grew to
$187 million for the year. Excluding restructuring, segment
operating income of $202 million improved 22 percent, benefiting
from continued focus on operational and lean initiatives. Emerging
Markets Progress During the fourth quarter, ITT made significant
progress against its emerging markets growth strategies by opening
three state-of-the-art manufacturing facilities and a new research
and development center. The new sites serving ITT�s commercial
businesses will focus on customizing and building products designed
to meet the specific needs of customers throughout Asia Pacific, as
well as other markets. ITT opened two advanced manufacturing and
assembly centers in China and one in Poland. The Wuxi, China site
will primarily support ITT�s Motion & Flow Control segment. The
Nanjing, China and Poland plants will primarily develop products
for the Fluid Technology segment. The Nanjing facility is a
showcase of ITT technologies as it deploys an advanced industrial
water treatment system enabling the plant to reuse virtually all
the water needed to operate the facility. During the quarter, the
company also opened an ITT Technology Center, in Vadodara, India,
which was established to meet the specific needs of Indian
customers, and eventually global customers. Income Tax Controls In
the fourth quarter, ITT identified a material weakness specifically
related to income tax accounting controls. The company has
initiated remedial steps to enhance controls in this area, and also
performed additional analyses and post-closing procedures that
reasonably assured the reliability of income tax accounts as of
December 31, 2007. This control issue, which will be more fully
discussed in the company�s 10-K, did not result in the restatement
of, or otherwise materially impact, ITT�s financial statements for
any period. Investor Call Today ITT's senior management will host a
conference call for investors today at 9:00 a.m. Eastern Standard
Time to review fourth quarter and full-year 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) is a diversified
high-technology engineering and manufacturing company dedicated to
creating more livable environments, enabling communications and
providing protection and safety. The company plays an important
role in vital markets including water and fluids management, global
defense and security, and motion and flow control. ITT employs
approximately 40,000 people serving customers in more than 50
countries. Headquartered in White Plains, N.Y., the company
generated $9 billion in 2007 sales. Safe Harbor Statement Certain
material presented herein includes forward-looking statements
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995 ("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 Corporation Non-GAAP
Reconciliation Reported vs. Organic Revenue / Orders Growth Fourth
Quarter 2007 & 2006 � � � � � � � � � � � ($ Millions) � � � �
� � � � � � � � � � � � � � � � � (As Reported - GAAP) (As Adjusted
- Organic) � � � Sales & Revenues Sales & Revenues Change %
Change Sales & Revenues Acquisition Contribution FX
Contribution Adj. Sales & Revenues Sales & Revenues Change
% Change 3M 2007 3M 2006 2007 vs. 2006 2007 vs. 2006 3M 2007 3M
2007 3M 2007 3M 2007 3M 2006 Adj. 07 vs. 06 Adj. 07 vs. 06 � � �
ITT Corporation - Consolidated 2,528.7 2,051.3 477.4 23.3 % 2,528.7
(108.4 ) (76.5 ) 2,343.8 2,051.3 292.5 14.3 % � Defense Electronics
& Services 1,177.9 952.3 225.6 23.7 % 1,177.9 (52.6 ) (0.2 )
1,125.1 952.3 172.8 18.1 % Communications Systems 222.4 204.0 18.4
9.0 % 222.4 0.0 0.0 222.4 204.0 18.4 9.0 % Space Systems 166.7
156.3 10.4 6.7 % 166.7 0.0 (0.2 ) 166.5 156.3 10.2 6.5 % Advanced
Engineering & Sciences 144.8 89.8 55.0 61.2 % 144.8 (3.4 ) 0.0
141.4 89.8 51.6 57.5 % Electronic Systems 100.4 88.2 12.2 13.8 %
100.4 0.0 0.0 100.4 88.2 12.2 13.8 % Night Vision 125.5 118.4 7.1
6.0 % 125.5 0.0 0.0 125.5 118.4 7.1 6.0 % Systems 372.9 299.0 73.9
24.7 % 372.9 0.0 0.0 372.9 299.0 73.9 24.7 % EDO 49.2 0.0 49.2 NA
49.2 (49.2 ) 0.0 0.0 0.0 0.0 0.0 % � � Fluid Technology 985.2 838.8
146.4 17.5 % 985.2 0.0 (55.0 ) 930.2 838.8 91.4 10.9 % Industrial
Process 192.0 155.7 36.3 23.3 % 192.0 0.0 (1.8 ) 190.2 155.7 34.5
22.2 % Residential and Commercial Water Group 304.2 271.7 32.5 12.0
% 304.2 0.0 (12.8 ) 291.4 271.7 19.7 7.3 % Water & WasteWater
500.9 420.5 80.4 19.1 % 500.9 0.0 (41.2 ) 459.7 420.5 39.2 9.3 % �
� � Motion & Flow Control 370.2 263.1 107.1 40.7 % 370.2 (55.8
) (20.2 ) 294.2 263.1 31.1 11.8 % Aerospace Controls 26.6 20.3 6.3
31.0 % 26.6 (0.7 ) 0.0 25.9 20.3 5.6 27.6 % Flow Control 62.8 51.2
11.6 22.7 % 62.8 (7.9 ) (2.6 ) 52.3 51.2 1.1 2.1 % Friction
Technologies 101.9 75.3 26.6 35.3 % 101.9 0.0 (11.3 ) 90.6 75.3
15.3 20.3 % Energy Absoprption 68.8 22.4 46.4 207.1 % 68.8 (42.3 )
(2.4 ) 24.1 22.4 1.7 7.6 % IMC Controls 16.5 0.0 16.5 0.0 % 16.5
(16.5 ) 0.0 0.0 0.0 0.0 0.0 % Interconnect Solutions 104.8 93.9
10.9 11.6 % 104.8 0.0 (3.9 ) 100.9 93.9 7.0 7.5 % � � Orders Orders
Change % Change Orders Acquisition Contribution FX Contribution
Adj. Orders Orders Change % Change 3M 2007 3M 2006 2007 vs. 2006
2007 vs. 2006 3M 2007 3M 2007 � 3M 2007 � 3M 2007 3M 2006 Adj. 07
vs. 06 Adj. 07 vs. 06 � � Defense Electronics & Services
1,401.6 1,211.7 189.9 16 % 1,401.6 (2.2 ) (0.2 ) 1,399.2 1,211.7
187.5 15.5 % � Fluid Technology 907.7 762.5 145.2 19 % 907.7 0.0
(49.6 ) 858.1 762.5 95.6 12.5 % � Motion & Flow Control 414.9
275.1 139.8 51 % 414.9 (83.7 ) (22.9 ) 308.3 275.1 33.2 12.1 % �
Total Segment Orders 2,720.5 2,243.7 476.8 21 % 2,720.5 (85.9 )
(75.7 ) 2,558.9 2,243.7 315.2 14.0 % � Note: Excludes intercompany
eliminations. ITT Corporation Non-GAAP Reconciliation Reported vs.
Organic Revenue / Orders Growth Full Year 2007 & 2006 � � � � �
� � � � � � ($ Millions) � � � � � � � � � � � � � � � � � � � �
(As Reported - GAAP) (As Adjusted - Organic) � � Sales &
Revenues Sales & Revenues Change % Change Sales & Revenues
Acquisition Contribution FX Contribution Adj. Sales & Revenues
Sales & Revenues Change % Change FY 2007 FY 2006 2007 vs. 2006
2007 vs. 2006 FY 2007 FY 2007 FY 2007 FY 2007 FY 2006 Adj. 07 vs.
06 Adj. 07 vs. 06 � � ITT Corporation - Consolidated 9,003.3
7,807.9 1,195.4 15.3 % 9,003.3 (150.6 ) (198.6 ) 8,654.1 7,807.9
846.2 10.8 % � Defense Electronics & Services 4,176.2 3,659.3
516.9 14.1 % 4,176.2 (54.6 ) (0.6 ) 4,121.0 3,659.3 461.7 12.6 %
Communications Systems 805.4 757.9 47.5 6.3 % 805.4 (0.8 ) 0.0
804.6 757.9 46.7 6.2 % Space Systems 605.8 626.8 (21.0 ) -3.4 %
605.8 0.0 (0.6 ) 605.2 626.8 (21.6 ) -3.4 % Advanced Engineering
& Sciences 480.8 326.8 154.0 47.1 % 480.8 (4.6 ) 0.0 476.2
326.8 149.4 45.7 % Electronic Systems 409.6 371.7 37.9 10.2 % 409.6
0.0 0.0 409.6 371.7 37.9 10.2 % Night Vision 484.7 419.8 64.9 15.5
% 484.7 0.0 0.0 484.7 419.8 64.9 15.5 % Systems 1353.7 1164.3 189.4
16.3 % 1,353.7 0.0 0.0 1,353.7 1,164.3 189.4 16.3 % EDO 49.2 0.0
49.2 NA 49.2 (49.2 ) 0.0 0.0 0.0 0.0 0.0 % � Fluid Technology
3,509.1 3,070.1 439.0 14.3 % 3,509.1 (26.8 ) (138.4 ) 3,343.9
3,070.1 273.8 8.9 % Industrial Process 703.9 595.6 108.3 18.2 %
703.9 0.0 (5.2 ) 698.7 595.6 103.1 17.3 % Residential and
Commercial Water Group 1,183.3 1,086.6 96.7 8.9 % 1,183.3 (1.4 )
(33.7 ) 1,148.2 1,086.6 61.6 5.7 % Water & WasteWater 1,663.3
1,419.2 244.1 17.2 % 1,663.3 (25.4 ) (101.5 ) 1,536.4 1,419.2 117.2
8.3 % � � � Motion & Flow Control 1,332.5 1,092.9 239.6 21.9 %
1,332.5 (69.2 ) (58.7 ) 1,204.6 1,092.9 111.7 10.2 % Aerospace
Controls 101.3 82.7 18.6 22.5 % 101.3 (3.0 ) 0.0 98.3 82.7 15.6
18.9 % Flow Control 251.6 224.4 27.2 12.1 % 251.6 (7.9 ) (9.1 )
234.6 224.4 10.2 4.5 % Friction Technologies 393.4 318.4 75.0 23.6
% 393.4 0.0 (31.9 ) 361.5 318.4 43.1 13.5 % Energy Absoprption
144.3 87.2 57.1 65.5 % 144.3 (42.3 ) (6.7 ) 95.3 87.2 8.1 9.3 % IMC
Controls 16.5 0.0 16.5 0.0 % 16.5 (16.5 ) 0.0 0.0 0.0 0.0 0.0 %
Interconnect Solutions 425.6 380.2 45.4 11.9 % 425.6 0.0 (11.0 )
414.6 380.2 34.4 9.0 % � � Orders Orders Change % Change Orders
Acquisition Contribution FX Contribution Adj. Orders Orders Change
% Change FY 2007 FY 2006 2007 vs. 2006 2007 vs. 2006 FY 2007 FY
2007 FY 2007 FY 2007 FY 2006 Adj. 07 vs. 06 Adj. 07 vs. 06 �
Defense Electronics & Services 4,073.9 4,118.0 (44.1 ) -1 %
4,073.9 (4.2 ) (0.6 ) 4,069.1 4,118.0 (48.9 ) -1.2 % � Fluid
Technology 3,657.1 3,144.1 513.0 16 % 3,657.1 (20.8 ) (139.1 )
3,497.2 3,144.1 353.1 11.2 % � Motion & Flow Control 1,399.3
1,141.4 257.9 23 % 1,399.3 (86.0 ) (63.1 ) 1,250.2 1,141.4 108.8
9.5 % � Total Segment Orders 9,118.1 8,391.7 726.4 9 % 9,118.1
(111.0 ) (205.5 ) 8,801.6 8,391.7 409.9 4.9 % � Note: Excludes
intercompany eliminations. ITT Corporation Non-GAAP Reconciliation
Segment Operating Income & OI Margin Adjusted for Restructuring
Fourth Quarter of 2007 & 2006 � � � � � � � � � � ($ Millions)
� � � � � � � � � � Q4 2007 As Reported Q4 2006 As Reported %
Change 07vs. 06 Q4 2007 As Reported Adjust for 2007 Restructuring
Q4 2007 As Adjusted Q4 2006 As Reported Adjust for 2006
Restructuring Q4 2006 As Adjusted % Change Adj.07 vs. 06 � � Sales
and Revenues: Defense Electronics & Services 1,177.9 952.3
1,177.9 1,177.9 952.3 952.3 Fluid Technology 985.2 838.8 985.2
985.2 838.8 838.8 Motion & Flow Control 370.2 263.1 370.2 370.2
263.1 263.1 Intersegment eliminations (4.6 ) (2.9 ) (4.6 ) (4.6 )
(2.9 ) (2.9 ) Total Sales and Revenues 2,528.7 � 2,051.3 � 2,528.7
� 2,528.7 � 2,051.3 � 2,051.3 � � Operating Margin: Defense
Electronics & Services 10.6 % 10.0 % 10.6 % 10.9 % 10.0 % 10.3
% 60 BP Fluid Technology 12.7 % 12.9 % 12.7 % 14.7 % 12.9 % 14.7 %
- BP Motion & Flow Control 10.3 % 13.6 % 10.3 % 13.6 % 13.6 %
13.9 % (30 ) BP Total Ongoing Segments 11.4 % 11.7 % 11.4 % 12.8 %
11.7 % 12.6 % 20 BP � � Income: Defense Electronics & Services
125.4 95.3 31.6 % 125.4 3.4 128.8 95.3 2.5 97.8 31.7 % Fluid
Technology 125.4 108.2 15.9 % 125.4 19.6 145.0 108.2 15.2 123.4
17.5 % Motion & Flow Control 38.0 � 35.9 � 5.8 % 38.0 � 12.2
50.2 � 35.9 � 0.7 36.6 � 37.2 % Total Segment Operating Income
288.8 � 239.4 � 20.6 % 288.8 � 35.2 324.0 � 239.4 � 18.4 257.8 �
25.7 % ITT Corporation Non-GAAP Reconciliation Segment Operating
Income & OI Margin Adjusted for Restructuring Full Year 2007
& 2006 � � � � � � � � � � ($ Millions) � � � � � � � � � � FY
2007 As Reported FY 2006 As Reported % Change 07vs. 06 FY 2007 As
Reported Adjust for 2007 Restructuring FY 2007 As Adjusted FY 2006
As Reported Adjust for 2006 Restructuring FY 2006 As Adjusted %
Change Adj.07 vs. 06 � Sales and Revenues: Defense Electronics
& Services 4,176.2 3,659.3 4,176.2 4,176.2 3,659.3 3,659.3
Fluid Technology 3,509.1 3,070.1 3,509.1 3,509.1 3,070.1 3,070.1
Motion & Flow Control 1,332.5 1,092.9 1,332.5 1,332.5 1,092.9
1,092.9 Intersegment eliminations (14.5 ) (14.4 ) (14.5 ) (14.5 )
(14.4 ) (14.4 ) Total Sales and Revenues 9,003.3 � 7,807.9 �
9,003.3 � 9,003.3 � 7,807.9 � 7,807.9 � � Operating Margin: Defense
Electronics & Services 12.0 % 11.0 % 12.0 % 12.3 % 11.0 % 11.2
% 110 BP Fluid Technology 12.3 % 12.1 % 12.3 % 13.5 % 12.1 % 12.9 %
60 BP Motion & Flow Control 14.1 % 13.7 % 14.1 % 15.2 % 13.7 %
15.2 % - BP Total Ongoing Segments 12.5 % 11.8 % 12.5 % 13.2 % 11.8
% 12.5 % 70 BP � � Income: Defense Electronics & Services 502.7
404.3 24.3 % 502.7 9.7 512.4 404.3 6.3 410.6 24.8 % Fluid
Technology 432.7 370.6 16.8 % 432.7 39.9 472.6 370.6 26.7 397.3
19.0 % Motion & Flow Control 187.4 � 149.7 � 25.2 % 187.4 �
14.9 202.3 � 149.7 � 16.5 166.2 � 21.7 % Total Segment Operating
Income 1,122.8 � 924.6 � 21.4 % 1,122.8 � 64.5 1,187.3 � 924.6 �
49.5 974.1 � 21.9 % ITT Corporation Non-GAAP Reconciliation
Reported vs. Adjusted Net Income & EPS Fourth Quarter of 2007
& 2006 � � � � � � � � ($ Millions, except EPS and shares) �
Change Percent Change Q4 2007 Q4 2007 Q4 2007 Q4 2006 Q4 2006 Q4
2006 2007 vs. 2006 2007 vs. 2006 As Reported Adjustments As
Adjusted As Reported � Adjustments As Adjusted As Adjusted As
Adjusted � � � � � � � Segment Operating Income 288.8 35.2 #A 324.0
239.4 18.4 #D 257.8 � � Interest Income (Expense) (27.6) - (27.6)
(14.8) - (14.8) Other Income (Expense) (2.8) - (2.8) 0.7 - 0.7
Corporate (Expense) (39.8) (0.2) #A (40.0) (39.7) 1.3 #D (38.4) � �
� � � � Income from Continuing Operations before Tax 218.6 35.0
253.6 185.6 19.7 205.3 � � Income Tax Items (20.0) 20.0 #B - (2.4)
2.2 #E (0.2) Income Tax Expense (70.2) (11.2) #C (81.4) (61.3)
(6.4) #F (67.7) � � � � � � Total Tax Expense (90.2) 8.8 (81.4)
(63.7) (4.2) (67.9) � � � � � � Income from Continuing Operations
128.4 43.8 172.2 121.9 15.5 137.4 � � � � � � � � Diluted EPS from
Continuing Operations 0.70 0.24 0.94 0.65 0.08 0.73 $0.21 28.8% � �
#A - Remove Restructuring Expense of $35.2M and ($0.2M). #B -
Remove Tax Charge of $20.0M and apply structural tax rate impact in
Q4. #C - Remove Tax Benefit on restructuring of ($11.2M). #D -
Remove Restructuring Expense of $18.4M and $1.3M. #E - Remove Tax
Charge of $2.4M and apply structural tax rate impact in Q4. #F -
Remove Tax Benefit on restructuring of ($6.4M). ITT Corporation
Non-GAAP Reconciliation Reported vs. Adjusted Net Income & EPS
Full Year 2007 & 2006 � � � � � � � � ($ Millions, except EPS
and shares) � Change Percent Change FY 2007 FY 2007 FY 2007 FY 2006
FY 2006 FY 2006 2007 vs. 2006 2007 vs. 2006 As Reported Adjustments
� As Adjusted As Reported Adjustments � As Adjusted As Adjusted As
Adjusted � � � � � � � Segment Operating Income 1,122.8 � 64.5 � #A
1,187.3 � 924.6 � 49.5 � #E 974.1 � � � Interest Income (Expense)
(65.3 ) (7.0 ) #B (72.3 ) (60.8 ) (60.8 ) Other Income (Expense)
(13.4 ) - (13.4 ) (12.9 ) - (12.9 ) Corporate (Expense) (145.6 )
1.6 � #A (144.0 ) (123.6 ) 2.2 � #E (121.4 ) � � � � � � Income
from Continuing Operations before Tax 898.5 � 59.1 � 957.6 � 727.3
� 51.7 � 779.0 � � � Income Tax Items 20.6 (20.6 ) #C - 0.2 (0.5 )
#F (0.3 ) Income Tax Expense (286.1 ) (21.2 ) #D (307.3 ) (227.8 )
(16.2 ) #G (244.0 ) � � � � � � Total Tax Expense (265.5 ) (41.8 )
(307.3 ) (227.6 ) (16.7 ) (244.3 ) � � � � � � Income from
Continuing Operations 633.0 � 17.3 � 650.3 � 499.7 � 35.0 � 534.7 �
� � � � � � � � Diluted EPS from Continuing Operations 3.44 � 0.09
� 3.53 � 2.67 � 0.18 � 2.85 � $0.68 23.9 % � � #A - Remove
Restructuring Expense of $64.5M and $1.6M. #B - Remove Interest
Adjustment on Tax Audit Settlement of ($7.0M). #C - Remove Tax
Benefit of ($20.6M). #D - Remove Tax Benefit on restructuring of
($21.2M). #E - Remove Restructuring Expense of $49.5M and $2.2M. #F
- Remove Tax Benefit of ($0.2M) and apply structural tax rate
impact in Q4. #G - Remove Tax Benefit on restructuring of ($16.2M).
ITT Corporation Non-GAAP Reconciliation Cash From Operating
Activities vs. Free Cash Flow 2007 & 2006 � ($ Millions) � � �
� � 2007 2006 � Net Cash - Operating Activities 798.1 780.7 �
Capital Expenditures (239.3 ) (177.1 ) � Cash Payment re
sale/leaseback 44.8 - � Pension Pre-funding, net of tax 50.0 � 82.0
� � Free Cash Flow 653.6 � 685.6 � ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS (In millions, except per
share) (Unaudited) � � Three Months Ended Twelve Months Ended
December 31, December 31, 2007 � 2006 2007 � 2006 � Sales and
revenues $ 2,528.7 $ 2,051.3 � $ 9,003.3 $ 7,807.9 � Costs of sales
and revenues 1,828.1 1,458.9 6,435.0 5,618.4 Selling, general and
administrative expenses 364.2 331.7 1,342.7 1,175.9 Research and
development expenses 52.4 41.3 182.3 160.9 Restructuring and asset
impairment charges, net � 35.0 � 19.7 � � 66.1 � 51.7 Total costs
and expenses 2,279.7 1,851.6 8,026.1 7,006.9 � Operating income
249.0 199.7 977.2 801.0 Interest expense 46.2 25.4 114.9 86.2
Interest income 18.6 10.6 49.6 25.4 Miscellaneous (income) expense,
net � 2.8 � (0.7 ) � 13.4 � 12.9 Income from continuing operations
before income taxes 218.6 185.6 898.5 727.3 Income tax expense �
90.2 � 63.7 � � 265.5 � 227.6 Income from continuing operations
128.4 121.9 633.0 499.7 Discontinued operations, net of tax � 29.9
� 18.9 � � 109.1 � 81.4 Net income $ 158.3 $ 140.8 � $ 742.1 $
581.1 � � � Earnings Per Share: Income from continuing operations:
Basic $ 0.71 $ 0.66 $ 3.51 $ 2.71 Diluted $ 0.70 $ 0.65 $ 3.44 $
2.67 Discontinued operations: Basic $ 0.17 $ 0.10 $ 0.60 $ 0.44
Diluted $ 0.16 $ 0.10 $ 0.59 $ 0.43 Net income: Basic $ 0.88 $ 0.76
$ 4.11 $ 3.15 Diluted $ 0.86 $ 0.75 $ 4.03 $ 3.10 � � Average
Common Shares � Basic 180.5 184.0 180.6 184.3 Average Common Shares
� Diluted 183.9 187.1 184.0 187.4 ITT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (In millions) (Unaudited) � �
December 31, December 31, 2007 2006 Assets Current Assets: Cash and
cash equivalents $ 1,840.0 $ 937.1 Receivables, net 1,935.0 1,288.9
Inventories, net 890.4 726.5 Assets of discontinued businesses held
for sale 5.0 183.2 Deferred income taxes 110.1 79.8 Other current
assets � 156.3 � 102.8 Total current assets 4,936.8 3,318.3 Plant,
property and equipment, net 980.3 833.0 Deferred income taxes 28.5
136.1 Goodwill, net 3,806.9 2,336.8 Other intangible assets, net
733.0 213.2 Other assets � 1,050.2 � 563.2 Total assets $ 11,535.7
$ 7,400.6 � Liabilities and Shareholders' Equity Current
Liabilities: Accounts payable $ 1,296.8 $ 929.4 Accrued expenses
938.0 839.4 Accrued taxes 40.9 105.6 Notes payable and current
maturities of long-term debt 3,083.0 597.0 Pension and
postretirement benefits 68.5 68.9 Liabilities of discontinued
businesses held for sale 1.0 96.7 Deferred income taxes � 8.2 � 0.2
Total current liabilities 5,436.4 2,637.2 � Pension and
postretirement benefits 764.6 735.5 Long-term debt 483.0 500.4
Other liabilities � 921.0 � 658.1 Total liabilities 7,605.0 4,531.2
� Shareholders' equity � 3,930.7 � 2,869.4 Total liabilities and
shareholders' equity $ 11,535.7 $ 7,400.6 ITT CORPORATION AND
SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In
millions) (Unaudited) � Twelve Months Ended December 31, 2007 �
2006 Operating Activities Net income $ 742.1 $ 581.1 Less: Income
from discontinued operations � (109.1 ) � (81.4 ) Income from
continuing operations 633.0 499.7 � Adjustments to income from
continuing operations: Depreciation and amortization 185.4 171.6
Stock-based compensation 34.6 22.9 Restructuring and asset
impairment charges, net 66.1 51.7 Payments for restructuring (51.5
) (43.4 ) Change in receivables (236.7 ) (61.2 ) Change in
inventories 111.8 (101.4 ) Change in accounts payable and accrued
expenses 137.2 246.4 Change in accrued and deferred taxes (34.1 )
30.3 Change in other current and non-current assets (106.0 ) (74.0
) Change in other current and non-current liabilities 47.2 30.7
Other, net � 11.1 � � 7.4 � Net cash � operating activities � 798.1
� � 780.7 � � � Investing Activities Additions to plant, property
and equipment (239.3 ) (177.1 ) Acquisitions, net of cash acquired
(1,780.2 ) (89.5 ) Proceeds from sale of assets and businesses
283.6 226.6 Other, net � 6.8 � � (6.3 ) Net cash � investing
activities � (1,729.1 ) � (46.3 ) � Financing Activities Short-term
debt, net 2,311.9 (155.6 ) Long-term debt repaid (244.2 ) (13.3 )
Long-term debt issued 0.5 0.5 Repurchase of common stock (299.0 )
(210.0 ) Proceeds from issuance of common stock 65.4 69.0 Dividends
paid (96.6 ) (77.6 ) Tax benefit from stock option exercises 15.0
16.7 Other, net � (0.9 ) � 0.1 � Net cash � financing activities �
1,752.1 � � (370.2 ) � Exchange Rate Effects on Cash and Cash
Equivalents 103.0 50.6 Net Cash � Discontinued Operations:
Operating Activities (16.2 ) 80.2 Investing Activities (4.0 ) (9.3
) Financing Activities � (1.0 ) � 0.4 � � Net change in cash and
cash equivalents 902.9 486.1 Cash and cash equivalents � beginning
of year � 937.1 � � 451.0 � Cash and Cash Equivalents � end of
period $ 1,840.0 � $ 937.1 �
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