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DISCONTINUED OPERATIONS | 9 Months Ended
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Sep. 30, 2012
DISCONTINUED OPERATIONS | 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 nine months ended September 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 September 30, 2011 |  | Exelis |  |  | Xylem |  |  | Other(a) |  |  | Total |
Revenue |  | $ | 1,522.4 |  |  | $ | 939.0 |  |  | $ | — |  |  | $ | 2,461.4 |
Transformation costs |  |  | 11.0 |  |  |  | 45.8 |  |  |  | 56.2 |  |  |  | 113.0 |
Earnings (loss) before income taxes |  |  | 152.5 |  |  |  | 72.4 |  |  |  | (45.7 | ) |  |  | 179.2 |
Income tax expense (benefit) |  |  | 52.7 |  |  |  | 17.5 |  |  |  | (29.0 | ) |  |  | 41.2 |
Income (loss) from discontinued operations |  |  | 99.8 |  |  |  | 54.9 |  |  |  | (16.7 | ) |  |  | 138.0 |
Nine Months Ended September 30, 2011 |  | Exelis |  |  | Xylem |  |  | Other(a) |  |  | Total |
Revenue |  | $ | 4,354.5 |  |  | $ | 2,800.2 |  |  | $ | — |  |  | $ | 7,154.7 |
Transformation costs |  |  | 23.4 |  |  |  | 66.7 |  |  |  | 105.1 |  |  |  | 195.2 |
Earnings (loss) before income taxes |  |  | 409.1 |  |  |  | 294.2 |  |  |  | (98.7 | ) |  |  | 604.6 |
Income tax expense (benefit) |  |  | 142.4 |  |  |  | 74.3 |  |  |  | (43.9 | ) |  |  | 172.8 |
Income (loss) from discontinued operations |  |  | 266.7 |  |  |  | 219.9 |  |  |  | (54.8 | ) |  |  | 431.8 |
| (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 from discontinued operations was $12.2 and $5.3 for the three and nine month periods ended September 30, 2012, respectively. The results include benefits from a third quarter 2012 asbestos-related Settlement Agreement related to a business we disposed of a number of years ago and changes in unrecognized tax benefits. The nine month period also includes transformation costs incurred in connection with the Distribution that qualified for classification within discontinued operations. Novation of Contracts On October 31, 2011, we entered into a Subcontract Agreement Pending Novation with Exelis through which ITT engaged Exelis as a subcontractor for approximately 425 contracts with the U.S. Government. Pursuant to the Subcontract Agreement Pending Novation, Exelis was obligated to perform to the contract specifications to the satisfaction of the U.S. Government as if the contracts had been novated. As of September 2012, the novation process has been completed with the U.S. Government for substantially all of the agreements in which ITT engaged Exelis as a subcontractor. Following the novation, all rights and benefits conferred or accruing under the U.S. Government contracts inure to Exelis. Exelis has indemnified ITT against claims and liabilities related to the U.S. Government contracts in connection with performance under the contracts while the novation was pending.

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- Definition Discontinued operation. + References No definition available. + Details
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