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Discontinued Operations

6 Months Ended

Jun. 30, 2012

NOTE 4

DISCONTINUED OPERATIONS

On October 31, 2011, the Company completed the Distribution of Exelis and Xylem (see Note 1). ITT was designated as the accounting and legal spinnor with respect to the Distribution. While we are a party to a Distribution Agreement and several other agreements, including a Tax Matters Agreement, Benefits and Compensation Matters Agreement and Master Transition Services Agreement, we have determined that we do not have significant continuing involvement in the operations of Exelis or Xylem, nor do we expect significant continuing cash flows from Exelis or Xylem. As a result, the operating results of Exelis and Xylem through the date of the Distribution have been classified in the Consolidated Condensed Financial Statements as discontinued operations for all periods presented.

Amounts presented for the three and six months ended June 30, 2011 have been adjusted to reflect certain immaterial corrections to the amounts previously reported in the consolidated financial statements. See Note 18, “Immaterial Corrections,” for further information.

The tables below provide the results of discontinued operations through the date of disposal or distribution and certain transformation costs that were incurred by ITT but qualified for classification within discontinued operations.


Three Months Ended June 30, 2011	Exelis		Xylem		Other^(a)			Total
Revenue	$	1,484.7	$	970.8	$	—		$	2,455.5
Transformation costs		8.8		17.6		31.7			58.1
Earnings (loss) before income taxes		122.7		125.6		(32.8	)		215.5
Income tax expense (benefit)		45.1		26.7		(7.3	)		64.5
Income (loss) from discontinued operations		77.6		98.9		(25.5	)		151.0

Six Months Ended June 30, 2011	Exelis		Xylem		Other^(a)			Total
Revenue	$	2,832.1	$	1,861.1	$	—		$	4,693.2
Transformation costs		12.4		20.9		48.9			82.2
Earnings (loss) before income taxes		256.6		221.8		(53.0	)		425.4
Income tax expense (benefit)		89.7		56.8		(14.9	)		131.6
Income (loss) from discontinued operations		166.9		164.9		(38.0	)		293.8

^(a)

Amounts presented in the “Other” column in the tables above relate to various divested ITT businesses accounted for as discontinued operations in the year of divestiture for which legacy liabilities remain, as well as certain transformation costs which were directly related to the Distribution that provide no future benefit to the Company. See Note 3, “Company Transformation” for further information.

Income (loss) from discontinued operations was $0.1 and $(6.9) for the three and six month periods ended June 30, 2012, respectively. These results include costs incurred in connection with the Distribution that qualified for classification within discontinued operations and net asbestos-related expenses related to a business we disposed of a number of years ago.