XML 72 R10.htm IDEA: XBRL DOCUMENT
v2.3.0.15

Company Transformation | 9 Months Ended
--- | ---
Sep. 30, 2011
Company Transformation [Abstract] |
COMPANY TRANSFORMATION | NOTE 2 COMPANY TRANSFORMATION On January 12, 2011, the Company announced that its Board of Directors had unanimously approved a plan to separate the Company’s businesses into three independent, publicly traded companies (the Transformation). Under the Transformation, ITT will execute tax-free spinoffs to shareholders of its water-related businesses (Xylem) and its Defense segment (Exelis). Xylem will include the Water & Wastewater division, including its analytical instrumentation component, and the Residential & Commercial Water division, as well as the Flow Control division that is currently reported within the Motion & Flow segment. The Industrial Process division, which is currently reported within the Fluid segment, will continue to operate as a division of ITT. After completion of the Transformation, ITT shareholders will own shares in all three corporations. Following the Transformation, ITT will continue to trade on the New York Stock Exchange as an industrial company that supplies highly engineered solutions in the aerospace, transportation, energy and industrial markets. On September 9, 2011, we received a private letter ruling from the Internal Revenue Service that ITT’s separation of the assets and liabilities constituting each of the Exelis business, the Xylem business and the new ITT business, as well as the planned distribution of the shares of Exelis and Xylem common stock to ITT shareholders, will qualify as a tax-free transaction for U.S. federal income tax purposes. On October 5, 2011, the ITT Board of Directors declared a pro rata dividend of Exelis common stock and Xylem common stock (the Distribution), to be made on October 31, 2011, or such other date whereby conditions to the distribution are satisfied or waived, to ITT’s shareholders of record as of the close of business on October 17, 2011 (the Record Date). Each ITT shareholder will receive a dividend of one share of Exelis common stock and one share of Xylem common stock for every one share of ITT common stock held on the Record Date. As a result of the Transformation, upon consummation of the spin, we will reorganize to a new management and segment reporting structure. As part of these organizational changes, we will assess new reporting units and perform valuations to determine the assignment of goodwill to any new reporting units based on their relative fair values. We will also test the recoverability of goodwill based on the identification of any new reporting units. During the three and nine month periods ended September 30, 2011, we recognized pre-tax expenses of $132 and $279, respectively, related to the Transformation. The components of transformation costs incurred during these periods are presented below.
|  | Three |  |  | Nine |
For the Periods Ended September 30, 2011 |  | Months |  |  | Months |
Transformation Costs: |  |  |  |  |  |  |  |
Non-cash asset impairment |  | $ | 9 |  |  | $ | 64 |
Advisory fees |  |  | 32 |  |  |  | 75 |
IT costs |  |  | 36 |  |  |  | 58 |
Lease termination and other real estate costs |  |  | 10 |  |  |  | 13 |
Loss on early extinguishment of debt |  |  | 3 |  |  |  | 3 |
Employee retention and other compensation costs |  |  | 23 |  |  |  | 36 |
Other costs |  |  | 19 |  |  |  | 30 |
Transformation costs in operating income |  |  | 132 |  |  |  | 279 |
Tax-related separation (benefit) costs(a) |  |  | (4 | ) |  |  | 10 |
Total transformation costs before tax benefit |  |  | 128 |  |  |  | 289 |
Income tax benefit |  |  | (35 | ) |  |  | (87 | )
Total transformation costs, net of tax impact |  | $ | 93 |  |  | $ | 202 |
(a) |  | In the third quarter of 2011, we revised our estimate of certain costs to be incurred related to tax-related separation costs. This adjustment resulted in a $4 net credit (income) for tax-related separation costs during the third quarter of 2011.
The $64 million non-cash impairment charge includes a $55 impairment related to a decision to discontinue development of an information technology consolidation initiative and $9 of impairments to long-lived assets. The table included below provides a rollforward of the Transformation-related accrual for the nine months ended September 30, 2011.
Transformation accrual – 12/31 |  | $ | 2 |
Charges actions during the period |  |  | 289 |
Cash payments |  |  | (137 | )
Pension curtailment |  |  | (5 | )
Asset impairment |  |  | (64 | )
Transformation accrual – 9/30 |  | $ | 85 |
To complete the Transformation, we expect major areas of spending to include debt refinancing, tax-related separation costs, information technology investments to build out independent environments for the new companies, advisory fees, and other Transformation activities. Our estimate of the remaining after-tax expense for activities associated with the Transformation is expected to be approximately $275, of which $210 is expected to be incurred prior to completion of the Transformation, primarily related to the extinguishment of debt. In addition, the Company anticipates net after-tax cash outflows of approximately $130 following the Transformation, primarily consisting of additional tax impacts, employee-related costs, capital expenditures for information systems investments, and advisory fees.

X
- Definition Company Transformation. + Details
Name: | itt_CompanyTransformationAbstract
Namespace Prefix: | itt
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Company Transformation. + Details
Name: | itt_CompanyTransformationTextBlock
Namespace Prefix: | itt
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration