ITT Corporation

ITT tops second quarter 2009 forecast on strong operational performance, full-year earnings outlook raised

Earnings from continuing operations were $1.10 per share for the second quarter, or $1.06 per share excluding special items, exceeding previous guidance
Revenue for the second quarter was $2.8 billion, down nine percent overall and five percent organically compared to the second quarter of 2008
Strong year-to-date free cash flow of $462 million, up 12 percent year-over-year
Excluding special items, full-year earnings forecast raised to $3.50 to $3.70 per share

WHITE PLAINS, N.Y., July 31, 2009 — ITT Corporation (NYSE: ITT) today reported second quarter 2009 income of $203 million, or $1.10 per share, from continuing operations. Excluding special items, income from continuing operations for the quarter was $196 million, or $1.06 per share, better than expected primarily due to productivity improvements and non-operating benefits during the quarter. Second quarter revenue was $2.8 billion, down nine percent compared to the second quarter of 2008, and down five percent excluding the impacts of foreign exchange, acquisitions and divestitures on a comparable basis. Year-to-date free cash flow generation was $462 million, representing a robust 139 percent conversion of income from continuing operations, excluding non-cash tax adjustments.

"While the global economy remains weak, impacting orders in many of our commercial markets, we believe our teams have aggressively positioned the company to weather these uncertain times. This strong leadership is resulting in greater productivity and having a positive impact on income," said Steve Loranger, ITT's chairman, president and chief executive officer. "This focused execution — coupled with disciplined capital deployment and premier free cash flow generation — affords us the flexibility to continue making investments in our future growth, which we intend to do."

During the second quarter of 2009, ITT successfully issued $1 billion in debt through a two-part bond offering, with an average yield of 5.5 percent. The proceeds of the long-term debt were used to reduce the company's short-term commercial paper exposure, which is now $339 million and down from $1.6 billion at the end of 2008.

Earnings Guidance Raised

In light of second quarter performance, ITT now forecasts its full-year earnings, excluding special items, to be in the range of $3.50 to $3.70 per share. ITT is raising and tightening its guidance range from the prior earnings forecast of $3.20 to $3.60 per share. Full-year 2009 revenue is now expected to be in the range of $10.8 billion to $11.0 billion.

"We're pleased with the relative performance of our portfolio. We expect the underlying global drivers of our businesses, combined with broad geographic and end-market diversity, will provide stability during challenging economic conditions. Ultimately, however, we believe it's the ability of our teams to stay close to our customers, anticipate their changing needs, and deliver essential solutions that is driving our performance," said Loranger.

2009 Second Quarter Business Segment Results

Fluid Technology

For the second quarter of 2009, revenue for the segment was $869 million, down 15 percent overall and seven percent organically compared to the second quarter of the prior year. Weak sales in North American commercial and residential water markets were partially offset by strong shipments in the municipal, mining, oil and gas markets. On a geographic basis, relative strength in emerging markets offset slower sales in North America and Europe.
Second quarter operating income for the segment was down to $112 million. Impacts from volume declines, higher employee pension costs and restructuring expenses were partially offset by productivity improvements.
During the quarter, ITT completed the acquisition of Laing GmbH, a privately held producer of energy-efficient circulator pumps, and also entered into a strategic global alliance with Atlas Copco to sell its energy-efficient blowers with ITT's aeration and mixer technologies. These transactions are part of ITT's focus on delivering sustainable solutions that reduce the customer's total cost over the life of the installation.

Defense Electronics & Services

For the second quarter of 2009, revenue for the segment was $1.6 billion, essentially flat as compared to the second quarter of 2008. Revenue for the quarter was driven by the GPS III navigation project and other programs in the Space Systems business and strong international sales of battlefield radios in the Communications Systems business.
Second quarter operating income for the segment grew slightly to $201 million. Operating margins improved 10 basis points compared to the second quarter of the prior year due to productivity improvements.
Backlog for the segment remained solid at $5.2 billion, on strong orders for battlefield radios, counter-IED jammers and military base services. Among the notable wins during the quarter, ITT was awarded a $363 million contract to continue providing systems control, system enhancements, logistics support and training for the U.S. Army's Single-Channel Ground and Airborne Radio System (SINCGARS) and the company remains the military's largest supplier of these battlefield radios.

Motion & Flow Control

For the second quarter of 2009, revenue for the segment was $308 million, down 30 percent in total and 19 percent organically compared to the prior year. Revenue in the quarter was impacted by production declines in the global automotive, industrial and commercial aerospace markets, offset slightly by relative strength in the rail market.
Second quarter operating income for the segment was $33 million, down significantly compared to the second quarter of the prior year, as volume declines, employee pension costs and unfavorable foreign currency fluctuations impacted earnings.
During the quarter, ITT's Motion Technologies business began shipping brake pads to European OEMs and aftermarket suppliers from its new 24,000-square-meter plant in Ostrava, Czech Republic. Organic orders in the Motion Technologies business have improved by four percent compared to the year-ago quarter, due in part to benefits from automotive stimulus initiatives in Europe.

Investor Call Today

ITT's senior management will host a conference call for investors today at 9:00 a.m. Eastern Daylight Time to review second quarter 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.

About ITT Corporation

ITT Corporation is a high-technology engineering and manufacturing company operating on all seven continents in three vital markets: water and fluids management, global defense and security, and motion and flow control. With a heritage of innovation, ITT partners with its customers to deliver extraordinary solutions that create more livable environments, provide protection and safety and connect our world. Headquartered in White Plains, N.Y., the company generated 2008 sales of $11.7 billion. www.itt.com

Safe Harbor Statement

Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 ("the Act"). These forward-looking statements include statements that describe the Company's business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. Whenever used, words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target" and other terms of similar meaning are intended to identify such forward-looking statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed in, or implied from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated include: Economic, political and social conditions in the countries in which we conduct our businesses; Changes in government defense budgets; Decline in consumer spending; Sales and revenues mix and pricing levels; Availability of adequate labor, commodities, supplies and raw materials; Interest and foreign currency exchange rate fluctuations; Competition and industry capacity and production rates; Ability of third parties, including our commercial partners, counterparties, financial institutions and insurers, to comply with their commitments to us; Our ability to borrow or refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; Acquisitions or divestitures; Personal injury claims; Our ability to effect restructuring and cost reduction programs and realize savings from such actions; Government regulations and compliance therewith; Changes in technology; Intellectual property matters; Governmental investigations; Potential future employee benefit plan contributions and other employment and pension matters; Contingencies related to actual or alleged environmental contamination, claims and concerns; Changes in generally accepted accounting principles; Other factors set forth in our Annual Report on Form 10−K for the fiscal year ended December 31, 2008 and our other filings with the Securities and Exchange Commission.

The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Press Contact:

Andy Hilton
tel +1 914 641 2160
andy.hilton@itt.com

Investor Contact:

Thomas Scalera
tel +1 914 641 2030
thomas.scalera@itt.com