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 ITT Reports Strong 2014 Fourth-Quarter and Full-Year Growth
   Friday, February 13, 2015 7:00:50 AM ET

--2014 Full-Year Financial Highlights

--Total revenue increased 6% to $2.7 billion with organic revenue up 7%

--GAAP segment operating margins expanded 150 bps to 12.8%

--Adjusted segment operating margins expanded 130 bps to 14.3% due to productivity initiatives

--GAAP EPS decreased to $2.03 due to a significant 2013 tax benefit

--Adjusted EPS increased 22% to $2.47

--2015 Guidance

--Total revenue down 1 to 3%; organic revenue up 1 to 3%

--GAAP segment operating margin expansion of approximately 100 bps; solid adjusted segment operating margin expansion of 60-80 bps

--GAAP EPS in range of $1.80 to $2.01; adjusted EPS in range of $2.55 to $2.65, up 5% at mid-point vs. 2014 and up 13% at mid-point excluding foreign exchange impact



--Plans to continue to return capital to shareowners through additional share repurchases of up to $100 million and a 7.5 percent dividend increase to 11.83 cents per share

ITT Corporation (ITT ) today reported strong 2014 fourth-quarter and full-year financial results, reflecting the power of a portfolio diversified and balanced across key end markets and geographies, strong operational execution and strategic investments for growth. These earnings results include gains in revenue, adjusted segment operating margins and adjusted earnings per share from continuing operations.

In 2014, the company delivered revenue of $2.7 billion, reflecting 6 percent overall growth and 7 percent organic growth (defined as total revenue excluding foreign exchange, acquisition and divestiture impacts). Full-year organic revenue reflects growth in major geographies including 14 percent growth in emerging markets and 4 percent growth in developed markets.

2014 GAAP earnings totaled $2.03 per share, compared with $5.28 per share in the prior year, primarily reflecting the impact of a significant tax benefit in 2013 from a valuation allowance release. Adjusted earnings, which exclude special items, increased 22 percent to $2.47 per share, reflecting strong productivity and a lower effective tax rate.

"ITT has a history of producing strong operational results, and we built on our performance track record in 2014 by making significant operational improvements while delivering record financial results," said Denise Ramos, chief executive officer and president. "I am very proud of all that our team has been able to accomplish, from enhancing our brake pad and pump capabilities for customers, to turning around our connectors and shock absorber businesses, to driving Lean and our cultural transformation efforts. I am also pleased that we were able to return additional value to shareowners by completing $50 million of share repurchases and increasing our dividend in 2014.

"As we move into 2015 and continue to face a difficult external environment with global oil and gas market and foreign exchange headwinds, we will proactively drive internal initiatives that will focus on optimizing execution, expanding our global transportation and industrial markets and deploying capital effectively. Through our collective focus in these areas, we will effectively drive our multi-industry strategy, which is keenly focused on long-term growth and value creation for stakeholders. And, we will continue to leverage our diversified and balanced portfolio, which we expect to further enhance with a pending $30 million revenue producing aerospace acquisition."

2014 Fourth-Quarter Results

In the fourth quarter, the company delivered revenue of $660 million, reflecting 2 percent overall growth and 6 percent organic growth. Fourth-quarter results include growth in global oil and gas project pumps and North American chemical and mining pumps, partially offset by expected weakness in aftermarket automotive brake pads and declines in defense and non-strategic connectors.

Fourth-quarter GAAP earnings increased from $0.12 in 2013 to $0.36 per diluted share. Adjusted earnings, which exclude special items, increased 20 percent to $0.59 per diluted share, reflecting strong operational performance, a lower effective tax rate and negative impacts from foreign exchange.

2014 Fourth-Quarter and Full-Year Business Segment Results

All full-year and quarterly results are compared with the respective prior-year periods.

Industrial Process designs and manufactures industrial pumps and valves for the oil and gas, chemical, mining and industrial markets.

-- Fourth-quarter total revenue increased 15 percent to $341 million, and organic revenue was up 19 percent, driven by strong growth in global oil and gas project pumps and North American chemical and mining pumps.

-- Fourth-quarter GAAP operating income increased 28 percent to $43.2 million. Adjusted operating income increased 18 percent to $46 million as net operating productivity more than offset incremental strategic investments and pricing pressure.

-- Full-year total revenue was up 9 percent to $1.2 billion, and organic revenue was up 11 percent, driven by growth in oil and gas, mining and chemical pumps.

-- Full-year GAAP operating income increased 11 percent to $124 million, and adjusted operating income was up 2 percent to $130 million, as increased sales volumes were partially offset by a higher mix of generally lower-margin large projects, incremental strategic investments and continued pricing pressure.

Motion Technologies designs and manufactures braking technologies and shock absorbers for the automotive and rail markets.

-- Fourth-quarter total revenue decreased 13 percent to $157 million, while organic revenue decreased 7 percent, as market share gains in China were more than offset by a tough prior-year comparison due to significant aftermarket restocking in 2013.

-- Fourth-quarter GAAP operating income increased 2 percent to $20 million. Adjusted operating income was flat at $21 million, as net operating productivity was offset by lower volumes, incremental strategic investments and unfavorable foreign exchange.

-- Full-year total revenue increased 7 percent to $769 million, and organic revenue was up 6 percent, driven by automotive brake pad growth in China and shock absorber growth in the global rail and North American automotive markets.

-- Full-year GAAP operating income increased 31 percent to $131 million, and adjusted operating income was up 24 percent to $133 million, as increased sales volumes and improved operational performance were partially offset by unfavorable pricing and incremental strategic investments.

Interconnect Solutions designs and manufactures connectors and interconnects for the oil and gas, medical, industrial and transportation, and aerospace and defense markets.

-- Fourth-quarter total revenue decreased 10 percent to $91 million, with organic revenue down 7 percent as growth in North American and Middle Eastern oil and gas connectors was more than offset by weakness in defense and expected declines in non-strategic connectors.

-- Fourth-quarter GAAP operating results increased $4 million to $2 million of income. Adjusted operating income increased 21 percent to $11 million, as net operating productivity and restructuring benefits more than offset lower volume and negative mix shift.

-- Full-year total revenue decreased 1 percent to $393 million, and organic revenue was flat, as growth in the oil and gas, transportation and industrial, and commercial aerospace markets was offset by expected declines in non-strategic connectors and weakness in the defense market.

-- Full-year GAAP operating income increased 56 percent to $22 million, and adjusted operating income was up 66 percent to $52 million, due to benefits from restructuring and improved operational performance.

Control Technologies designs and manufactures products including fuel management, actuation, and noise and energy absorption components for the aerospace and industrial markets.

-- Fourth-quarter total revenue increased 5 percent to $73 million, and organic revenue was up 6 percent, due to growth in aerospace and defense as well as industrial growth.

-- Fourth-quarter GAAP operating income increased 36 percent to $16 million. Adjusted operating income increased 21 percent to $16 million, as net operating productivity, volume and pricing more than funded incremental strategic investments.

-- Full-year total revenue increased 4 percent to $291 million, and organic revenue was up 5 percent, due to industrial growth driven by the energy absorption market as well as commercial aerospace growth.

-- Full-year GAAP operating income increased 15 percent to $64 million. Adjusted operating income was up 12 percent to $64 million, as improved operational performance and increased sales volumes were partially offset by an unfavorable shift in sales mix.

2015 Guidance

The company announced 2015 guidance with total revenue down 1 to 3 percent and organic revenue up 1 to 3 percent. Organic revenue growth is expected to be driven by share gains and market growth in automotive, aerospace, and chemical and industrial pumps that more than offsets market-driven declines in oil and gas. The total revenue guidance reflects unfavorable foreign exchange impacts, partially offset by benefits from a pending $30 million revenue producing aerospace acquisition.

The company expects GAAP segment operating margin expansion of approximately 100 basis points as well as solid adjusted segment operating margin expansion of 60-80 basis points due to benefits from improved operational performance and Lean transformation activities across its facilities including incremental benefits from 2014 and 2015 restructuring actions.

GAAP EPS in 2015 is expected to be in the range of $1.80 to $2.01. Adjusted EPS is expected to be in the range of $2.55 to $2.65 per share, up 5 percent at the mid-point and up 13 percent at the mid-point excluding the impact of foreign exchange.

The company plans to continue to return capital to shareowners through additional share repurchases of up to $100 million and increasing its dividend by 7.5 percent to 11.83 cents per share.

Investor Call Today

ITT’s senior management will host a conference call for investors today at 9 a.m. EST to review 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/investors and will be available on the website from two hours after the webcast until Friday, Feb. 20, 2015, at midnight.

For a reconciliation of GAAP to non-GAAP results, please click here.

All references to EPS are defined as diluted earnings per share from continuing operations.

About ITT

ITT is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for the energy, transportation and industrial markets. Building on its heritage of innovation, ITT partners with its customers to deliver enduring solutions to the key industries that underpin our modern way of life. Founded in 1920, ITT is headquartered in White Plains, N.Y., with employees in more than 35 countries and sales in a total of approximately 125 countries. The company generated 2014 revenues of $2.7 billion. For more information, visit www.itt.com.

Safe Harbor Statement

This release contains "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 (the "Act"). No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. All forward-looking statements included in this release are based on information available to us on the date hereof, and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the industry in which we operate, and other legal, regulatory and economic developments. These forward-looking statements include, but are not limited to, future strategic plans and other statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance.

We use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "future," "may," "will," "could," "should," "potential," "continue," "guidance" and other similar expressions 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 or implied in, or reasonably inferred from, such forward-looking statements.

Forward-looking statements in this release should be evaluated together with the risks and uncertainties that affect our business, particularly those mentioned in the Risk Factors section of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the Securities and Exchange Commission.

 
                                                                                                                                                                                         ITT CORPORATION AND SUBSIDIARIES
                                                                                                                                                                                     CONSOLIDATED CONDENSED INCOME STATEMENTS
                                                                                                                                                                                          (In millions, except per share)
                                                                                                                                                                                                    (Unaudited)
                                                                                                                                                                                     
                                                                                                                                                                  Three Months Ended                                                                                                                                               Twelve Months Ended
                                                                                                                                                                     December 31,                                                                                                                                                     December 31,
                                                                                                                                      2014                                                                 2013                                                                             2014                                                                                        2013
                                                                                                                           ---------------------------                                          ---------------------------                                          --------------------------------------------------                                          --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                  
Revenue                                                                                                                                       $ 660.0                                                              $ 645.5                                                              $ 2,654.6                                                                                   $ 2,496.9
                                                                                                                                                                                                                                                                                                                                                                  
Costs of revenue                                                                                                                                443.1                                                                436.9                                                                1,788.2                                                                                     1,697.1
Selling, general and administrative expenses                                                                                                    138.1                                                                145.9                                                                  519.5                                                                                       516.1
Research and development expenses                                                                                                                20.2                                                                 18.4                                                                   76.6                                                                                        67.3
Asbestos-related (benefit) costs, net                                                                                         14.7                                              16.3                                                 3.9                                                  32.8  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Total costs and expenses                                                                                                                        616.1                                                                617.5                                                                2,388.2                                                                                     2,313.3
                                                                                                                                                                                                                                                                                                                                                                  
Operating income                                                                                                                                 43.9                                                                 28.0                                                                  266.4                                                                                       183.6
Interest and non-operating expenses (income), net                                                                              2.1                                               0.5                                                 4.4                                                   3.1  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Income from continuing operations before income tax                                                                                              41.8                                                                 27.5                                                                  262.0                                                                                       180.5
Income tax expense (benefit)                                                                                                   7.9                                              15.4                                                71.3                                                (309.6 )
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Income from continuing operations                                                                                                                33.9                                                                 12.1                                                                  190.7                                                                                       490.1
Income (loss) from discontinued operations, net of tax                                                                         0.3                                               0.3                                                (3.9 )                                                                    0.8  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net Income                                                                                                                    34.2                                              12.4                                               186.8                                                 490.9  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Less: Income attributable to noncontrolling interests                                                                          0.5                                               1.2                                                 2.3                                                   2.4  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net Income attributable to ITT Corporation                                                                                                    $  33.7                                                              $  11.2                                                              $   184.5                                                                $   488.5  
                                                                                                                           ==================== =====                                           ==================== =====                                           ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                  
Amounts attributable to ITT Corporation:
     Income from continuing operations, net of tax                                                                                               33.4                                                                 10.9                                                                  188.4                                                                                       487.7
     Income (loss) from discontinued operations, net of tax                                                                    0.3                                               0.3                                                (3.9 )                                                                    0.8  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
        Net Income                                                                                                                            $  33.7                                                              $  11.2                                                              $   184.5                                                                $   488.5  
                                                                                                                           ==================== =====                                           ==================== =====                                           ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                  
Earnings (loss) per share attributable to ITT Corporation:
Basic:
     Continuing operations                                                                                                                    $  0.37                                                              $  0.12                                                              $    2.06                                                                                   $    5.36
     Discontinued operations                                                                                                     -                                                 -                                               (0.04 )                                                                   0.01  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
       Net income                                                                                                                             $  0.37                                                              $  0.12                                                              $    2.02                                                                                   $    5.37
                                                                                                                                                                                                                                                                                                                                                                  
Diluted:
     Continuing operations                                                                                                                    $  0.36                                                              $  0.12                                                              $    2.03                                                                                   $    5.28
     Discontinued operations                                                                                                     -                                                 -                                               (0.04 )                                                                   0.01  
                                                                                                                           -------------------- -----                                           -------------------- -----                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
        Net income                                                                                                                            $  0.36                                                              $  0.12                                                              $    1.99                                                                                   $    5.29
                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                  
Weighted average common shares - basic                                                                                                           91.4                                                                 90.8                                                                   91.5                                                                                        91.0
Weighted average common shares - diluted                                                                                                         92.5                                                                 92.4                                                                   92.8                                                                                        92.3
                                                                                                       
 
                                                                                           ITT CORPORATION AND SUBSIDIARIES
                                                                                         CONSOLIDATED CONDENSED BALANCE SHEETS
                                                                                                     (In millions)
                                                                                      
                                                                                                                                                                                       
                                                                                                                                                                                       
                                                                                                                       December 31,                                                             December 31,
                                                                                                                           2014                                                                     2013
                                                                                                               -----------------------------                                          --------------------------------
                                                                                                                        (Unaudited)
Assets
Cash and cash equivalents                                                                                                         $   584.0                                                              $      507.3
Receivables, net                                                                                                                      500.1                                                                     496.7
Inventories, net                                                                                                                      302.3                                                                     315.9
Other current assets                                                                                               249.8                                                  345.6
                                                                                                               -------------------- -------                                           -------------------- ----------
     Total current assets                                                                                                           1,636.2                                                                   1,665.5
                                                                                                                                                                                       
Plant, property and equipment, net                                                                                                    443.9                                                                     426.2
Goodwill                                                                                                                              632.1                                                                     659.8
Other intangible assets, net                                                                                                           91.4                                                                     106.9
Asbestos-related assets                                                                                                               374.0                                                                     433.3
Deferred income taxes                                                                                                                 304.1                                                                     303.6
Other non-current assets                                                                                           149.8                                                  144.9
                                                                                                               -------------------- -------                                           -------------------- ----------
     Total assets                                                                                                3,631.5                                                3,740.2
                                                                                                               ==================== =======                                           ==================== ==========
                                                                                                                                                                                       
                                                                                                                                                                                       
Liabilities and Shareholders’ Equity
Accounts payable                                                                                                                      309.6                                                                     332.7
Accrued liabilities                                                                                                465.8                                                  499.9
                                                                                                               -------------------- -------                                           -------------------- ----------
     Total current liabilities                                                                                                        775.4                                                                     832.6
                                                                                                                                                                                       
Asbestos-related liabilities                                                                                                        1,116.6                                                                   1,179.6
Postretirement benefits                                                                                                               249.7                                                                     243.3
Other non-current liabilities                                                                                      269.5                                                  277.8
                                                                                                               -------------------- -------                                           -------------------- ----------
     Total liabilities                                                                                                              2,411.2                                                                   2,533.3
                                                                                                                                                                                       
Total ITT Corporation shareholders’ equity                                                                                          1,214.9                                                                   1,201.0
     Noncontrolling interests                                                                                        5.4                                                    5.9
                                                                                                               -------------------- -------                                           -------------------- ----------
Total shareholders’ equity                                                                                       1,220.3                                                1,206.9
                                                                                                               -------------------- -------                                           -------------------- ----------
     Total liabilities and shareholders’ equity                                                                                   $ 3,631.5                                                              $    3,740.2
                                                                                                               ==================== =======                                           ==================== ==========
 
 
                                                                                                                           ITT CORPORATION AND SUBSIDIARIES
                                                                                                                    CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                                                                                                                     (In millions)
                                                                                                                                      (Unaudited)
                                                                                                                                     
                                                                                                                                                                                                       Twelve Months Ended
                                                                                                                                                                                                          December 31,
                                                                                                                                                                2014                                                                                       2013
                                                                                                                                          -------------------------------------------------                                          -------------------------------------------------
                                                                                                                                                                                                                                      
Operating Activities
Net income                                                                                                                                                   $  186.8                                                                                   $  490.9
Less: (Loss) income from discontinued operations                                                                                                                 (3.9 )                                                                                      0.8
Less: Income attributable to noncontrolling interest                                                                                           2.3                                                  2.4  
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
Income from continuing operations - ITT Corporation                                                                                                             188.4                                                                                      487.7
                                                                                                                                                                                                                                      
Adjustments to income from continuing operations:
   Depreciation and amortization                                                                                                                                 88.3                                                                                       86.9
   Stock-based compensation                                                                                                                                      14.0                                                                                       13.1
   Asbestos-related costs, net                                                                                                                                    3.9                                                                                       32.8
   Asbestos-related payments, net                                                                                                                                (3.9 )                                                                                    (25.4 )
   Deferred income taxes                                                                                                                                         (0.2 )                                                                                   (364.0 )
   Contributions to postretirement plans                                                                                                                        (12.6 )                                                                                    (11.9 )
   Changes in assets and liabilities:
     Change in receivables                                                                                                                                      (45.1 )                                                                                    (60.7 )
     Change in inventories                                                                                                                                       (3.1 )                                                                                    (10.7 )
     Change in accounts payable                                                                                                                                  (5.8 )                                                                                      4.5
     Change in accrued expenses                                                                                                                                  (5.2 )                                                                                     35.6
     Change in accrued income taxes                                                                                                                             (10.4 )                                                                                     28.6
     Other, net                                                                                                                               36.4                                                 10.1  
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
   Net Cash - Operating Activities                                                                                                           244.7                                                226.6  
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                      
Investing Activities
Capital expenditures                                                                                                                                           (118.8 )                                                                                   (122.9 )
Purchases of investments                                                                                                                                       (165.4 )                                                                                   (240.2 )
Maturities of investments                                                                                                                                       269.0                                                                                      168.2
Acquisitions, net of cash acquired                                                                                                                               (2.8 )                                                                                      0.7
Proceeds from sale of assets and businesses                                                                                                                       3.7                                                                                        2.3
Other, net                                                                                                                                    (0.2 )                                                                   3.1  
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
   Net Cash -- Investing Activities                                                                                              (14.5 )                                                                (188.8 )
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                      
Financing Activities
Short-term debt, net                                                                                                                                            (38.0 )                                                                                     25.4
Long-term debt repaid                                                                                                                                            (1.7 )                                                                                     (6.4 )
Proceeds from issuance of common stock                                                                                                                           15.1                                                                                       34.8
Repurchase of common stock                                                                                                                                      (60.2 )                                                                                    (87.9 )
Excess tax benefit from equity compensation activity                                                                                                             10.4                                                                                        8.7
Dividends paid                                                                                                                                                  (40.7 )                                                                                    (36.4 )
Other, net                                                                                                                                    (1.5 )                                                                   3.5  
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
   Net Cash -- Financing Activities                                                                                             (116.6 )                                                                 (58.3 )
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                      
Exchange rate effects on cash and cash equivalents                                                                                           (31.2 )                                                                  (0.4 )
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                   
                                                                                                                                          -------------------------------------------------                                          -------------------------------------------------
   Net Cash - Operating activities of discontinued operations                                                                    (5.7 )                                                                 (16.3 )
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                      
Net change in cash and cash equivalents                                                                                                                          76.7                                                                                      (37.2 )
Cash and cash equivalents -- beginning of year                                                                                   507.3                                                544.5  
                                                                                                                                          -------------------- ------ --------------------                                           -------------------- ------ --------------------
Cash and cash equivalents - end of period                                                                                                                    $  584.0                                                                $  507.3  
                                                                                                                                          ==================== ====== ====================                                           ==================== ====== ====================
 

Key Performance Indicators and Non-GAAP Measures

Management reviews key performance indicators including revenue, segment operating income and margins, earnings per share, order growth, and backlog, among others. In addition, we consider certain measures to be useful to management and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, dividends, acquisitions and share repurchases. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators for purposes of our reconciliation tables.

Organic Revenues and Organic Orders are defined as revenues and orders, excluding the impact of foreign currency fluctuations and contributions from acquisitions and divestitures made during the last twelve months. Divestitures include sales of insignificant portions of our business that did not meet the criteria for presentation as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes translation at a constant exchange rate for the current and prior periods.

Adjusted Segment Operating Income and Adjusted Segment Operating Margin are defined as operating income, adjusted to exclude costs incurred in connection with the acquisition of Bornemann Pumps, transformation costs, restructuring charges and spin-related repositioning charges; and adjusted segment operating margin is defined as adjusted segment operating income divided by total revenue. Spin-related repositioning charges are expenses to reposition the post-transformation organization to its full operating structure primarily consist of transition services agreement exit costs, advisory fees and other redesign actions related to the new company structure.

Adjusted Income from Continuing Operations, Adjusted EPS and Adjusted EPS Guidance are defined as income from continuing operations and income from continuing operations per diluted share, adjusted to exclude special items. Special items may include, but are not limited to, asbestos-related costs, transformation costs, repositioning costs, realignment costs, restructuring costs, acquisition-related costs, income tax settlements or adjustments, and other unusual and infrequent non-operating items. Special items represent significant charges or credits on an after-tax basis that impact current results, but may not be related to the Company’s ongoing operations and performance.

Adjusted Free Cash Flow is defined as net cash provided by operating activities less capital expenditures, cash payments for restructuring costs, transformation costs, repositioning costs, net asbestos cash flows and other significant items that impact current results which management believes are not related to our ongoing operations and performance. Due to other financial obligations and commitments, the entire free cash flow may not be available for discretionary purposes.

 
                                                                                                                                                                               ITT Corporation Non-GAAP Reconciliation
                                                                                                                                                                             Reported vs. Organic Revenue / Order Growth
                                                                                                                                                                                     Fourth Quarter 2014 & 2013
                                                                                                                                                                                            (In Millions)
                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                         
                                                                         -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                      -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                        (As Reported - GAAP)                                                                                                                                                   (As Adjusted - Organic)
                                                                         ---------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                            (A)                                       (B)                                                                                 (C)                                       (D)                                   (E) = B-C-D                               (F) = E / A
                                                                                                                                                                    Change                                   % Change                                Acquisition /                               FX Impact                                  Change                                   % Change
                                                                                                                                                                                                                                                     Divestitures
                                                                                3M 2014                                   3M 2013                                2014 vs. 2013                             2014 vs. 2013                                3M 2014                                   3M 2014                             Adj. 2014 vs. 2013                         Adj. 2014 vs.2013
                                                                         --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                                                                                                                                                                                                                                                                                                                                                                                
Revenues
------------------------------
ITT Corporation - Consolidated                                                          660.0                                     645.5                                      14.5                                      2.2%                                       0.8                                    (25.6)                                      39.3                                      6.1%
                                                                                                                                                                                                                                                                                                                                                                                
Industrial Process                                                                      340.7                                     296.9                                      43.8                                     14.8%                                       0.8                                    (12.0)                                      55.0                                     18.5%
Motion Technologies                                                                     156.6                                     180.4                                    (23.8)                                   (13.2%)                                       0.0                                    (10.5)                                    (13.3)                                    (7.4%)
Interconnect Solutions                                                                   90.7                                     100.5                                     (9.8)                                    (9.8%)                                       0.0                                     (2.7)                                     (7.1)                                    (7.1%)
Control Technologies                                                                     73.2                                      69.5                                       3.7                                      5.3%                                       0.0                                     (0.3)                                       4.0                                      5.8%
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                
Orders
------------------------------
Total Segment Orders                                                                    622.2                                     596.9                                      25.3                                      4.2%                                       0.8                                    (24.5)                                      49.0                                      8.2%
                                                                                                                                                                                                                                                                                                                                                                                
Industrial Process                                                                      300.4                                     244.7                                      55.7                                     22.8%                                       0.8                                     (9.9)                                      64.8                                     26.5%
Motion Technologies                                                                     159.6                                     195.5                                    (35.9)                                   (18.4%)                                       0.0                                    (11.8)                                    (24.1)                                   (12.3%)
Interconnect Solutions                                                                   93.8                                      98.6                                     (4.8)                                    (4.9%)                                       0.0                                     (2.5)                                     (2.3)                                    (2.3%)
Control Technologies                                                                     69.9                                      59.6                                      10.3                                     17.3%                                       0.0                                     (0.4)                                      10.7                                     18.0%
                                                                                                                                                                                                                                                           
Note: Excludes intercompany eliminations
Immaterial differences due to rounding
 
                                                                                                                                                                               ITT Corporation Non-GAAP Reconciliation
                                                                                                                                                                             Reported vs. Organic Revenue / Order Growth
                                                                                                                                                                                   Full Year December 2014 & 2013
                                                                                                                                                                                            (In Millions)
                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                         
                                                                         -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                      -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                        (As Reported - GAAP)                                                                                                                                                   (As Adjusted - Organic)
                                                                         ---------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                            (A)                                       (B)                                                                                 (C)                                       (D)                                   (E) = B-C-D                               (F) = E / A
                                                                                                                                                                    Change                                   % Change                                Acquisition /                               FX Impact                                  Change                                   % Change
                                                                                                                                                                                                                                                     Divestitures
                                                                               12M 2014                                  12M 2013                                2014 vs. 2013                             2014 vs. 2013                               12M 2014                                  12M 2014                             Adj. 2014 vs. 2013                         Adj. 2014 vs.2013
                                                                         --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                                                                                                                                                                                                                                                                                                                                                                                
Revenues
------------------------------
ITT Corporation - Consolidated                                                        2,654.6                                   2,496.9                                     157.7                                      6.3%                                       3.0                                    (18.7)                                     173.4                                      6.9%
                                                                                                                                                                                                                                                                                                                                                                                
Industrial Process                                                                    1,208.3                                   1,107.4                                     100.9                                      9.1%                                       3.0                                    (20.6)                                     118.5                                     10.7%
Motion Technologies                                                                     769.4                                     721.8                                      47.6                                      6.6%                                       0.0                                       3.4                                      44.2                                      6.1%
Interconnect Solutions                                                                  392.8                                     395.5                                     (2.7)                                    (0.7%)                                       0.0                                     (1.0)                                     (1.7)                                    (0.4%)
Control Technologies                                                                    290.5                                     278.2                                      12.3                                      4.4%                                       0.0                                     (0.5)                                      12.8                                      4.6%
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                
Orders
------------------------------
Total Segment Orders                                                                  2,683.0                                   2,575.5                                     107.5                                      4.2%                                       3.0                                    (18.7)                                     123.2                                      4.8%
                                                                                                                                                                                                                                                                                                                                                                                
Industrial Process                                                                    1,214.2                                   1,162.0                                      52.2                                      4.5%                                       3.0                                    (20.7)                                      69.9                                      6.0%
Motion Technologies                                                                     797.0                                     743.9                                      53.1                                      7.1%                                       0.0                                       3.3                                      49.8                                      6.7%
Interconnect Solutions                                                                  388.4                                     400.3                                    (11.9)                                    (3.0%)                                       0.0                                     (0.7)                                    (11.2)                                    (2.8%)
Control Technologies                                                                    289.2                                     276.0                                      13.2                                      4.8%                                       0.0                                     (0.6)                                      13.8                                      5.0%
 
Note: Excludes intercompany eliminations
Immaterial differences due to rounding
 
 
                                                                                                                                                                                                          ITT Corporation Non-GAAP Reconciliation
                                                                                                                                                                                             Reported vs Adjusted Segment Operating Income & Operating Margin
                                                                                                                                                                                                               Fourth Quarter of 2014 & 2013
                                                                                                                                                                                                                       (In Millions)
                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                 3M 2014                           3M 2014                                                   3M 2014                          3M 2013                           3M 2013                                                   3M 2013                          % Change                                                   % Change
                                                                               As Reported                      Special Items                                              As Adjusted                      As Reported                      Special Items                                              As Adjusted                       As Reported                                                As Adjusted
                                                                                                                                                                                                                                                                                                                                         2014 vs. 2013                                              2014 vs. 2013
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                                                                                                                                                                                                       
Revenue:
Industrial Process                                                                  340.7                                                                                       340.7                            296.9                                                                                       296.9                              14.8%                                                      14.8%
Motion Technologies                                                                 156.6                                                                                       156.6                            180.4                                                                                       180.4                            (13.2%)                                                    (13.2%)
Interconnect Solutions                                                               90.7                                                                                        90.7                            100.5                                                                                       100.5                             (9.8%)                                                     (9.8%)
Control Technologies                                                                 73.2                                                                                        73.2                             69.5                                                                                        69.5                               5.3%                                                       5.3%
Intersegment eliminations                                                           (1.2)                                                                                       (1.2)                            (1.8)                                                                                       (1.8)                            (33.3%)                                                    (33.3%)
                                                                              -----------                                                                                 -----------                      -----------                                                                                 -----------                      -------------                                              -------------
     Total Revenue                                                                  660.0                                                                                       660.0                            645.5                                                                                       645.5                               2.2%                                                       2.2%
                                                                              -----------                                                                                 -----------                      -----------                                                                                 -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating Margin:
Industrial Process                                                                  12.7%                                 70                      BP                            13.4%                            11.4%                                170                      BP                            13.1%                                130                      BP                                 30                      BP
Motion Technologies                                                                 12.5%                                110                      BP                            13.6%                            10.6%                                120                      BP                            11.8%                                190                      BP                                180                      BP
Interconnect Solutions                                                               1.9%                              1,030                      BP                            12.2%                           (2.0%)                              1,120                      BP                             9.2%                                390                      BP                                300                      BP
Control Technologies                                                                22.0%                                  -                      BP                            22.0%                            17.0%                                210                      BP                            19.1%                                500                      BP                                290                      BP
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
     Total Operating Segments                                                       12.2%                                210                      BP                            14.3%                             9.7%                                310                      BP                            12.8%                                250                      BP                                150                      BP
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income:
Industrial Process                                                                   43.2                                2.4                                                     45.6                             33.7                                5.1                                                     38.8                              28.2%                                                      17.5%
Motion Technologies                                                                  19.5                                1.8                                                     21.3                             19.2                                2.1                                                     21.3                               1.6%                                                       0.0%
Interconnect Solutions                                                                1.7                                9.4                                                     11.1                            (2.0)                               11.2                                                      9.2                                 na                                                      20.7%
Control Technologies                                                                 16.1                                  -                                                     16.1                             11.8                                1.5                                                     13.3                              36.4%                                                      21.1%
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
     Total Segment Operating Income                                                  80.5                               13.6                                                     94.1                             62.7                               19.9                                                     82.6                              28.4%                                                      13.9%
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
 
Note: Immaterial differences due to rounding.
 
Special items include, but are not limited to, certain costs
associated with repositioning costs associated with spin-related
activities, restructuring and realignment costs and other unusual
and or infrequent non-operating items.
 
                                                                                                                                                                                                          ITT Corporation Non-GAAP Reconciliation
                                                                                                                                                                                             Reported vs Adjusted Segment Operating Income & Operating Margin
                                                                                                                                                                                                              Full Year December 2014 & 2013
                                                                                                                                                                                                                       (In Millions)
                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                12M 2014                          12M 2014                                                  12M 2014                         12M 2013                          12M 2013                                                  12M 2013                          % Change                                                   % Change
                                                                               As Reported                      Special Items                                              As Adjusted                      As Reported                      Special Items                                              As Adjusted                       As Reported                                                As Adjusted
                                                                                                                                                                                                                                                                                                                                         2014 vs. 2013                                              2014 vs. 2013
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                                                                                                                                                                                                       
Revenue:
Industrial Process                                                                1,208.3                                                                                     1,208.3                          1,107.4                                                                                     1,107.4                               9.1%                                                       9.1%
Motion Technologies                                                                 769.4                                                                                       769.4                            721.8                                                                                       721.8                               6.6%                                                       6.6%
Interconnect Solutions                                                              392.8                                                                                       392.8                            395.5                                                                                       395.5                             (0.7%)                                                     (0.7%)
Control Technologies                                                                290.5                                                                                       290.5                            278.2                                                                                       278.2                               4.4%                                                       4.4%
Intersegment eliminations                                                           (6.4)                                                                                       (6.4)                            (6.0)                                                                                       (6.0)                               6.7%                                                       6.7%
                                                                              -----------                                                                                 -----------                      -----------                                                                                 -----------                      -------------                                              -------------
     Total Revenue                                                                2,654.6                                                                                     2,654.6                          2,496.9                                                                                     2,496.9                               6.3%                                                       6.3%
                                                                              -----------                                                                                 -----------                      -----------                                                                                 -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating Margin:
Industrial Process                                                                  10.3%                                 50                      BP                            10.8%                            10.1%                                150                      BP                            11.6%                                 20                      BP                               (80)                      BP
Motion Technologies                                                                 17.0%                                 30                      BP                            17.3%                            13.9%                                100                      BP                            14.9%                                310                      BP                                240                      BP
Interconnect Solutions                                                               5.7%                                760                      BP                            13.3%                             3.6%                                430                      BP                             7.9%                                210                      BP                                540                      BP
Control Technologies                                                                21.9%                                  -                      BP                            21.9%                            19.9%                                 50                      BP                            20.4%                                200                      BP                                150                      BP
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
     Total Operating Segments                                                       12.8%                                150                      BP                            14.3%                            11.3%                                170                      BP                            13.0%                                150                      BP                                130                      BP
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income:
Industrial Process                                                                  123.9                                6.5                                                    130.4                            112.0                               16.3                                                    128.3                              10.6%                                                       1.6%
Motion Technologies                                                                 130.9                                2.1                                                    133.0                            100.3                                7.0                                                    107.3                              30.5%                                                      24.0%
Interconnect Solutions                                                               22.2                               30.0                                                     52.2                             14.2                               17.2                                                     31.4                              56.3%                                                      66.2%
Control Technologies                                                                 63.5                                0.0                                                     63.5                             55.3                                1.5                                                     56.8                              14.8%                                                      11.8%
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
     Total Segment Operating Income                                                 340.5                               38.6                                                    379.1                            281.8                               42.0                                                    323.8                              20.8%                                                      17.1%
                                                                              -----------                      -------------                                              -----------                      -----------                      -------------                                              -----------                      -------------                                              -------------
                                                                                                                                                                                                                                                           
Note: Immaterial differences due to rounding.
 
Special items include, but are not limited to, certain costs
associated with repositioning costs associated with spin-related
activities, restructuring and realignment costs and other unusual
and or infrequent non-operating items.
 
                                                                                                                                                                                                              ITT Corporation Non-GAAP Reconciliation
                                                                                                                                                                                                     Reported vs. Adjusted Income from Continuing Operations &
                                                                                                                                                                                                                           Adjusted EPS
                                                                                                                                                                                                                   Fourth Quarter of 2014 & 2013
                                                                                                                                                                                                              (In Millions, except per share amounts)
                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                Percent Change
                                                                                                     Q4 2014                                  Non-GAAP                                                           Q4 2014                                   Q4 2013                                  Non-GAAP                                                           Q4 2013                             2014 vs. 2013                         2014 vs. 2013
                                                                                                   As Reported                               Adjustments                                                       As Adjusted                               As Reported                               Adjustments                                                       As Adjusted                            As Adjusted                           As Adjusted
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------                      -------------                      --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                  
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
Segment Operating Income                                                                                      80.5                                      13.6                      #A                                      94.1                                      62.7                                      19.9                      #A                                      82.6
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                              
Interest Income (Expense)                                                                                    (0.7)                                         -                                                             (0.7)                                     (0.7)                                     (0.7)                      #B                                     (1.4)
Other Income (Expense)                                                                                       (1.4)                                         -                                                             (1.4)                                       0.2                                         -                                                               0.2
Corporate (Expense)                                                                                         (36.6)                                      17.4                      #C                                    (19.2)                                    (34.7)                                      18.5                      #C                                    (16.2)
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
                                                                                                                                                                                                                                                                  
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
Income from Continuing Operations before Tax                                                                  41.8                                      31.0                                                              72.8                                      27.5                                      37.7                                                              65.2
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                  
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
Income Tax Benefit (Expense)                                                                                 (7.9)                                    (10.1)                      #D                                    (18.0)                                    (15.4)                                     (3.4)                      #D                                    (18.8)
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
                                                                                                                                                                                                                                                                  
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
Income from Continuing Operations                                                                             33.9                                      20.9                                                              54.8                                      12.1                                      34.3                                                              46.4
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                              
Less: Non Controlling Interest                                                                                 0.5                                         -                                                               0.5                                       1.2                                         -                                                               1.2
                                                                                                                                                                                                                                                                  
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
Income from Continuing Operations - ITT Corporation                                                           33.4                                      20.9                                                              54.3                                      10.9                                      34.3                                                              45.2
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
                                                                                                                                                                                                                                                                  
                                                                                              --------------------                      --------------------                                              --------------------                      --------------------                      --------------------                                              --------------------
EPS from Continuing Operations                                                                                0.36                                      0.23                                                              0.59                                      0.12                                      0.37                                                              0.49                               0.10                                     20.4%
                                                                                              ====================                      ====================                                              ====================                      ====================                      ====================                                              ====================                      =============
 
Note: Amounts may not calculate due to rounding.
                  
#A -                                  2014 segment operating income includes restructuring costs ($5.6M);
                                      and realignment and repositioning costs ($5.3M) and certain costs
                                      associated with the Venezuela currency devaluation ($2.7M).
#A -                                  2013 segment operating income includes transformation and
                                      repositioning costs ($2.2M); restructuring costs ($17.1M); costs
                                      primarily related to Bornemann integration ($0.6M).
                                       
#B -                                  2013 includes ($0.7M) reduction in interest income related to prior
                                      year tax audits.
                                       
#C -                                  2014 corporate (expense) includes repositioning costs ($2.4M);
                                      restructuring and realignment costs ($0.3M); net asbestos related
                                      expense ($14.7M).
                                      Note: ($14.7M) net asbestos related expense includes ($16.9M)
                                      adjustment to maintain 10 year accrual and ($2.2M) favorable
                                      settlement agreement.
#C -                                  2013 corporate expense includes asbestos related expense ($16.3M),
                                      transformation and repositioning costs ($2.3M); restructuring costs
                                      ($0.7M) and reversal of integration costs ($0.8M).
                                       
#D -                                  2014 includes various tax-related special items including tax impact
                                      of change in valuation allowance assessment $1.0M, state tax rate
                                      changes of $0.6M, U.S. tax on undistributed foreign earnings ($2.6M).
#D -                                  2013 includes various tax-related special items including reduction
                                      in tax valuation allowances of ($7.1M) and tax on un-remitted
                                      foreign earnings of ($11.0M).
                                       
                                                                                                                                                                     ITT Corporation Non-GAAP Reconciliation
                                                                                                                                                            Reported vs. Adjusted Income from Continuing Operations &
                                                                                                                                                                                  Adjusted EPS
                                                                                                                                                                              Full Year 2014 & 2013
                                                                                                                                                                      (In Millions, except EPS and shares)
                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                              Percent Change
                                                                                                                                                                                                                                                                                                                                                               2014 vs. 2013
                                                                                                                                                                                                                                                                                                                                                                As Adjusted
                                                                                                                                                                                                                                                                                                                                                           -------------------
                                                      12M 2014                                                       Non-GAAP                 12M 2014                                             12M 2013                                                       Non-GAAP                 12M 2013                                           2014 vs. 2013
                                                               As Reported                                          Adjustments                        As Adjusted                                          As Reported                                          Adjustments                        As Adjusted                                As Adjusted
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------                     -----------  -------------------
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                           
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------
Segment Operating Income                                 340.5                              38.6   #A      379.1                             281.8                              42.0   #A      323.8  
                                                    ---------- --------------------                      ---------- --------------------    ---------- --------------------                      ---------- --------------------                      ---------- --------------------    ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                            
Interest Income (Expense)                                 (1.5 )                                                  -                               (1.5 )                                               (1.3 )                                               (4.9 )                    #B       (6.2 )
Other Income (Expense)                                    (2.9 )                                                  -                               (2.9 )                                               (1.8 )                                                  -                               (1.8 )
Gain on sale of Assets                                       -                                                    -                                  -                                                    -                                                    -                                  -
Corporate (Expense)                                      (74.1 )                                               14.4   #C      (59.7 )                                              (98.2 )                                               52.3   #C      (45.9 )
                                                    ---------- --------------------                      ---------- --------------------    ---------- --------------------                      ---------- --------------------                      ---------- --------------------    ---------- --------------------
                                                                                                                                                                                           
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------
Income from Continuing Operations before Tax             262.0                              53.0           315.0                             180.5                              89.4           269.9  
                                                    ---------- --------------------                      ---------- --------------------    ---------- --------------------                      ---------- --------------------                      ---------- --------------------    ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                           
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------
Income Tax Benefit (Expense)                             (71.3 )                                              (12.6 )                    #D      (83.9 )                                              309.6                            (390.8 )                    #D      (81.2 )
                                                    ---------- --------------------                      ---------- --------------------    ---------- --------------------                      ---------- --------------------                      ---------- --------------------    ---------- --------------------
                                                                                                                                                                                           
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------
Income from Continuing Operations                        190.7                              40.4           231.1                             490.1                            (301.4 )                            188.7  
                                                    ---------- --------------------                      ---------- --------------------    ---------- --------------------                      ---------- --------------------                      ---------- --------------------    ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
Less: Non Controlling Interest                             2.3                                                    -                                2.3                                                  2.4                                                    -                                2.4
                                                                                                                                                                                           
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------
Income from Continuing Operations - ITT Corporation      188.4                              40.4           228.8                             487.7                            (301.4 )                            186.3  
                                                    ---------- --------------------                      ---------- --------------------    ---------- --------------------                      ---------- --------------------                      ---------- --------------------    ---------- --------------------
                                                                                                                                                                                           
                                                    --------------------------------                     --------------------------------   --------------------------------                     --------------------------------                     --------------------------------   --------------------------------
EPS from Continuing Operations                            2.03                              0.44            2.47                              5.28                             (3.26 )                             2.02                               0.45        22.3 %
                                                    ========== ====================                      ========== ====================    ========== ====================                      ========== ====================                      ========== ====================    ========== ====================                      ===========
                                         
Note: Amounts may not calculate due to rounding.
                                                                                        
#A -                           2014 segment operating income includes restructuring costs
                               ($26.8M); realignment and repositioning costs ($9.1M) and certain
                               costs associated with the Venezuela currency devaluation ($2.7M).
#A -                           2013 segment operating income includes transformation and
                               repositioning costs ($6.2M); restructuring costs ($27.2M);
                               Bornemann Pumps acquisition costs, integration costs, backlog
                               amortization and product line exit ($8.6M).
                                                                                        
#B -                           2013 interest income of ($3.5M) related to a legacy settlement and
                               ($1.4M) reduction in interest expense related to tax audits.
                                                                                        
#C -                           2014 corporate (expense) includes repositioning and realignment
                               costs ($9.2M); restructuring costs ($1.3M); net asbestos related
                               expense ($3.9M).
                                      Note: ($3.9M) net asbestos related expense includes ($64.9M)
                                      adjustment to maintain 10-year accrual, ($58.8M) remeasurement
                                      income and ($2.2M) settlement agreement.
#C -                           2013 corporate (expense) includes transformation and repositioning
                               costs ($19.0M); restructuring costs ($1.2M); other special expense
                               ($32.1M).
                                      Notes:
                                            ($32.1M) other special expense includes reversal of other
                                            integration costs ($0.7M) and net asbestos related expense ($32.8M).
                                            ($32.8M) net asbestos related expense includes insurance settlement
                                            ($31.0M), recurring accrual ($63.3M) and remeasurement ($0.5M).
                                                                                        
#D -                           2014 includes various tax-related special items including tax
                               impact of change in valuation allowance assessment $2.5M, state
                               tax rate changes of $2.5M, election for tax basis step-up in
                               Italia ($2.2M) and U.S. tax on undistributed foreign earnings
                               $0.8M.
                                       
#D -                           2013 includes various tax-related special items including
                               reduction in tax valuation allowances of ($375.3M) and tax on
                               foreign un-remitted earnings of $11.0M.
                                                                  ITT Corporation Non-GAAP Reconciliation
                                                        Net Cash - Operating Activities vs. Adjusted Free Cash Flow
                                                                                Conversion
                                                                           Full Year 2014 & 2013
                                                                               (In Millions)
                                                                                                   
                                                                                       12M 2014                          12M 2013  
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                     Net Cash - Operating Activities                                      244.7                                                226.6
                                                                                                                                           
                     Capital Expenditures                                                 118.8                                                122.9
                                                                                                                                           
                     Free Cash Flow                                                       125.9                             103.7  
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                     Transformation & Repositioning Related Capex                           4.3                                                  4.8
                                                                                                                                           
                     Transformation, Repositioning & Realignment Related Cash Payments     20.3                                                 30.6
                                                                                                                                           
                     Restructuring Cash Payments                                           18.6                                                 17.1
                                                                                                                                           
                     Asbestos Cash Payments, net                                            3.9                              25.4  
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                     Adjusted Free Cash Flow                                              173.0                             181.6  
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                     Income from Continuing Operations - ITT Corp                         188.4                             487.7  
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                                                                                                                                           
                     Special Items                                                         40.4                            (301.4 )
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                     Income from Continuing Operations - ITT Corp., Excluding
                     Special Items                                                        228.8                             186.3  
                                                                                       -------- --------------------                      ---------- --------------------
                                                                                                                                           
                                                                                                                                           
                     Adjusted Free Cash Flow Conversion                                    75.6 %                                               97.5 %
                                                                                       -------- --------------------                      ---------- --------------------
                                    ITT Corporation Non-GAAP Reconciliation
                                        GAAP vs. Adjusted EPS Guidance
                                                Full Year 2015
                                                                      
                                                                                           
                                                                    2015 Full-Year Guidance
                                                ---------------------------------------------------------------
                                                         Low                                      High
                                                --------------------                      --------------------
                                                                                           
EPS from Continuing Operations - GAAP                         $ 1.80                                    $ 2.01
                                                                                           
Asbestos Related Expense, Net of Tax                            0.48                                      0.45
                                                --------------------                      --------------------
                                                                                           
                                                              $ 2.28                                    $ 2.46
                                                                                           
Restructuring and Realignment Costs, Net of Tax                 0.27                                      0.19
                                                                                           
                                                                        
                                                --------------------                      --------------------
EPS from Continuing Operations - Adjusted                     $ 2.55                                    $ 2.65
                                                --------------------                      --------------------

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150213005094r1&sid=cmtx6&distro=nx&lang=en

SOURCE: ITT Corporation

ITT Corporation 
Investors: 
Melissa Trombetta, +1 914-641-2030 
melissa.trombetta@itt.com 
or 
Media: 
Kathleen Bark, +1 914-641-2103 
kathleen.bark@itt.com


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