ITT Annual Report 2015 | Quarterlytics

FY2015 Annual Report · ITT

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Annual Report 2015

At ITT, we have a clear vision of our purpose as a company and as a team – to partner with our customers in the
transportation, industrial, and oil and gas markets to solve their most critical problems. That vision is core to
who we are and over the past four years, it has driven our focus on continually building our foundation and
capabilities as a growth-oriented, multi-industrial company.

Today, we are a leading manufacturer of highly engineered, critical components and customized technologies
that provide differentiated solutions for our customers across the globe. Our portfolio has strength and
durability, balance and diversity, whether it’s by business mix, geography or end market. In addition, our
businesses are aligned with global growth drivers – urbanization, a growing middle class and sustainable
development – that underpin our modern way of life.

Our work is made possible by the talent and contributions of our 9,700 employees around the world, who are
committed every day to reflecting our principles of Impeccable character, Bold thinking and Collective know-how.
Together, they are outstanding ambassadors for our long-standing brands – including Goulds and Bornemann
pumps, Cannon connectors, KONI shock absorbers and Enidine energy absorption components, to name a few –
that are recognized and trusted globally.

Thanks to the commitment of our people, we generated solid results in 2015 and continued on our multi-year
track record of execution and growth. Our journey has been guided by a focus on expanding our markets,
optimizing our execution and deploying our capital in a balanced and effective way, while building a winning
culture. Going forward, we’ll continue this focus to ensure that we are well positioned for further growth
and value creation and that the ITT legacy extends and expands far into the future.

Our Portfolio: Balanced and Diversified

End Markets

Industrial

36%

Oil & Gas

19%

Balanced
& Diverse

Transportation

45%

Geography

E. Europe, Middle East & Africa

13%

Western Europe

24%

31%
Emerging
Markets

Business Mix

Industrial Process

45%

Asia Paci(cid:192)c

12%

Latin America

North America

42%

Control Technologies

11%

$2.5B

(cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:192)(cid:79)(cid:72)(cid:17)(cid:3)

Interconnect Solutions

13%

Motion Technologies

31%

Dear Shareowners, Employees, Customers and Friends,

At the beginning of 2015, there was a growing level of uncertainty in the macroeconomic environment that created
an intense focus across ITT on managing those areas that were within our control. As the year unfolded, that focus
intensified as external conditions continued to deteriorate with declining oil and gas markets, weaker than expected
general industrial markets and the negative impacts of foreign exchange.

However, despite the challenges we faced, ITT generated solid financial results and made significant strides in advancing
our strategy as a result of our collective focus on optimizing execution, market expansion, and balanced and effective
capital deployment.

• Our organic revenue was down 1 percent, as 4 percent growth in transportation markets, led by
automotive, was offset by declines in the oil and gas and general industrial markets, which were
collectively down 5 percent.
• We expanded our adjusted operating income margin by 80 basis points to a record 12.8 percent
as we drove productivity and efficiencies across the company.
• And at $2.55 per share, we delivered another strong year of adjusted earnings per share growth,
which was up 13 percent excluding the impact of foreign exchange.

As we look ahead, we will continue to drive momentum and remain laser focused on the three key areas that drove
our progress in 2015:

Optimizing Our Execution – As we move through 2016, we will continue to capture opportunities to improve
efficiency and costs, and we expect to take a number of actions that will strengthen our focus and market leadership
positions, help us better serve customers and build our strategic path for the future. A focus of these actions will be
our Industrial Process business, as we continue to align with the realities of the oil and gas market. In addition, we are
targeting another year of significant productivity savings, driven by advancing our Lean transformation and realizing
supply chain and restructuring benefits.

Expanding Our Market Positions – We expect strong performance in 2016 in our transportation markets driven
by global expansion in our automotive friction business due to new original equipment manufacturer platforms and
customers in North America and China, as well as market share gains in Europe, where we expect to continue to
outpace auto production rates.

Balanced and Effective Capital Deployment – From a capital allocation standpoint, we will continue our track
record of balanced and effective capital deployment by funding major organic investments that extend our global reach
and capabilities and drive future organic growth. Our plans include investments in a new North American automotive
brake pad production facility and in aerospace engineering to increase our content on new and existing long-term
platforms. At the same time, we also will continue focusing on acquisition opportunities, which are a critical part of
our long-term capital deployment priorities.

We believe this focus will provide us significant advantages as we move through 2016 and continue to face a challenging
external environment. Across ITT, we are confident that we will further drive our strategy and build on our multi-year track
record of strong performance through the bold thinking and collective know-how of our employees around the world.
We all remain committed to exceeding the expectations of our stakeholders, and we look forward to continuing on this
journey with each of you.

Sincerely,

Denise L. Ramos
Chief Executive Officer and President

ITT BOARD OF DIRECTORS

SHAREOWNER INFORMATION

INDEPENDENT AUDITORS
Deloitte & Touche LLP
695 East Main Street
Stamford, CT 06901

TRANSFER AGENT & REGISTRAR
Wells Fargo Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
(888) 217-2614

ANNUAL MEETING OF SHAREOWNERS
The annual meeting will be held at 9 a.m. EDT on
Wednesday, May 11, 2016 at ITT Corporation Headquarters,
1133 Westchester Avenue, White Plains, NY 10604.

CORPORATE GOVERNANCE
Copies of the ITT Code of Conduct, Corporate Governance
Principles and Committee charters are available through
our website: www.itt.com.

ETHICS CHAMPION PROGRAM
The ITT Ethics Champion Program encourages employees to
report possible violations of our Code of Corporate Conduct
or other misconduct. The ITT Ethics Champion can be contacted
at: (800) 777-1738.

ITT HEADQUARTERS
ITT Corporation
1133 Westchester Avenue
White Plains, NY 10604
Tel: (914) 641-2000
www.itt.com

FOR GENERAL CORPORATE INFORMATION, CONTACT:
Kathleen Bark
Communications
kathleen.bark@itt.com

FOR FINANCIAL AND INDUSTRY INFORMATION, CONTACT:
Melissa Trombetta
Investor Relations
melissa.trombetta@itt.com

Frank T. MacInnis
Chairman of the ITT Board of Directors and Former Chairman and
Chief Executive Officer, EMCOR Group, Inc.

Denise L. Ramos
Chief Executive Officer and President

Orlando D. Ashford
President, Holland America Line

G. Peter D’Aloia
Former Senior Vice President and Chief Financial Officer,
American Standard Companies, Inc.

Geraud Darnis
Former President and Chief Executive Officer,
UTC Building & Industrial Systems

Donald DeFosset, Jr.
Former Chairman, Chief Executive Officer and President,
Walter Industries, Inc.

Christina A. Gold
Former Chief Executive Officer, President and Director,
The Western Union Company, Inc.

Richard P. Lavin
Former Chief Executive Officer and President,
Commercial Vehicle Group, Inc.

Rebecca A. McDonald
Former Chief Executive Officer, Laurus Energy, Inc.

Timothy H. Powers
Former Chairman, Chief Executive Officer and President,
Hubbell, Inc.

ITT LEADERSHIP TEAM

Denise L. Ramos
Chief Executive Officer and President

Farrokh Batliwala
Senior Vice President and President, Control Technologies

Aris C. Chicles
Executive Vice President and President, Industrial Process

Victoria L. Creamer
Senior Vice President and Chief Human Resources Officer

Mary Beth Gustafsson
Senior Vice President, General Counsel and
Chief Compliance Officer

Luca Savi
Executive Vice President and President, Motion Technologies

Thomas M. Scalera
Executive Vice President and Chief Financial Officer

Neil W. Yeargin
Senior Vice President and President, Interconnect Solutions

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark One)

Form 10-K
ANNUAL REPORT

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Transition period from

Commission File No. 001-05672

ITT CORPORATION

Incorporated in the State of Indiana

13-5158950

(I.R.S. Employer Identification No.)

1133 Westchester Avenue, White Plains, NY 10604
(Principal Executive Office)
Telephone Number: (914) 641-2000

Securities registered pursuant to Section 12(b) of the Act, all of which are registered on The New York Stock Exchange, Inc.:

COMMON STOCK, $1 PAR VALUE

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files. Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant on June 30, 2015 was approximately
$3.7 billion. As of February 17, 2016, there were outstanding 89.5 million shares of common stock, $1 par value, of the registrant.

Portions of the registrant’s Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A
for its 2016 Annual Meeting of Shareholders are incorporated by reference in Part II and Part III of this Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

Description of Business

ITEM
PART I
1
1A Risk Factors
1B Unresolved Staff Comments
2
3
4
*

Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers of the Registrant

PART II
5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Performance Graph
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations

6
7
7A Quantitative and Qualitative Disclosures About Market Risk
8
9
9A Controls and Procedures
9B Other Information

Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

PART III
10 Directors, Executive Officers and Corporate Governance
11 Executive Compensation
12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13 Certain Relationships and Related Transactions, and Director Independence
14 Principal Accounting Fees and Services

PART IV
15 Exhibits and Financial Statement Schedule
Signatures
Exhibit Index

Included pursuant to Instruction 3 to Item 401(b) of Regulation S-K.

PAGE

1
8
16
17
18
18
19

23
25
56
56
56
57
58

60
60
60
60
60

61
II-1
II-3

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information included herein includes forward-looking statements intended to qualify for the safe harbor
from liability established by the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act). These forward-looking statements are not historical facts, but rather are based on current expectations,
estimates, assumptions and projections about our business, future financial results and 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.

Where, in any forward-looking statement we express an expectation or belief as to future results or events, such
expectation or belief is based on current plans and expectations of our management, expressed in good faith and
believed to have a reasonable basis. However, there can be no assurance that the expectation or belief will occur or
that anticipated results will be achieved or accomplished. More information on factors that could cause actual results
or events to differ materially from those anticipated is included in this Annual Report on Form 10-K under the caption
"Risk Factors", and in other documents that we file from time to time with the U.S. Securities and Exchange Commission
(SEC).

The forward-looking statements included in this report speak only as of the date of this report. We undertake no
obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can inspect,
read and copy these reports, proxy statements and other information at the SEC's Public Reference Room, which is
located at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information regarding the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at
www.sec.gov on which you may access electronic copies of our SEC filings.

We make available free of charge at www.itt.com/investors copies of materials we file with, or furnish to, the SEC
as well as other important information that we disclose from time to time. Information contained on our website, or that
can be accessed through our website, does not constitute a part of this Annual Report on Form 10-K. We have included
our website address only as an inactive textual reference and do not intend it to be an active link to our website.

Our corporate headquarters are located at 1133 Westchester Avenue, White Plains, NY 10604 and the telephone

number of this location is (914) 641-2000.

PART I

ITEM 1. DESCRIPTION OF BUSINESS
(In millions, except per share amounts, unless otherwise stated)

COMPANY OVERVIEW

Unless the context otherwise indicates, references herein to "ITT," "the Company," and such words as "we," "us,"

and "our" include ITT Corporation and its subsidiaries.

ITT is a diversified manufacturer of highly engineered critical components and customized technology solutions
for the energy, transportation and industrial markets. We manufacture components that are integral to the operation
of systems and manufacturing processes in these key markets. Our products provide enabling functionality for
applications where reliability and performance are critically important to our customers and the users of their products.

We are a global company with approximately 9,700 employees in more than 35 countries and 2015 revenue of
$2.5 billion, which we derived from sales in more than 100 countries. In 2015, 62% of our sales were outside the U.S.,
including 31% from emerging growth markets. Accordingly, we have located approximately half of our manufacturing
facilities outside of the U.S. in order to lower costs, achieve strategic proximity to customers and further increase
international sales and market share.

We have a balanced and diversified portfolio of businesses, which are organized in four segments – Industrial
Process, Motion Technologies, Interconnect Solutions, and Control Technologies. Our businesses share a common,
repeatable operating model centered on our engineering aptitude. Each business applies its technology and
engineering expertise to solve some of the most pressing challenges of our customers. Our applied engineering
provides a special business fit with our customers given the critical nature of their applications. This in turn provides
us with unique insight to our customers' requirements and enables us to develop solutions to better assist our customers
achieve their business goals. Our technology and customer intimacy together produce opportunities to capture recurring
revenue streams, aftermarket opportunities and long-lived platforms from original equipment manufacturers (OEMs).

We also possess strong leading brands, such as Goulds Pumps, Bornemann, Engineered Valves, Cannon, VEAM,
BIW Connector Systems, KONI, Wolverine, Enidine, Hartzell Aerospace, and ITT, in many of our niche markets. These
brands are associated with quality, reliability, durability, and engineering excellence. Our brands extend internationally
and perform strongly in emerging growth markets including China, Mexico, Brazil, Saudi Arabia, and Russia.

We are committed to creating long-term sustainable value for all of our stakeholders, supported by our balanced
operating strategy designed to achieve long-term profitable growth. The elements of this strategy are disciplined organic
growth through global market expansion and new product development, combined with operational improvements that
focus on the principles of Lean Six Sigma to reduce costs and cycle times while improving overall productivity, quality,
and safety on a continuing basis. We have also moved beyond the factory floor to improve the efficiency of other critical
processes of the value chain to become a truly lean enterprise. This initiative encompasses not only core lean, problem
solving and continuous improvement principles but also leadership, talent and cultural aspects.

Given these dynamics and our technology investments, global reach and vibrant brands, we believe we have the
opportunity to continue to expand geographically, broaden our product lines, improve our market position, and increase
earnings through organic revenue growth and operational efficiencies and through targeted acquisitions. We continue
to prioritize deploying capital for organic growth and then acquisitive growth. Our acquisition strategy generally targets
firms in similar businesses and end-markets that have unique and differentiated products, services, and technologies.
Effective capital deployment, including resource optimization and a disciplined focus on liquidity and cash management
is a major part of how we plan to achieve our financial performance goals.

We aspire to drive long-term average annual organic revenue growth of approximately 5%-7%, with corresponding
operating margin expansion of 50-70 basis points, achieve an adjusted free cash flow conversion rate of greater than
105%, deliver adjusted earnings per share growth of 10%-15% per year, and maintain a return on invested capital
(ROIC) that is in-line with proxy peers.

Segment Information

See Note 3, Segment Information, to the Consolidated Financial Statements for financial information about each

of our segments.

Industrial Process

The Industrial Process segment, commonly referred to as IP, is an original equipment manufacturer and service
provider offering an extensive portfolio of industrial pumps, valves and plant optimization systems and services. During
2015, this segment aligned around three business units – Industrial Products, Engineered Systems, and Aftermarket
Solutions – serving an extensive base of customers from large multi-national companies and engineering, procurement
and construction (EPC) firms to regional distributors to end-user customers. IP's customers operate in global
infrastructure and natural resource markets such as oil and gas, chemical and petrochemical, general industrial, mining,
pulp and paper, and power generation. Brands include Goulds Pumps, Bornemann, Engineered Valves, PRO Services,
and C'treat.

Industrial Products Business Unit

Industrial Products designs and manufactures configured-to-order industrial pumps, valves, and equipment for
both original equipment installations and replacement parts and pumps. We serve customers rapidly as products in
this business unit typically have shorter lead times. These products include centrifugal process pumps and engineered
industrial and sanitary valves.

Engineered Systems Business Unit

Engineered Systems provides highly engineered and customized pumping systems typically used in severe service
conditions via both original equipment installations and replacement parts and pumps. Products include API (American
Petroleum Institute) centrifugal pumps, vertical centrifugal pumps, twin screw pumps and water systems. Our pumping
systems are generally part of larger capital projects, which have longer lead times and are generally managed by
EPCs.

Aftermarket Solutions Business Unit

Aftermarket Solutions provides customers with parts, services, and solutions that reduce total cost of ownership
for pumps and rotating equipment. In addition to providing standard repairs and upgrades, the business also develops
engineered solutions for specific customer process issues. Examples include innovative technologies like PumpSmart
Controllers and i-ALERT2 Equipment Health Monitoring Devices to monitor and control pumps and other rotating
equipment in an industrial environment.

IP goes to market via a global and diversified sales channel structure. End-users are serviced by an extensive
network of independent industrial distributors, which account for approximately 30% of revenue, and representatives
which complement our customer-focused direct sales and service organization. We also have focused channels
dedicated to supporting EPC firms as their needs are often distinct from those of other distributor and end-user
customers.

The pump and valve markets served are highly competitive. For most of our products there are hundreds of regional
competitors and a limited number of larger global peers. Primary customer purchase decision drivers include price,
delivery terms and on-time performance, brand recognition and reputation, perceived quality, breadth of product and
service offerings, commercial terms, technical support and localization. Pricing can be very competitive for large projects
because of the engineering complexity and increased potential for aftermarket opportunities for the original equipment
provider.

Motion Technologies

The Motion Technologies segment, commonly referred to as MT, is a manufacturer of braking pads, shims, shock
absorbers, damping, and sealing technologies primarily for the transportation industry, including passenger cars, light-
and heavy-duty commercial and military vehicles, buses and rail transportation. MT consists of three business units,
Friction Technologies, KONI, and Wolverine.

Friction Technologies

Our Friction Technologies business manufactures a range of brake pads installed as OE pads on cars and light
and heavy duty commercial vehicles. Demand for MT's products stem from a variety of end customers and automotive
platforms around the world. OE pads are sold either directly to OEMs or to Tier-1 and Tier-2 brake manufacturers. Our
OE pads are designed to meet customer specifications and environmental regulations, and to satisfy an array of
geographic applications. Most automobile OEM platforms (car model) require specific brake pad formulations and
have demanding delivery and volume schedules.

Friction Technologies also manufactures aftermarket brake pads designed for the automotive service and repairs
market. This market consists of both OE dealers, also referred to as original equipment spares (OES) networks, and
independent aftermarket (AM) networks. Brake pads sold within the OES network generally match the specifications
of an original auto platform OE brake pad, while our catalog of AM pads feature technology designed to provide up to
a range of braking performance levels. Within the service and repairs market, pads are sold either directly to OE
manufacturers or Tier-1 and Tier-2 brake manufacturers (such as Continental or TRW) or indirectly through independent
distributor channels.

Combined sales to Continental and TRW, MT's two largest customers, were approximately 40% of 2015 MT
revenue, however, approximately 50% of the Continental and TRW derived revenue is directly attributable to OES
supply agreements signed directly with automakers. In addition, all OE pad contracts are specified by brake
manufacturers even in cases where automakers specify the use of our pads in the braking system.

KONI

The KONI business organizes its various performance shock absorber products into three main product groups:

railway rolling stock; car & racing; and bus, truck & trailer.

Railway Rolling Stock provides a wide range of equipment for passenger rail, locomotives, freight cars, high speed
trains and light rail. Offerings include hydraulic shock absorbers (primary, lateral and inter-car), yaw dampers as well
as visco-elastic and hydraulic buffers. Revenue opportunities for our rail damping systems are balanced between OE
and AM customers. Sales are either directly to train manufacturers and train operators carrying out scheduled train
maintenance programs or indirectly through distributors.

Car & Racing features performance shock absorbers often using our Frequency Selective Damping (FSD)
technology. FSD products generally have been used by car and racing enthusiasts who desire to modify their cars for
increased handling performance and comfort, but are now also being incorporated into OE platform designs. KONI
car shock absorbers are sold all over the world, through a distribution network that markets KONI products into specific
geographies or customer groups.

Bus, Truck & Trailer manufactures shock absorbers and bus dampers, destined to both OE and AM customers.

Wolverine

In October 2015, ITT acquired Wolverine Automotive Holdings Inc., the parent company of Wolverine Advanced
Materials LLC (Wolverine). Wolverine is a manufacturer of customized technologies for automotive braking systems
and specialized sealing solutions for harsh operating environments across a range of industries. Brake shims are thin
metal and rubber adhesive dampeners that fit onto the brake pad and against the brake caliper to prevent excessive
noise and vibration. Gaskets are an anti-vibration solution and a sealing solution that prevent fluid spillage with
applications to engines, transmissions, exhaust systems, fuel systems and a variety of pneumatic systems.

MT has a market reputation derived from many years of mutual collaboration with major OEMs and is focused on
customer satisfaction, quality and on-time delivery. MT has a global manufacturing footprint, with production facilities
in Western Europe, Eastern Europe and China.

MT competes in markets primarily served by large, well-established national and global companies. Key competitive
drivers within the brake pad business include technical expertise, formulation development capabilities, scale
production, product performance, high-quality standards, customer intimacy, reputation and the ability to meet
demanding delivery and volume schedules in a reduced amount of time. OE and OES customers usually require long-
lasting and well-established relationships, based on mutual trust, local proximity and a wide range of cooperative
activities, starting from the design to the sampling, prototyping and testing phases of brake pads. Within the independent
AM pads market, MT is a leading European provider in a highly fragmented global market.

Competitive drivers in the rail damping systems business include price,

technical expertise and product
performance. Rail damping systems are considered critical components because of safety requirements and thus they
have to be specifically designed according to many different train applications, and must satisfy strict compliance
requirements. MT is a global leader in the rail dampers component of the complete rail damper system.

Interconnect Solutions

The Interconnect Solutions segment, commonly referred to as ICS, designs and manufactures a broad range of
highly engineered connectors and cable assemblies for critical applications in harsh environments. ICS' product portfolio
includes high performance, military-specification, and commercial electrical connectors of the following types: Circular,
Rectangular, Radio Frequency, Fiber Optic, D-sub Miniature, Micro-Miniature and cable assemblies. ICS operates
through its brands, Cannon, VEAM and BIW Connector Systems, which deliver solutions to enable the transfer of data,
signal, and power into three end-user markets: aerospace and defense, transportation and industrial, and oil and gas.
ICS has organized its business around these three end-user markets, with each business unit having a dedicated
team that specializes in solutions for their specific market, providing focused customer support and expertise. ICS is
considered a leading company in the harsh environment niche markets it participates in, because of its technological
capabilities, customer relationships, cost performance and global footprint.

Aerospace and Defense

ICS Aerospace and Defense products include industry standards-based connectors and customized interconnect
solutions for most segments of the commercial aviation and defense industry. These products are designed to withstand
the extreme shock, exposure and vibration environments that are typical in aviation and military applications and where
reliability and safety are critical factors.

Transportation and Industrial

ICS Transportation products include connectors for high-speed, mainline, metro and light passenger rail, heavy-
duty vehicles, electric vehicle applications, and medical devices. ICS Industrial products include connectors for industrial
production equipment, industrial electronics and instruments, and other industrial and medical applications. Both
markets are served through the Cannon brand, which celebrated its 100-year anniversary in 2015, and VEAM brand,
which celebrated its 60-year anniversary in 2014. These brands are known for high-performance, high-reliability
solutions which withstand high vibrations and are resistant to dirt and fluids.

Oil and Gas

Operating through the BIW Connector Systems brand, ICS Oil and Gas products include connectors that provide
power for electric submersible pumps (ESP) in oil and gas wells, reservoir monitoring instruments and electrical
downhole heaters. Product applications include electrical power penetrations for wellheads, packers and pods that
are able to accommodate any size and provide for multiple sealing strategies and ratings.

ICS has a global production footprint, including major facilities in the United States, Mexico, Germany, and China,
which provides geographic proximity and the highest level of customer support to over 2,500 global customers. Products
are sold either directly to OEM’s, contract manufacturers and cable system operators or indirectly through partnerships
with leading distribution companies, creating an extensive global distribution channel. We have long-lasting
relationships with our distributor partners, as many have been selling ICS products for over 70 years. Sales to distributors
represented approximately 33% of 2015 ICS revenue.

ICS competes with a large number of competitors in a highly fragmented industry. Our products compete to varying
degrees on the basis of quality, price, availability, performance and brand recognition. We also compete on the basis
of customer service. Our ability to compete also depends on continually providing innovative new product solutions
and worldwide support for our customers.

Control Technologies

The Control Technologies segment, commonly referred to as CT, manufactures specialized equipment, including
actuation, fuel management, noise and energy absorption, and environmental control system components, for the
aerospace and defense, and industrial markets. CT has a broad customer base including end-users, OEM’s, and
distributors, for which no single customer represents more than 15% of the segment's revenue. Channels to market
include direct, commissioned representation and buy-resell distributors. CT consists of two business units, CT
Aerospace and CT Industrial.

CT Aerospace

CT Aerospace designs and manufactures products for commercial aerospace, business aviation, defense, and
other markets, which are generally part of long-lived platforms that provide for recurring aftermarket opportunities.
Aircraft component products consist of fuel and water pumps, valves, electro-mechanical rotary and linear actuators,
and pressure, temperature, limit, and flow switches for various aircraft systems. Aircraft interior products include a
variety of engineered elastomer isolators to protect equipment and keep the interior of the aircraft quiet, stowage bin
rate controls, rotary hinge dampers and actuators, and seat recline locks and control cables. CT Aerospace also
provides electromechanical seat actuation for premium seating products. Defense products generally include energy
absorption applications and aerospace components. CT’s 2015 acquisition of Hartzell Aerospace brings additional
product capabilities in environmental control systems including climate control and ice protection heaters, composite
conveyance ducting and acoustically engineered inlets and exhausts for Auxiliary Power Units (APU). Most of the
products are sold direct to the customer by an in-house sales force. CT Aerospace utilizes a small third-party business
for government spare parts distribution.

Competitors range from large multi-national corporations to small privately held firms. CT Aerospace markets are
often fragmented and thus there are several types of competitors. Competition in these markets focuses on application
expertise with effective solutions, product delivery and performance, previous installation history, quality, price and
customer support. CT Aerospace competes by offering a wide portfolio of reliable products, coupled with advanced
application expertise and customer support. We believe application expertise and our reputation for quality and
operational performance significantly enhance our market position. CT Aerospace's ability to collaborate with customers
to deliver a wide range of product offerings has allowed them to compete effectively, to cultivate and maintain customer
relationships, and to expand into new markets.

CT Industrial

CT Industrial designs, manufactures, and markets large and small bore shock absorbers, linear and rotary actuators,
and process control instrumentation, such as high and low pressure regulators and flow, temperature, and pressure
switches. The shock absorbers and actuators serve a wide range of applications in a diverse set of end-markets
including automotive production, packaging, and factory automation. The process control products primarily serve the
chemical, petrochemical, energy markets. CT Industrial possesses a specialized set of design and application
engineering skills and capabilities that enables us to engineer differentiated custom solutions for unique applications.
For example, CT Industrial's large bore shock absorbers are custom designed to mitigate the damaging effects of
seismic events on critical structures such as buildings and bridges. In addition, CT Industrial has a strong direct and
indirect sales channel providing reliable and value added service to our diverse customer base.

Competitors change depending on the product line and global region and range from large multi-national
corporations to small privately held firms. CT Industrial's broad product offerings, technical expertise, quality and lead
times enable us to collaborate with our customers to deliver comprehensive solutions enabling CT Industrial to compete
effectively in existing markets and expand into new markets.

Other Company Information

Materials

All of our businesses require various OEM products, manufactured components and raw materials, the availability
and prices of which may fluctuate. The principal OEM products and manufactured components assembled into our
products include motors, castings, mechanical seals, machined castings, metal fabrications and miscellaneous metal,
plastic, or electronic components. The primary raw materials used in manufacturing our products include steel, gold,
copper, nickel, iron, aluminum, and tin, as well as specialty alloys, including titanium. Materials are purchased in various
forms, such as sheet, bar, rod and wire stock, pellets and metal powders.

Raw materials, supplies and product subassemblies are purchased from third-party suppliers, contract
manufacturers, and commodity dealers. For most of our products, we have existing alternate sources of supply, or
such materials are readily available. In some instances we depend on a single source of supply, manufacturing or
assembly or participate in commodity markets that may be subject to a limited number of suppliers.

We continually monitor the business conditions of our supply chain to maintain our market position and to avoid
potential supply disruptions. There have been no raw materials shortages that have had a material adverse impact on
our business as a whole, and we have been able to develop a robust supply chain such that we do not anticipate
shortages of such materials in the future.

Although some cost increases may be recovered through increased prices to customers, our operating results are
generally exposed to such fluctuations. When practical, we attempt to control such costs through fixed-priced contracts
with suppliers. We typically acquire materials and components through a combination of blanket and scheduled
purchase orders to support our materials requirements for an average of four to eight weeks, with the exception of
some specialty materials. From time to time, we experience price volatility or supply constraints for raw materials based
on market supply and demand dynamics. In limited circumstances, we may have to obtain scarce components for
higher prices on the spot market, which may have a negative impact on gross margin and can periodically create a
disruption to production and delivery. We also acquire certain inventory in anticipation of supply constraints or enter
into longer-term pricing commitments with vendors to improve the priority, price and availability of supply. We evaluate
hedging opportunities to mitigate or minimize the risk of operating margin erosion resulting from the volatility of
commodity prices.

Manufacturing Methods

We utilize two primary methods of fulfilling demand for products: build-to-order and engineer-to-order. Build-to-
order consists of assembling a group of products with the same pre-defined specifications, generally for our OEM
customers. Engineer-to-order consists of assembling a customized system for a customer’s individual order
specifications. In both cases, we offer design, integration, test and other production value-added services. We employ
build-to-order capabilities to maximize manufacturing and logistics efficiencies by producing high volumes of basic
product configurations. Engineering products to order permits the configuration of units to meet the customized
requirements of our customers. Our inventory management and distribution practices in both build-to-order and
engineer-to-order seek to minimize inventory holding periods, and improve customer delivery performance.

Backlog

Delivery schedules vary from customer to customer based on their requirements. For example, large complex
projects in specialized markets such as oil and gas, chemical, and mining at Industrial Process require longer lead
times and production cycles. Delivery delays could arise from supply chain limitations, internal production challenges,
changes in the customer’s requirements, or technical difficulties. Total backlog, representing firm orders that have
been received, acknowledged and entered into our production systems, was $860.5 and $1,024.6 at December 31,
2015 and 2014, respectively. Total backlog by segment as of December 31, 2015 and 2014 was: IP - $410.9 and
$603.4; MT - $198.2 and $199.9; ICS - $102.1 and $108.5; and CT - $116.9 and $94.7. We expect to satisfy nearly
all December 31, 2015 backlog commitments during 2016.

Intellectual Property

We generally seek patent protection for those inventions and improvements that are likely to be incorporated into
our products or where proprietary rights are expected to improve our competitive position. The highly customized
application engineering embedded within our products, our proprietary rights and our knowledge capabilities all
contribute to enhancing our competitive position.

While we own and control a significant number of patents, trade secrets, confidential information, trademarks,
trade names, copyrights, and other intellectual property rights which, in the aggregate, are of material importance to
our business, management believes that our Company, as a whole, as well as each of our core segments, is not
materially dependent on any one intellectual property right or related group of such rights. Patents, patent applications,
and license agreements will expire or terminate over time by operation of law, in accordance with their terms or
otherwise. As the portfolio of our patents, patent applications, and license agreements has evolved over a long period
of time, we do not expect the expiration of any specific patent or other intellectual property right to have a material
adverse effect on our financial statements.

Research and Development

Research and Development (R&D) is a key element of ITT’s engineering culture and is generally focused on the
design and development of products and solutions that anticipate customer needs and emerging trends. Our approach
to R&D often begins by working with our customers to address a problem, then engineering a solution to the particular
customer need. As a result, our R&D is based on taking technology quickly to the tangible phase, increasing the
competitive offering, and increasing the customer service experience through engineered application solutions. During
2015, 2014 and 2013, we recognized R&D expenses of $78.9, $76.6, and $67.3, respectively, which were 3.2%, 2.9%,
and 2.7%, of revenues, respectively.

Cyclicality and Seasonality

Many of the businesses in which we operate are subject to specific industry and general economic cycles. We
consider our connectors business to be an early cycle business, meaning it generally is impacted more in the early
portion of an economic cycle, while the automotive and aerospace components businesses tend to be impacted in the
middle portion of the cycle and the industrial pump business typically is impacted late in the economic cycle.

Our businesses experience limited seasonal variations, with demand generally lower during summer months (our
third quarter) mainly attributable to manufacturing shutdowns and the planned industrial maintenance activities of our
customers. Revenue impacts from the limited seasonal variations are typically mitigated by our backlog of orders that
allow us to adjust levels of production across the summer months.

Environmental Matters

We are subject to stringent federal, state, local, and foreign environmental laws and regulations concerning air
emissions, water discharges and waste disposal. In the U.S., these include, but are not limited to, the Federal Clean
Air Act, the Clean Water Act, the Resource, Conservation and Recovery Act, and the Comprehensive Environmental
Response, Compensation and Liability Act. Environmental requirements are significant factors affecting our operations.
We have established an internal program to assess compliance with applicable environmental requirements for our
facilities. The program, which includes periodic audits of many of our locations, including our major operating facilities,
is designed to identify problems in a timely manner, correct deficiencies and prevent future noncompliance.

We closely monitor our environmental responsibilities, together with trends in the environmental laws. In addition,
we have purchased insurance protection against certain environmental risks arising from our business activities.
Environmental laws and regulations are subject to change, however, the nature and timing of such changes, if any, is
difficult to predict. As actual costs incurred at identified sites in future periods may vary from our current estimates
given the inherent uncertainties in evaluating environmental exposures, management believes it is possible that the
outcome of these uncertainties may have a material adverse effect on our financial statements. See "Critical Accounting
Estimates" within Item 7, Management's Discussion and Analysis, as well as Note 18, Commitments and Contingencies,
to the Consolidated Financial Statements for additional information regarding environmental matters.

Employees

As of December 31, 2015, we had approximately 9,700 employees, of which approximately 3,800 were located
in the U.S. Approximately 12% of our U.S. employees are represented by unions. We also have unionized employees
in Italy, Germany, and Brazil. No one unionized facility accounts for more than 16% of ITT total revenues. Although
our relations with our employees are strong and we have not experienced any material strikes or work stoppages
recently, no assurances can be made that we will not experience these or other types of conflicts with labor unions,
works councils, other groups representing employees or our employees generally, or that any future negotiations with
our labor unions will not result in significant increases in our cost of labor.

General Developments of the Business

ITT Corporation was incorporated as ITT Industries, Inc. on September 5, 1995. On July 1, 2006, ITT Industries,

Inc. changed its name to ITT Corporation.

On October 31, 2011, ITT completed the tax-free spin-off (referred to herein as the 2011 spin-off) of its Defense
and Information Solutions business, Exelis Inc. (Exelis), and its water-related businesses, Xylem Inc. (Xylem) by way
of a distribution of all of the issued and outstanding shares of Exelis common stock and Xylem common stock, on a
pro rata basis, to ITT shareholders of record on October 17, 2011. The 2011 spin-off was made pursuant to a Distribution
Agreement, dated October 25, 2011, among ITT, Exelis and Xylem (the Distribution Agreement). Following the 2011
spin-off, ITT did not own any shares of common stock of Exelis or Xylem. On May 29, 2015, Exelis was acquired by
Harris Corporation (Harris).

Acquisitions

On November 28, 2012, we acquired Joh. Heinr. Bornemann GmbH (Bornemann), a supplier and servicer of
multiphase pumping systems in the global oil and gas, industrial, food and pharmaceutical markets. Bornemann is
included as part of our Industrial Process segment.

On March 31, 2015, we completed the acquisition of Hartzell (Hartzell) Aerospace, a designer and manufacturer

of products to support aerospace applications. Hartzell is included as part of our Control Technologies segment.

See Note 21, Acquisitions, to the Consolidated Financial Statements for additional information.

ITEM 1A. RISK FACTORS

We are subject to a wide range of factors that could materially affect future developments and performance. Because
of these factors, past performance may not be a reliable indicator of future results. Set forth below and elsewhere in
this document are descriptions of the risks and uncertainties that could cause our actual results to differ materially
from the results contemplated by the forward-looking statements contained in this document. The most significant
factors affecting our business and operations include the following:

Business and Operating Risks

Our exposure to pending and future asbestos claims and related liabilities, assets, and cash flows is subject
to significant uncertainties.

ITT, including its subsidiary Goulds Pumps, Inc., has been sued, along with many other companies, in numerous
lawsuits in which the plaintiffs claim damages for personal injury arising from exposure to asbestos from component
parts of certain products sold or distributed by various defendants, including the Company. We expect to be sued in
similar actions in the future. We record an estimated liability related to pending claims and claims estimated to be filed
over the next 10 years based on a number of key assumptions, including the plaintiffs’ propensity to sue, claim
acceptance rates, disease type, settlement values and defense costs. These assumptions are derived from ITT’s
recent experience and reflect the Company’s expectations about future claim activities. These assumptions about the
future may or may not prove accurate, and accordingly, the Company may incur additional liabilities in the future. A
change in one or more of the inputs used to estimate our asbestos liability could materially change the estimated
liability and associated cash flows for pending claims and those estimated to be filed in the next 10 years. Although it
is probable that the Company will incur additional costs for asbestos claims filed beyond the next 10 years, we do not
believe that there is a reasonable basis for estimating those costs at this time.

We record an asset that represents our best estimate of probable recoveries from our insurers for the estimated
asbestos liabilities. There are significant assumptions made in developing estimates of asbestos-related recoveries,
such as policy triggers, policy or contract interpretation, the methodology for allocating claims to policies, and the
continued solvency of the Company’s insurers. Certain of our primary coverage-in-place agreements are exhausted
which may result in higher net cash outflows until excess carriers begin accepting claims for reimbursement.
Performance by our insurers could differ from the assumptions underlying the recognized asset and could result in
lower collections of receivables than are currently expected to reduce the Company’s asbestos costs.

Due to these uncertainties, as well as our inability to reasonably estimate any additional asbestos liability for claims
that may be filed beyond the next 10 years, it is difficult to predict the ultimate outcome of the cost, including potential
recoveries, of resolving the pending and all unasserted asbestos claims. Additionally, we believe it is possible that the
cost of asbestos claims filed beyond the next 10 years, net of expected recoveries, could have a material adverse
effect on our financial condition and results of operations.

Many uncertainties exist surrounding asbestos litigation. The Company will continue to evaluate its estimated
asbestos-related liability and corresponding estimated insurance reimbursement, as well as the underlying assumptions
and process used to derive these amounts. Changes in estimates related to these uncertainties may result in increases
or decreases to the net asbestos liability, particularly if the quality or number of claims or settlement or defense costs
change significantly, if there are significant developments in the trend of case law or court procedures, or if legislation
or another alternative solution is implemented; however, the Company is currently unable to predict such future changes
or estimate their potential effect on its net asbestos liability. Although the resolution of asbestos claims may take many
years, the effect of changes in our estimates related to our pending or estimated future claims in any given period
could be material to our financial condition and results of operations.

In addition, as part of the 2011 spin-off, ITT indemnified Exelis and Xylem with respect to asserted and unasserted
asbestos claims that relate to the presence or alleged presence of asbestos in products manufactured, repaired or
sold prior to the 2011 spin-off, subject to limited exceptions.

Our operating results and our ability to maintain liquidity or procure capital may be adversely affected by
unfavorable economic and capital market conditions associated with global sales and operations and the
uncertain geopolitical environment.

We have experienced and expect to continue to experience fluctuations in revenues and operating results due to
economic and business cycles. Important factors impacting our businesses include the overall strength of the global
economy and our customers’ confidence in local and global macroeconomic conditions, industrial spending, interest
rates, availability of commercial financing for our customers and unemployment rates.

We serve a diverse mix of customers in global infrastructure industries which can be volatile. The markets in which
our businesses operate include automotive, aerospace, oil and gas, industrial, mining, chemical and defense, each
of which is impacted by specific industry and general economic cycles. Our revenues, operating results and profitability
have varied in the past and can be negatively impacted by volatility in the end markets we serve. We have undertaken
measures to reduce the impact of this volatility through diversification of markets we serve and expansion of geographic
regions in which we operate, but we expect volatility to continue to affect our business in the future. We may be
adversely affected by disruptions in financial markets or downturns in macroeconomic conditions in specific countries
or regions, or in the various industries in which the Company operates or be subject to adverse changes in the availability
and cost of capital, interest rates, tax rates, or regulations in the jurisdictions in which the Company operates.

Our international operations, including U.S. exports, comprise a growing portion of our operations and are a
strategic focus for continued future growth. Our strategy calls for increasing sales in overseas markets, including
emerging growth markets such as Central and South America, China, Russia, and the Middle East. In 2015, 62% of
our total sales were to customers operating outside of the United States. Our sales from international operations and
export sales are subject in varying degrees to risks inherent to doing business outside of the United States. These
risks include the following:

• possibility of unfavorable circumstances arising from host country laws or regulations;
• restrictions on currency repatriation;

• potential negative consequences from changes to taxation policies;

• the disruption of operations from labor and political disturbances;

• our ability to hire and maintain qualified staff in these regions; and

• changes in tariff and trade barriers and import and export licensing requirements.

Instability in the global credit markets and geopolitical environment in many parts of the world may continue to put
pressure on global economic conditions. If global economic and market conditions, or economic conditions in key
markets, deteriorate further we may experience material impacts on our financial statements.

Adverse changes to financial conditions could jeopardize certain counterparty obligations, including those of our
insurers and customers. Restrictive credit markets may also result in customers extending terms for payment and may
result in our having higher customer receivables with increased risk of default. We closely monitor the credit worthiness
of our insurers and customers and evaluate their ability to service their obligations to us. A tightening of credit markets
may reduce funds available to our customers to pay for or buy our products and services for an unknown, but perhaps
lengthy, period.

Should market conditions deteriorate, this may adversely affect our ability to manage inventory levels and maintain
current levels of profitability. If, for any reason, we lose access to our currently available lines of credit, or if we are
required to raise additional capital, we may be unable to do so or we may be able to do so only on unfavorable terms.
Deteriorating market conditions could also indicate an impairment in the value of our goodwill and intangible assets
in one or more of our reporting units which would require us to recognize a non-cash charge to our Statement of
Operations. We test both goodwill and intangible assets for impairment on an annual basis and whenever events or
changes in circumstances indicate the carrying value of an asset may not be recoverable.

In addition to the general risks that we face outside the U.S., we now conduct more of our operations in emerging
growth markets than we have in the past, which could involve additional uncertainties, including risks that governments
may impose limitations on our ability to repatriate funds, impose or increase withholding or other taxes on remittances
and other payments to us, seek to nationalize our assets, or impose or increase investment barriers or other restrictions
that may adversely affect our business. In addition, emerging growth markets pose other uncertainties, including
challenges to our ability to protect our intellectual property, pressure on the pricing of our products, and risks of political
instability.

A substantial portion of our earnings is generated by our foreign subsidiaries and repatriation of those earnings
to the U.S. may be inefficient from a tax perspective. Any distributions, loans or advances to us by our foreign subsidiaries

could be subject to taxation under applicable local law, monetary transfer restrictions and foreign currency exchange
regulations in the jurisdictions in which our subsidiaries operate.

The cost of compliance with increasingly complex and often conflicting regulations worldwide can also impair our
flexibility in modifying product, marketing, pricing, or other strategies for growing our businesses, as well as our ability
to improve productivity and maintain acceptable profit margins.

Significant movements in foreign currency exchange rates may adversely affect our financial statements.

A significant portion of our sales are to customers operating outside the U.S. We are exposed to fluctuations in
foreign currency exchange rates. The primary currencies to which we have exposure are the Euro, Chinese renminbi,
Czech koruna, South Korean won, and British pound. We have currently elected not to hedge these foreign currency
exposures but we continue to evaluate the need for hedging activities within our business.

As we continue to grow our business internationally, our operating results could be affected by the relative strength
of the European, Asian and developing economies and the impact of currency exchange rate fluctuations. Any significant
change in the value of currencies of the countries in which we do business relative to the value of the U.S. dollar could
affect our ability to sell products competitively and control our cost structure, which could have a material adverse
effect on our financial statements. Accordingly, fluctuations in exchange rates may also impact our results when financial
statements of non-U.S. operating units are translated into U.S. dollars. Given that the majority of our sales are non-
U.S. based, a strengthening of the U.S. dollar against other major foreign currencies could adversely affect our results
of operations.

Our business is impacted by our customer's levels of capital investment and maintenance expenditures,
particularly in the oil and gas, chemical, and mining markets.

Demand for our industrial products and services depend on the level of capital investment and planned maintenance
expenditures of our customers. Our customers' levels of capital expenditures depends, in turn, on general economic
conditions, availability of credit, economic conditions within their respective industries and expectations of future market
behavior. Additionally, volatility in commodity prices can negatively affect the level of these activities and can result in
postponement of capital spending decisions or the delay or cancellation of existing orders. The ability of our customers
to finance capital investment and maintenance may also be affected by factors independent of the conditions in their
industries, such as the condition of global credit and capital markets.

The businesses of many of our customers, particularly oil and gas companies, chemical companies, mining
companies and industrial companies are to varying degrees cyclical and have experienced, or may experience, periodic
downturns of varying severity. Our customers in these industries, particularly those whose demand for our products
and services is primarily profit-driven, historically have tended to delay large capital projects, including expensive
maintenance and upgrades, during economic downturns. Additionally, fluctuating energy demand forecasts and
lingering uncertainty concerning commodity pricing can cause our customers to be more conservative in their capital
planning, which may reduce demand for our products and services. Reduced demand for our products and services
could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably
impacts our absorption of fixed manufacturing costs. This reduced demand may also erode average selling prices in
our industry. Any of these results could adversely affect our business and financial results.

Additionally, some of our industrial products customers may choose to delay capital investment and maintenance,
even during favorable conditions in their industries or markets. Despite these favorable conditions, the general health
of global credit and capital markets and our customers' ability to access such markets may significantly impact
investments in large capital projects, as well as necessary maintenance and upgrades. In addition, the liquidity and
financial position of our customers, which is typically directly linked to the economies in which they operate, could
impact capital investment decisions and their ability to pay in full and/or on a timely basis. Any of these factors, whether
individually or in the aggregate, could have a material adverse effect on our customers and, in turn, our business and
financial results.

Failure to compete successfully in our markets could adversely affect our business.

We provide products and services to competitive markets. We believe the principal points of competition in our
markets are product performance, reliability and innovation, application expertise, brand reputation, energy efficiency,
product life cycle cost, timeliness of delivery, proximity of service centers, effectiveness of our distribution channels
and price.

Maintaining and improving our competitive position will require continued investment by us in manufacturing,
research and development, engineering, marketing, customer service and support, and our distribution networks. We
may not be successful in maintaining our competitive position. Our competitors may develop products that are superior
to our products, or may develop more efficient or effective methods of providing products and services or may adapt
more quickly than we do to new technologies or evolving customer requirements. Pricing pressures also could cause
us to adjust the prices of certain products to stay competitive. We may not be able to compete successfully with existing
or new competitors. Risks such as these are particularly apparent in our ICS business, which relies on innovation to
stay competitive.

Our operating costs are subject to fluctuations, particularly due to changes in commodity prices, raw materials,
energy and related utilities, freight, and cost of labor. In order to remain competitive, we may not be able to recoup all
or a portion of these higher costs from our customers through product price increases. Further, our ability to realize
financial benefits from Lean Six Sigma activities may not be able to mitigate fully or in part these manufacturing and
operating cost increases and, as a result, could negatively impact our profitability.

Quality problems with our manufacturing processes or finished goods could harm our reputation for producing
high-quality products and erode our competitive advantage, sales, and market share.

We manufacture key components that are integral to the operation of systems and manufacturing processes in
the energy, transportation and industrial markets. Our products provide enabling functionality for applications where
reliability and performance are critically important to our customers and the users of their products. As such, quality
is extremely important to us and our customers due to the serious and costly consequences of product failure. Our
quality certifications, including products manufactured to military specifications, are critical to the marketing success
of our goods and services. If we fail to meet these standards, our reputation could be damaged, we could lose customers
or the ability to sell certain products, and our revenue and results of operations could be materially adversely affected.
Aside from specific customer standards, our success in part depends on our ability to manufacture to exact tolerances
precision-engineered components, subassemblies, and finished devices from multiple materials. If our components
fail to meet these standards or fail to adapt to evolving standards, our reputation as a manufacturer of high-quality
components will be harmed, our competitive advantage could be damaged, and we could lose customers, market
share or our ability to sell certain products.

We are subject to risks related to government contracting, including changes in levels of government spending
and regulatory and contractual requirements applicable to sales to the U.S. government.

Our Interconnect Solutions, Control Technologies and Motion Technologies segments derive revenue from sales
to U.S. government customers and to higher tier contractors who sell to the U.S. government. Government expenditures
are subject to political and budgetary fluctuations and constraints, which may result in significant unexpected changes
in levels of demand for our products. In addition, the award, administration and performance of government contracts
are subject to regulatory and contractual requirements that differ significantly from the terms and conditions that apply
to contracts with our non-governmental customers. We may be subject to audits and investigations to evaluate our
compliance with these requirements. If we are found to have failed to comply with requirements applicable to government
contractors, we may be subject to various actions, including but not limited to fines or penalties, reductions in the value
of our government contracts, suspension and termination. Failure to comply with applicable requirements also could
harm our reputation and our ability to compete for future government contracts. Any of these outcomes could have a
material adverse effect on our business, results of operations and financial condition.

Our business could be adversely affected by raw material price volatility and the inability of suppliers to meet
quality and delivery requirements.

Our business relies on third-party suppliers for raw materials, components, and contract manufacturing services
to produce our products. The supply of raw materials to the Company and to its component parts suppliers and the
supply of castings, motors, and other critical components could be interrupted for a variety of reasons, including
availability and pricing. Prices for raw materials necessary for production have fluctuated significantly in the past and
significant increases could adversely affect the Company’s results of operations and profit margins. Due to pricing
pressure or other factors, the Company may not be able to pass along increased raw material and components parts
prices to its customers in the form of price increases or its ability to do so could be delayed. Consequently, our results
of operations and financial condition may be adversely affected.

For most of our products, we have existing alternate sources of supply, or such materials are readily available. In
some instances we depend on a single source of supply, manufacturing or assembly or participate in commodity
markets that may be subject to a limited number of suppliers. Delays in obtaining supplies may result from a number
of factors affecting our suppliers, including production interruptions at suppliers, capacity constraints, labor disputes,
the impaired financial condition of a particular supplier, the ability of suppliers to meet regulatory requirements, and
suppliers’ allocations to other purchasers. Any delay in our suppliers’ abilities to provide us with sufficient quality and
flow of materials, price increases, or decreased availability of raw materials or commodities could impair our ability to
deliver products to our customers and, accordingly, could have an adverse effect on our business, results of operations
and financial position.

Our business could be adversely affected by the inability of suppliers to provide us with certifications relating
to conflict minerals.

Since our supply chain is complex, ultimately we may not be able to sufficiently discover the origin of the conflict
minerals (generally defined as the minerals tin, tantalum, titanium and gold which have been extracted from the
Democratic Republic of the Congo or adjoining countries) used in our products through the due diligence procedures
that we implement, which may adversely affect our reputation with our customers, shareholders, and other stakeholders.
In such event, we may also face difficulties in satisfying customers who require that all of our products are certified as
conflict mineral free. If we are not able to meet such requirements, customers may choose not to purchase our products,
which could adversely affect our sales and the value of portions of our inventory. Further, there may be only a limited
number of suppliers offering conflict free minerals and, as a result, we cannot be sure that we will be able to obtain
metals, if necessary, from such suppliers in sufficient quantities or at competitive prices. Any one or a combination of
these various factors could harm our business, reduce market demand for our products, and adversely affect our
financial results.

If we fail to manage the distribution of our products and services effectively, our revenue, gross margin and
profitability could suffer. A significant portion of our revenue is derived from a single customer.

We use a variety of sales channels to sell our products and services. Successfully managing these sales channels
is a complex process as we sell a broad mix of products through a network of over 750 distributors, agents, and value-
added resellers. Moreover, since each distribution method has distinct risks and profit margins, our failure to implement
the most advantageous balance in the delivery model for our products and services could adversely affect our revenue
and profit margins. In addition, changes to the sales channels could introduce additional complexity to the sales and
inventory management processes and could cause disruptions to customer service or create channel conflicts.

Further, we must manage inventory effectively, particularly with respect to sales to distributors, which involves
forecasting demand and potential pricing issues. Distributors may increase orders during periods of product shortages,
cancel orders if their inventory is too high or delay orders in anticipation of new products. Our reliance on indirect
distribution methods may reduce visibility to end-customer demand, generating a time lag to the market trend with
potential negative impacts on strategic decisions, including pricing and operational decisions.

Our financial results could be adversely affected by the loss of a distributor, the loss or deterioration of some
distribution or reseller arrangements, channel conflicts including the consolidation of third-party distributors, or if the
financial conditions of our channel partners were to weaken. It is not unreasonable to suspect that some of our
distributors may have insufficient financial resources and may not be able to withstand changes in business conditions,
including economic weakness, leading to a slowness or difficulty in the cash collection process.

Approximately 10% of our total revenue is derived from a single customer, Continental ATE, whom we sell to
through OE pad contracts and OES supply agreements with automakers and which is also a third-party distributor for
us in the independent aftermarket channel. The loss of this customer could have a material adverse effect on our
business, results of operations, and financial condition.

Changes in our effective tax rates as a result of changes in the realizability of our deferred tax assets, the
geographic mix of earnings, tax examinations or disputes, tax authority rulings, or changes in the tax laws,
may adversely affect our financial results.

The Company is subject to income taxes in the U.S. and in various foreign jurisdictions. We exercise significant
judgment in calculating our provision for income taxes and other tax liabilities. In the ordinary course of our business,
there are many transactions and calculations where the ultimate tax determination is uncertain. Furthermore, changes
in domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income
tax rates assessed or changes in the taxability of certain income or the deductibility of certain expenses, thereby
affecting our income tax expense and profitability.

Any significant increase in our future effective tax rates could reduce net income for future periods. Given the

global nature of our business, a number of factors may increase our future effective tax rates, including:

• decisions to repatriate non-U.S. earnings for which we have not previously provided for U.S. income taxes;

• changes in the geographic mix of our profits among jurisdictions with differing statutory income tax rates;

• sustainability of historical income tax rates in the jurisdictions in which we conduct business;

• changes in tax laws applicable to us;

• expiration, renewal, or application of tax holidays;

• the resolution of issues arising from tax audits with various tax authorities; and

• changes in the valuation of our deferred tax assets, deferred tax liabilities and deferred tax asset valuation

allowances.

The amount of income taxes and other taxes we have paid are subject to ongoing audits by U.S. federal, state
and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from amounts paid
or reserved, future financial results may include unfavorable tax adjustments. We are currently under routine
examination by the U.S. Internal Revenue Service and other tax authorities, and we may be subject to additional
examinations in the future. The tax authorities may disagree with our tax treatment of certain material items and thereby
increase our tax liability. Failure to sustain our position in these matters could result in a material adverse effect on
our financial statements.

Failure to retain our existing senior management, engineering and other key personnel or the inability to attract
and retain new qualified personnel could negatively impact our ability to operate or grow our business.

Our success will continue to depend to a significant extent on our ability to retain or attract a significant number
of employees in senior management, engineering and other key personnel. The ability to attract or retain employees
will depend on our ability to offer competitive compensation, training and cultural benefits. We will need to continue to
develop a roster of qualified talent to support business growth and replace departing employees. A failure to retain or
attract highly skilled personnel could adversely affect our operating results or ability to operate or grow our business.

A material business interruption, particularly at one of our manufacturing facilities, could negatively impact
our ability to generate sales and meet customer demand.

If operations at one of our manufacturing facilities were to be disrupted as a result of a significant equipment failure,
natural disaster, power outage, fire, explosion, terrorism, IT system failure, cyber-based attack, adverse weather
conditions, labor disputes, relocation of production location, or any other reason, our financial performance could be
adversely affected as a result of our inability to meet customer demand for our products. A significant interruption in
production capability could require also us to make substantial payments due to non-performance, which could
negatively affect our results of operations. We have insurance for certain covered losses which we believe to be
adequate to provide for reconstruction of facilities and equipment, as well as certain financial losses resulting from
any production interruption or shutdown. However, any recovery under our insurance policies may not offset the lost
revenues or increased expenses that may be experienced during the disruption of operations.

Additionally, we have intentions to upgrade or replace existing Enterprise Resource Planning (ERP) systems over
the next several years. Implementing new systems may result in unintended changes to the way in which production
is performed and transactions are processed. Our ability to execute these ERP systems implementations will directly
impact our potential risk exposure during this implementation period.

Security breaches could adversely affect our business and results of operations.

The efficient operation of our business is dependent on computer hardware and software systems. While we
believe we have taken many steps to protect our information systems, even the most well-protected information systems
are vulnerable to internal and external security breaches including those by computer hackers and cyber terrorists.
Furthermore, information technology security threats are increasing in sophistication and frequency. While we actively
manage the risks to our information systems that are within our control, we can provide no assurance that our actions
will be successful in eliminating or mitigating risks to our systems, networks and data. The unavailability of our
information systems, the failure of these systems to perform as anticipated for any reason or any significant breach
of security could cause significant disruption to our business and could result in decreased performance and increased
overhead costs, causing an adverse effect on our reputation, business, financial condition and results of operations.
A breach could also result in the loss of our intellectual property, potentially impacting our long-term capability to
compete on sales for affected products. In addition, a breach of security of our information systems could result in
litigation, regulatory action and potential liability, as well as increased costs to implement further information security
measures.

Portfolio management strategies for growth, including cost-saving initiatives, may not meet expectations.

We regularly review our portfolio of businesses and pursue growth through the acquisition of other companies,
assets and product lines that either complement or expand our existing business. Although we conduct what we believe
to be a prudent level of investigation regarding the operating and financial condition of the businesses we purchase,
a level of risk remains regarding the actual operating condition of these businesses. Until we actually assume operating
control of these business assets and their operations, we may not be able to ascertain the actual value or understand
the potential liabilities of the acquired entities and their operations. Acquisitions involve a number of risks and present
financial, managerial and operational challenges that could have a material adverse effect on our reputation and
business, including that an acquired business could under-perform relative to our expectations, the failure to realize
expected synergies, integration of technology, operations, personnel and financial and other systems, the possibility
that we have acquired substantial undisclosed liabilities, potentially insufficient internal controls over financial activities
or financial reporting at an acquired company that could impact us on a consolidated basis, diversion of management
attention from other businesses, loss of key employees of the acquired businesses, and customer dissatisfaction or
performance.

Our portfolio reviews also include the potential for cost-saving initiatives through restructuring and other initiatives.
We strive for and expect to achieve cost savings in connection with certain initiatives, including: (i) manufacturing
process and supply chain rationalization; (ii) streamlining redundant administrative overhead and support activities;
and (iii) restructuring and repositioning organizations. Cost savings expectations are inherently estimates that are
difficult to predict and we cannot provide assurance that we will achieve expected, or any, actual cost savings. Our
restructuring activities may place substantial demands on our management, which could lead to the diversion of
management’s attention from other business priorities and result in a reduced customer focus.

The level of returns on postretirement benefit plan assets, changes in interest rates and other factors could
affect our earnings and cash flows in future periods.

A portion of our current and retired employee population is covered by pension and other employee-related defined
benefit plans (collectively, postretirement benefit plans). We may experience significant fluctuations in costs related
to postretirement benefit plans as a result of macroeconomic factors, such as interest rates, that are beyond our control.
The cost of our postretirement plans is incurred over long periods of time and involves various factors and uncertainties
during those periods, which can be volatile and unpredictable, including the rates of return on postretirement benefit
plan assets and discount rates used to calculate liabilities and expenses. Management develops each assumption
using relevant Company experience in conjunction with market-related data. Our liquidity, cash flows and financial
statements could be materially affected by significant changes in key economic indicators, volatility in the financial
markets, future legislation and other governmental regulatory actions.

We make contributions to fund our postretirement benefit plans when considered necessary or advantageous to
do so. The macro-economic factors discussed above, including the return on postretirement benefit plan assets and
the minimum funding requirements established by local government funding or taxing authorities, or established by
other agreements, may influence future funding requirements. A significant decline in the fair value of our plan assets,
or other adverse changes to our overall pension and other employee-related benefit plans could require increased
funding contributions and could adversely affect our financial statements. Future minimum funding requirements will
depend primarily on the return on plan assets and discount rate. Depending on these factors, the level of future minimum
contributions could be material.

Other Risks, Including Litigation and Regulatory Risk

Changes in environmental laws or regulations, the discovery of previously unknown or more extensive
contamination, or the failure of a potentially responsible party to perform may adversely affect our financial
results.

Environmental laws and regulations allow for the assessment of substantial fines and criminal sanctions as well
as facility shutdowns to address violations, and may require the installation of costly pollution control equipment or
operational changes to limit emissions or discharges. We also could be affected by changes in environmental laws or
regulations, including, for example, those imposed in response to vapor intrusion or climate change concerns.

Accruals for environmental liabilities are recorded on a site-by-site basis when it is probable that a liability has
been incurred and the amount of the liability can be reasonably estimated based on current law and existing
technologies. Our estimated liability is undiscounted and is reduced to reflect the participation of other potentially
responsible parties in those instances where it is probable that such parties are legally responsible and financially
capable of paying their respective share of the relevant costs. Such estimates are subject to change and may be
affected by many factors, such as new information about a site, evolving scientific knowledge about risk associated
with any contamination involved, developments affecting remediation technology, and enforcement by regulatory
authorities.

Developments such as the adoption of new environmental laws and regulations, violations by us of such laws and
regulations, discovery of previously unknown or more extensive contamination, litigation involving environmental
impacts, the adequacy of insurance policies, our inability to recover costs associated with any such developments, or
financial insolvency of other potentially responsible parties could have a material adverse effect on our financial
statements.

Failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation,
as well as export controls and trade sanctions, could result in fines or criminal penalties.

We operate in a number of countries throughout the world, including countries known to have a reputation for
corruption. We are committed to doing business in accordance with applicable anti-corruption laws. We are subject,
however, to the risk that we, our affiliated entities, or the respective officers, directors, employees and agents of ITT,
may take action determined to be in violation of such anti-corruption laws, including but not limited to, the U.S. Foreign
Corrupt Practices Act of 1977 and the U.K. Bribery Act of 2010, as well as trade sanctions administered by the Office
of Foreign Assets Control (OFAC) and the U.S. Department of Commerce. Any such violation could result in substantial
fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely
affect our business, results of operations or financial position. In addition, actual or alleged violations could damage
our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations
is expensive and can consume significant time and attention of our senior management.

We are subject to laws, regulations and potential liability relating to claims, complaints and proceedings,
including those related to product and other matters.

We are subject to various laws, ordinances, regulations and other requirements of government authorities in the
U.S. and in foreign countries. Any violations or failure to comply with securities laws, trade or tax rules or similar
regulations could create a substantial liability for us, and also could cause harm to our reputation. Changes in laws,
ordinances, regulations or other government policies, the nature, timing, and effect of which are uncertain, may
significantly increase our expenses and liabilities.

Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and
marketing of products for the markets we serve. In addition, many of the devices we manufacture and sell are designed
to be used in harsh environments for long periods of time where the cost of failure is high. Component failures,
manufacturing defects, design flaws, or inadequate disclosure of product-related risks or product-related information
could result in an unsafe condition or injury to, or death of, an end-user of our products. The occurrence of such a
problem could result in product liability claims or a recall of, or safety alert relating to, one or more of our products
which could ultimately result, in certain cases, in the removal of such products from the marketplace and claims
regarding costs associated therewith. Product liability claims or product recalls in the future, regardless of their ultimate
outcome, could have a material adverse effect on our business and reputation and on our ability to attract and retain
customers for our products.

From time to time we are involved in legal proceedings that are incidental to the operation of our businesses. Some
of these proceedings allege damages relating to personal injury claims, employment and employee benefit matters
and commercial or contractual disputes, sometimes related to acquisitions or divestitures. Additionally, we may become
subject to significant claims of which we are currently unaware or the claims of which we are aware may result in our
incurring a significantly greater liability than we anticipate or can estimate.

The 2011 Spin-Off may expose us to potential liabilities.

In connection with the 2011 spin-off, we may be exposed to potential liabilities. As part of the Distribution Agreement,
ITT, Exelis, and Xylem indemnified each other with respect to such parties’ assumed or retained liabilities pursuant to
the Distribution Agreement and breaches of the Distribution Agreement or related spin agreements. There can be no
assurance that the indemnity from Exelis and Xylem will be sufficient to protect us against the full amount of these and
other liabilities, or that each of Exelis and Xylem will be able to fully satisfy its indemnification obligations. Third-parties
could also seek to hold us responsible for any of the liabilities that each of Exelis and Xylem has agreed to assume.
Even if we ultimately succeed in recovering from Exelis and/or Xylem any amounts for which we are held liable, we
may be temporarily required to bear these losses ourselves. In addition, performance on indemnities that we provided
Exelis and Xylem may be significant. Each of these risks could negatively affect our business, results of operations
and financial position.

Anti-takeover provisions in our organizational documents and Indiana law could delay or prevent a change
in control.

Certain provisions of our articles of incorporation and by-laws may delay or prevent a merger or acquisition that
a shareholder may consider favorable. For example, the articles of incorporation authorize our Board of Directors to
issue one or more series of preferred stock. In addition, the articles of incorporation and by-laws, among other things,
do not permit action by written consent of the shareholders. These provisions may also discourage acquisition proposals
or delay or prevent a change in control, which could harm our stock price. Indiana law also imposes some restrictions
on mergers and other business combinations between any holder of 10% or more of our outstanding common stock
and us as well as certain restrictions on the voting rights of "control shares" of an "issuing public corporation."

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We consider the offices, plants, warehouses, and other properties that we own or lease to be in good condition
and generally suitable for their intended purpose. We believe these properties are adequate for the Company’s needs
and will generally allow for expansion of capacity if needed. The following table summarizes the number and area (in
thousands of square feet) of our properties by region and business segment.

Location
Manufacturing:
North America
Europe
Asia

Non-Manufacturing:

North America
Europe
South America

Location
Manufacturing:
North America
Europe
Asia
South America

Non-Manufacturing:

North America
Europe
Middle East
Asia
South America

Number of Facilities - Owned

Industrial
Process

Motion
Technologies

Interconnect
Solutions

Control
Technologies

Other

Total

Area

4
2
1
7

2
—
1
3

1,155.0
367.5
189.0
1,711.5

66.5
—
68.0
134.5

2
4
—
6

—
1
—
1

226.1
848.5
—
1,074.6

—
38.5
—
38.5

2
1
1
4

—
—
—
—

722.1
231.3
13.4
966.8

—
—
—
—

3
—
—
3

—
—
—
—

182.6
—
—
182.6

—
—
—
—

11
7
2
20

2,285.8
1,447.3
202.4
3,935.5

2
1
1
4

66.5
38.5
68.0
173.0

Number of Facilities - Leased

Industrial
Process

Motion
Technologies

Interconnect
Solutions

Control
Technologies

Other

Total

Area

5
—
1
1
7

16
12
2
19
8
57

290.4
—
211.5
33.6
535.5

303.9
115.3
12.5
217.8
199.5
849.0

2
1
1
—
4

1
1
—
—
1
3

85.6
261.4
341.7
—
688.7

16.0
28.0
—
—
0.5
44.5

5
1
1
—
7

3
2
2
4
—
11

178.6
52.8
294.4
—
525.8

6.5
11.3
1.0
10.5
—
29.3

2
1
—
—
3

1
—
—
—
—
1

255.5
5.5
—
—
261.0

3.0
—
—
—
—
3.0

—
—
—
—
—

1
—
—
3
—
4

—
—
—
—
—

53.7
—
—
18.4
—
72.1

14
3
3
1
21

22
15
4
26
9
76

810.1
319.7
847.6
33.6
2,011.0

383.1
154.6
13.5
246.7
200.0
997.9

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings that are incidental to the operation of our businesses.
Some of these proceedings allege damages relating to personal injury claims, environmental exposures, intellectual
property matters, commercial or contractual disputes, sometimes related to acquisitions or divestitures, and
employment and employee benefit matters. We will continue to defend vigorously against all claims.

Asbestos Proceedings

ITT, including its subsidiary Goulds Pumps, Inc., has been sued, along with many other companies in product
liability lawsuits alleging personal injury due to asbestos exposure. These claims allege that certain of our products
sold prior to 1985 contained a part manufactured by a third party (e.g., a gasket) that contained asbestos. To the extent
these third-party parts may have contained asbestos, it was encapsulated in the gasket (or other) material and was
non-friable. Frequently, the plaintiffs are unable to identify any ITT or Goulds Pumps, Inc. product as a source of
asbestos exposure. In addition, a large percentage of claims pending against the Company have been placed on
inactive dockets because the plaintiffs cannot demonstrate a significant compensable loss. Our experience to date is
that a majority of resolved claims are dismissed without payment by the Company.

We record a liability for pending asbestos claims and asbestos claims estimated to be filed over the next 10 years.
While it is probable that we will incur additional costs for future claims to be filed against the Company, the amount of
liability for potential future claims beyond the next 10 years is not reasonably estimable due to a number of factors.
As of December 31, 2015, we have recorded an undiscounted asbestos-related liability for pending claims and
unasserted claims estimated to be filed over the next 10 years of $1,042.8, including expected legal fees, and an
associated asset of $412.0 which represents estimated recoveries from insurers, resulting in a net exposure of $630.8.
See information provided below and in Note 18, Commitments and Contingencies, to the Consolidated Financial
Statements for further information.

Other Matters

The Company has received a civil subpoena from the Department of Defense, Office of the Inspector General
requesting documents pertaining to certain products manufactured by the Company’s Interconnect Solutions segment
that are purchased or used by the U.S. government. The Company is cooperating with the request. The Company is
unable to estimate the timing or outcome of the matter.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The current executive officers of the Company, as of February 1, 2016, are listed below.

Name
Denise L. Ramos

Farrokh Batliwala

Aris C. Chicles

Victoria L. Creamer

Steven C. Giuliano

Mary Beth Gustafsson

Luca Savi

Thomas M. Scalera

Neil W. Yeargin

Age
59

Chief Executive Officer and President

Current Title

Senior Vice President and President, Control Technologies

Executive Vice President and President, Industrial Process

Senior Vice President Human Resources

Vice President and Chief Accounting Officer

Senior Vice President, General Counsel and Chief Compliance Officer

Senior Vice President and President, Motion Technologies

Senior Vice President and Chief Financial Officer

Senior Vice President and President, Interconnect Solutions

Denise L. Ramos was appointed Chief Executive Officer, President and a director of the Company in October 2011.
She previously served as Senior Vice President and Chief Financial Officer of the Company since 2007. Prior to
joining the Company, Ms. Ramos served as Chief Financial Officer for Furniture Brands International from 2005
to 2007. From 2000 to 2005, Ms. Ramos served as Senior Vice President and Corporate Treasurer at Yum! Brands,
Inc. and Chief Financial Officer for the U.S. division of KFC Corporation. Ms. Ramos began her career in 1979 at
Atlantic Richfield Company (ARCO), where she had more than 20 years of business and financial experience
serving in a number of increasingly responsible finance positions, including Corporate General Auditor and Assistant
Treasurer. Ms. Ramos has served as a director of Praxair, Inc. since April 2014, where she serves on the Audit
Committee and the Governance and Nominating Committee. She serves on the Executive Committee of the Board
of Trustees for the Manufacturers Alliance for Productivity and Innovation and is also a member of the Business
Roundtable and the Business Council. Ms. Ramos was included in the Top 100 CEO Leaders in Science,
Technology, Engineering and Math publication by STEMconnector, she recently received a Distinguished
Leadership Award from the New York Hall of Science and she was named to Fortune magazine’s 2014 Top People
in Business.

Farrokh Batliwala has served as our Senior Vice President and President, Control Technologies since October 2015.
Prior to joining us, Mr. Batliwala served as Vice President and General Manager, Hydraulics, Power and Motion
Control Division for Eaton Corporation (Eaton), a diversified global power management technology company, from
2013 to 2015. Mr. Batliwala held various other positions of increasing levels of responsibility at Eaton since 2004.

Aris C. Chicles has served as our Executive Vice President and President, Industrial Process since May 2014 and
previously as Executive Vice President since October 2011. Prior to that he served as our Senior Vice President,
Strategy and Corporate Development from August 2007 to October 2011 and Vice President, Strategy and
Corporate Development from June 2006 to July 2007. Before joining us, Mr. Chicles held various positions of
increasing levels of responsibility at American Standard Companies, Inc., a global manufacturer of products and
systems in diversified industries, and Owens Corning Inc., a leading provider of building materials systems and
composite solutions.

Victoria L. Creamer has served as our Senior Vice President, Human Resources since February 2015. Prior to joining
ITT, Ms. Creamer served as Vice President, Global Compensation and Recognition of International Business
Machines Corporation (IBM), a global technology and consulting company, from April 2013 to January 2015. Ms.
Creamer held various other positions of increasing levels of responsibility at IBM since 1991.

Steven C. Giuliano has served as our Vice President and Chief Accounting Officer since January 2014. Prior to joining
us, Mr. Giuliano served as Senior Vice President and Chief Financial Officer from 2009 to 2011 and was Vice
President and Chief Financial Officer from 2007 to 2009 of Arch Chemicals, Inc. Mr. Giuliano was Controller of
Arch Chemicals from 1999 through 2007, while assuming increasing levels of responsibility.

Mary Beth Gustafsson has served as our Senior Vice President and General Counsel since February 2014 and as
our Chief Compliance Officer since August 2014. Prior to joining us, Ms. Gustafsson served as Executive Vice
President, General Counsel and Corporate Secretary of First Solar Inc., a global provider of comprehensive
photovoltaic solar systems, from 2009 to 2013 and from 2008 to 2009 as Vice President, General Counsel. Ms.
Gustafsson was previously Senior Vice President, General Counsel and Secretary of American Standard
Companies, Inc.

Luca Savi has served as our Senior Vice President and President, Motion Technologies since November 2011. Prior
to joining us, Mr. Savi served as Chief Operating Officer, Comau Body Welding at Comau, a subsidiary of the Fiat
Group responsible for producing and serving advanced manufacturing systems, from 2009 to 2011 and prior to
that as Chief Executive Officer, Comau North America from 2007 to 2009 and Chief Executive Officer, Comau
China from 2004 to 2007. Mr. Savi previously held senior leadership roles at Honeywell International, Royal Dutch
Shell and Ferruzzi-Montedison Group.

Thomas M. Scalera has served as our Senior Vice President, Chief Financial Officer and Strategy and IT Leader since
August 2014 and prior to that as Senior Vice President and Chief Financial Officer since October 2011. He previously
served as Vice President, Corporate Finance from 2010 to 2011 and Director, Investor Relations from 2008 to
2010. Prior to joining ITT in 2006, Mr. Scalera held senior financial roles with R.R. Donnelley, Dover Corp., and
PricewaterhouseCoopers, LLP.

Neil W. Yeargin has served as our Senior Vice President and President, Interconnect Solutions since February 2013.
Prior to joining us, Mr. Yeargin held several leadership roles at Invensys plc, a global maker of software, systems
and controls, most recently serving as Senior Vice President, Global Commercial Business from 2011 to 2013 and
prior to that as Vice President and General Manager, Americas/APAC from 2008 to 2011. Mr. Yeargin previously
held leadership roles in operations, supply chain and process improvement with Cooper Industries and Honeywell
Inc. (formerly Allied Signal).

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

COMMON STOCK – MARKET PRICES AND DIVIDENDS

The table below reflects the range of market prices of our common stock as reported in the consolidated transaction
reporting system of the New York Stock Exchange (NYSE), the principal market in which this security is traded (under
the trading symbol "ITT").

Three Months Ended:
March 31
June 30
September 30
December 31

2015

2014

High

Low

High

Low

$ 42.97
43.96
42.43
40.52

$ 35.30
39.01
32.86
32.70

$ 44.87
48.24
49.42
45.34

$ 37.87
41.48
44.93
36.74

We declared dividends of $0.1183 and $0.11 per share of common stock in each of the four quarters of 2015 and
2014, respectively. In the first quarter of 2016, we declared a dividend of $0.124 per share for shareholders of record
on March 11, 2016. The amount and timing of dividends payable on our common stock are within the sole discretion
of our Board of Directors and will be based on, and affected by, a number of factors, including our financial position
and results of operations, available cash, expected capital spending plans, prevailing business conditions, and other
factors the Board deems relevant. Therefore, there can be no assurance as to what level of dividends, if any, will be
paid in the future.

There were approximately 10,687 holders of record of our common stock on February 17, 2016.

EQUITY COMPENSATION PLAN INFORMATION

The equity compensation plan information called for by Item 5(a) is set forth under the caption "Equity Compensation

Plan Information" in our Proxy Statement for the 2016 Annual Meeting of Shareholders.

During the fiscal year ended December 31, 2015, no equity securities of the Company were sold by the Company

that were not registered under the Securities Act.

ISSUER PURCHASES OF EQUITY SECURITIES

The following table summarizes our purchases of our common stock for the quarter ended December 31, 2015.

(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)

PERIOD
10/1/2015 - 10/31/2015
11/1/2015 - 11/30/2015
12/1/2015 - 12/31/2015

TOTAL
NUMBER
OF SHARES
PURCHASED
—
—
—

AVERAGE
PRICE
PAID
PER SHARE(1)

TOTAL NUMBER OF
SHARES PURCHASED AS
PART OF PUBLICLY
ANNOUNCED PLANS OR
PROGRAMS(2)

—
—
—

MAXIMUM DOLLAR VALUE OF
SHARES THAT MAY YET BE
PURCHASED UNDER THE
PLANS OR PROGRAMS(2)
$ 240.7
$ 240.7
$ 240.7

(1) Average price paid per share is calculated on a settlement basis and includes commissions.

(2) On October 27, 2006, our Board of Directors approved a three-year $1 billion share repurchase program (2006
Share Repurchase Program). On December 16, 2008, our Board of Directors modified the provisions of the 2006
Share Repurchase Program to replace the original three-year term with an indefinite term. As of December 31,
2015, we had repurchased 18.4 shares for $759.3, including commissions, under the 2006 Share Repurchase
Program. The program is consistent with our capital allocation process, which has centered on those investments
necessary to grow our businesses organically and through acquisitions, while also providing cash returns to
shareholders. Our strategy for cash flow utilization is to invest in our business, execute strategic acquisitions,
pay dividends and repurchase common stock.

PERFORMANCE GRAPH
CUMULATIVE TOTAL RETURN

Based upon an initial investment on December 31, 2010 of $100 with dividends reinvested

ITT Corporation
S&P 400 Mid-Cap

12/31/2010
$ 100.00

$ 100.00

12/31/2011
$ 114.01
98.27
$

12/31/2012
$ 140.76

12/31/2013
$ 263.75

12/31/2014
$ 248.26

12/31/2015
$ 225.59

$ 115.76

$ 154.50

$ 169.54

$ 165.85

S&P 400 Capital Goods

$ 100.00

95.45

$ 119.81

$ 169.36

$ 169.79

$ 160.43

This graph is not, and is not intended to be, indicative of future performance of our common stock. This graph
shall not be deemed "filed" with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and should not
be deemed to be incorporated by reference into any of our prior or subsequent filings under the Securities Act.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected historical financial data derived from the Consolidated Financial Statements for
each of the five years presented. The selected financial data should be read in conjunction with, and is qualified in its
entirety by reference to, Management’s Discussion and Analysis of Financial Condition and Results of Operations and
the Consolidated Financial Statements and the Notes thereto.

(In Millions, except per share amounts)
Results of Operations

Revenue

Gross profit

Gross margin
Asbestos-related (benefit) costs, net(b)
Other operating costs(c)
Operating income (loss)

Operating margin
Income tax expense (benefit)(d)
Income (loss) from continuing operations
attributable to ITT Corporation

Income (loss) from discontinued
operations, net of tax(e)
Net income (loss) attributable to ITT
Corporation

Income (loss) from continuing
operations per basic share

Income (loss) from discontinued
operations per basic share

Net income (loss) per basic share

Income (loss) from continuing
operations per diluted share

Income (loss) from discontinued
operations per diluted share

Net income (loss) per diluted share

Dividends declared

Financial Position
Cash and cash equivalents(f)
Total assets(g)
Total debt and capital leases

2015

2014

2013(a)

2012

2011

$ 2,485.6
809.1

$ 2,654.6
866.4

$ 2,496.9
799.8

$ 2,227.8
680.2

$ 2,085.6
645.0

32.6%
(91.4)
520.4
380.1

15.3%

70.1

32.6%

32.0%

30.5%

30.9 %

3.9

596.1
266.4

10.0%

71.3

32.8

583.4
183.6

7.4%

(309.6)

50.9

477.8
151.5

6.8%

39.6

100.4

789.5
(244.9)

(11.7)%

260.6

312.4

188.4

487.7

109.5

(576.5)

39.4

351.8

3.48

0.44

3.92

3.44

0.44

3.88

$ 0.4732

415.7

3,723.6
248.5

(3.9)

0.8

15.9

447.0

184.5

2.06

(0.04)

2.02

2.03

(0.04)

1.99

0.44

584.0
3,631.5

8.5

488.5

5.36

0.01

5.37

5.28

0.01

5.29

0.40

507.3
3,740.2

48.9

125.4

$ (129.5)

1.18

0.17

1.35

1.16

0.17

1.33

0.364

544.5
3,386.1

26.9

(6.22)

4.82

(1.40)

(6.22)

4.82

(1.40)

1.591

689.8
3,671.5

6.5

(a) On November 28, 2012, we acquired Bornemann GmbH, therefore our 2013 Consolidated Financial Statements

include an additional eleven months of operations.

(b) The asbestos-related benefit in 2015 primarily reflects a $100.7 benefit recognized related to a new single firm
strategy and streamlined case management that is expected to significantly reduce asbestos defense costs. See
Note 18, Commitments and Contingencies, to the Consolidated Financial Statements for further information.

(c) The decrease in other operating costs from 2011 to 2012 was primarily due to the 2011 spin-off of Exelis and
Xylem. In connection with activities taken to create the revised organizational structure and to complete the 2011
spin-off (referred to herein as transformation costs) we recognized total transformation costs of $636.2 during
2011, of which $396.1 are presented within income from continuing operations. Transformation costs incurred
during 2011 primarily relate to losses on the extinguishment of debt, asset impairments, and employee retention
and severance.

(d) The 2011 tax expense of $260.6 includes a $340.7 valuation allowance for U.S. federal and state deferred tax
assets as it became more likely than not that these deferred tax assets would not be realized, a $69.3 tax expense
for undistributed foreign earnings that were no longer considered indefinitely reinvested, and a $30.9 tax benefit
from an increase in state deferred tax assets which were re-measured based on enacted tax rates using different
state apportionment factors as a result of the 2011 spin-off. The 2013 tax benefit of $309.6 includes the release
of a U.S. deferred tax valuation allowance of $374.6 that was initially established in 2011. See Note 5, Income
Taxes, to the Consolidated Financial Statements for further information.

(e) During 2015, the Company recognized income from discontinued operations of $39.4, principally related to the
settlement of the U.S. income tax audit. Discontinued operations include the results of the Shape Cutting
Businesses (disposed of in 2012), Exelis (disposed of in 2011), Xylem (disposed of in 2011) and transformation
costs of $240.1 recorded during 2011. Transformation costs presented within discontinued operations are costs
directly related to the 2011 spin-off, primarily advisory fees and information technology costs, which provide no
future benefit to the Company.

(f) The decline in cash and cash equivalents from 2014 to 2015 was primarily due to the acquisitions of Wolverine
in October of 2015 and Hartzell Aerospace in March of 2015 and an increase of $59.5 in short-term investment
deposits. The decline in cash and cash equivalents from 2011 to 2012 was primarily due to the acquisition of
Bornemann for $193.2 net of cash acquired.

(g) The increase in total assets from 2012 to 2013 is primarily due to the release of a U.S. deferred tax valuation
allowance of $374.6. The decline in total assets from 2011 to 2012 is primarily due to a reduction in asbestos-
related assets and liabilities resulting from a Settlement Agreement executed during the third quarter of 2012.
See Note 18, Commitments and Contingencies, to the Consolidated Financial Statements for further information.

ITEM 7.

MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and the notes
related thereto. As we noted earlier in the Forward-Looking and Cautionary Statements of this Annual Report on Form
10-K, this Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations,"
and Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk" (along with other sections of this
Annual Report), may contain forward-looking statements. The risks discussed in Part I, Item 1A, "Risk Factors," and
other risks identified in this Annual Report on Form 10-K could cause our actual results to differ materially from those
expressed by such forward-looking statements.

OVERVIEW

ITT Corporation is a diversified manufacturer of highly engineered critical components and customized technology
solutions for the energy, transportation and industrial markets. We refer you to Part I, Item 1, "Description of Business"
for a further overview of our company, segments, products and services offerings, and other information about our
business.

See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation

of organic revenue, adjusted segment operating income, and adjusted income from continuing operations.

EXECUTIVE SUMMARY

During 2015, we continued to face an ongoing difficult external environment including a declining global oil and
gas market, weaker than expected general industrial markets, and negative impacts from a strengthening U.S. dollar.
Despite these persistent external challenges, our ITT team focused on key strategic areas including Optimizing
Execution, Market Expansion, and Balanced and Effective Capital Deployment. The progress we made in these strategic
growth areas helped propel our strategy forward and create sustainable benefits, which are keenly focused on long-
term growth and value creation for all of our stakeholders.

Our 2015 results include:

•

A 6% decline in revenue (1% decline organic revenue) driven by a $193.8 unfavorable impact from foreign
currency translation and the declines we experienced in oil & gas and general industrial markets, which were
collectively down 6% on an organic basis. The impact of these headwinds was partially offset by top-line growth
of 4% on an organic basis in the transportation markets, led by Automotive.

Despite the overall topline decline, operating income and margin increased $113.7 and 530 basis points,
respectively, which includes a $100.7 benefit from our estimate of future asbestos-related legal costs as we
drove productivity and efficiencies across ITT.

Income from continuing operations was $3.44 per diluted share, or $2.55 per diluted share on an adjusted
EPS basis. The adjusted EPS non-GAAP metric reflects a 3.2% increase over the same prior year metric.

Our attention to controlling what we had the ability to control drove progress across our three strategic areas of

focus. The following highlights a few examples of our value-creating activities this year.

• We advanced the reorganization and streamlining of our Industrial Process segment leading to improved
operational effectiveness and productivity savings to address the current realities of the global oil & gas market
and slowing project activity.

• We continued to identify additional opportunities to improve efficiency and reduce both operational and
corporate costs in areas ranging from footprint optimization and a more focused supplier base to in-sourcing
more functional activities.

• We also reduced our net asbestos liability by 16%, by aggressively driving our strategy focused on reducing

the volatility and uncertainty associated with the assets and liabilities.

Despite experiencing market pressures throughout the year, we continued to focus on our long-term strategic

markets.

• Motion Technologies continued their track record of outpacing the global automotive friction market with organic

revenue growth of 9%, with all major geographies contributing to the results.

• We remained focused on new product launches and innovation across the organization. For example, our i-
ALERT 2 Equipment Health Monitor, was named Processing magazine’s 2015 Breakthrough Product of the
Year.

The year of 2015 also marked the highest deployment of capital since the 2011 spin-off, topping out at close to

$600 million.

• We advanced our portfolio by acquiring two businesses this year - Wolverine Advanced Materials and Hartzell

Aerospace.

• We continued our phased investments to further expand our friction facilities in Europe and China to meet the

growing customer demand.

• We completed $80 of share repurchases during the year, in addition to maintaining a solid dividend.

As we enter 2016, we are continuing to recalibrate our cost structure to improve efficiency and costs, while building
our strategic path for the future. As a result, we expect to take an additional restructuring and realignment actions
during 2016. These actions will largely take place within our Industrial Process segment, as we further align with the
current realities of the oil and gas market and will help to solidify the foundation and position the business for long-
term growth. We will also be maintaining our focus on gross productivity savings during 2016 by advancing our Lean
Transformation and realizing supply chain and restructuring benefits.

From a capital allocation standpoint, we will continue our track record of balanced and effective capital deployment
by funding major organic investments that extend our global reach and capabilities and drive future organic growth.
In 2016, we will be expanding our global auto brake pad footprint by adding a new production facility in Mexico that
will supply the North American market. We will take a standardized and modular approach, just as we did with our
Wuxi, China facility, where we will only add enough production capacity for the known platform wins. We expect to
begin production in this new facility by the end of 2017. Acquisitions are also a critical component of our long-term
capital deployment priorities.

Our success in 2016 will rely heavily on the effective execution of our strategic plan, however there are certain
macro-trends that are out of our control, such as the impacts from lower oil prices, industrial production declines, and
foreign exchange volatility, which create uncertainty with regard to our overall business and financial performance.

Demand for our products that serve the oil and gas market, primarily pumps and connectors that represent
approximately 20% of 2015 revenue, depend substantially on the level of expenditures by the oil and gas industry for
exploration, development and production. These expenditures are generally dependent on the industry’s view of
future oil and natural gas prices and are sensitive to the industry’s view of future economic growth and the resulting
impact on demand for oil and natural gas. Since 2014, oil and gas prices have declined significantly, resulting in lower
expenditures by the oil and gas industry. As a result, many of our customers have reduced or delayed spending, thus
reducing the demand for our products and exerting downward pressure on the prices that we charge. These conditions
have had, and may continue to have, an adverse impact on our financial condition.

DISCUSSION OF FINANCIAL RESULTS
2015 VERSUS 2014

Revenue
Gross profit

Gross margin

Operating expenses

Operating expense to revenue ratio

Operating income
Operating margin

Interest and non-operating (income) expenses, net
Income tax expense
Effective tax rate

Income from continuing operations attributable to ITT Corporation

Income (loss) from discontinued operations, net of tax

Net income attributable to ITT Corporation

** Resulting percentage not considered meaningful.

2015

2014

$ 2,485.6
809.1

$ 2,654.6
866.4

32.6%

429.0

17.3%

380.1

15.3%
(2.2)
70.1
18.3%

312.4
39.4
351.8

32.6%

600.0

22.6%

266.4

10.0%
4.4
71.3
27.2%

188.4
(3.9)
184.5

Change
(6.4 )%
(6.6 )%
—
(28.5 )%
(530)bp
42.7 %
530bp
(150.0 )%
(1.7 )%
(890)bp
65.8 %

90.7 %

All comparisons included with the Discussion of Financial Results 2015 versus 2014 refer to results for the year

ended December 31, 2015 compared to the year ended December 31, 2014, unless stated otherwise.

REVENUE

The following table illustrates the year-over-year revenue results from each of our segments for the years ended

December 31, 2015 and 2014.

Industrial Process
Motion Technologies
Interconnect Solutions
Control Technologies
Eliminations
Total Revenue

2015
$ 1,113.8
767.2
328.1
281.2
(4.7)
$ 2,485.6

2014
$ 1,208.3
769.4
392.8
290.5
(6.4)
$ 2,654.6

Change
(7.8)%
(0.3)%
(16.5)%
(3.2)%
(26.6)%
(6.4)%

Organic
Revenue
Growth(a)
(2.4)%
9.1 %
(11.3)%
(10.4)%
—
(1.2)%

(a) See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation

of organic revenue and organic orders.

Our 2015 revenue was significantly impacted by an unfavorable foreign currency translation impact of $193.8,
primarily due to the strengthening of the U.S. dollar versus the Euro. The decline in revenue during 2015 also reflects
the impact of reduced capital spending levels from the softness in the global general industrial markets, which were
partially offset by the increased sales volumes at our Motion Technologies segment from market share gains and
geographical expansion within North America and China. Additional details regarding revenue and orders are provided
by segment below.

Industrial Process

Industrial Process revenue for the year ended December 31, 2015 was $1,113.8, reflecting a decrease of $94.5,
or 7.8%. Unfavorable foreign currency fluctuations negatively impacted revenue growth by $65.0, or 5.4%. Organic
revenue decreased 2.4%, from the prior year, reflecting the challenging oil and gas and industrial market conditions
which have impacted customers' capital spending levels and led to project delays in 2015. However, a large portion
of the impact was offset by shipments from strong prior year bookings despite the difficult market conditions. These
were the primary drivers that impacted our results within the oil and gas market resulting in a revenue decline of
approximately 2%. Revenue stemming from the chemical market declined approximately 10% globally, which reflects
significant impacts within the Asia Pacific region driven by a decline in large projects. Revenue from the mining market
was down approximately 3% as strength in Latin America, primarily due to large project pumps, was more than offset
by the impact of soft market conditions in North America.

Orders for the year ended December 31, 2015 were $936.7, reflecting a decrease of $277.5, or 22.9%. Unfavorable
foreign currency fluctuations negatively impacted order growth by $57.8, or 4.8%. Organic orders decreased 18.1%,
from the prior year, primarily reflecting the impact from lower oil prices which has decreased the level of capital
investment in the oil and gas markets and created difficult prior year comparisons which included multiple large-scale
highly engineered pump project wins. Soft market conditions also drove lower orders to both the chemical and mining
markets, primarily within North America and Asia. We did experience some modest order improvement in the other
general industrial markets, primarily the pulp and paper and power markets within North America and Latin America.

Backlog

The level of order and shipment activity related to engineered pumps can vary significantly from period to period.
Backlog as of December 31, 2015 was $410.9, reflecting a decrease of $192.5, or 31.9%, and includes a $25.3
unfavorable foreign currency translation impact. The decrease reflects a delinquency reduction through improved
operational performance combined with a lower project order in-take due to global capital project delays and lower oil
and gas, chemical, and general industrial orders due to market uncertainty and volatility.

Motion Technologies

Motion Technologies revenue for the year ended December 31, 2015 was $767.2, reflecting a decrease of $2.2,
or 0.3%. The decrease was due to an unfavorable foreign currency translation impact of $106.8, offset by organic
revenue growth of $69.7, or 9.1%, and revenue of $34.9 from the acquisition of Wolverine which was completed in
the beginning of fourth quarter of 2015. Organic revenue growth reflected strength in global automotive brake pads of
approximately 12% in Friction Technologies reflecting increases in the OEM, OES and independent aftermarket sales
channels due to market share gains and geographical expansion within North America and China. Sales from our
KONI business were flat as growth in the European automotive and U.S. defense markets were partially offset by a
decline in the global rail market.

Orders for the year ended December 31, 2015 were $780.0, reflecting a decrease of $17.0, or 2.1%. The unfavorable
foreign currency translation impact of $110.0 was partially offset by organic order growth of $52.9, or 6.6%, and orders
of $40.1 from the acquisition of Wolverine. Organic orders for 2015 increased due to overall strength in Friction
Technologies as our past automotive platform wins began to enter the production cycle but were partially offset by a
year-over-year decline in KONI orders related to the rail market.

Interconnect Solutions

Interconnect Solutions revenue for the year ended December 31, 2015 was $328.1, reflecting a decrease of $64.7,
or 16.5%, which includes unfavorable foreign currency translation impact of $20.3. Organic revenue decreased $44.4,
or 11.3%, as compared to prior year, reflecting a decline in all market categories. Organic revenue derived from the
transportation and industrial market category declined approximately 12%, primarily due to weak demand in the heavy
vehicle and industrial markets. Organic revenue stemming from the oil and gas market decreased approximately 25%
due primarily to the decline in oil prices and related decline in North American rig counts. Organic revenue within the
aerospace and defense market declined approximately 6% primarily due to shipment delays from operational
disruptions related to the relocation of certain North American operations.

Orders for the year ended December 31, 2015 were $324.3, reflecting a decrease of $64.1, or 16.5%, primarily
due to a decline in organic orders driven by challenging industrial market conditions combined with a decline in market
share, end-of-life connector platforms, and including an unfavorable foreign currency translation impact of $20.0.

Control Technologies

Control Technologies revenue for the year ended December 31, 2015 was $281.2, reflecting a decrease of $9.3,
or 3.2%, which includes an unfavorable foreign currency translation impact of $1.7, as well as revenues of $5.0 from
the prior year associated with an industrial product line that was sold in May 2015. These decreases were offset by
additional revenues of $27.7 from the Hartzell Aerospace acquisition in March 2015. Organic revenue for 2015
decreased $30.3, or 10.4%, driven by declines at the CT Aerospace and CT Industrial divisions of 8% and 15%,
respectively. At CT Aerospace, the declines were driven by weakness in our automated seat product line, as well as
soft market conditions in the aerospace aftermarket channel. Weakness in our CT Aerospace division was partially
offset by a 6% increase in revenue related to our Defense products. At CT Industrial, weakness in energy absorption
products in Europe and China as well as the impact from the oil and gas markets and overall weakness in the industrial
markets caused the decline.

Orders received during the year ended December 31, 2015 were $294.3, reflecting an increase of $5.1, or 1.8%,
including unfavorable foreign currency translation impact of $1.8 and an impact of $4.0 from an industrial product line
that was sold in May 2015. These items were offset by orders of $31.2 from the acquisition of Hartzell Aerospace in
March 2015. On an organic basis, orders declined $20.3, or 7.0% for the same reasons as discussed above regarding
revenue, and were, partially offset by a 36% increase in orders for Defense products in the CT Aerospace division.

GROSS PROFIT

Gross profit for the year ended December 31, 2015 was $809.1, a decrease of $57.3, or 6.6%. The table below

provides gross profit and gross margin by segment for the years ended December 31, 2015 and 2014.

Industrial Process
Motion Technologies
Interconnect Solutions
Control Technologies
Corporate and Other
Total gross profit
Gross margin:

Industrial Process
Motion Technologies
Interconnect Solutions
Control Technologies
Consolidated

2015

2014

$ 362.8
227.9
105.6
111.8
1.0
$ 809.1

$ 385.4
219.5
136.8
123.9
0.8
$ 866.4

32.6%
29.7%
32.2%
39.8%
32.6%

31.9%
28.5%
34.8%
42.7%
32.6%

Change
(5.9 )%
3.8 %
(22.8 )%
(9.8 )%
25.0 %
(6.6 )%

70bp
120bp
(260)bp
(290)bp
—

OPERATING EXPENSES

Operating expenses for the year ended December 31, 2015 decreased $171.0, primarily due to lower net asbestos-
related costs as well as from additional cost savings generated by recent restructuring and Lean initiative actions. The
following table provides further information by expense type, as well as a breakdown of operating expense by segment.

Sales and marketing expenses

General and administrative expenses

Research and development expenses

Asbestos-related (benefit) costs, net
Total operating expenses

By Segment:

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Corporate & Other

2015
$ 183.2

2014
$ 219.4

258.3

78.9

(91.4)

300.1

76.6

3.9

Change
(16.5)%

(13.9)%

3.0 %

$ 429.0

$ 600.0

(28.5)%

$ 221.6

$ 261.5

101.5

93.4

69.4

(56.9)

88.6

114.6

60.4

74.9

(15.3)%

14.6 %

(18.5)%

14.9 %

** Resulting percentage not considered meaningful.

Sales and marketing expenses for the year ended December 31, 2015 were $183.2, reflecting a decrease of $36.2,
or 16.5%, mainly due to lower commission expenses and other selling and marketing expenses primarily associated
with lower sale volumes and cost reduction actions.

G&A expenses were $258.3 for the year ended December 31, 2015, reflecting a decrease of $41.8, or 13.9%. The
decrease was primarily driven by a decline in corporate costs of $36.7 (excluding asbestos) reflecting lower
environmental-related costs of $12, and a decline in human resource and culture-related investment spending of
approximately $10. G&A expense also benefited by favorable foreign currency and year-over-year savings from past
restructuring and Lean initiatives, as well as focused cost control efforts across the entire company. G&A expenses
associated with the operations of our 2015 acquisitions were approximately $12, which includes $4.5 of restructuring
charges.

R&D expenses for the year ended December 31, 2015 were $78.9, reflecting an increase of $2.3, or 3.0%. As a
percentage of revenue, R&D expenses increased to 3.2% in 2015 from 2.9% in 2014, as we continued to invest in
new product development activities at Control Technologies and Motion Technologies combined with consistent levels
of investment spending at the other two business segments.

During 2015, we recognized a net asbestos-related benefit of $91.4, compared to a net asbestos-related cost of
$3.9 in the prior year. The decrease of $95.3 was primarily due to a $100.7 benefit recognized during the second
quarter of 2015, reflecting a change in our asbestos defense strategy to retain a single firm to defend the Company
in asbestos litigation. This new long-term strategy streamlines the management of cases and significantly reduces
defense costs. See Note 18, Commitments and Contingencies, in our Notes to the Consolidated Financial Statements
for further information on our asbestos-related liabilities and assets.

OPERATING INCOME

Operating income for 2015 was $380.1, reflecting an increase of $113.7, or 42.7%. The change was primarily
driven by a $100.7 benefit recognized in the second quarter of 2015 resulting in a net asbestos-related benefit of $91.4
in 2015. The following table illustrates the 2015 and 2014 operating income and operating margin by segments and
at the consolidated level.

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Segment operating income

Asbestos-related benefit (cost), net

Other corporate costs

Total corporate and other benefit (costs), net

Total operating income

Operating margin:

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Segment operating margin

Consolidated operating margin

2015

2014

$ 141.2

$ 123.9

126.4

12.2

42.4

322.2

91.4

(33.5)

57.9

130.9

22.2

63.5

340.5

(3.9)

(70.2)

(74.1)

$ 380.1

$ 266.4

12.7%

16.5%

3.7%

15.1%

13.0%

15.3%

10.3%

17.0%

5.7%

21.9%

12.8%

10.0%

Change
14.0 %

(3.4 )%

(45.0 )%

(33.2 )%

(5.4 )%

(52.3 )%

(178.1 )%

42.7 %

240bp

(50)bp

(200)bp

(680)bp

20bp

530bp

** Resulting percentage not considered meaningful.

Industrial Process operating income for the year ended December 31, 2015 increased $17.3, or 14.0%, to $141.2
and resulted in an operating margin of 12.7%, reflecting growth of 240 basis points. The increase in operating income
and margin was primarily the result of net savings from restructuring, Lean, sourcing, and cost control initiatives of
approximately $29, an adjustment to reserves established in purchase accounting for a prior acquisition, and a favorable
product warranty resolution during 2015, as well as lower commission and postretirement costs. The favorability of
these items was partially offset by negative pricing and sales mix impacts of approximately $25 and higher restructuring
costs of $8.

Motion Technologies operating income for the year ended December 31, 2015 decreased $4.5, or 3.4%, to $126.4
and resulted in an operating margin of 16.5%, reflecting a decline of 50 basis points. The operating income result was
primarily driven by costs of $13.1 related to the acquisition of Wolverine. Excluding these acquisition costs, operating
income increased $8.6, or 6.6%, driven by higher sales volume growth, coupled with continued press efficiency
improvements and net savings from Lean, sourcing, and cost control initiatives resulting in a benefit of approximately
$48. Also included in the 2015 operating income is a $3 gain from an insurance recovery. These items were partially
offset by unfavorable foreign currency impacts of approximately $24, as well as unfavorable pricing and sales mix
impacts, higher strategic investment costs, and legal settlement favorability in 2014 that totaled an unfavorable impact
of approximately $20.

Interconnect Solutions operating income for the year ended December 31, 2015 decreased $10.0, or 45.0%, to
$12.2 and resulted in an operating margin of 3.7%, reflecting a decline of 200 basis points. The result reflects declines
in sales volume of approximately $18 and incremental costs of approximately $25 related to operational disruptions
from the relocation of certain North American operations. Foreign currency unfavorably impacted operating income
results by approximately $3. The decline in operating income was partially offset by lower restructuring costs of $14,
incremental savings from past restructuring initiatives that provided a benefit of approximately $14, and lower
postretirement-related costs of $5 primarily due to a benefit from a plan curtailment.

Control Technologies operating income for the year ended December 31, 2015 decreased $21.1, or 33.2%, to
$42.4 and resulted in an operating margin of 15.1%, reflecting a decline of 680 basis points. The decrease in operating
income and margin primarily relates to an unfavorable impact of approximately $19 due to lower sales volume and
sales mix. In addition, 2015 included higher restructuring costs of $5 and R&D expenses of $3, as well as an unfavorable
legal settlement impact of $2 and an impairment charge of $2 both associated with a non-core product line. These
31

expenses were partially offset by the 2015 operating income generated by the Hartzell Aerospace acquisition. These
items were further offset by net savings from Lean and sourcing initiatives and cost control management actions of
approximately $9 and lower compensation costs.

Other corporate costs for the year ended December 31, 2015 decreased $36.7, or 52.3%, to $33.5, primarily
reflecting lower environmental-related costs of $12 (see Note 18, Commitments and Contingencies, for additional
information) and a decline in human resource and culture related investment spending of approximately $10 and
generally lower departmental spending due to a focus on cost control. Other corporate costs also reflect lower insurance-
related costs of approximately $6 and employee incentive costs of approximately $4.

INTEREST AND NON-OPERATING (INCOME) EXPENSES, NET

Interest (income) expense, net

Miscellaneous expense (income), net

Total interest and non-operating (income) expenses, net

2015
$ (2.5)

0.3

$ (2.2)

2014
1.5

2.9

4.4

Change
(266.7)%

(89.7)%

(150.0)%

Interest (income) expense, net reflects a $5.0 favorable change for 2015, primarily due to the reversal of accrued
interest in the third quarter of 2015 related to unrecognized tax benefits, partially offset by additional interest expense
associated with higher annual average outstanding borrowings from our revolving credit and commercial paper facilities
during 2015. In addition, earned interest income declined $1.0 due to lower average interest rates primarily in Europe
and a lower average balance of short-term investments during 2015.

Miscellaneous expenses (income), net decreased $2.6 during 2015, primarily due to a $1.6 receivable with Xylem
and Exelis related to the settlement of the U.S. income tax audit in the third quarter of 2015, as well as higher income
from equity method investments.

INCOME TAX EXPENSE

For the year ended December 31, 2015, the Company recognized income tax expense of $70.1 representing an
effective tax rate of 18.3%, compared to income tax expense of $71.3, and an effective tax rate of 27.2% for 2014.
Our effective tax rate in 2015 is lower than the statutory tax rate primarily resulting from a larger mix of foreign income
taxed more favorably than the U.S., including a tax holiday in South Korea, the recognition of previously unrecognized
tax benefits upon the completion of tax examinations and lapses in the statute of limitations.

After considering all available evidence, including cumulative income and the absence of any significant negative
evidence, the Company released the valuation allowance against certain foreign net deferred tax assets in China. The
Company continues to maintain a valuation allowance against certain deferred tax assets attributable to state net
operating losses and tax credits, and certain foreign net deferred tax assets primarily in Luxembourg, Germany and
India which are not expected to be realized. Overall, the current year decrease in the valuation allowance of $11.4 is
primarily attributable to the release of valuation allowance in China.

The Company operates in various tax jurisdictions and is subject to examination by tax authorities in these
jurisdictions. The Company is currently under examination in several jurisdictions including Canada, Germany, Hong
Kong, Mexico, South Korea, the U.S. and Venezuela. The estimated tax liability calculation for unrecognized tax benefits
includes dealing with uncertainties in the application of complex tax laws and regulations in various tax jurisdictions.
Due to the complexity of some uncertainties, the ultimate resolution may result in a payment that is materially different
from the current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability
for unrecognized tax benefits in foreign and domestic jurisdictions could change by approximately $16 due to changes
in audit status, expiration of statutes of limitations and other events. The settlement of any future examinations could
result in changes in amounts attributable to the Company under its existing Tax Matters Agreement with Exelis and
Xylem.

See Note 5, Income Taxes, to the Consolidated Financial Statements for further information on tax-related matters.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX

During 2015, the Company recognized income from discontinued operations of $39.4, principally related to the
settlement of the U.S. income tax audit during the third quarter of 2015. This includes a tax benefit of $38.3 from the
recognition of previously unrecognized tax positions, related net interest income of $3.2, and a $13.2 receivable due
from Exelis and Xylem, partially offset by net tax expense of $17.4 from unfavorable audit adjustments. During 2014,
the Company incurred a loss from discontinued operations of $3.9, net of tax, primarily related to a settlement payment
to a former ITT entity.

DISCUSSION OF FINANCIAL RESULTS
2014 VERSUS 2013

Revenue
Gross profit

Gross margin

Operating expenses

Operating expense to revenue ratio

Operating income
Operating margin

Interest and non-operating expenses, net
Income tax expense (benefit)

Effective tax rate

2014

2013

$ 2,654.6
866.4

$2,496.9
799.8

32.6%

600.0

22.6%

266.4

10.0%
4.4
71.3
27.2%

188.4
(3.9)
184.5

32.0 %

616.2

24.7 %

183.6

7.4 %
3.1
(309.6)
(171.5)%
487.7
0.8
$ 488.5

Change
6.3 %
8.3 %
60bp
(2.6 )%
(210)bp
45.1 %
260bp
41.9 %
(123.0 )%
19,870bp
(61.4 )%
(587.5 )%
(62.2 )%

Income from continuing operations attributable to ITT Corporation

(Loss) income from discontinued operations, net of tax

Net income attributable to ITT Corporation

All comparisons included with the Discussion of Financial Results 2014 versus 2013 refer to results for the year

ended December 31, 2014 compared to the year ended December 31, 2013, unless stated otherwise.

REVENUE

Revenue for the year ended December 31, 2014 was $2,654.6, reflecting an increase of $157.7, or 6.3%. The
Industrial Process segment generated revenue growth of $100.9, or 9.1%, primarily from long-term industrial pump
projects serving the oil and gas, mining, and chemical markets in North America and Latin America. The Motion
Technologies segment experienced revenue growth of $47.6, or 6.6%, driven by strength in both automotive OE and
aftermarket, as well as in the global rail markets. The Interconnect Solutions segment revenue declined $2.7, or 0.7%,
primarily due to weakness in the defense and communication market connectors, as well as from the expected decline
in our non-strategic connector product lines, offset by growth from oil and gas in the North American market. The
Control Technologies segment revenue grew $12.3, or 4.4%, reflecting strength in both our industrial and commercial
aerospace markets.

The following table illustrates the year-over-year revenue results from each of our segments for the years ended

December 31, 2014 and 2013.

Industrial Process
Motion Technologies
Interconnect Solutions
Control Technologies
Eliminations
Total Revenue

2014
$ 1,208.3
769.4
392.8
290.5
(6.4)
$ 2,654.6

2013
$ 1,107.4
721.8
395.5
278.2
(6.0)
$ 2,496.9

Change
9.1 %
6.6 %
(0.7)%
4.4 %
6.7 %
6.3 %

Organic
Revenue
Growth(a)
10.7 %
6.1 %
(0.4)%
4.6 %
—
6.9 %

(a) See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation

of organic revenue.

Industrial Process

Industrial Process revenue for the year ended December 31, 2014 was $1,208.3, reflecting an increase of $100.9,
or 9.1%. Unfavorable foreign currency fluctuations negatively impacted revenue growth by $20.6, or 1.9%. Organic
revenue increased 10.7%, over the prior year, primarily reflecting market share gains in the large, highly engineered
project pump business, driven by our growth in the oil and gas market of approximately 21%. The project pump business
also contributed to revenue growth in the mining market of approximately 16% and in the chemical market of
approximately 9%. The growth of our project pump business was partially offset by a decline in our Asia Pacific general
chemical and mining markets.

Orders for the year ended December 31, 2014 were $1,214.2, reflecting an increase of $52.2, or 4.5%. Unfavorable
foreign currency fluctuations negatively impacted order growth by $20.7, or 1.8%. Organic orders increased 6.0%
primarily reflecting a strong fourth quarter of large engineered project business, mainly in the downstream oil and gas
markets in Canada, which led to full year-over-year growth of approximately $60 in the global oil and gas market. We
also experienced strong fourth quarter 2014 orders of pumps and parts for the mining market, primarily to the Latin
America region, which contributed to our full year 2014 order growth in the mining market of approximately $10. The
level of order and shipment activity related to engineered pumps can vary from period to period, which may impact
year-over-year comparisons.

Motion Technologies

Motion Technologies revenue for the year ended December 31, 2014 was $769.4, reflecting an increase of $47.6,
or 6.6%, due to approximately 5% growth in Friction Technologies and 19.0% growth in KONI. Growth in Friction
Technologies came from both the aftermarket and OE channels. Growth in aftermarket channels benefited from the
addition of a new production line, as well as improved production press efficiency rates coming from specific Lean
initiatives to meet increased demand. The year-over-year increase in OE was driven by growth in China which
corresponded with our investments and strategic focus to gain market share in the Asia Pacific region. Higher year-
over-year revenues in KONI related to growth in the global rail market as well as growth in the North American automotive
market. Foreign currency translation favorably impacted revenue growth by $3.4, resulting in organic revenue growth
of 6.1%.

Orders for the year ended December 31, 2014 were $797.0, reflecting an increase of 7.1% driven by order growth
at KONI of approximately 23% from strong order intake within the global rail market, along with strong North American
aftermarket orders. Orders at our Friction Technologies business increased 4% during 2014, due to key automotive
platform wins in Europe and China. Organic orders increased $49.8, or 6.7%.

Interconnect Solutions

Interconnect Solutions revenue for the year ended December 31, 2014 was $392.8, reflecting a decrease of $2.7,
or 0.7%. The decline in revenue was mainly due to the phase-out of certain non-strategic connector product lines in
the communications market and weakness in the defense market, which was partially offset by year-over-year growth
in our other market areas. Revenue from the oil and gas market increased during 2014 by approximately $7, primarily
within North America. Revenue from the transportation and industrial market increased by approximately $6, due
primarily to growth in heavy equipment and electric vehicle connector products. Revenue from the commercial aircraft
market increased approximately 11% over the prior year. Revenue from the medical technologies market was relatively
consistent with the prior year.

Orders decreased during 2014 by 3.0%, to $388.4, primarily reflecting year-over-year declines from the U.S.
defense market, and the Asia Pacific medical market. These declines were partially offset by an increase in North
America oil and gas orders.

Control Technologies

Control Technologies revenue for the year ended December 31, 2014 was $290.5, reflecting an increase of $12.3,
or 4.4%. The increase in revenue was primarily driven by growth of 6% in our CT Industrial division and 4% in the CT
Aerospace division. The CT Industrial growth was due to gains in energy absorption products, which experienced
growth across all major markets, and from higher sales of natural gas valves due to the continued conversion of
commercial vehicles to a natural gas fuel source.

The aerospace growth was due to both higher commercial OE sales of approximately 15%, stemming from
increased aircraft production rates, as well as increased sales of aftermarket spares of 38%. Total aftermarket sales
grew 2%, as the growth in spares was offset by a decline in revenue from an aftermarket program that ended. In
addition, the overall CT aerospace revenue growth was reduced by lower year-over-year sales from our seat actuation
product line and a 7% decline in sales to the defense market.

Orders received during the year ended December 31, 2014 were $289.2, reflecting an increase of $13.2, or 4.8%,
primarily driven by growth in commercial aerospace OEM components due to production rate increases and share
gains, as well as order growth in the aerospace aftermarket spares business.

GROSS PROFIT

Gross profit for the year ended December 31, 2014 was $866.4, an increase of $66.6, or 8.3%. The table below

provides gross profit and gross margin by segment for the year ended December 31, 2014 and 2013.

Industrial Process
Motion Technologies
Interconnect Solutions
Control Technologies
Corporate and Other
Total gross profit
Gross margin:

Industrial Process
Motion Technologies
Interconnect Solutions
Control Technologies
Consolidated

2014

2013

$ 385.4
219.5
136.8
123.9
0.8
$ 866.4

$ 361.7
193.4
129.7
113.7
1.3
$ 799.8

31.9%
28.5%
34.8%
42.7%
32.6%

32.7%
26.8%
32.8%
40.9%
32.0%

Change
6.6 %
13.5 %
5.5 %
9.0 %
(38.5 )%
8.3 %

(80)bp
170bp
200bp
180bp
60bp

OPERATING EXPENSES

Operating expenses for the year ended December 31, 2014 decreased $16.2 primarily due to lower net asbestos-
related costs as well as from additional cost savings generated by recent restructuring and Lean initiative actions,
which were partially offset by higher R&D costs and strategic investment costs. The following table provides further
information by expense type, as well as a breakdown of operating expense by segment.

Sales and marketing expenses

General and administrative expenses

Research and development expenses

Asbestos-related costs, net

Total operating expenses

By Segment:

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Corporate & Other

2014
$ 219.4

2013
$ 216.2

300.1

76.6

3.9

299.9

67.3

32.8

$ 600.0

$ 616.2

$ 261.5

$ 249.7

88.6

114.6

60.4

74.9

93.1

115.5

58.4

99.5

Change
1.5 %

0.1 %

13.8 %

(88.1)%

(2.6)%

4.7 %

(4.8)%

(0.8)%

3.4 %

(24.7)%

Sales and marketing expenses for the year ended December 31, 2014 were $219.4, reflecting an increase of $3.2,
or 1.5%, mainly due to increased selling costs associated with higher sales volume. Sales and marketing expenses
as a percentage of revenue decreased 40 basis points to 8.3%, primarily due to a decline in marketing expenses of
approximately 6% combined with the year-over-year revenue growth.

G&A expenses were $300.1 for the year ended December 31, 2014, which were consistent with the prior year.
During 2014 we incurred lower transformation and repositioning costs of $16.1 and received a favorable legal settlement;
however these items were offset by an increase in strategic investment costs, charges related to our operations in
Venezuela, as well as higher spending on various corporate initiatives, such as Human Resource (HR) capability
improvements and our culture initiative.

R&D expenses for the year ended December 31, 2014 were $76.6, reflecting an increase of $9.3, or 13.8%. As a
percentage of revenue, R&D expenses increased to 2.9% in 2014 from 2.7% in 2013, as we continued to invest in
new product developments for use in new automotive platforms and expanding multiphase pump technology, as well
as in various other targeted growth markets.

During 2014, we recognized net asbestos-related costs of $3.9, reflecting a decrease of $28.9. The decrease was
primarily due to our 2014 asbestos remeasurement that resulted in a year-over-year benefit of $58.8, which was
partially offset by a settlement agreement entered into in the prior year with an insurer that resulted in a $31.0 gain.
Based on the results of our 2014 remeasurement, we decreased our estimated undiscounted asbestos liability, including
legal fees, by $42.8, reflecting a decrease in costs the company estimates will be incurred to resolve all pending claims,
as well as unasserted claims estimated to be filed over the next 10 years. The decrease in our estimated liability is a
result of several developments, including an expectation of lower defense costs relative to indemnities paid over the
projection period and favorable experience in the ratio of dismissed claims versus settled claims. These favorable
factors were offset in part by an increasing number of cases expected to be adjudicated. Further, in 2014, the Company
increased its estimated asbestos-related assets by $16.0, principally due to the estimated probable recoveries of
certain liabilities resulting from the annual study. See Note 18, “Commitments and Contingencies,” in our Notes to the
Consolidated Financial Statements for further information on our asbestos-related liabilities and assets.

OPERATING INCOME

Operating income for 2014 was $266.4, reflecting an increase of $82.8, or 45.1% primarily due to segment operating
income growth of $58.7 and lower asbestos-related of $28.9. The following table illustrates the 2014 and 2013 operating
income and operating margin by segments and at the consolidated level.

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Segment operating income

Asbestos-related costs, net

Other corporate costs

Total corporate and other costs

Total operating income

Operating margin:

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Segment operating margin

Consolidated operating margin

2014

2013

$ 123.9

$ 112.0

130.9

22.2

63.5

340.5

(3.9)

(70.2)

(74.1)

100.3

14.2

55.3

281.8

(32.8)

(65.4)

(98.2)

$ 266.4

$ 183.6

10.3%

17.0%

5.7%

21.9%

12.8%

10.0%

10.1%

13.9%

3.6%

19.9%

11.3%

7.4%

Change
10.6 %

30.5 %

56.3 %

14.8 %

20.8 %

(88.1)%

7.3 %

(24.5)%

45.1 %

20bp

310bp

210bp

200bp

150bp

260bp

Industrial Process operating income for the year ended December 31, 2014 increased $11.9, or 10.6%, to $123.9
and resulted in an operating margin of 10.3%, reflecting growth of 20 basis points. The benefit from increased sales
volume, particularly large engineered project pumps, of approximately $20, and a similar benefit from net savings from
Lean, productivity, and global sourcing initiatives taken during 2014 were partially offset by an unfavorable shift of
sales mix and continued project pricing pressures, resulting in an approximate 40 basis point increase to operating
margin. Acquisition-related costs related to Bornemann, incurred during 2013, and a reduction in postretirement plan
costs and repositioning-related expenses provided a year-over-year operating income benefit of $15.3, resulting in a
120 basis point improvement to operating margin, which were offset by higher strategic investment spending, charges
of approximately $10 associated with our operations in Venezuela, corporate expense allocations, and operational
impacts from certain complex engineering projects.

Motion Technologies operating income for the year ended December 31, 2014 increased $30.6, or 30.5%, to
$130.9 and resulted in an operating margin of 17.0%, reflecting growth of 310 basis points. The primary growth driver
was higher sales volumes which provided approximately $24 of additional operating income and a 200 basis point
operating margin improvement. Motion Technologies' results also reflected year-over-year operating income and
margin growth from the KONI business which are due to strong sales volume growth, fixed cost reductions, and
manufacturing improvements. In addition, net savings from Lean, productivity, and global sourcing initiatives and a
favorable legal settlement during 2014, as well as lower year-over-year restructuring costs provided approximately
$29 of additional operating income, and approximately 380 basis point increase to operating margin. The total year-
over-year growth in operating income was partially offset by unfavorable OE pricing, as well as higher R&D and other
costs related to capacity expansion and start-up costs.

Interconnect Solutions operating income for the year ended December 31, 2014 increased $8.0, or 56.3%, to
$22.2 and resulted in an operating margin of 5.7%, reflecting growth of 210 basis points. The increase in operating
income and margin was primarily driven by the cost savings from our restructuring actions taken over the last 2 years,
as well as from additional net savings from Lean and sourcing initiatives and lower year-over-year postretirement
employee benefit costs, resulting from a plan modification to reduce future participant benefits, that improved operating
income and margin by approximately $27 and 710 basis points, respectively. The favorability of these items was partially
offset by costs incurred associated with an action to move certain production lines from one location to another existing
lower cost manufacturing site, costs incurred related to the design of an enterprise resource planning system, higher
restructuring costs, and a negative change in sales mix that reduced operating income and margin by approximately
$20 and 500 basis points, respectively.

Control Technologies operating income for the year ended December 31, 2014 increased $8.2, or 14.8%, to $63.5
and resulted in an operating margin of 21.9%, reflecting growth of 200 basis points. The growth in operating income
stemmed from net productivity savings generated by Lean and sourcing initiatives, increased sales volume and benefits
from pricing initiatives, and lower pension, repositioning and restructuring costs which provided approximately $14 of
additional operating income and 400 basis points to operating margin for 2014. However, the benefit provided by these
items was partially offset by an unfavorable shift in sales mix related to the decline in sales to the defense market and
from an aerospace aftermarket program that was nearing its end of life and higher year-over-year strategic investment-
related costs and corporate expense allocations which reduced operating income and margin by approximately $6
and 200 basis points, respectively.

Other corporate costs for the year ended December 31, 2014 increased $4.8, or 7.3%, to $70.2. The increase was
due to higher compensation and benefit-related costs, including severance, bonus and stock compensation expenses,
combined with a favorable worker's disability insurance adjustment in 2013 that did not occur in 2014. Additionally,
other corporate expenses for 2014 were impacted by higher investment spending on various corporate initiatives, such
as Human Resource capabilities and our culture initiative. These costs were partially offset by a decline in transformation
and repositioning costs of $10.3.

INTEREST AND NON-OPERATING EXPENSES, NET

Interest expense (income), net

Miscellaneous expense (income), net

Total interest and non-operating expenses, net

2014
1.5

2.9

4.4

2013
1.3

1.8

3.1

Change
15.4%

61.1%

41.9%

Interest expense (income), net increased by $0.2 during 2014, as a favorable movement in accrued interest
associated expense related to unrecognized tax benefits and lower average outstanding debt and commercial paper
during 2014 were almost entirely offset by a $2.5 decline in interest income primarily related to a 2013 interest-related
benefit associated with the settlement of legacy receivables and payables with a former ITT entity.

Miscellaneous expenses (income), net increased $1.1 during 2014, primarily due to income earned during 2013

in connection with transition services arrangements pertaining to the 2011 spin-off of Exelis and Xylem.

INCOME TAX EXPENSE

For the year ended December 31, 2014, the Company recognized an income tax expense of $71.3 representing
an effective tax rate of 27.2%, compared to an income tax benefit of $309.6, and an effective tax rate of (171.5)% for
2013. Excluding the impact of the release of the valuation allowance (described further in Note 5, Income Taxes, to
the Consolidated Financial Statements) the effective tax rate was 36.0% in 2013. The 2014 effective tax rate included
tax benefits resulting from a tax basis step-up election in Italy and additional income that was eligible for a tax holiday
in Korea. These were partially offset by changes in the New York State income tax law during the year which resulted
in an increase in tax expense of $3.2.

After considering all available evidence, including a cumulative loss and the absence of any significant positive
evidence, the Company recorded a valuation allowance against certain foreign net deferred tax assets in Germany
and Venezuela. In addition, a portion of the deferred tax assets in Italy were no longer realizable. The Company
continued to maintain a valuation allowance against certain deferred tax assets attributable to state net operating
losses and tax credits and certain foreign net deferred tax assets primarily in Luxembourg, Germany, India and China
which were not expected to be realized. Overall, the increase in the valuation allowance of $11.8 was primarily
attributable to foreign net operating loss carryforwards in Luxembourg.

(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

During 2014, the Company incurred a loss from discontinued operations of $3.9, net of tax, primarily related to a
settlement payment to a former ITT entity. During 2013, ITT had income from discontinued operations primarily related
to a reversal of warranty reserves and legal-related contingencies associated with previously disposed businesses
that were partially offset by a net after-tax loss of $1.3 related to a settlement of legacy receivables and payables with
a former ITT entity.

LIQUIDITY AND CAPITAL RESOURCES

Funding and Liquidity Strategy

Our funding needs are monitored and strategies are executed to meet overall liquidity requirements, including the
management of our capital structure on both a short- and long-term basis. We expect to fund our ongoing working
capital, capital expenditures, dividends, and financing requirements through cash flows from operations and cash on
hand or by accessing the commercial paper market. If our access to the commercial paper market were adversely
affected, we believe that alternative sources of liquidity, including our 2014 Revolving Credit Agreement, described
below, would be sufficient to meet our short-term funding requirements.

We manage our worldwide cash requirements considering available funds among the many subsidiaries through
which we conduct business and the cost effectiveness with which those funds can be accessed. We have identified
and continue to look for opportunities to access cash balances in excess of local operating requirements to meet global
liquidity needs in a cost-efficient manner. A majority of our cash and cash equivalents is held by our international
subsidiaries. We have and plan to transfer cash between certain international subsidiaries and the U.S. and other
international subsidiaries when it is cost effective to do so. Our intent is generally to indefinitely reinvest these funds
outside of the U.S., consistent with our overall intention to support growth and expand in markets outside of the U.S.
through the development of products, increased non-U.S. capital spending, and potentially the acquisition of foreign
businesses. However, we have determined that certain undistributed foreign earnings generated in Luxembourg,
Japan, Hong Kong and South Korea should not be considered permanently reinvested outside of the U.S. Net cash
distributions from foreign countries amounted to $235.0 and $138.5 during 2015 and 2014, respectively. The timing
and amount of future remittances, if any, remains under evaluation.

The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of
Directors and will be based on, and affected by, a number of factors, including our financial position and results of
operations, available cash, expected capital spending plans, prevailing business conditions, and other factors the
Board deems relevant. Therefore, there can be no assurance as to what level of dividends, if any, will be paid in the
future. Aggregate dividends paid in 2015 were $42.8, compared to $40.7 in 2014 and $36.4 in 2013, reflecting per
share amounts of $0.4732, $0.44, and $0.40, respectively. In the first quarter of 2016, we declared a quarterly dividend
of $0.124 per share for shareholders of record on March 11, 2016.

We repurchased 2.0 and 1.1 shares of ITT common stock at a cost of $80.0 and $50.0 in 2015 and 2014, respectively,

through our share repurchase program.

Significant factors that affect our overall management of liquidity include our credit ratings, the adequacy of
commercial paper and supporting bank lines of credit, and the ability to attract long-term capital on satisfactory terms.
We assess these factors along with current market conditions on a continuous basis, and as a result, may alter the
mix of our short- and long-term financing when it is advantageous to do so.

We access the commercial paper market to supplement the cash flows generated internally to provide additional
short-term funding for strategic investments and other funding requirements. We manage our short-term liquidity
through the use of our commercial paper program by adjusting the level of commercial paper borrowings as opportunities
to deploy additional capital arise and when it is cost effective to do so. We had $94.5 of commercial paper outstanding
as of December 31, 2015 and we had an average outstanding commercial paper balance of $73.1 during the year.

Credit Facilities

On November 25, 2014, we replaced the four-year revolving $500 credit agreement (the 2011 Revolving Credit
Agreement) with a new five-year revolving $500 credit agreement (the 2014 Revolving Credit Agreement). The 2014
Revolving Credit Agreement provides for increases of up to $200 for a possible maximum total of $700 in aggregate
principal amount, at the request of the Company and with the consent of the institutions providing such increased
commitments. The 2014 Revolving Credit Agreement is intended to provide access to additional liquidity and be a
source of alternate funding to the commercial paper program, if needed. Our policy is to maintain unused committed
bank lines of credit in an amount greater than outstanding commercial paper balances. Two borrowing options are
available under the 2014 Credit Agreement: (i) a competitive advance option and (ii) a revolving credit option. The
interest rates for the competitive advance option will be obtained from bids in accordance with competitive auction
procedures. The interest rates under the revolving credit option will be based either on LIBOR plus spreads reflecting
the Company’s credit ratings, or on the Administrative Agent’s Alternate Base Rate. The provisions of the 2014 Revolving
Credit Agreement require that we maintain an interest coverage ratio, as defined, of at least 3.0 times and a leverage
ratio, as defined, of not more than 3.0 times. At December 31, 2015, we had $150 outstanding under the 2014 Revolving
Credit Agreement. Our interest coverage ratio and leverage ratio were within the prescribed thresholds as of
December 31, 2015. In the event of certain ratings downgrades of the Company, to a level below investment grade,
the direct and indirect significant U.S. subsidiaries of the Company would be required to guarantee the obligations
under the credit facility.

Our credit ratings as of December 31, 2015 were as follows:

Rating Agency
Standard & Poor’s
Moody’s Investors Service
Fitch Ratings

Short-Term
Ratings
A-3
P-3
F2

Long-Term
Ratings
BBB-
Baa3
BBB+

Please refer to the rating agency websites and press releases for more information.

Sources and Uses of Liquidity

Our principal source of liquidity is our cash flow generated from operating activities, which provides us with the
ability to meet the majority of our short-term funding requirements. The following table summarizes net cash derived
from operating, investing, and financing activities for the three years ended December 31, 2015, 2014, and 2013.

Operating activities
Investing activities
Financing activities
Foreign exchange

Total net cash flow (used in) from continuing operations

Net cash used in discontinued operations

Net change in cash and cash equivalents

2015
$ 229.7
(485.5)
120.4
(31.6)
$ (167.0)
(1.3)
$ (168.3)

2014
$ 244.7
(14.5)
(116.6)
(31.2)
82.4
(5.7)
76.7

2013
$ 226.6
(188.8)
(58.3)
(0.4)
(20.9)
(16.3)
(37.2)

Net cash provided by operating activities was $229.7 for the year ended December 31, 2015, representing a
decrease of $15.0, or 6.1%, from 2014. This decline was primarily driven by higher asbestos-related payments of
$20.7, higher postretirement benefit contributions of $6.0, and additional restructuring-related payments of $5.8, and
payments associated with the completion and related integration of acquisitions. In addition, cash provided by segment
operating income declined by $17.1, after adjustments for non-cash items such as depreciation and amortization. The
decrease in net cash provided by operating activities was partially offset by lower income tax payments, net of refunds,
of $21.5 and fluctuations in working capital, primarily related to inventory, that resulted in a favorable year-over-year
impact of $24.5.

Net cash provided by operating activities was $244.7 for the year ended December 31, 2014, representing an
increase of $18.1, or 8.0%, from 2013. This growth was primarily driven by increased segment operating income,
which increased $60.5 after adjustments for non-cash items such as depreciation and amortization. A decline in cash
payments related to transformation and repositioning activities of $18.0 and lower net asbestos-related payments of
$21.5, also contributed to the year-over-year increase in cash from operating activities. However, these items were
partially offset by higher net tax payments of $48.1 and unfavorable changes in accrued expenses of $30.2 and
customer advances of $10.6. In addition, during 2014 we made payments of $7.7 associated with an action to move
certain production lines from one location to another existing lower cost manufacturing site and develop an ERP global
template design. The year-over-year change in working capital balances resulted in lower cash usage of $12.9 during
2014, primarily related to improved cash collections and lower year-end inventory balances due to the timing of certain
large, long-term industrial pump projects and inventory reduction plans.

Net cash used in investing activities increased from $14.5 in 2014 to $485.5 in 2015 over 2014, primarily due to
our acquisitions of Wolverine for $298.1 and Hartzell Aerospace for $52.9 during 2015. In addition, net purchases of
short-term investments (net of maturities) exceeded the 2014 amount by $165.2. Capital expenditure spending
decreased $32.1 year-over-year with spending for both years focused on capacity expansion projects and system
upgrades. In addition, during the second quarter of 2015 we sold an industrial product line within our Control
Technologies segment resulting in proceeds of $8.9.

Net cash used in investing activities declined from $188.8 in 2013 to $14.5 in 2014, primarily due to maturities of
short-term time deposits that exceeded purchases by $103.6 during 2014. In contrast, during 2013, purchases of short-
term time deposits exceeded maturities by $72.0. In addition, capital expenditures were lower by $4.1, or 3.3%, year-
over-year, primarily related to our production capacity investments during 2013 and 2014. Capital expenditures during
2014 primarily relate to the production capacity investments in the Motion Technologies segment and the construction
of an additional testing and production facility in Seneca Falls, New York for our Industrial Process segment.

Net cash provided by financing activities was $120.4 for the year ended December 31, 2015, reflecting an increase
of $237.0 as compared to 2014. The increase reflects 2015 net borrowings of $150 from our revolving credit facility
and commercial paper issuances of $94.5, partially offset by a $23.8 increase in repurchases of ITT common stock.

Net cash used in financing activities increased by $58.3 in the year ended December 31, 2014 as compared to
2013 primarily due to the repayment of all outstanding commercial paper during 2014, compared to net commercial
paper borrowings during 2013. This led to a year-over-year outflow from short-term debt activity of $63.4. Cash from
financing activities was also unfavorably impacted by a reduction of $18.0 in proceeds associated with employee stock
issuance activity, net of excess tax benefits. However, these items were partially offset by a $27.7 decline in the amount
of common stock repurchased during 2014 compared to 2013. In addition, we made dividend payments of $40.7 and
$36.4 during the years ended December 31, 2014 and 2013, respectively.

Our average daily outstanding commercial paper balance for the years ended 2015, 2014, and 2013 was $73.1,
$41.2, and $47.7, respectively. The maximum outstanding commercial paper during each of those respective years
was $180.0, $100.5, and $103.5, respectively. We had $94.5 of commercial paper outstanding as of December 31,
2015.

Net cash used related to discontinued operations for the year ended December 31, 2015 of $1.3 is primarily related
to environmental-related payments for sites formerly owned by ITT. Net cash used related to discontinued operations
for the year ended December 31, 2014 is primarily related to a settlement payment to a former ITT entity. Net cash
used related to discontinued operations for the year ended December 31, 2013 is primarily due to the settlement of
legacy receivables and payables with a former ITT entity, resulting in a net cash payment by ITT of $15.3.

Asbestos

Based on the estimated undiscounted asbestos liability as of December 31, 2015 for claims filed or estimated to
be filed over the next 10 years, we have estimated that we will be able to recover approximately 40% of the asbestos
indemnity and defense costs from our insurers. Actual insurance reimbursements may vary significantly from period
to period and the anticipated recovery rate is expected to decline over time due to gaps in our insurance coverage,
reflecting uninsured periods, the insolvency of certain insurers, prior settlements with our insurers, and our expectation
that certain insurance policies will exhaust within the next 10 years. In the 10th year of our estimate, our insurance
recoveries are currently projected to be 15%. Additionally, future recovery rates may be impacted by other factors,
such as future insurance settlements, insolvencies, and judicial determinations relevant to our coverage program,
which are difficult to predict and subject to a high degree of uncertainty.

The Company has negotiated with certain of its excess insurers to reimburse the Company for a portion of its
settlement and/or defense costs as incurred, frequently referred to as "coverage-in-place" agreements. Under
coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage
for the Company’s present and future asbestos claims on specified terms and conditions that address, among other
things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and
the expiration of the insurer’s obligations. The Company has entered into policy buyout agreements with certain insurers
confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for
future payments to a Qualified Settlement Fund, to be disbursed for future asbestos costs. Collectively, these
agreements are designed to facilitate an orderly resolution and collection of ITT’s insurance and to mitigate issues
that insurers may raise regarding their responsibility to respond to claims.

As of December 31, 2015, the Company has entered into coverage-in-place agreements and policy buyout
agreements representing approximately 53% of our recorded asset. Certain of our primary coverage-in-place
agreements are exhausted which may result in higher net cash outflows until excess carriers begin accepting claims
for reimbursement. While there are overall limits on the aggregate amount of insurance available to the Company with
respect to asbestos claims, with respect to ITT coverage, those overall limits were not reached by the estimated liability
recorded by the Company at December 31, 2015.

Further, there is uncertainty in estimating when cash payments related to the recorded asbestos liability will be
fully expended and such cash payments will continue for a number of years beyond the next 10 years due to the
significant proportion of future claims included in the estimated asbestos liability and the delay between the date a
claim is filed and when it is resolved. Subject to these inherent uncertainties, it is expected that cash payments related
to pending claims and claims to be filed in the next 10 years will extend through approximately 2029.

Although asbestos cash outflows can vary significantly from year to year, our current net cash outflows, net of tax
benefits, averaged $12 over the past three annual periods and are projected to average $15 to $25 over the next five
years, increasing to an average of approximately $35 to $45 per year over the remainder of the projection period.

In light of the uncertainties and variables inherent in the long-term projection of the Company's asbestos exposures
and potential recoveries, although it is probable that the Company will incur additional costs for asbestos claims filed
beyond the next 10 years, we do not believe that there is a reasonable basis for estimating the number of future claims,
the nature of future claims, or the cost to resolve future claims for years beyond the next 10 years at this time. Accordingly,
no liability or related asset has been recorded for any costs that may be incurred for claims asserted subsequent to
2025.

Due to these uncertainties, as well as our inability to reasonably estimate any additional asbestos liability for claims
that may be filed beyond the next 10 years, it is difficult to predict the ultimate outcome of the cost of resolving the
pending and estimated unasserted asbestos claims. We believe it is possible that the future events affecting the key
factors and other variables within the next 10 years, as well as the cost of asbestos claims filed beyond the next 10
years, net of expected recoveries, could have a material adverse effect on our financial statements.

Funding of Postretirement Plans

The following table provides a summary of the funded status of our postretirement benefit plans as of December 31,

2015 and 2014.

2015

2014

Fair value of plan assets
Projected benefit obligation

Funded status

U.S.
Pension
$ 278.1
339.9
(61.8) $

Non-U.S.
Pension
0.9
78.0
(77.1) $ (135.5) $ (274.4) $ (51.2) $

Other
Benefits
7.9
$
143.4

U.S.
Pension
$ 272.9
324.1

Total
$ 286.9
561.3

Other
Non-U.S.
Total
Benefits
Pension
283.4
9.5
$
1.0
87.5
546.1
134.5
(86.5) $ (125.0) $ (262.7)

The funded status of our U.S. pension plans declined by $10.6 during 2015 primarily due to our assumption of
two plans in connection with our fourth quarter 2015 acquisition of Wolverine. In addition, lower than expected asset
returns reduced the funded status but were offset by a change in the discount rate and discretionary company
contributions. Our non-U.S. pension plans, which are typically not funded due to local regulations, had an improvement
in funded status of $9.4 during 2015 due to an increase in the discount rate used to measure the benefit obligation.

While the Company has significant discretion in making voluntary contributions, the Employee Retirement Income
Security Act of 1974, and applicable Internal Revenue Code regulations mandate minimum funding thresholds. Failure
to satisfy the minimum funding thresholds could result in restrictions on our ability to amend a plan or make benefit
payments. In general, certain benefit restrictions apply when the Adjusted Funding Target Attainment Percentage
(AFTAP) of a plan is less than 80%. When the AFTAP is between 80% and 60%, there is a restriction on plan amendments
and a partial restriction on accelerated benefit payments (i.e., lump sum payments cannot exceed 50% of the value
of the participants total benefit). Full benefit restrictions apply if the plan’s AFTAP falls below 60%. As of December 31,
2015, the funding percentages of all ITT U.S. Qualified pension plans exceeded 80% as calculated using the AFTAP
approach.

While we make contributions to our postretirement benefit plans when considered necessary or advantageous to
do so, the minimum funding requirements established by local government funding or taxing authorities, or established
by other agreements, may influence future contributions. Funding requirements under IRS rules are a major
consideration in making contributions to our U.S. pension plans. Future minimum funding requirements will depend
primarily on the return on plan assets and discount rate, both determined using AFTAP guidelines. Depending on these
factors, and the resulting funded status of our U.S. pension plans, the level of future minimum contributions could be
material. During 2015 and 2014, we contributed $12.4 and $4.4 to our global pension plans, respectively. The 2015
contribution included a $7.5 discretionary contribution to our U.S. pension plans. We currently estimate that the 2016
contributions to our global pension plans will be approximately $5.0.

The funded status of our other employee-related defined benefit plans declined $10.5 during 2015 primarily due
to our assumption of the Wolverine other employee-related defined benefit plan. We contributed $6.2 and $8.2 to our
other employee-related defined benefit plans during 2015 and 2014. We currently estimate that the 2016 contributions
to our other employee-related defined benefit plans will be approximately $10.0. See Note 15, Postretirement Benefit
Plans, for additional financial information related to our postretirement obligations.

Capital Resources

Long-term debt is generally defined as any debt with an original maturity greater than 12 months. As of
December 31, 2015, we have sources of long- and short-term funding including access to the capital markets through
a commercial paper program and available unused credit lines of $350, as well as general market access to longer-
term markets. Our commercial paper program is supported by the 2014 Revolving Credit Agreement and our policy
is to maintain unused committed bank lines of credit in an amount greater than outstanding commercial paper balances.

The table below provides long-term debt outstanding and capital lease obligations at December 31, 2015 and

2014.

Current portion of long-term debt and capital leases
Non-current portion of long-term debt and capital leases

Total long-term debt and capital leases

2015
1.2
2.8
4.0

2014
1.5
7.0
8.5

Contractual Obligations

ITT’s commitment to make future payments under long-term contractual obligations was as follows, as of

December 31, 2015:

Contractual Obligations
Long-term debt, including interest and
capital leases
Operating leases
Purchase obligations(a)
Other long-term obligations(b)
Total

Total

4.7
156.9
64.2
116.9
$ 342.7

Payments Due By Period

Less Than
1 Year

1.4
21.7
63.1
16.2
102.4

1-3 Years

3-5 Years

1.6
35.9
0.9
31.1
69.5

0.9
26.8
0.2
30.7
58.6

More Than
5 Years

0.8
72.5
—
38.9
112.2

In addition to the amounts presented in the table above, we have recorded liabilities for pending asbestos claims
and asbestos claims estimated to be filed over the next 10 years and uncertain tax positions of $1,042.8 and $51.7,
respectively, in our Consolidated Balance Sheet at December 31, 2015. These amounts have been excluded from the
contractual obligations table due to an inability to reasonably estimate the timing of payments in individual years. In
addition, while we make contributions to our postretirement benefit plans when considered necessary or advantageous
to do so, the minimum funding requirements established by local government funding or taxing authorities, or established
by other agreements, may influence future contributions. As such, expected contributions to our postretirement benefit
plans have been excluded from the table above.

(a) Represents unconditional purchase agreements that are enforceable and legally binding and that specify all
significant terms to purchase goods or services, including fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the transaction. Purchase agreements that
are cancellable without penalty have been excluded.

(b) Other long-term obligations include amounts recorded on our December 31, 2015 Consolidated Balance Sheet,
including estimated environmental payments and employee compensation agreements. We estimate based on
historical experience that we will spend between $10 and $15 per year on environmental investigation and
remediation, a portion of which we are legally mandated to perform investigation and/or remediation through
various orders and agreements with state and federal oversight agencies. At December 31, 2015, our recorded
environmental liability was $82.6.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements represent transactions, agreements or other contractual arrangements with
unconsolidated entities, where an obligation or contingent interest exists. Our off-balance sheet arrangements, as of
December 31, 2015, consist of indemnities related to acquisition and disposition agreements and certain third-party
guarantees.

Indemnities

Since ITT’s incorporation in 1920, we have acquired and disposed of numerous entities. The related acquisition
and disposition agreements contain various representation and warranty clauses and may provide indemnities for a
misrepresentation or breach of the representations and warranties by either party. The indemnities address a variety
of subjects; the term and monetary amounts of each such indemnity are defined in the specific agreements and may
be affected by various conditions and external factors. Many of the indemnities have expired either by operation of
law or as a result of the terms of the agreement. We do not have a liability recorded for these expired indemnifications
and are not aware of any claims or other information that would give rise to material payments under such indemnities.

As part of the 2011 spin-off, ITT agreed to provide certain indemnifications and cross-indemnifications among ITT,
Exelis and Xylem, subject to limited exceptions with respect to employee claims. The indemnifications address a variety
of subjects, including asserted and unasserted product liability matters (e.g., asbestos claims, product warranties)
which relate to products manufactured, repaired and/or sold prior to the date of the 2011 spin-off. These indemnifications
last indefinitely and are not affected by Harris' acquisition of Exelis. In addition, ITT, Exelis and Xylem agreed to certain
cross-indemnifications with respect to other liabilities and obligations. ITT expects Exelis and Xylem to fully perform
under the terms of the Distribution Agreement and therefore has not recorded a liability for matters for which we have
been indemnified. In addition, both Exelis and Xylem have made asbestos indemnity claims that could give rise to
material payments under the indemnity provided by ITT; such claims are included in our estimate of asbestos liabilities.

Guarantees

We have $167.1 of guarantees, letters of credit and similar arrangements outstanding at December 31, 2015,
primarily pertaining to commercial or performance guarantees and insurance matters. We have not recorded any
material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31,
2015 as the likelihood of nonperformance by the underlying obligors is considered remote. From time to time, we may
provide certain third-party guarantees that may be affected by various conditions and external factors, some of which
could require that payments be made under such guarantees. We do not consider the maximum exposure or current
recorded liabilities under our third-party guarantees to be material either individually or in the aggregate. We do not
believe such payments would have a material adverse impact on our financial statements.

KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES

Management reviews key performance indicators including revenue, segment operating income and margins,
earnings per share, orders growth, and backlog, among others. In addition, we consider certain supplemental measures
to be useful to management and investors when evaluating our operating performance for the periods presented.
These supplemental measures provide a tool for evaluating our on-going 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 accounting principles generally accepted in the United States of America (GAAP) and should not be considered
a substitute for measures determined in accordance with GAAP. Our non-GAAP measures exclude from reported
results those items that management believes are not indicative of our ongoing performance and reflect how
management evaluates our operating results and trends. 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:

•

"organic revenue" and "organic orders" are defined as revenue and orders, excluding the impacts of foreign currency
fluctuations and acquisitions and divestitures. Divestitures include sales of 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 is estimated using a fixed exchange rate for both the current and prior periods.

Reconciliations of organic revenue for the years ended December 31, 2015 and 2014 are provided below.

Industrial
Process

Motion
Technologies

Interconnect
Solutions

Control
Technologies

Eliminations

Total
ITT

2015 Revenue

$ 1,113.8

767.2

328.1

281.2

(4.7)

$ 2,485.6

(Acquisitions)/divestitures, net

Foreign currency translation

2015 Organic revenue

Organic (decline)/growth

(0.1)

65.0

$ 1,178.7

(34.9)

106.8

839.1

—

20.3

(22.7)

1.7

—

(57.7)

193.8

348.4

260.2

(4.7)

$ 2,621.7

(2.4)%

9.1%

(11.3)%

(10.4)%

(1.2)%

2014 Revenue

$ 1,208.3

769.4

392.8

290.5

(6.4)

$ 2,654.6

(Acquisitions)/divestitures, net

Foreign currency translation

2014 Organic revenue

Organic growth/(decline)

(3.0)

20.6

—

(3.4)

—

1.0

—

0.5

—

(3.0)

18.7

$ 1,225.9

766.0

393.8

291.0

(6.4)

$ 2,670.3

10.7 %

6.1%

(0.4)%

4.6 %

6.9 %

Reconciliations of organic orders for the years ended December 31, 2015 and 2014 are provided below.

Industrial
Process

Motion
Technologies

Interconnect
Solutions

Control
Technologies

Eliminations

Total
ITT

2015 Orders

936.7

780.0

324.3

294.3

(4.7)

$ 2,330.6

(Acquisitions)/divestitures, net

Foreign currency translation

2015 Organic orders

Organic (decline)/growth

(0.1)

57.8

994.4

(40.1)

110.0

849.9

—

20.0

(27.2)

1.8

—

(67.4)

189.6

344.3

268.9

(4.7)

$ 2,452.8

(18.1)%

6.6%

(11.4)%

(7.0)%

(8.6)%

2014 Orders

$ 1,214.2

797.0

388.4

289.2

(5.8)

$ 2,683.0

(Acquisitions)/divestitures, net

Foreign currency translation

2014 Organic orders

Organic growth/(decline)

(3.0)

20.7

—

(3.3)

—

0.7

—

0.6

—

(3.0)

18.7

$ 1,231.9

793.7

389.1

289.8

(5.8)

$ 2,698.7

6.0 %

6.7%

(2.8)%

5.0 %

4.8 %

•

"adjusted segment operating income" is defined as operating income, adjusted to exclude special items that include,
but are not limited to, restructuring costs and realignment costs, certain asset impairment charges, repositioning
items
costs, certain acquisition-related expenses, and other unusual or infrequent operating items. Special
represent significant charges or credits that impact current results, which management views as unrelated to the
Company's ongoing operations and performance.

Reconciliations of segment operating income to adjusted segment operating income for the years ended

December 31, 2015, 2014 and 2013 are provided in the tables below.

Year Ended December 31, 2015

Segment operating income

Restructuring costs

Acquisition-related expenses
Other unusual or infrequent items(a)
Adjusted segment operating income

Year Ended December 31, 2014

Segment operating income

Restructuring costs
Other unusual or infrequent items(b)
Adjusted segment operating income

Year Ended December 31, 2013

Segment operating income

Restructuring costs

Bornemann acquisition-related expenses
Other unusual or infrequent items(c)
Adjusted segment operating income

Industrial
Process

Motion
Technologies

Interconnect
Solutions

Control
Technologies

Total
Segment

$ 141.2

$ 126.4

$ 12.2

$ 42.4

$ 322.2

12.2

—

(7.5)

—

13.1

—

6.3

—

0.4

5.3

1.4

0.8

23.8

14.5

(6.3)

$ 145.9

$ 139.5

$ 18.9

$ 49.9

$ 354.2

$ 123.9

$ 130.9

$ 22.2

$ 63.5

$ 340.5

4.2

2.3

2.1

—

20.5

9.5

—

26.8

11.8

$ 130.4

$ 133.0

$ 52.2

$ 63.5

$ 379.1

$ 112.0

$ 100.3

$ 14.2

$ 55.3

$ 281.8

4.5

8.6

3.2

5.1

—

1.9

17.2

—

0.4

—

1.1

27.2

8.6

6.2

$ 128.3

$ 107.3

$ 31.4

$ 56.8

$ 323.8

(a) The adjustments for unusual or infrequent items during 2015 primarily reflect the reversal of a customer-related

liability related to the 2012 acquisition of Bornemann.

(b) The adjustments for unusual or infrequent items during 2014 include costs associated with an action to move
certain production lines from one location to another existing lower cost manufacturing site, enterprise resource
planning (ERP) global template design costs, and foreign exchange-related impacts associated with our
operations in Venezuela.

(c) The adjustments for unusual or infrequent items during 2013 primarily consist of costs to exit transition services
agreements, IT infrastructure modifications, and other various actions, pursuant to the 2011 spin-off, referred
to as Repositioning Costs.

•

"adjusted income from continuing operations" and "adjusted income from continuing operations per diluted share"
are defined as income from continuing operations attributable to ITT Corporation and income from continuing
operations attributable to ITT Corporation per diluted share, adjusted to exclude special items that include, but are
not limited to, asbestos-related costs, repositioning costs, restructuring and realignment costs, certain asset
impairment charges, certain acquisition-related expenses, income tax settlements or adjustments, and other
unusual or infrequent non-operating items. Special items represent significant charges or credits, on an after-tax
basis, that impact current results which management views as unrelated to the Company's ongoing operations
and performance. A reconciliation of adjusted income from continuing operations, including adjusted earnings per
diluted share, to income from continuing operations and income from continuing operations per diluted share for
the years ended December 31, 2015, 2014 and 2013 are provided in the table below.

2015

2014

2013

Income from continuing operations attributable to ITT Corporation

$ 312.4

$ 188.4

$ 487.7

Restructuring costs, net of tax benefit of $5.5, $8.6, and $6.2, respectively

Repositioning costs, net of tax benefit of $0.1, $2.5, and $8.9, respectively

Net asbestos-related costs, net of tax (expense) benefit of $(33.8), $1.4, and $11.5,
respectively
Tax-related special items(a)
Other unusual or infrequent items, net of tax of benefit of $4.0, $3.9, and $0.5,
respectively(b)

18.5

0.1

(57.6)

(37.1)

(4.6)

19.5

6.4

2.5

3.8

8.2

Adjusted income from continuing operations

Income from continuing operations attributable to ITT Corporation per diluted share

Adjusted income from continuing operations per diluted share

$ 231.7

3.44

2.55

$ 228.8

$ 2.03

$ 2.47

22.2

16.3

21.3

(363.7)

2.5

$ 186.3

5.28

2.02

(a) The following table details significant components of the tax-related special items. See Note 5, "Income Taxes,"

to our Consolidated Financial Statements for further information.

Change in uncertain tax positions

Charge on undistributed foreign earnings

Change in deferred tax asset valuation allowance

Impacts of tax audit closure

Other

Net tax-related special items

2015

2014

2013

(15.1)

(7.4)

(7.3)

(7.0)

(0.3)

(37.1)

0.4

0.8

2.5

0.7

(0.6)

3.8

(0.4)

11.0

(375.3)

1.4

(0.4)

$ (363.7)

(b) Other unusual or infrequent non-operating items, net of tax, for 2015 reflect a benefit from the reversal of a
customer-related liability related to the acquisition of Bornemann and the reversal of accrued interest associated
with a change in uncertain tax positions, partially offset by costs associated with the acquisitions of Wolverine
and Hartzell.

Other unusual or infrequent non-operating items, net of tax, for 2014 include costs associated with an action to
move certain production lines from one location to another existing lower cost manufacturing site, the Venezuela
currency devaluation, and ERP global template design costs.

Other unusual or infrequent non-operating items, net of tax, for 2013 include Bornemann integration-related
expenses of $5.7, partially offset by a reduction of accrued interest due to tax audits of $3.2.

•

"adjusted free cash flow" is defined as net cash provided by operating activities less capital expenditures, adjusted
for cash payments for restructuring and realignment actions, repositioning costs, net asbestos cash flows and
other significant items that impact current results which management views as unrelated to the Company's
ongoing operations and performance. Due to other financial obligations and commitments, including asbestos,
the entire free cash flow may not be available for discretionary purposes. A reconciliation of adjusted free cash
flow is provided below.

"adjusted free cash flow conversion" is defined as adjusted free cash flow divided by adjusted income from
continuing operations.

Net cash from continuing operations

Capital expenditures(a)
Restructuring cash payments

Net asbestos cash flows
Other cash payments(b)

Adjusted free cash flow

Adjusted income from continuing operations

Adjusted free cash flow conversion

2015

2014

2013

$ 229.7

$ 244.7

$ 226.6

(86.3)

(114.5)

(118.1)

24.4

24.6

7.2

18.6

3.9

20.3

17.1

25.4

30.6

$ 199.6

$ 173.0

$ 181.6

231.7

86.1%

228.8

75.6%

186.3

97.5%

(a) Capital expenditures represent capital expenditures as reported in the Consolidated Statement of Cash Flows,
less capital expenditures associated with repositioning activities of $0.4, $4.3 and $4.8 for the years ended
December 31, 2015, 2014, and 2013, respectively.

(b) Other cash payments during 2015 include discretionary pension contributions, net of tax. Other cash payments
during 2014 include payments associated with an action to move certain production lines from one location to
another existing lower cost manufacturing site and develop an ERP global template design. Other cash payments
during 2013 primarily reflect payments associated with repositioning activities.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in accordance with GAAP requires us to make
judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. Significant accounting policies used in the preparation of the financial statements are discussed in Note 1,
"Description of Business, Basis of Presentation and Summary of Significant Accounting Policies," to the Consolidated
Financial Statements. An accounting policy is deemed critical if it requires an accounting estimate to be made based
on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably
could have been used, or if changes to the estimate that are reasonably possible could materially affect the financial
statements. Senior management has discussed the development, selection and disclosure of these estimates with
the Audit Committee of ITT’s Board of Directors.

The accounting estimates and assumptions discussed below are those that we consider most critical to fully
understanding our financial statements and evaluating our results as they are inherently uncertain, involve the most
subjective or complex judgments, include areas where different estimates reasonably could have been used, and the
use of an alternative estimate that is reasonably possible could materially affect the financial statements. We base our
estimates on historical experience and other data and assumptions believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Management believes that the accounting estimates employed and the resulting
balances reported in the Consolidated Financial Statements are reasonable; however, actual results could differ
materially from our estimates and assumptions.

Asbestos Matters

ITT, including its subsidiary Goulds Pumps, Inc., has been sued along with many other companies in product
liability lawsuits alleging personal injury due to asbestos exposure. These claims allege that certain products sold by
us or our subsidiaries prior to 1985 contained a part manufactured by a third party (e.g., a gasket) that contained
asbestos. To the extent that these third-party parts may have contained asbestos, it was encapsulated in the gasket
(or other) material and was non-friable. In certain other cases, it is alleged that former ITT companies were distributors
for other manufacturers’ products that may have contained asbestos.

Estimating our exposure to pending asbestos claims and those that may be filed in the future is subject to significant
uncertainty and risk as there are multiple variables that can affect the timing, severity, quality, quantity and resolution
of claims. The methodology used to project future asbestos costs is based largely on the Company’s experience in a
reference period, including the last few years, for claims filed, settled and dismissed, and is supplemented by
management’s expectations of the future. This experience is compared to the results of previously conducted
epidemiological studies by estimating the number of individuals likely to develop asbestos-related diseases. Those
studies were undertaken in connection with an independent analysis of the population of U.S. workers across eleven
different industry and occupation categories believed to have been exposed to asbestos. Using information for the
industry and occupation categories relevant to the Company, an estimate is developed of the number of claims estimated
to be filed against the Company over the next 10 years, as well as the aggregate settlement costs that would be
incurred to resolve both pending and estimated future claims based on the average settlement costs by disease during
the reference period. In addition, the estimate is augmented for the costs of defending asbestos claims in the tort
system using a forecast based on recent experience, as well as agreements with the Company’s external defense
counsel. The asbestos liability has not been discounted to present value due to the inability to reliably forecast the
timing of future cash flows. The Company retains a consulting firm to assist management in estimating our potential
exposure to pending asbestos claims and for claims estimated to be filed over the next 10 years. The methodology to
project
future asbestos costs is one in which the underlying assumptions are separately assessed for their
reasonableness and then each is used as an input to the liability estimate. Our assessment of the underlying
assumptions concludes on one value for each assumption.

The liability estimate is most sensitive to assumptions surrounding mesothelioma and lung cancer claims, as
together, the estimated costs to resolve pending and estimated future mesothelioma and lung cancer claims represent
approximately 95% of the estimated asbestos exposure, but only 25% of pending claims. The assumptions related to
mesothelioma and lung cancer that are most significant include the number of new claims forecast to be filed against
the Company in the future, the projected average settlement costs (including the rate of inflation assumed), the
percentage of claims against the Company that are dismissed without a settlement payment, and the cost to defend
against filed claims.

These assumptions are interdependent, and no one factor predominates in estimating the asbestos liability. While
there are other potential inputs to the model used to estimate our asbestos exposures for pending and estimated future
claims, our methodology relies on the best input available in the circumstances for each individual assumption and,
due to the interdependencies, does not create a range of reasonably possible outcomes. Projecting future asbestos
costs is subject to numerous variables and uncertainties that are inherently difficult to predict. In addition to the
uncertainties surrounding the key assumptions, additional uncertainty related to asbestos claims arises from the long
latency period prior to the manifestation of an asbestos-related disease, changes in available medical treatments and
changes in medical costs, changes in plaintiff behavior resulting from bankruptcies of other companies that are potential
defendants or co-defendants, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from
case to case, and the impact of potential legislative or judicial changes.

The forecast period used to estimate our potential exposure to pending and projected asbestos claims is a judgment
based on a number of factors, including the number and type of claims filed, recent experience with pending claims
activity and whether that experience is expected to continue into the future, the jurisdictions where claims are filed,
the effect of any legislative or judicial developments, and the likelihood of any comprehensive asbestos legislation at
the federal level. These factors have both positive and negative effects on the dynamics of asbestos litigation and,
accordingly, on our estimate of the asbestos exposure. Developments related to asbestos tend to be long-cycle,
changing over multi-year periods. We closely monitor these and other factors and periodically assess whether an
alternative forecast period is appropriate.

We record a corresponding asbestos-related asset that represents our best estimate of probable recoveries related
to the recorded asbestos liability. In developing this estimate, the Company considers coverage-in-place and other
settlement agreements with its insurers, as well as a number of additional factors, including expected levels of future
cost recovery, the financial viability of the insurance companies, the method by which losses will be allocated to the
various insurance policies and the years covered by those policies, the extent to which settlement and defense costs

will be reimbursed by the insurance policies, and interpretation of the various policy and contract terms and limits and
their interrelationships. The asbestos-related asset has not been discounted to present value, consistent with the
asbestos liability as the timing of the insurance recoveries, including those under coverage-in-place and other settlement
agreements, is dependent on the timing of payments of the asbestos liability.

The Company retains a consulting firm to assist management in estimating probable recoveries for pending
asbestos claims and for claims estimated to be filed over the next 10 years based on the analysis of policy terms, the
likelihood of recovery provided by external legal counsel assuming the continued viability of those insurance carriers
that are currently solvent, incorporating risk mitigation judgments where policy terms or other factors are not certain,
and allocating asbestos settlement and defense costs between our insurers.

Based on the estimated undiscounted asbestos liability as of December 31, 2015 (for claims filed or estimated to
be filed over the next 10 years), we have estimated that we will be able to recover approximately 40% of asbestos
indemnity and defense costs from our insurers. However, there is uncertainty in estimating when cash payments related
to the recorded asbestos liability will be fully expended and such cash payments will continue for a number of years
beyond the next 10 years due to the significant proportion of future claims included in the estimated asbestos liability
and the lag time between the date a claim is filed and when it is resolved. Actual insurance reimbursements may vary
significantly from period to period and the anticipated recovery rate is expected to decline over time due exhaustion
of policies and the insolvency of certain insurers. In the 10th year of our estimate, our insurance recoveries are currently
projected to be approximately 15%. Future recovery rates may be impacted by other factors, such as future insurance
settlements, unforeseen insolvencies and judicial determinations relevant to our coverage program, which are difficult
to predict and subject to a high degree of uncertainty.

Our estimated asbestos liability and related receivables are based on management’s best estimate of future events
largely based on past experience; however, past experience may not prove a reliable predictor of the future. Future
events affecting the key assumptions and other variables for either the asbestos liability or the related receivables
could cause actual costs and recoveries to be materially higher or lower than currently estimated. For example, a
significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the
jurisdiction where filed and the quality of the product identification could change the estimated liability, as would
substantial adverse verdicts at trial that withstand appeal. A legislative solution, structured settlement transaction, or
significant change in relevant case law could also change the estimated liability. Further, the bankruptcy of an insurer
or settlements with our insurers, whether through coverage-in-place agreements or policy buyouts, could change the
estimated amount of recoveries.

Furthermore, any predictions with respect to the variables impacting our estimate of the asbestos liability and
related asset are subject to even greater uncertainty as the projection period lengthens. In light of the uncertainties
and variables inherent in the long-term projection of the Company’s asbestos exposures and potential recoveries,
although it is probable that the Company will incur additional costs for asbestos claims filed beyond the next 10 years,
we do not believe there is a reasonable basis for estimating the number of future claims, the nature of future claims,
or the cost to resolve future claims for years beyond the next 10 years at this time. Accordingly, no accrual or receivable
has been recorded for any costs which may be incurred for claims asserted subsequent to 2025.

Due to these uncertainties, as well as our inability to reasonably estimate any additional asbestos liability for claims
which may be filed beyond the next 10 years, it is difficult to predict the ultimate cost of resolving all pending and
estimated unasserted asbestos claims. We believe it is possible that the future events affecting the key factors and
other variables within the next 10 years, as well as the cost of asbestos claims filed beyond the next 10 years, net of
expected recoveries, could have a material adverse effect on our financial statements.

Revenue Recognition

Revenue is derived from the sale of products and services to customers. We recognize revenue when persuasive
evidence of an arrangement exists, the sales price is fixed or determinable, collectability is reasonably assured and
delivery has occurred. For product sales, other than long-term construction and production-type contracts (referred to
as design and build arrangements), we recognize revenue at the time title and risks and rewards of ownership pass
to the customer, which is generally when products are shipped, and the contractual terms have been fulfilled. Certain
contracts with customers require delivery, installation, testing, certification or other acceptance provisions to be satisfied
before revenue is recognized. In instances where contractual terms include a provision for customer acceptance,
revenue is recognized when either (i) we have previously demonstrated that the product meets the specified criteria
based on either seller or customer-specified objective criteria or (ii) on formal acceptance received from the customer
where the product has not been previously demonstrated to meet customer-specified objective criteria.

We recognize revenue for certain long-term design and build projects using the percentage-of-completion method,
based upon the percentage of costs incurred to total projected costs. Revenue and profit recognized under the
percentage-of-completion method are based on management’s estimates such as total contract revenues, contract
costs and the extent of progress toward completion. Due to the long-term nature of the contracts, these estimates are
subject to uncertainties and require significant judgment. Estimates of contract costs include labor hours and rates,
and material costs. These estimates consider historical performance, the complexity of the work to be performed, the
estimated time to complete the project, and other economic factors such as inflation and market rates. We update our
estimates on a periodic basis and any revisions to such estimates are recorded in earnings in the period in which they
are determined. Provisions for estimated losses, if any, on uncompleted long-term contracts, are made in the period
in which such losses are determined.

We recognize revenue on smaller design and build projects, including those of short-term duration, using the
completed contract method. Provisions for estimated losses, if any, on uncompleted design and build arrangements,
are recognized in the period in which such losses are determined. Due to the long-term nature of the contracts, these
estimates are subject to uncertainties and require significant judgment and may consider historical performance, the
complexity of the work to be performed, the estimated time to complete the project, and other economic factors such
as inflation.

Additionally, accruals for estimated expenses related to sales returns and warranties are made at the time products
are sold. Reserves for sales returns, rebates and other allowances are established using historical information on the
frequency of returns for a particular product and period over which products can be returned. For distributors and
resellers, our typical return period is less than 180 days. Future market conditions and product transitions may require
us to take actions to increase customer incentive offerings, possibly resulting in a reduction in revenue at the time the
incentive is offered.

Warranty accruals are established using historical information on the nature, frequency and average cost of
warranty claims and estimates of future costs. Our standard product warranty terms generally include post-sales
support and repairs or replacement of a product at no additional charge for a specified period of time. While we engage
in extensive product quality programs and processes, we base our estimated warranty obligation on product warranty
terms offered to customers, ongoing product failure rates, materials usage, service delivery costs incurred in correcting
a product failure, as well as specific product class failures outside of our baseline experience and associated overhead
costs. If actual product failure rates, repair rates or any other post-sales support costs differ from these estimates,
revisions to the estimated warranty liability would be required.

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of differences
between the financial reporting and tax bases of assets and liabilities, applying currently enacted tax rates in effect
for the year in which we expect the differences will reverse. We periodically assess the likelihood that we will be able
to recover our deferred tax assets and reflect any changes to our estimate of the amount we are more likely than not
to realize as a valuation allowance, with a corresponding adjustment to earnings or other comprehensive income (loss),
as appropriate. The ultimate realization of deferred tax assets depends on the generation of future taxable income
(including the reversals of deferred tax liabilities) during the periods in which those deferred tax assets will become
deductible.

The Company assesses all available positive and negative evidence regarding the realizability of its deferred tax
assets. Significant judgment is required in assessing the need for any valuation allowance recorded against deferred
tax assets. In assessing the need for a valuation allowance, we consider all available evidence, both positive and
negative, including the future reversal of existing taxable temporary differences, taxable income in carryback periods,
prudent and feasible tax planning strategies, estimated future taxable income, and whether we have a recent history
of losses. The valuation allowance can be affected by changes to tax regulations, interpretations and rulings, changes
to enacted statutory tax rates, and changes to future taxable income estimates.

Our effective tax rate reflects the impact of certain undistributed foreign earnings for which we have not provided
U.S. taxes because we plan to reinvest such earnings indefinitely outside of the U.S. We plan foreign earnings
remittance amounts based on projected cash flow needs, as well as the working capital and long-term investment
requirements of our foreign subsidiaries and our domestic operations. Based on these assumptions, we estimate the
amount we will distribute to the U.S. and accrue U.S. federal taxes on these planned foreign remittance amounts.
Material changes in our estimates of cash, working capital and long-term investment requirements in the various
jurisdictions in which we do business could impact our effective tax rate. Our provision for income taxes could be
adversely impacted by changes in our geographic mix of earnings or changes in the enacted tax rates in the jurisdictions
in which we conduct our business.

The calculation of our deferred and other tax balances involves significant management judgment when dealing
with uncertainties in the application of complex tax regulations and rulings in a multitude of taxing jurisdictions across
our global operations. The Company is routinely audited by U.S. federal, state and foreign tax authorities, the results
of which could result in proposed assessments against the Company. We recognize potential liabilities and record tax
liabilities for anticipated tax audit issues based on our estimate of whether, and to the extent to which, additional taxes
will be due. Furthermore, we recognize the tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position in consideration of applicable tax statutes and related interpretations and precedents and the expected outcome
of the proceedings (or negotiations) with the taxing authorities. Tax benefits recognized in the financial statements
from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
on ultimate settlement.

We adjust our liability for uncertain tax positions in light of changing facts and circumstances; however, the ultimate
resolution of a tax examination may differ from the amounts recorded in the financial statements for a number of
reasons, including the Company’s decision to settle rather than litigate a matter, relevant legal precedent related to
similar matters, and the Company’s success in supporting its filing positions with the tax authorities. If our estimate of
tax liabilities proves different than the ultimate outcome, such differences will affect the provision for income taxes in
the period in which such determination is made.

Postretirement Plans

ITT sponsors numerous defined benefit pension and other postretirement benefit plans for employees around the
world (collectively, postretirement benefit plans). Postretirement benefit obligations for domestic plans are generally
determined on a flat dollar benefit formula and years of service. Foreign plan benefit obligations are primarily determined
based on participant years of service, future compensation, and age at retirement or termination. The determination
of projected benefit obligations and the recognition of expenses related to postretirement benefit plans are dependent
on various assumptions that are judgmental and developed in consultation with our actuaries and other advisors. The
assumptions involved in the measurement of our postretirement benefit plan obligations and net periodic postretirement
costs primarily relate to discount rates, long-term expected rates of return on plan assets, and mortality and termination
rates. Actual results that differ from our assumptions are accumulated and are amortized over the estimated future
working life, or remaining lifetime, of the plan participants depending on the nature of the retirement plan. See Note
15, Postretirement Benefit Plans, to the Consolidated Financial Statements for detailed information regarding our
postretirement plan assumptions.

Assumption Sensitivity

We estimate that every twenty-five basis point change in the discount rate impacts net periodic postretirement
costs by approximately $0.4 and the funded status of our postretirement benefit plans by approximately $15.3. We
estimate that every twenty-five basis point change in the expected rate of return on plan assets impacts net periodic
postretirement costs by approximately $0.7.

Goodwill and Other Intangible Assets

We review goodwill and indefinite-lived intangible assets for impairment annually and whenever events or changes
in circumstances indicate the carrying value of an asset may not be recoverable. We also review the carrying value
of our finite-lived intangible assets for potential impairment when impairment indicators arise. We conduct our annual
impairment tests as of the first day of the fourth quarter. When reviewing for impairment, we may opt to make an initial
qualitative evaluation, which considers present events and circumstances, to determine the likelihood of impairment.
Our decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced
by a number of factors, including the significance of the excess of the reporting unit's estimated fair value over carrying
value at the last quantitative assessment date, changes in macroeconomic, industry and reporting-unit specific
conditions and the amount of time in between quantitative fair value measurements. If the likelihood of impairment is
not considered to be more likely than not, then no further testing is performed.

In cases when we opt not to perform a qualitative evaluation or the qualitative evaluation indicates that the likelihood
of impairment is more likely than not, we then perform a two-step impairment test for goodwill. In the first step, we
compare the estimated fair value of each reporting unit to its carrying value. If the estimated fair value of the reporting
unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and we are
not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds
its fair value, then we must perform the second step of the impairment test in order to measure the impairment loss
to be recorded, if any. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we record
an impairment loss equal to the difference. In our annual impairment test for indefinite-lived intangible assets, we
compare the fair value of those assets to their carrying value. We recognize an impairment loss when the estimated
fair value of the indefinite-lived intangible asset is less than its carrying value.

We estimate the fair value of our reporting units using an income approach. Under the income approach, we
calculate fair value based on the present value of estimated future cash flows. We estimate the fair value of our
indefinite-lived intangible assets using the relief from royalty method. The relief from royalty method estimates the
portion of a company’s earnings attributable to an intellectual property asset based on an assumed royalty rate that
the company would have paid had the asset not been owned.

Determining the fair value of a reporting unit or an indefinite-lived intangible asset is judgmental in nature and
involves the use of significant estimates and assumptions, particularly related to future operating results and cash
flows. These estimates and assumptions include, but are not limited to, revenue growth rates and operating margins
used to calculate projected future cash flows, risk-adjusted discount rates, assumed royalty rates, future economic
and market conditions and the identification of appropriate market comparable data. In addition, the identification of
reporting units and the allocation of assets and liabilities to the reporting units when determining the carrying value of
each reporting unit also requires judgment. Goodwill is tested for impairment at the reporting unit level, which, based
on the applicable accounting guidance, is either the operating segment or one level below (e.g., the divisions of our
Control Technology segment). The fair value of our reporting units and indefinite-lived intangible assets are based on
estimates and assumptions that are believed to be reasonable. Significant changes to these estimates and assumptions
could adversely impact our conclusions. Actual future results may differ from those estimates. Further, had different
reporting units been identified or had different valuation techniques or assumptions been utilized, the results of our
impairment tests could have resulted in an impairment loss, which could have been material.

In 2015, a qualitative assessment was performed for all reporting units and it was determined that it was not more

likely than not that the fair value of each reporting unit was less than its carrying amount.

Environmental Liabilities

We are subject to various federal, state, local and foreign environmental

laws and regulations that require
environmental assessment or remediation efforts. Accruals for environmental exposures are recorded on a site-by-
site basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably
estimated, based on current law and existing technologies. Significant judgment is required to determine both the
likelihood of a loss and the estimated amount of loss. Engineering studies, probability techniques, historical experience
and other factors are used to identify and evaluate remediation alternatives and their related costs in estimating our
liabilities. Our environmental reserve of $82.6 at December 31, 2015, represents
reserve for environmental
management’s estimate of undiscounted costs expected to be incurred related to environmental assessment or
remediation efforts, as well as related legal fees, without regard to potential recoveries from insurance companies or
other third parties. Our estimated liability is reduced to reflect the participation of other potentially responsible parties
in those instances where it is probable that such parties are legally responsible and financially capable of paying their
respective share of the relevant costs. Our environmental accruals are reviewed and adjusted for progress of
investigation and remediation efforts and as additional technical or legal information become available, such as the
impact of negotiations with regulators and other potentially responsible parties, settlements, rulings, advice of legal
counsel, and other current information.

responsibilities,

We closely monitor our environmental

together with trends in the environmental

laws.
Environmental remediation reserves are subject to numerous inherent uncertainties that affect our ability to estimate
our share of the costs. Such uncertainties involve incomplete information regarding particular sites and other potentially
responsible parties, uncertainty regarding the nature and extent of contamination at each site, the extent of remediation
required under existing regulations, our share of any remediation liability, if any, widely varying cost estimates associated
with potential alternative remedial approaches, the length of time required to remediate a particular site, the potential
effects of continuing improvements in remediation technology, and changes in environmental standards and regulatory
requirements. While environmental laws and regulations are subject to change, the nature of such change is inherently
unpredictable and the timing of potential changes is uncertain. The effect of legislative or regulatory changes on
environmental standards could be material to the Company’s financial statements. Additionally, violations by us of such
laws and regulations, discovery of previously unknown or more extensive contamination,
litigation involving
environmental impacts, our inability to recover costs associated with any such developments, or financial insolvency
of other potentially responsible parties could have a material adverse effect on our financial statements.

Although it is not possible to predict with certainty the ultimate costs of environmental remediation, the reasonably

possible high-end range of our estimated environmental liability at December 31, 2015 was $140.6.

Recent Accounting Pronouncements

See Note 2, "Recent Accounting Pronouncements," in the Notes to the Consolidated Financial Statements for a

complete discussion of recent accounting pronouncements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of our global operating and financing activities, we are exposed to market risks from changes in foreign
currency exchange rates, interest rates, and commodity prices, which may adversely affect our operating results and
financial position. The impact from changes in market conditions is generally minimized through our normal operating
and financing activities. However, we may use derivative instruments, primarily forward contracts, interest rate swaps
and futures contracts, to manage some of these exposures. We do not use derivative financial instruments for trading
or other speculative purposes. To minimize the risk of counterparty non-performance, derivative instruments are entered
into with major financial institutions and there is no significant concentration with any one counterparty. A summary of
our accounting policies for derivatives is included in Note 1, "Description of Business, Basis of Presentation and
Summary of Significant Accounting Policies," to the Consolidated Financial Statements.

Foreign Currency Exchange Rate Exposures

Our foreign currency exchange rate risk relates to receipts from customers, payments to suppliers and intercompany
transactions denominated in foreign currencies. Our principal currency exposures relate to the Euro, Chinese renminbi,
Czech koruna, South Korean won, and British pound. Based on a sensitivity analysis at December 31, 2015, a
hypothetical 10% change in the foreign currency exchange rates for the year ended December 31, 2015 would have
resulted in translation impact to our pre-tax earnings of approximately $20, due primarily to the Euro. This calculation
assumes that all currencies change in the same direction and proportion relative to the U.S. dollar and that there are
no indirect effects, such as changes in non-U.S. dollar sales volumes or prices. This calculation does not take into
account the impact of the foreign currency forward exchange contracts discussed above.

Interest Rate Exposures

As of December 31, 2015, our outstanding variable rate debt was $244.5. We estimate that a hypothetical increase
in interest rates of 100 basis points would result in approximately $2.5 of additional annual interest expense based on
current borrowing levels.

As of December 31, 2015, we had one interest rate swap outstanding with an aggregate notional amount of $1.6
and a fair value of $0.2. These interest rate swap agreements modify our exposure to interest rate risk by converting
a portion of the floating-rate debt to a fixed rate. Changes in the fair value of the interest rate swaps are recorded in
earnings as the interest rate swaps do not qualify for hedge accounting.

Commodity Price Exposures

Portions of our business are exposed to volatility in the prices of certain commodities, such as steel, gold, copper,
nickel, iron, aluminum and tin, as well as specialty alloys, including titanium. Our primary exposure to commodity price
volatility resides with the use of these materials in purchased component parts. We generally maintain long-term fixed
price contracts on raw materials and component parts; however, we are prone to exposure as these contracts expire.
We evaluate hedging opportunities to mitigate or minimize the risk of operating margin erosion resulting from the
volatility of commodity prices. We estimate that a hypothetical 10% adverse movement in prices for raw metal
commodities would not be material to the financial statements.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Consolidated Financial Statements herein.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Attached as exhibits to the Form 10-K are certifications of the Company’s Chief Executive Officer (CEO) and Chief

Financial Officer (CFO), which are required in accordance with Rule 13a-14 under the Exchange Act, as amended.

(a) Evaluation of Disclosure Controls and Procedures

The Company, with the participation of various levels of management, including the CEO and CFO, conducted an
evaluation of effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15
(e) and 15d-15(e) of the Exchange Act) as of December 31, 2015. Based on such evaluation, such officers have concluded
that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective.

The Company's Disclosure Committee has the responsibility of considering and evaluating the materiality of information
and reviewing disclosure obligations on a timely basis. The Disclosure Committee meets regularly and assists the CEO and
the CFO in designing, establishing, reviewing and evaluating the Company’s disclosure controls and procedures.

(b) Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America.

Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, completely, accurately and fairly reflect the transactions and dispositions of the Company’s
assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial
statements in accordance with accounting principles generally accepted in the United States of America; (iii) provide
reasonable assurance that Company receipts and expenditures are made only in accordance with the authorization of
management and the directors of the Company, and (iv) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the Consolidated
Financial Statements. Internal control over financial reporting includes the controls themselves, monitoring and internal
auditing practices and actions taken to correct any identified deficiencies.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2015. The Company adopted the updated internal control framework released by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). The framework is referred to as the COSO 2013 Internal Control Framework (COSO
2013), and is a replacement of the 1992 "Internal Control - Integrated Framework" issued previously by COSO and utilized
by most companies, including ITT, up to December 31, 2013. Management’s assessment under COSO 2013 included an
evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness
of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee
of our Board of Directors.

For purposes of evaluating internal controls over financial reporting, management determined that the internal controls
of Wolverine Automotive Holdings Inc., the parent company of Wolverine Advanced Materials LLC (Wolverine), which the
Company acquired on October 5, 2015, would be excluded from the internal control assessment as of December 31, 2015,
due to the timing of the closing of the acquisition and as permitted by the rules and regulations of the U.S. Securities and
Exchange Commission. For the year ended December 31, 2015, Wolverine constituted 9.0% of total assets and 1.4% of
total revenues of the Company.

Based on this assessment, management determined that, as of December 31, 2015, the Company maintained effective

internal control over financial reporting.

The Company’s management, including the CEO and the CFO, does not expect that our internal controls over financial
reporting, because of inherent limitations, will prevent or detect all errors and all fraud. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may be inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.

Management’s assessment, included herein, should be read in conjunction with the certifications and the report issued
by Deloitte & Touche LLP (Deloitte & Touche), an independent registered public accounting firm, as stated in their report,
which appears subsequent to Item 9B in this Annual Report on Form 10-K.

During the three months ended December 31, 2015, no change occurred in our internal controls over financial reporting

that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B.

OTHER INFORMATION

Disclosure pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act (ITRA)

This disclosure is made pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012,
codified as Section 13(r) of the Exchange Act, which requires a reporting company to disclose in its annual and quarterly
reports whether it or any of its affiliates have knowingly engaged in specified activities or transactions relating to Iran,
including activities conducted outside of the United States by non-U.S. affiliates in compliance with local law.

In its 2012 Annual Report, ITT described its acquisition of all the shares of Bornemann in November 2012, as well
as certain activities of Bornemann in Iran and the wind down of those activities in accordance with a General License
issued on December 26, 2012 (the General License) by OFAC. As permitted by the General License, on or before
March 8, 2013, Bornemann completed the wind-down activities and ceased all activities in Iran. As required to be
disclosed by Section 13(r), the gross revenues and operating income to Bornemann from its Iranian activities
subsequent to its acquisition by ITT were Euros 2.2 million and Euros 1.5 million, respectively. Prior to its acquisition
by ITT, Bornemann issued a performance bond to its Iranian customer in the amount of Euros 1.3 million (the Bond).
Bornemann requested that the Bond be canceled prior to March 8, 2013; however, the former customer refused this
request and as a result the Bond remains outstanding. Bornemann did not receive gross revenues or operating income,
or pay interest, with respect to the performance bond in either 2015, 2014 or 2013, however, Bornemann did pay fees
of approximately 11 thousand Euros in 2015 and 2014 and fees of approximately 43 thousand Euros in 2013 to the
German financial institution which is maintaining the performance bond.

In connection with certain activities that could not be finalized on or before March 8, 2013, ITT received a Special
License from OFAC in June 2014 in order to conclude a settlement with an agent associated with Bornemann’s Iranian
activities. The settlement agreement has been finalized and payments totaling Euro 770 thousand were made to the
agent in 2014.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
ITT Corporation
White Plains, New York

We have audited the internal control over financial reporting of ITT Corporation and subsidiaries (the "Company")
as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report
on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over
financial reporting at Wolverine Automotive Holdings Inc. (“Wolverine”), the parent company of Wolverine Advanced
Materials LLC, which was acquired on October 5, 2015 and whose financial statements constitute 9.0% of total assets
and 1.4% of revenues of the consolidated financial statement amounts as of and for the year ended December 31,
2015. Accordingly, our audit did not include the internal control over financial reporting at Wolverine. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on
Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the
company's principal executive and principal financial officers, or persons performing similar functions, and effected by
the company's board of directors, management, and other personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have
a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion
or improper management override of controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial
reporting to future periods are subject to the risk that the controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements as of and for the year ended December 31, 2015 of the Company
and our report dated February 19, 2016 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP
Stamford, Connecticut

February 19, 2016

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item 10 is incorporated by reference from the information provided under the sections
entitled “Information about Voting,” "Proposals to be voted on at the Annual Meeting-Item 1. Election of Directors,"
"Corporate Governance and Related Matters-Board and Committee Membership-Audit Committee," "Section 16(a)
Beneficial Ownership Reporting Compliance," and "Audit Committee Report" in our Proxy Statement for the 2016
Annual Meeting of Shareholders (2016 Proxy Statement).

Information required by this Item 10 with respect to executive officers of the Company is contained under the

heading "Executive Officers of the Company" in Part I of this Form 10-K.

ITT has adopted corporate governance principles and charters for each of its standing committees. The principles
address director qualification standards, election and selection of an independent presiding director, as well as
responsibilities, access to management and independent advisors, compensation, orientation and continuing
education, management succession principles and board and committee self-evaluation. The corporate governance
principles and charters are available on the Company’s website at www.itt.com/investors/governance/. A copy of the
corporate governance principles and charters is also available to any shareholder who requests a copy from the
Company’s secretary.

ITT has also adopted a written code of ethics, the "Code of Conduct," which is applicable to all directors, employees
and officers (including the Company’s principal executive officer, principal financial officer, principal accounting officer
or controller, or person performing similar functions). The Company’s Code of Conduct is available on our website at
www.itt.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment
to, or waiver from, a provision of our Code of Conduct by posting such information on our website at www.itt.com.

Pursuant to New York Stock Exchange (NYSE) Listing Company Manual Section 303A.12(a), the Company
submitted a Section 12(a) CEO Certification to the NYSE in 2015. The Company also filed with the SEC, as exhibits
to the Company’s current Annual Report on Form 10-K, the certifications required under Section 302 of the Sarbanes-
Oxley Act for its Chief Executive Officer and Chief Financial Officer.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item 11 is incorporated by reference to the discussion under the headings "2015 Non-
Management Director Compensation,"
"Compensation Discussion and Analysis,"
"Compensation and Personnel Committee Report" and "Corporate Governance and Related Matters-Compensation
Committee Interlocks and Insider Participation" in our 2016 Proxy Statement.

"Compensation Tables,"

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item 12 is incorporated by reference to the discussion under the caption "Stock
Ownership of Directors, Executive Officers, and Certain Shareholders" "Section 16(a) Beneficial Ownership Reporting
Compliance" and "Equity Compensation Plan Information" in our 2016 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR

INDEPENDENCE

Information required by this item is incorporated by reference to the discussions under the captions "Corporate
Governance and Related Matters-Policies for Approving Related Party Transactions" and "Corporate Governance and
Related Matters-Director Independence," in our 2016 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information about the fees for 2015 and 2014 for professional services rendered by our independent registered
public accounting firm is incorporated by reference to the discussion under the heading "Proposal 2. Ratification of
Appointment of the Independent Registered Public Accounting Firm" of our 2016 Proxy Statement. Our Audit
Committee’s policy on pre-approval of audit and permissible non-audit services of our independent registered public
accounting firm is also incorporated by reference to the discussion under the heading "Proposal 2. Ratification of
Appointment of the Independent Registered Public Accounting Firm" of our 2016 Proxy Statement.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of this report:

1. See Index to Consolidated Financial Statements appearing on page 62 for a list of the financial statements

filed as a part of this report.

2. See Exhibit Index beginning on pages II-3 for a list of the exhibits filed or incorporated herein as a part of this

report.

(b) Financial Statement Schedules are omitted because of the absence of the conditions under which they are
required or because the required information is included in the Consolidated Financial Statements filed as part
of this report.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

ITEM
Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013

Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013
Consolidated Balance Sheets as of December 31, 2015 and 2014

Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2015, 2014 and

2013

Notes to Consolidated Financial Statements:

Note 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

Note 2 – Recent Accounting Pronouncements

Note 3 – Segment Information

Note 4 – Restructuring Actions

Note 5 – Income Taxes

Note 6 – Earnings Per Share Data

Note 7 – Receivables, Net

Note 8 – Inventories, Net

Note 9 – Other Current and Non-Current Assets

Note 10 – Plant, Property and Equipment, Net

Note 11 – Goodwill and Other Intangible Assets, Net

Note 12 – Accrued Liabilities and Other Non-Current Liabilities

Note 13 – Leases and Rentals

Note 14 – Debt

Note 15 – Postretirement Benefit Plans

Note 16 – Long-Term Incentive Employee Compensation

Note 17 – Capital Stock

Note 18 – Commitments and Contingencies

Note 19 – Guarantees, Indemnities and Warranties

Note 20 – Discontinued Operations

Note 21 – Acquisitions

Supplemental Financial Data:

Selected Quarterly Financial Data (Unaudited)

PAGE

64
65

101

102

107

108

109

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
ITT Corporation
White Plains, New York

We have audited the accompanying consolidated balance sheets of ITT Corporation and subsidiaries (the
"Company") as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive
income, cash flows, and shareholders' equity for each of the three years in the period ended December 31, 2015.
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position
of ITT Corporation and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles
generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company's internal control over financial reporting as of December 31, 2015, based on the criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 19, 2016 expressed an unqualified opinion on the
Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP
Stamford, Connecticut

February 19, 2016

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31
Revenue

Costs of revenue

Gross profit

Sales and marketing expenses

General and administrative expenses

Research and development expenses

Asbestos-related (benefit) costs, net

Operating income

Interest and non-operating (income) expenses, net

Income from continuing operations before income tax

Income tax expense (benefit)

Income from continuing operations

Income (loss) from discontinued operations, including tax benefit of
$24.5, $4.8, and $0.2, respectively

Net income

Less: (Loss) income attributable to noncontrolling interests

2015
$ 2,485.6

1,676.5

2014
$ 2,654.6

1,788.2

2013
$ 2,496.9

1,697.1

809.1

183.2

258.3

78.9

(91.4)

380.1

(2.2)

382.3

70.1

312.2

39.4

351.6

(0.2)

866.4

219.4

300.1

76.6

3.9

266.4

4.4

262.0

71.3

190.7

(3.9)

186.8

2.3

799.8

216.2

299.9

67.3

32.8

183.6

3.1

180.5

(309.6)

490.1

0.8

490.9

2.4

Net income attributable to ITT Corporation

$ 351.8

$ 184.5

$ 488.5

Amounts attributable to ITT Corporation:

Income from continuing operations, net of tax

$ 312.4

$ 188.4

$ 487.7

Income (loss) from discontinued operations, net of tax

39.4

(3.9)

0.8

Net income

$ 351.8

$ 184.5

$ 488.5

Earnings (loss) per share attributable to ITT Corporation:

Basic Earnings Per Share:

Continuing operations

Discontinued operations

Net income

Diluted Earnings Per Share:

Continuing operations

Discontinued operations

Net income

Weighted average common shares – basic

Weighted average common shares – diluted

Cash dividends declared per common share

3.48

0.44

3.92

3.44

0.44

3.88

89.8

90.7

$ 0.4732

2.06

(0.04)

2.02

2.03

(0.04)

1.99

91.5

92.8

0.44

5.36

0.01

5.37

5.28

0.01

5.29

91.0

92.3

0.40

The accompanying Notes to Consolidated Financial Statements are an integral part of the above statements of operations.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)
YEARS ENDED DECEMBER 31
Net income

Other comprehensive (loss) income:

Net foreign currency translation adjustment

2015
$ 351.6

2014
$ 186.8

2013
$ 490.9

(93.4)

(95.9)

10.9

Net change in postretirement benefit plans, net of tax impacts of $9.8,
$2.6, and $(38.8), respectively

Other comprehensive (loss) income

Comprehensive income

(9.5)

(102.9)

248.7

Less: Comprehensive (loss) income attributable to noncontrolling interests

(0.2)

(15.0)

(110.9)

75.9

2.3

66.3

77.2

568.1

2.4

Comprehensive income attributable to ITT Corporation

$ 248.9

$ 73.6

$ 565.7

Disclosure of reclassification adjustments and other adjustments to

postretirement benefit plans

Reclassification adjustments:

Amortization of prior service (benefit) costs, net of tax expense (benefit) of
$3.8, $2.2, and $(0.1), respectively (See Note 15)

Amortization of net actuarial loss, net of tax benefit of $(4.5), $(3.1), and
$(4.8), respectively (See Note 15)

Gain on plan curtailment, net of tax expense of $1.6, $0.0, and $0.0,
respectively

(6.2)

8.6

(2.6)

(3.8)

6.3

—

Other adjustments:

Prior service (cost) credit, net of tax benefit (expense) of $0.7, $(19.7),
and $(7.1), respectively

Net actuarial (loss) gain, net of tax benefit (expense) of $8.2, $23.2, and
$(26.8), respectively

Unrealized change from foreign currency translation

(1.3)

34.5

(10.5)

2.5

(53.8)

1.8

0.3

8.5

—

11.9

46.1

(0.5)

Net change in postretirement benefit plans, net of tax

(9.5)

$ (15.0)

$ 66.3

The accompanying Notes to Consolidated Financial Statements are an integral part of the statements of comprehensive income.

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31
Assets

Current assets:

Cash and cash equivalents

Receivables, net

Inventories, net

Other current assets

Total current assets

Plant, property and equipment, net

Goodwill

Other intangible assets, net

Asbestos-related assets

Deferred income taxes

Other non-current assets

Total non-current assets

Total assets

Liabilities and Shareholders’ Equity

Current liabilities:

2015

2014

415.7

584.9

292.7

204.4

584.0

500.1

302.3

249.8

1,497.7

1,636.2

443.5

778.3

187.2

337.5

326.1

153.3

443.9

632.1

91.4

374.0

304.1

149.8

2,225.9

1,995.3

$ 3,723.6

$ 3,631.5

Short-term loans and current maturities of long-term debt

Accounts payable

Accrued liabilities

Total current liabilities

Asbestos-related liabilities

Postretirement benefits

Other non-current liabilities

Total non-current liabilities

Total liabilities

Shareholders’ Equity:

Common stock:

Authorized - 250 shares, $1 par value per share (104.5 and 104.3 shares issued,
respectively)

Outstanding - 89.5 and 91.0 shares, respectively

Retained earnings

Accumulated other comprehensive loss:

Postretirement benefit plans

Cumulative translation adjustments

Unrealized loss on investment securities

Total ITT Corporation shareholders' equity

Noncontrolling interests

Total shareholders’ equity

Total liabilities and shareholders’ equity

245.7

314.7

392.7

953.1

954.8

260.4

189.9

1,405.1

2,358.2

89.5

1,696.7

(153.7)

(270.1)

(0.3)

1,362.1

3.3

1.5

309.6

464.3

775.4

1,116.6

249.7

269.5

1,635.8

2,411.2

91.0

1,445.1

(144.2)

(176.7)

(0.3)

1,214.9

5.4

1,365.4

$ 3,723.6

1,220.3
$ 3,631.5

The accompanying Notes to Consolidated Financial Statements are an integral part of the above balance sheets.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)
YEARS ENDED DECEMBER 31

Operating Activities
Net income
Less: Income (loss) from discontinued operations
Less: (Loss) income attributable to noncontrolling interests

Income from continuing operations attributable to ITT Corporation
Adjustments to income from continuing operations

Depreciation and amortization
Equity-based compensation
Asbestos-related (benefit) costs, net
Deferred income taxes

Asbestos-related payments, net
Contributions to postretirement plans
Changes in assets and liabilities:

Change in receivables
Change in inventories
Change in accounts payable
Change in accrued expenses
Change in accrued income taxes
Other, net

Net Cash – Operating activities

Investing Activities

Capital expenditures
Acquisitions, net of cash acquired
Purchases of investments
Maturities of investments
Proceeds from sale of businesses and other assets
Proceeds from insurance recovery
Other, net

Net Cash – Investing activities

Financing Activities

Commercial paper, net borrowings (repayments)
Short-term revolving loans, borrowings
Short-term revolving loans, repayments
Long-term debt, repaid
Repurchase of common stock
Dividends paid
Proceeds from issuance of common stock
Excess tax benefit from equity compensation activity
Other, net

Net Cash – Financing activities

Exchange rate effects on cash and cash equivalents
Net Cash – Discontinued operations
Net change in cash and cash equivalents

Cash and cash equivalents – beginning of year

Cash and Cash Equivalents – End of Period
Supplemental Cash Flow Disclosures

Cash paid (received) during the year for:

Interest
Income taxes, net of refunds received

2015

2014

2013

$ 351.6
39.4
(0.2)
312.4

$ 186.8
(3.9)
2.3
188.4

$ 490.9
0.8
2.4
487.7

90.0
15.7
(91.4)
25.6
(24.6)
(18.6)

(72.0)
31.5
11.0
(45.8)
(7.4)
3.3
229.7

(86.7)
(351.0)
(140.1)
78.5
9.5
4.2
0.1
(485.5)

94.5
200.0
(50.0)
(3.6)
(84.0)
(42.8)
6.2
3.4
(3.3)
120.4
(31.6)
(1.3)
(168.3)
584.0
$ 415.7

88.3
14.0
3.9
(0.2)
(3.9)
(12.6)

(45.1)
(3.1)
(5.8)
(5.2)
(10.4)
36.4
244.7

(118.8)
(2.8)
(165.4)
269.0
3.7
—
(0.2)
(14.5)

(38.0)
—
—
(1.7)
(60.2)
(40.7)
15.1
10.4
(1.5)
(116.6)
(31.2)
(5.7)
76.7
507.3
$ 584.0

86.9
13.1
32.8
(364.0)
(25.4)
(11.9)

(60.7)
(10.7)
4.5
35.6
28.6
10.1
226.6

(122.9)
0.7
(240.2)
168.2
2.3
—
3.1
(188.8)

25.4
—
—
(6.4)
(87.9)
(36.4)
34.8
8.7
3.5
(58.3)
(0.4)
(16.3)
(37.2)
544.5
$ 507.3

4.3
48.5

1.1
70.0

0.9
21.9

The accompanying Notes to Consolidated Financial Statements are an integral part of the above statements of cash flows.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(IN MILLIONS)
YEARS ENDED DECEMBER 31
Common Stock

Common stock, beginning balance
Activity from stock incentive plans
Share repurchases

Common stock, ending balance

Retained Earnings

Retained earnings, beginning balance

Net income attributable to ITT Corporation
Dividends declared
Activity from stock incentive plans
Share repurchases
Purchase of noncontrolling interest

Retained earnings, ending balance

Accumulated Other Comprehensive Loss

Postretirement benefit plans, beginning balance

Net change in postretirement benefit plans
Postretirement benefit plans, ending balance
Cumulative translation adjustment, beginning balance

Net cumulative translation adjustment

Cumulative translation adjustments, ending balance
Unrealized (loss) gain on investment securities,

beginning balance

Unrealized (loss) gain on investment securities,

ending balance

Total accumulated other comprehensive loss
Noncontrolling Interests

Noncontrolling interests, beginning balance

(Loss) income attributable to noncontrolling interests
Dividend to noncontrolling interest shareholders
Noncontrolling interest acquired
Purchase of noncontrolling interests
Reclassification of noncontrolling interests
Other

Noncontrolling interests, ending balance

Total Shareholders’ Equity

Total shareholders’ equity, beginning balance

Net change in common stock
Net change in retained earnings
Net change in accumulated other comprehensive loss
Net change in noncontrolling interests
Total shareholders’ equity, ending balance

SHARES
2014

2015

2013

2015

DOLLARS
2014

91.0
0.6
(2.1)
89.5

91.0
1.4
(1.4)
91.0

91.9 $

2.3
(3.2)
91.0 $

91.0 $

0.6
(2.1)
89.5 $

91.0 $

1.4
(1.4)
91.0 $

2013

91.9
2.3
(3.2)
91.0

$ 1,445.1 $1,320.3 $

898.8
488.5
(36.7)
54.4
(84.7)
—
$ 1,696.7 $1,445.1 $ 1,320.3

184.5
(40.6)
38.2
(58.8)
1.5

351.8
(42.8)
24.5
(81.9)
—

(9.5)

(15.0)

$ (144.2) $ (129.2) $ (195.5)
66.3
$ (153.7) $ (144.2) $ (129.2)
(91.7)
$ (176.7) $ (80.8) $
10.9
(80.8)

$ (270.1) $ (176.7) $

(95.9)

(93.4)

(0.3) $

(0.3)

(0.3) $

$
(0.3)
$ (424.1) $ (321.2) $ (210.3)

(0.3) $

5.4 $
(0.2)
(3.3)
1.4
—
—
—
3.3 $

5.9 $
2.3
—
—
(2.9)
—
0.1
5.4 $

—
2.4
—
—
—
3.9
(0.4)
5.9

$ 1,220.3 $1,206.9 $

703.2
(0.9)
421.5
77.2
5.9
$ 1,365.4 $1,220.3 $ 1,206.9

(1.5)
251.6
(102.9)
(2.1)

—
124.8
(110.9)
(0.5)

The accompanying Notes to Consolidated Financial Statements are an integral part of the above statements of changes in shareholders’ equity.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS AND SHARE AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

NOTE 1
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Description of Business

ITT Corporation is a diversified manufacturer of highly engineered critical components and customized technology
solutions for the energy, transportation, and industrial markets. Unless the context otherwise indicates, references
herein to "ITT," "the Company," and such words as "we," "us," and "our" include ITT Corporation and its subsidiaries.
ITT operates through four segments: Industrial Process, consisting of industrial pumping and complementary
equipment; Motion Technologies, consisting of friction and shock & vibration equipment; Interconnect Solutions,
consisting of electronic connectors; and Control Technologies, consisting of fluid handling, motion control, and noise
and energy absorption products. Financial information for our segments is presented in Note 3, "Segment Information."

On October 31, 2011, ITT completed the tax-free spin-off of its Defense and Information Solutions business, Exelis
Inc. (Exelis), and its water-related businesses, Xylem Inc. (Xylem) by way of a distribution of all of the issued and
outstanding shares of Exelis common stock and Xylem common stock, on a pro rata basis, to ITT shareholders of
record on October 17, 2011. This transaction is referred to in this Report as the “2011 spin-off.” On May 29, 2015,
Harris Corporation acquired Exelis.

Basis of Presentation

The Consolidated Financial Statements and Notes thereto were prepared in conformity with accounting principles

generally accepted in the United States of America (GAAP).

The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.
Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not
limited to, asbestos-related liabilities and recoveries from insurers, revenue recognition, unrecognized tax benefits,
deferred tax valuation allowances, projected benefit obligations for postretirement plans, accounting for business
combinations, goodwill and other intangible asset impairment testing, environmental liabilities and recoveries from
insurers, allowance for doubtful accounts and inventory valuation. Actual results could differ from these estimates.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Significant Accounting Policies

Principles of Consolidation

Our consolidated financial statements include the accounts of all majority-owned subsidiaries. ITT consolidates
companies in which it has a controlling financial interest or when ITT is considered the primary beneficiary of a variable
interest entity. We account for investments in companies over which we have the ability to exercise significant influence,
but do not hold a controlling interest under the equity method, and we record our proportionate share of income or
losses in the Consolidated Statements of Operations. The results of companies acquired or disposed of during the
fiscal year are included in the Consolidated Financial Statements from the effective date of acquisition or up to the
date of disposal or distribution. All intercompany transactions have been eliminated.

Revenue Recognition

Revenue is derived from the sale of products and services to customers. The following revenue recognition policies

describe the manner in which we account for different classes of revenue transactions.

Revenue is recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable,
collectability is reasonably assured and delivery has occurred or services have been rendered. For product sales,
other than long-term construction and production-type contracts (referred to as design and build arrangements), we
recognize revenue at the time title and risks and rewards of ownership pass to the customer, which is generally when
products are shipped, and the contractual terms have been fulfilled. Certain contracts with customers require delivery,
installation, testing, certification or other acceptance provisions to be satisfied before revenue is recognized. In instances
where contractual terms include a provision for customer acceptance, revenue is recognized when either (i) we have
previously demonstrated that the product meets the specified criteria based on either seller or customer-specified
objective criteria or (ii) on formal acceptance received from the customer where the product has not been previously
demonstrated to meet customer-specified objective criteria.

We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution
providers at the time of sale when the channel partners have economic substance apart from ITT and ITT has completed
its obligations related to the sale. Revenue on service and repair contracts is recognized after services have been
agreed to by the customer and rendered or over the service period.

For multiple deliverable arrangements, we recognize revenue based on the relative selling price if the deliverable
has stand-alone value to the customer and, in arrangements that include a general right of return relative to the delivered
element, performance of the undelivered element is considered probable and substantially in the Company’s control.
The selling price for a deliverable is based on vendor-specific objective evidence of selling price (VSOE), if available,
third-party evidence of selling price (TPE), if VSOE is not available, or best estimated selling price (BESP), if neither
VSOE nor TPE is available.

The deliverables in our arrangements with multiple elements include various products and may include related
services, such as installation and start-up services. We allocate arrangement consideration based on the relative
selling prices of the separate units of accounting determined in accordance with the hierarchy described above. For
deliverables that are sold separately, we establish VSOE based on the price when the deliverable is sold separately.
We establish TPE, generally for services, based on prices similarly situated customers pay for similar services from
third party vendors. For those deliverables for which we are unable to establish VSOE or TPE, we estimate the selling
price considering various factors including market and pricing trends, geography, product customization, and profit
objectives. Revenue for multiple element arrangements is recognized when the appropriate revenue recognition criteria
for the individual deliverable have been satisfied.

We recognize revenue for certain long-term design and build projects using the percentage-of-completion method,
based upon the percentage of costs incurred to total projected costs. Revenue and profit recognized under the
percentage-of-completion method are based on management’s estimates. Amounts invoiced to customers in excess
of revenue recognized are recorded as deferred revenue, until the revenue recognition criteria are satisfied. Revenue
that is earned and recognized in excess of amounts invoiced is recorded as a component of receivables, net. During
the performance of long-term sales contracts, estimated final contract prices and costs are reviewed quarterly and
revisions are made as required and recorded in income in the period in which they are determined.

We apply the completed-contract method of accounting for smaller design and build contracts, including those of
short-term duration. Amounts invoiced to customers in excess of revenue recognized are recorded as a reduction of
inventory to the extent project costs have accumulated within inventory or as deferred revenue, within accrued liabilities,
until the revenue recognition criteria are satisfied. Our results of operations and financial position would not vary
materially had we used the percentage-of-completion method for these types of contracts.

Provisions for estimated losses on uncompleted design and build arrangements are recognized in the period in
which such losses are determined. Provisions for estimated losses are recorded as a component of costs of revenue.

We record a reduction in revenue at the time of sale for estimated product returns, rebates and other allowances,

based on historical experience and known trends.

Revenue is reported net of any required taxes collected from customers and remitted to government authorities,

with the collected taxes recorded as current liabilities until remitted to the relevant government authority.

Shipping and Handling Costs

Shipping and handling costs are recorded as a component of costs of revenue.

Product Warranties

Our standard product warranty terms generally include post-sales support and repairs or replacement of a product
at no additional charge for a specified period of time. Accruals for estimated expenses related to product warranties
are made at the time revenue is recognized and are recorded as a component of costs of revenue. We estimate the
liability for warranty claims based on our standard warranties, the historical frequency of claims and the cost to replace
or repair our products under warranty. Factors that influence our warranty liability include the number of units sold, the
length of warranty term, historical and anticipated rates of warranty claims and the cost per claim.

Asbestos-Related Liabilities and Assets

ITT has been named as a defendant in numerous product liability lawsuits alleging personal injury due to asbestos
exposure. We accrue the estimated value of pending claims and unasserted claims estimated to be filed over the next
10 years, including legal fees, on an undiscounted basis, due to the inability to reliably forecast the timing of future
cash flows. Assumptions utilized in estimating the liability for both pending and unasserted claims include: disease
type, average settlement costs, percentage of claims settled or dismissed, the number of claims estimated to be filed
against the Company in the future and the costs to defend such claims.

The Company has also recorded an asbestos-related asset, composed of insurance receivables. The asbestos-
related asset represents our best estimate of probable recoveries from third parties for pending claims, as well as
unasserted claims estimated to be filed over the next 10 years. In developing this estimate, the Company considers
coverage-in-place and other settlement agreements with its insurers, as well as a review of expected levels of future
cost recovery, the financial viability of the insurance companies, the method by which losses will be allocated to the
various insurance policies and the years covered by those policies, and interpretation of the various policy and contract
terms and limits and their interrelationships. Consistent with the asbestos liability, the asbestos-related asset has not
been discounted to present value due to the inability to reliably forecast the timing of future cash flows. Under coverage-
in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for the
Company’s pending and future asbestos claims on specified terms and conditions. Insurance payments under
coverage-in-place agreements are made to the Company as asbestos claims are settled or adjudicated. The Company’s
buyout agreements provide an agreed upon amount of available coverage for future asbestos claims under the subject
policies to be paid to a Qualified Settlement Fund (QSF) on a specific schedule as agreed upon by the Company and
its insurer. However, assets in the QSF are only available and distributed when qualifying asbestos expenditures are
submitted for reimbursement as defined in the QSF agreement. Therefore, recovery of insurance reimbursements
under these types of agreements is dependent on the timing of the payment of the liability and, consistent with the
asbestos liability, have not been discounted to present value.

In the third quarter each year we conduct an asbestos remeasurement with the assistance of outside consultants
to review and update, as appropriate, the underlying assumptions used to estimate our asbestos liability and related
assets, including a reassessment of the time horizon over which a reasonable estimate of unasserted claims can be
projected. In addition, as part of our ongoing review of our net asbestos exposure, each quarter we assess the most
recent data available for the key inputs and assumptions, comparing the data to the expectations on which the most
recent annual liability and asset estimates were based. Provided the quarterly review does not indicate a more detailed
evaluation of our asbestos exposure is required, each quarter we record a net asbestos expense to maintain a rolling
10-year time horizon.

Postretirement Benefit Plans

ITT sponsors pension and other employee-related defined benefit plans (collectively, postretirement benefit plans)
for employees around the world. Postretirement benefit obligations are generally determined, where applicable, based
on participant years of service, future compensation, and age at retirement or termination. The determination of
projected benefit obligations and the recognition of expenses related to postretirement benefit plans are dependent
on various assumptions that are judgmental. The assumptions involved in the measurement of our postretirement
benefit plan obligations and net periodic postretirement costs primarily relate to discount rates, long-term expected
rates of return on plan assets, mortality and termination rates, and other factors. Management develops each
assumption using relevant Company experience in conjunction with market-related data for each individual country in
which such plans exist. Actual results that differ from our assumptions are accumulated and are amortized over the
estimated future working life, or remaining lifetime, of the plan participants depending on the nature of the retirement
plan. For the recognition of net periodic postretirement cost, the calculation of the long-term expected return on plan
assets is generally derived using a market-related value of plan assets based on yearly average asset values at the
measurement date over the last 5 years.

The fair value of plan assets is estimated based on market prices or estimated fair value at the measurement date.

The funded status of each plan is recorded on our balance sheet. Actuarial gains and losses and prior service
costs or credits that have not yet been recognized through net income are recorded in accumulated other comprehensive
income within shareholders’ equity, net of taxes, until they are amortized as a component of net periodic postretirement
cost.

Research & Development

Research and development activities are charged to expense as incurred.

Income Taxes

We determine the provision for income taxes using the asset and liability approach. Under this approach, deferred
income tax assets and liabilities are determined based on the estimated future tax effects of differences between the
financial reporting and tax bases of assets and liabilities, applying currently enacted tax rates in effect for the year in
which we expect the differences will reverse. The ultimate realization of deferred tax assets is dependent on the
generation of future taxable income (including the reversals of deferred tax liabilities) during the periods in which those
deferred tax assets will become deductible.

We record a valuation allowance against our deferred tax assets when it is more likely than not that all or a portion
of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, the Company considers
all available positive and negative evidence regarding the realizability of its deferred tax assets, including the future
reversal of existing taxable temporary differences, taxable income in carryback periods, prudent and feasible tax
planning strategies, estimated future taxable income, and whether we have a recent history of losses. The valuation
allowance can be affected by changes to tax regulations, interpretations and rulings, changes to enacted statutory tax
rates, and changes to future taxable income estimates.

We have not provided deferred tax liabilities for the impact of U.S. income taxes on undistributed foreign earnings
which we plan to reinvest indefinitely outside the U.S. We plan foreign earnings remittance amounts based on projected
cash flow needs, as well as the working capital and long-term investment requirements of foreign subsidiaries and our
domestic operations.

Furthermore, we recognize the tax benefit from an uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position in
consideration of applicable tax statutes and related interpretations and precedents and the expected outcome of the
proceedings (or negotiations) with the taxing authorities. Tax benefits recognized in the financial statements from such
a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized on
ultimate settlement.

Earnings Per Share

Basic earnings per common share considers the weighted average number of common shares outstanding. Diluted
earnings per share considers the outstanding shares utilized in the basic earnings per share calculation as well as the
dilutive effect of outstanding stock options and restricted stock that do not contain rights to nonforfeitable dividends.
Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock units and
unvested performance stock units. The dilutive effect of such equity awards is calculated based on the average share
price for each reporting period using the treasury stock method. Common stock equivalents are excluded from the
computation of earnings per share if they have an anti-dilutive effect.

Cash and Cash Equivalents

ITT considers all highly liquid investments purchased with an original maturity or remaining maturity at the time of
purchase of three months or less to be cash equivalents. Cash equivalents primarily include fixed-maturity time deposits
and money market investments. We record the fixed maturity time deposits at amortized cost and accrue interest
during the maturity period.

Concentrations of Credit Risk

Financial instruments that potentially subject ITT to significant concentrations of credit risk consist principally of
cash and cash equivalents, accounts receivable from trade customers, investments and derivatives. We maintain cash
and cash equivalents with various financial institutions located in different geographical regions, and our policy is
designed to limit exposure to any individual counterparty. As part of our risk management processes, we perform
periodic evaluations of the relative credit standing of the financial institutions. We have not sustained any material
credit losses during the previous three years from financial instruments held at financial institutions.

Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising
ITT’s customer base and their dispersion across many different industries and geographic regions. However, our largest
customer represents approximately 10% of the December 31, 2015 outstanding trade accounts receivable balance.
ITT performs ongoing credit evaluations of the financial condition of its third-party distributors, resellers and other
customers and requires collateral, such as letters of credit and bank guarantees, in certain circumstances.

Allowance for Doubtful Accounts

We determine our allowance for doubtful accounts using a combination of factors to reduce our trade receivables
balances to their estimated net realizable amount. We maintain an allowance for doubtful accounts based on a variety
of factors including the length of time receivables are past due, macroeconomic trends and conditions, significant one-
time events, historical experience and the financial condition of our customers. We record a specific reserve for individual
accounts when we become aware of specific customer circumstances, such as in the case of bankruptcy filings or
deterioration in the customer’s operating results or financial position. The past due or delinquency status of a receivable
is based on the contractual payment terms of the receivable. If circumstances related to the specific customer change,
we adjust estimates of the recoverability of receivables as appropriate.

Inventories

Inventories, which include the costs of material, labor and overhead, are stated at the lower of cost or market, with
cost generally computed on a first-in, first-out (FIFO) basis. Estimated losses from obsolete and slow-moving inventories
are recorded to reduce inventory values to their estimated net realizable value and are charged to cost of sales. At
the point of loss recognition, a new cost basis for that inventory is established and subsequent changes in facts and
circumstances do not result in a recovery in carrying value. Inventories valued under the last-in, first-out (LIFO) method
represent 13.2% and 15.1% of total 2015 and 2014 inventories, respectively. We have a LIFO reserve of $8.3 and
$9.3 recorded as of December 31, 2015 and 2014, respectively.

Cost of sales is generally reported using standard cost techniques with full overhead absorption that approximates

actual cost.

Plant, Property and Equipment

Plant, property and equipment, including capitalized interest applicable to major project expenditures, are recorded
at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
buildings and improvements – five to 40 years, machinery and equipment – two to 10 years, furniture and office
equipment – three to seven years, and other – five to 40 years. Leasehold improvements are depreciated over the life
of the lease or the asset, whichever is shorter. Fully depreciated assets are retained in property and accumulated
depreciation accounts until disposal. Repairs and maintenance costs are expensed as incurred.

The Company enters into operating and capital leases for the use of premises and equipment. Rent expense
related to operating lease agreements are recorded on a straight line basis, considering lease incentives and escalating
rental payments.

Capitalized Internal Use Software

Costs incurred in the preliminary project stage of developing or acquiring internal use software are expensed as
incurred. After the preliminary project stage is completed, management has approved the project and it is probable
that the project will be completed and the software will be used for its intended purpose, ITT capitalizes certain internal
and external costs incurred to acquire or create internal use software, principally related to software coding, designing
system interfaces and installation and testing of the software. ITT amortizes capitalized internal use software costs
using the straight-line method over the estimated useful life of the software, generally from three to seven years.

Investments

As of December 31, 2015 and 2014, we held investments in time deposits with a cost of $64.9 and $5.4, respectively,
having an original maturity exceeding three months at the time of purchase. These investments mature within four
months of the balance sheet date and have been presented in other current assets as short-term investments on the
Consolidated Balance Sheet. These investments have been classified as held-to-maturity and are recorded at amortized
cost, which approximates fair value at December 31, 2015 and 2014. We did not realize any gains or losses from the
maturity of our investments during 2015 or 2014. Interest income recognized from these investments during 2015 or
2014 was not material to our results of operations.

Investments in corporate-owned life insurance (COLI) policies are recorded at their cash surrender values as of
the balance sheet date. The Company’s investments in COLI policies are included in other non-current assets in the
consolidated balance sheets and were $92.9 and $93.0 at December 31, 2015 and 2014, respectively. Changes in
the cash surrender value during the period generally reflect gains or losses in the fair value of assets, premium
payments, and policy redemptions. Gains from COLI investments of $3.6, $4.6, and $3.7 were recorded within operating
expenses during years ended December 31, 2015, 2014 and 2013, respectively. These investments were made with
the intention of utilizing them as a long-term funding source for deferred compensation obligations, which as of
December 31, 2015 and 2014 were approximately $13.0 and $14.4, respectively, however, the COLI policies do not
represent a committed funding source for these obligations and as such they are subject to claims from creditors, and
we can designate them for another purpose at any time.

Long-Lived Asset Impairment

Long-lived assets, including intangible assets with finite lives and capitalized internal use software, are tested for
impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We
assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to
generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from
the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value
of the asset. When an impairment is identified, we reduce the carrying amount of the asset to its estimated fair value
based on a discounted cash flow approach or, when available and appropriate, to comparable market values.

Goodwill and Intangible Assets

Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to
the net assets of the acquired business. Intangible assets include customer relationships, proprietary technology,
trademarks, patents and other intangible assets. Intangible assets with a finite life are generally amortized on a straight-
line basis over an estimated economic useful
life, which generally ranges from 10-20 years, and are tested for
impairment if indicators of impairment are identified. Certain of our intangible assets have an indefinite life, namely
certain brands and trademarks.

Goodwill and indefinite-lived intangible assets are not amortized, but rather are tested for impairment annually (or
more frequently if impairment indicators arise, such as changes to the reporting unit structure, significant adverse
changes in the business climate or an adverse action or assessment by a regulator). We conduct our annual impairment
testing on the first day of the fourth fiscal quarter. An initial qualitative evaluation is performed which considers present
events and circumstances, to determine the likelihood of impairment. If the likelihood of impairment is not considered
to be more likely than not, then no further testing is performed. If it is considered to be more likely than not that the
asset is impaired, then a two-step quantitative impairment test is performed. If the carrying value of the reporting unit
exceeds its estimated fair value, then the second step of the impairment test is performed in order to measure the
impairment loss to be recorded, if any. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value,
then we record an impairment loss equal to the difference. For indefinite-lived intangibles, if it is considered to be more
likely than not that the asset is impaired, we compare the fair value of those assets to their carrying value. We recognize
an impairment loss when the estimated fair value of the indefinite-lived intangible asset is less than its carrying value.

We estimate the fair value of our reporting units using an income approach. Under the income approach, we
estimate fair value based on the present value of estimated future cash flows. We estimate the fair value of our indefinite-
lived intangible assets using the relief from royalty method. The relief from royalty method estimates the portion of a
company’s earnings attributable to an intellectual property asset based on an assumed royalty rate that the company
would have paid had the asset not been owned.

Business Combinations

ITT allocates the purchase price of its acquisitions to the tangible and intangible assets acquired, liabilities assumed,
and non-controlling interests in the acquiree based on their estimated fair value at the acquisition date. Changes to
acquisition date fair values prior to the expiration of the measurement period, a period not to exceed 12 months from
date of acquisition, are recorded as an adjustment to the associated goodwill. Changes to acquisition date fair values
after expiration of the measurement period are recorded in earnings. The excess of the acquisition price over those
estimated fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred and the costs
associated with restructuring actions initiated after the acquisition are recognized separately from the business
combination.

Commitments and Contingencies

We record accruals for commitments and loss contingencies for those which are both probable and the amount
can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related
fees can be reasonably estimated. Significant judgment is required to determine both probability and the estimated
amount of loss. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations,
settlements, rulings, advice of legal counsel, and other current information.

Environmental-Related Liabilities and Assets

Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been
incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies.
Our estimated liability is reduced to reflect the participation of other potentially responsible parties in those instances
where it is probable that such parties are legally responsible and financially capable of paying their respective shares
of the relevant costs. Accruals for environmental liabilities are primarily included in other non-current liabilities at
undiscounted amounts and exclude claims for recoveries from insurance companies or other third parties.

The Company records an asset related to its environmental exposures for insurance and other third parties. The
environmental-related asset represents our best estimate of probable recoveries from third parties for costs incurred
in past periods, as well as costs estimated to be incurred in future periods.

Environmental costs and related recoveries are recorded within general and administrative expenses in the

Consolidated Statements of Operations.

Foreign Currency Translation

The national currencies of our foreign subsidiaries are generally the functional currencies. Balance sheet accounts
are translated at the exchange rate in effect at the end of each period, except for equity which is translated at historical
rates; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains
and losses resulting from foreign currency translation are reflected in the cumulative translation adjustments component
of shareholders’ equity.

For foreign subsidiaries that do not use the local currency as their functional currency, foreign currency assets and
liabilities are remeasured to the foreign subsidiary’s functional currency using end of period exchange rates, except
for nonmonetary balance sheet accounts, which are remeasured at historical exchange rates.

For transactions denominated in other than the functional currency, revenue and expenses are remeasured at
average exchange rates in effect during the reporting period in which the transactions occurred, except for expenses
related to nonmonetary assets and liabilities. Transaction gains or losses from foreign currency remeasurement are
reported in general and administrative expenses.

NOTE 2
RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of all accounting standard updates (ASUs). ASUs not listed
below were assessed and determined to be either not applicable or are expected to have minimal impact on our
consolidated financial position or results of operations.

Recently Adopted Accounting Pronouncements

In November 2015, the Financial Accounting Standards Board (FASB) issued guidance to simplify the presentation
and reduce cost and complexity around deferred tax assets (DTAs) and deferred tax liabilities (DTLs). The new guidance
requires entities to present DTAs and DTLs as noncurrent in the balance sheet as opposed to the previous guidance
which required entities to separately present DTAs and DTLs as current and noncurrent in the balance sheet. The
requirement to net DTAs and DTLs by tax jurisdiction is unchanged. ITT has elected to adopt this accounting
pronouncement as of December 31, 2015 on a prospective basis. The adoption of this amendment did not have a
material impact to ITT's financial statements.

In September 2015, the FASB issued guidance simplifying the accounting for measurement-period adjustments.
This guidance replaces the requirement that an acquirer in a business combination account for measurement period
adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that
are identified during the measurement period in the reporting period in which the adjustment amounts are determined.
The acquirer is required to record, in the same period’s financial statements, the effect on earnings of changes in
depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated
as if the accounting had been completed at the acquisition date. The pronouncement is effective for annual reporting
periods beginning after December 15, 2015, including interim periods within that reporting period. The guidance is to
be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance, but
early adoption is permitted. The adoption of this amendment did not have a material impact to ITT's financial statements.
The effects on future periods will depend upon the nature and significance of future acquisitions.

In April 2014, the FASB issued guidance that raises the threshold for a disposal to qualify as a discontinued
operation and requires new disclosures of both discontinued operations and other disposals that do not meet the
definition of a discontinued operation. The new guidance defines a discontinued operation as a disposal of a component
or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or
will have) a major effect on an entity's operations and financial results. The adoption of these amendments on January
1, 2015 did not have a material impact to ITT's financial statements. The effects on future periods will depend upon
the nature and significance of future disposals.

Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments
are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is
recognized. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty
of revenue and cash flows arising from an entity’s contracts with customers. The new guidance will be effective for the
Company beginning in its first quarter of 2018. The amendments may be applied retrospectively to each prior period
presented or with the cumulative effect recognized as of the date of initial application. ITT is currently evaluating the
impact of these amendments and the transition alternatives on ITT's financial statements.

NOTE 3
SEGMENT INFORMATION

The Company’s segments are reported on the same basis used internally for evaluating performance and for
allocating resources. Our four reportable segments are referred to as: Industrial Process, Motion Technologies,
Interconnect Solutions and Control Technologies.

Industrial Process manufactures engineered fluid process equipment serving a diversified mix of customers in
global industries such as chemical, oil and gas, mining, and other industrial process markets and is a provider
of plant optimization and efficiency solutions and aftermarket services and parts.

Motion Technologies manufactures brake components and specialized sealing solutions, shock absorbers and
damping technologies primarily for the global automotive, truck and trailer, public bus and rail transportation
markets.

Interconnect Solutions manufactures and designs a wide range of highly engineered harsh environment connector
solutions that make it possible to transfer signal and power between electronic devices which service global
customers for the aerospace and defense, industrial and transportation, oil and gas, and medical markets.

Control Technologies manufactures specialized equipment, including actuation, fuel management, noise and
energy absorption, and environmental control system components, for the aerospace and defense, and
industrial markets.

Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy,
depreciation, and other administrative costs, as well as charges related to certain matters, such as asbestos and
environmental liabilities, that are managed at a corporate level and are not included in segment results when evaluating
performance or allocating resources. Assets of the segments exclude general corporate assets, which principally
consist of cash, investments, asbestos-related receivables and certain property, plant and equipment.

Revenue

Operating Income (Loss)

Operating Margin

2015

2014

2013

2015

2014

2013

Industrial Process

$ 1,113.8

$ 1,208.3

$ 1,107.4

$ 141.2

$ 123.9

$ 112.0

Motion Technologies

Interconnect Solutions

Control Technologies

767.2

328.1

281.2

769.4

392.8

290.5

721.8

395.5

278.2

126.4

130.9

100.3

12.2

42.4

22.2

63.5

14.2

55.3

Total segment results

2,490.3

2,661.0

2,502.9

322.2

340.5

281.8

2015

12.7%

16.5%

3.7%

15.1%

13.0%

—

2014

10.3%

17.0%

5.7%

21.9%

12.8%

—

2013

10.1%

13.9%

3.6%

19.9%

11.3%

—

(4.7)

—

(6.4)

—

91.4

(3.9)

(32.8)

(6.0)

(33.5)

(70.2)

(65.4)

(6.0)

57.9

(74.1)

(98.2)

$ 2,485.6

$ 2,654.6

$ 2,496.9

$ 380.1

$ 266.4

$ 183.6

15.3%

10.0%

7.4%

Assets

2015

2014

$ 1,097.5

$ 1,152.3

779.8

303.2

370.6

450.1

365.4

334.1

1,172.5

1,329.6

Capital
Expenditures

Depreciation
and Amortization

2015

20.4

39.3

17.6

6.1

3.3

2014

40.4

49.2

20.2

3.8

5.2

2013

63.0

31.7

15.6

5.7

6.9

2015

2014

2013

27.9

32.4

10.8

12.6

6.3

29.1

30.3

12.8

10.0

6.1

31.0

29.6

10.6

10.0

5.7

$ 3,723.6

$ 3,631.5

86.7

$ 118.8

$ 122.9

90.0

88.3

86.9

Asbestos-related benefit
(costs), net
Eliminations / Other
corporate costs
Total Eliminations /
Corporate and Other costs
Total

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Corporate and Other

Total

Geographic Information

United States

Germany

Other developed markets

Other emerging growth markets

Total

Revenue(a)
2014

2015

2013

941.1

927.0

896.2

290.7

476.8

777.0

303.3

588.3

836.0

266.7

583.4

750.6

$ 2,485.6

$ 2,654.6

$ 2,496.9

(a) Revenue to external customers is attributed to individual regions based upon the destination of product or service

delivery.

Geographic Information
United States
Italy
Germany
South Korea
China
Other developed markets
Other emerging growth markets
Total

Plant, Property &
Equipment, Net
2015
$ 192.0
81.6
36.8
32.6
37.2
22.2
41.1
$ 443.5

2014
$ 169.4
89.3
44.9
37.1
36.1
20.9
46.2
$ 443.9

The following table provides revenue by product category, net of intercompany balances.

Pumps and complementary products
Pump support and maintenance services
Brake component products
Shock absorber equipment
Connectors equipment
CT Aerospace products
CT Industrial products
Total

2015
$ 1,025.9
87.8
656.7
110.2
327.9
210.7
66.4
$ 2,485.6

2014
$ 1,112.3
96.0
647.9
121.3
392.3
199.5
85.3
$ 2,654.6

2013
$ 1,010.8
96.6
619.6
102.0
394.9
192.6
80.4
$ 2,496.9

During 2015, 2014, and 2013, a single customer accounted for 9.1%, 9.2%, and 10.1% of consolidated ITT revenue,

respectively.

NOTE 4
RESTRUCTURING ACTIONS

We have initiated various restructuring actions throughout the business during the past three years. Discussion
of certain individually significant actions is provided below. Other less significant restructuring actions initiated during
2014 and 2013 include reduction in force initiatives and geographic sales presence realignment. Restructuring costs
are included as a component of general and administrative expense in our Consolidated Income Statements.
Restructuring costs incurred during each of the previous three years ended are presented in the table below.

By component:

Severance costs

Asset write-offs

Other restructuring costs

Total restructuring costs

By segment:

Industrial Process

Motion Technologies

Interconnect Solutions

Control Technologies

Corporate and Other

2015

2014

2013

$ 21.7

$ 23.2

$ 22.3

1.0

1.3

1.5

3.4

3.9

2.2

$ 24.0

$ 28.1

$ 28.4

$ 12.2

—

6.3

5.3

0.2

4.2

2.1

20.5

—

1.3

4.5

5.1

17.2

0.4

1.2

In the fourth quarter of 2015, we initiated a restructuring action at our Control Technologies segment to relocate
the operations of two facilities to a lower-cost location. The total restructuring costs of this action is estimated to be
approximately $7, primarily related to employee severance. During 2015, we recognized $4.5 related to this action
and anticipate that the action will be completed in early 2017.

The following table displays a rollforward of the restructuring accruals, presented on our Consolidated Balance

Sheet within accrued liabilities, for each of the previous two years ended December 31st.

Restructuring accruals - beginning balance

Restructuring costs

Cash payments

Asset write-offs

Foreign exchange translation and other

Restructuring accrual - ending balance

By accrual type:

Severance accrual

Facility carrying and other costs accrual

2015
$ 21.9

2014
$ 14.7

24.0

(24.4)

(1.0)

(0.5)

28.1

(18.6)

(1.5)

(0.8)

$ 20.0

$ 21.9

$ 19.6

0.4

2.3

2015 Industrial Process Restructuring Actions

In March 2015, we announced a series of restructuring actions in the Company's Industrial Process segment
related to a strategic reorganization of the business and to achieve efficiencies and reduce the overall cost structure.
The Company expects to incur restructuring costs, principally involuntary severance costs, of approximately $16 related
to this action. The costs incurred during 2015 primarily relate to employee severance for approximately 200 planned
headcount reductions. We expect to incur remaining restructuring costs of approximately $4 related to this action in
the first half of 2016. The following table provides a rollforward of the restructuring accruals associated with the 2015
Industrial Process restructuring actions.

Restructuring accruals - beginning balance

Restructuring costs

Cash payments

Asset write-offs

Foreign exchange translation

Restructuring accruals - ending balance

2015

—

12.2

(6.1)

(1.0)

(0.2)

4.9

2013 - 2015 Interconnect Solutions Restructuring Actions

Beginning in 2013, we initiated comprehensive restructuring actions to improve the overall cost structure of our
Interconnect Solutions segment. In 2013, these actions included headcount reductions for approximately 500
employees and the transition of certain production lines from one location to another existing lower cost manufacturing
site. The total cost recognized for these actions was $38.4. In May 2015, we initiated a subsequent action to better
align the segment with current market conditions. Under this action, the Company recognized total costs of $6.5,
principally involuntary severance for approximately 100 employees. Both actions were substantially completed in 2015.
The timing of payments related to the remaining accrual for these actions is expected to be approximately $5 in both
2016 and 2017.

The following table provides a rollforward of the restructuring accrual associated with the Interconnect Solutions

turnaround activities.

Restructuring accruals - beginning balance

Restructuring costs

Cash payments

Asset Write-Offs

Foreign exchange translation

Restructuring accruals - ending balance

2015
17.1

6.3

(13.8)

—

(0.2)

9.4

2014
8.0

20.5

(9.9)

(1.3)

(0.2)

17.1

NOTE 5
INCOME TAXES

For each of the years ended December 31, 2015, 2014, and 2013 the tax data related to continuing operations is as
follows:

Income components:

United States
International

Income from continuing operations before income tax
Income tax expense (benefit) components:
Current income tax expense (benefit):

United States – federal
United States – state and local
International

Total current income tax expense
Deferred income tax expense (benefit) components:

United States – federal
United States – state and local
International

Total deferred income tax (benefit) expense

Income tax expense (benefit)
Effective income tax rate

2015

2014

2013

159.3
223.0
382.3

44.5
217.5
262.0

28.5
152.0
180.5

(8.5)
0.1
52.9
44.5

31.9
6.0
(12.3)
25.6
70.1
18.3%

16.2
0.7
54.6
71.5

(0.6)
5.1
(4.7)
(0.2)
71.3
27.2%

10.6
4.2
39.6
54.4

(331.2)
(36.7)
3.9
(364.0)
$ (309.6)

(171.5)%

A reconciliation of the income tax expense (benefit) for continuing operations from the U.S. statutory income tax

rate to the effective income tax rate is as follows for each of the years ended December 31, 2015, 2014, and 2013:

Tax provision at U.S. statutory rate
Tax exempt interest
U.S. tax on foreign earnings
Valuation allowance on deferred tax assets
Tax on undistributed foreign earnings
Foreign tax rate differential
State and local income tax
Other adjustments
Foreign tax holiday
U.S. permanent items
Audit settlements & unrecognized tax benefits
Effective income tax rate

2015
35.0 %
(6.7)%
3.8 %
2.1 %
(5.6)%
(3.6)%
1.0 %
(0.6)%
(1.1)%
(1.0)%
(5.0)%
18.3 %

2014
35.0 %
(10.3)%
9.3 %
8.6 %
(8.1)%
(6.2)%
1.6 %
(1.3)%
(1.3)%
(1.0)%
0.9 %
27.2 %

2013
35.0 %
(17.5)%
(0.7)%
(191.1)%
6.1 %
(4.8)%
0.6 %
(0.6)%
(1.0)%
(1.3)%
3.8 %
(171.5)%

Our effective tax rate in 2015 includes tax benefits for previously unrecognized tax positions of approximately

$13.0 due to the completion of tax examinations and lapses in the statute of limitations.

During 2015, the Company settled the U.S. income tax audit for tax years 2009 to 2011. The Company recorded
a tax benefit of $18.0 in continuing operations, which includes a net tax benefit of $8.0 from favorable audit adjustments
and $10.0 from the recognition of previously unrecognized tax benefits. In addition, this U.S. income tax audit resulted
in a tax benefit of $20.9 related to discontinued operations, which includes net tax expense of $17.4 from unfavorable
audit adjustments and a tax benefit of $38.3 from the recognition of previously unrecognized tax positions. In accordance
with the existing Tax Matters Agreement with Exelis and Xylem, the Company is entitled to reimbursement for a portion
of the tax liability and has recorded a receivable of $1.6 and $13.2 in continuing and discontinued operations,
respectively.

As a result of investment opportunities and other factors, and their impact on the Company’s expected liquidity,
certain earnings generated in Hong Kong, Japan, Luxembourg, and South Korea may be repatriated in the future and
are therefore not considered to be indefinitely reinvested outside of the U.S. In 2015, the Company repatriated certain
foreign earnings and subsequently reversed the deferred tax liability on the undistributed foreign earnings by $21.5.
We have not provided for deferred taxes on the remaining excess of financial reporting over tax bases of investments
in foreign subsidiaries in the amount of $809.7 because we plan to reinvest such earnings indefinitely outside of the
U.S. While the amount of U.S. federal income taxes, if such earnings are distributed in the future, cannot be determined,
such taxes may be reduced by tax credits and other tax deductions. As of December 31, 2015, the amount of cash,
cash equivalents and marketable securities held by foreign subsidiaries was $432.7. Our intent is to permanently
reinvest these funds outside of the U.S., and current plans do not anticipate that we will need funds generated from
foreign operations to fund our domestic operations. In the event funds from foreign operations are needed to fund
operations in the U.S. and if U.S. tax has not already been previously provided, we would be required to accrue and
pay additional U.S. taxes to repatriate these funds.

We operate under a tax holiday in South Korea, which is effective until December 31, 2019. The tax holiday is
conditional upon our meeting certain earnings thresholds. The impact of this holiday decreased foreign taxes by $4.1,
or $0.05, per diluted share in 2015.

Deferred tax assets and liabilities include the following:

Deferred Tax Assets:

Accruals
Asbestos
Employee benefits
Credit carryforwards
Loss carryforwards
Other

Gross deferred tax assets

Less: Valuation allowance

Net deferred tax assets

Deferred Tax Liabilities:
Undistributed earnings
Intangibles
Accelerated depreciation
Investment

Total deferred tax liabilities
Net deferred tax assets

Deferred taxes are presented in the Consolidated Balance Sheets as follows:

Current assets
Non-current assets
Other non-current liabilities
Net deferred tax assets

2015

2014

88.0
228.7
110.4
34.5
125.1
15.5
602.2
135.7
$ 466.5

(39.6)
(70.8)
(31.0)
(0.5)
$ (141.9)
$ 324.6

69.0
272.6
109.4
29.3
128.0
36.0
644.3
147.1
$ 497.2

(61.2)
(58.7)
(26.0)
(0.4)
$ (146.3)
$ 350.9

2015
—

326.1

(1.5)

2014
56.2

304.1

(9.4)

$ 324.6

$ 350.9

On December 31, 2015, we adopted new FASB guidance related to simplifying the presentation of deferred income
taxes on the balance sheet. We have elected to apply the guidance prospectively, resulting in the classification of all
deferred tax assets and liabilities as non-current as of December 31, 2015. Prior periods were not retrospectively
adjusted.

The table included below provides a rollforward of our valuation allowance on net deferred income tax assets from

December 31, 2012 to December 31, 2015.

DTA valuation allowance - December 31, 2012

Change in assessment
Current year operations

DTA valuation allowance - December 31, 2013

Change in assessment
Current year operations

DTA valuation allowance - December 31, 2014

Change in assessment
Current year operations

DTA valuation allowance - December 31, 2015

Federal
$ 352.8
(339.6)
(13.2)
—
—
—
—
—
—
—

State
$ 122.4
(35.0)
(42.7)
44.7
—
0.3
45.0
—
(3.5)
41.5

Foreign
61.5
$
3.7
25.4
90.6
2.5
9.0
102.1
(7.4)
(0.5)
94.2

Total
$ 536.7
(370.9)
(30.5)
135.3
2.5
9.3
147.1
(7.4)
(4.0)
$ 135.7

In the third quarter of 2013, the Company moved from a three-year adjusted cumulative domestic pretax loss
position to a three-year adjusted cumulative domestic pretax income position. In measuring adjusted cumulative pretax
income (loss), the Company adjusted pretax U.S. income (loss) for nonrecurring items and recurring permanent
differences. The recurring permanent differences included excess stock option deductions which represented the
amount of tax deductions in excess of book deductions, ultimately reducing book income on the tax return, and foreign
earnings, the indefinite reinvestment of which was not asserted, and was not expected to be asserted in the foreseeable
future, and dividends paid or expected to be paid. Each of these items was recurring in nature and representative of
our book taxable income. In addition, we included adjustments for certain non-recurring costs directly attributable to
the 2011 spin-off as these were not indicative of future taxable income. The three-year cumulative income position
was strong positive evidence in evaluating the realizability of our deferred tax assets as of September 30, 2013.
However, the Company considered all available evidence, both positive and negative, in its evaluation to reverse the
valuation allowance at that time, including future earnings, industry trends, and certain contingencies, such as asbestos-
related costs. Further, we considered future reversals of existing taxable temporary differences as a source of income
available to recover a portion of existing deferred tax assets, future taxable income exclusive of reversing taxable
temporary differences and carryforwards, and available tax-planning strategies in assessing the realizability of the
deferred tax assets. Based on positive evidence, including the three-year cumulative positive income and the absence
of any significant negative evidence, management determined that it was more likely than not that the Company's U.S.
deferred tax assets would be realized except for certain deferred tax assets attributable to state net operating losses
and tax credits.

During the current year, after considering all available evidence, including cumulative income and the absence of
any significant negative evidence, the Company released the valuation allowance against certain foreign net deferred
tax assets in China. The Company continues to maintain a valuation allowance against certain deferred tax assets
attributable to state net operating losses and tax credits and certain foreign net deferred tax assets primarily in
Luxembourg, Germany and India which are not expected to be realized. Overall, the current year decrease in the
valuation allowance of $11.4 is primarily attributable to the release of valuation allowance in China.

We have the following tax attributes available for utilization at December 31, 2015:

Attribute
U.S. federal net operating losses
U.S. state net operating losses
U.S. federal tax credits
U.S. state tax credits
Foreign net operating losses

Amount
$
1.4
$ 1,313.5
28.6
$
$
5.8
296.2
$

First Year of
Expiration
12/31/2024
12/31/2016
12/31/2021
12/31/2027
12/31/2016

We have approximately $191.9 of net operating loss carryforwards in Luxembourg as of December 31, 2015 that

do not expire.

Shareholders’ equity at December 31, 2015 and 2014 includes excess income tax benefits related to stock-based

compensation in 2015 and 2014 of approximately $3.4 and $10.4, respectively.

Uncertain Tax Positions

We recognize income tax benefits from uncertain tax positions only if, based on the technical merits of the position,
it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The tax benefits
recognized in the Consolidated Financial Statements from such positions are measured based on the largest benefit
that has a greater than 50% likelihood of being realized upon ultimate settlement.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for each of the years ended

December 31, 2015, 2014, and 2013 is as follows:

Unrecognized tax benefits – January 1
Additions for:

Prior year tax positions
Current year tax positions
Assumed in Acquisition
Reductions for:

Prior year tax positions
Settlements
Expiration of Statute of Limitations

Unrecognized tax benefits – December 31

2015
$ 160.1

2014
$ 161.2

2013
$ 208.8

1.8
3.4
1.9

2.4
2.8
—

1.6
8.0
—

(56.6)
(19.0)
(4.0)
87.6

(2.8)
(1.0)
(2.5)
$ 160.1

(55.4)
(1.0)
(0.8)
$ 161.2

As of December 31, 2015, $38.2 and $3.7 of the unrecognized tax benefits would affect the effective tax rate for
continuing operations and discontinued operations respectively, if realized. The Company operates in various tax
jurisdictions and is subject to examination by tax authorities in these jurisdictions. The Company is currently under
examination in several jurisdictions including Canada, China, Germany, Hong Kong, Italy, Korea, Mexico, the U.S. and
Venezuela.

The calculation of our tax liability for unrecognized tax benefits includes dealing with uncertainties in the application
of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some uncertainties, the
ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized
tax benefit. Over the next twelve months, the net amount of the tax liability for unrecognized tax benefits in foreign and
domestic jurisdictions could change by approximately $16 due to changes in audit status, expiration of statutes of
limitations and other events. The settlement of any future examinations could result in changes in the amounts
attributable to the Company under its existing Tax Matters Agreement with Exelis and Xylem.

The following table summarizes the earliest open tax years by major jurisdiction as of December 31, 2015:

Jurisdiction
China
Czech
Germany
Italy
Korea
Luxembourg
Mexico
United States

Earliest Open Year
2010
2013
2008
2005
2008
2011
2010
2012

We classify interest relating to tax matters as a component of interest expense and tax penalties as a component
of income tax expense in our Consolidated Statements of Operations. During 2015 and 2014, we recognized a net
interest benefit of $5.7 and net interest expense of $0.8, respectively, related to tax matters. We had $9.8 and $19.4
of interest expense accrued from continuing and discontinued operations related to tax matters as of December 31,
2015 and 2014, respectively.

Tax Matters Agreement

On October 25, 2011, we entered into a Tax Matters Agreement with Exelis and Xylem that governs the respective
rights, responsibilities and obligations of the companies after the 2011 spin-off with respect to tax liabilities and benefits,
tax attributes, tax contests and other tax sharing regarding U.S. Federal, state, local and foreign income taxes, other
tax matters and related tax returns. Exelis and Xylem have liability with ITT to the U.S. Internal Revenue Service (IRS)
for the consolidated U.S. Federal income taxes of the ITT consolidated group relating to the taxable periods in which
Exelis and Xylem were part of that group. During 2015, the Company settled the U.S. income tax audit for tax years
2009 to 2011. Pursuant to the Tax Matters Agreement, the Company is entitled to reimbursement for a portion of the
tax liability and has recorded an aggregate receivable of $14.8 from Exelis and Xylem as of December 31, 2015. The
settlement of future examinations in state or foreign jurisdictions could result in changes in amounts attributable to us
through the Tax Matters Agreement entered into with Exelis and Xylem. Currently we cannot reasonably estimate the
amount of such changes.

NOTE 6
EARNINGS PER SHARE DATA

The following table provides a reconciliation of the data used in the calculation of basic and diluted common shares

outstanding for the three years ended December 31, 2015, 2014 and 2013.

Weighted average common shares outstanding
Add: Weighted average restricted stock awards outstanding(a)
Basic weighted average common shares outstanding

Add: Dilutive impact of outstanding equity awards

Diluted weighted average common shares outstanding

2015
89.8

—

89.8

0.9

90.7

2014
91.5

—

91.5

1.3

92.8

2013
90.9

0.1

91.0

1.3

92.3

(a) Restricted stock awards containing rights to non-forfeitable dividends which participate in undistributed earnings
with common shareholders are considered participating securities for purposes of computing earnings per share.

The following table provides the number of shares underlying stock options excluded from the computation of
diluted earnings per share for the three years ended December 31, 2015, 2014 and 2013 because they were anti-
dilutive.

Anti-dilutive stock options

Average exercise price
Year(s) of expiration

2015
0.4

2014
0.2

42.50 $

43.51 $

2024 - 2025

2024

2013
0.2

26.83

2023

In addition, 0.1 of outstanding employee ROIC awards (see Note 16, Long-Term Incentive Employee
Compensation, for additional information on ROIC awards) were excluded from the computation of diluted earnings
per share for the year ended December 31, 2015, as the performance period related to ROIC awards has not been
achieved.

NOTE 7
RECEIVABLES, NET

Trade accounts receivable

Notes receivable

Other

Receivables, gross

Less: allowance for doubtful accounts

Receivables, net

2015
$ 554.0

2014
$ 476.8

3.9

43.1

601.0

16.1

6.1

30.5

513.4

13.3

$ 584.9

$ 500.1

The following table displays a rollforward of the allowance for doubtful accounts for the years ended December 31,

2015, 2014, and 2013.

Allowance for doubtful accounts – January 1

Charges to income

Write-offs

Foreign currency and other

2015
13.3

3.6

(0.8)

—

2014
12.6

4.0

(1.6)

(1.7)

2013
12.9

1.8

(1.7)

(0.4)

Allowance for doubtful accounts – December 31

16.1

13.3

12.6

NOTE 8
INVENTORIES, NET

Finished goods

Work in process

Raw materials

Inventoried costs related to long-term contracts

Total inventory before progress payments

Less – progress payments

Inventories, net

2015
60.9

56.0

162.9

43.0

322.8

(30.1)

2014
70.5

59.9

148.5

61.4

340.3

(38.0)

$ 292.7

$ 302.3

NOTE 9
OTHER CURRENT AND NON-CURRENT ASSETS

Asbestos-related current assets
Current deferred income taxes(a)
Short-term investments

Prepaid income tax

Other

Other current assets

Other employee benefit-related assets

Capitalized software costs

Environmental related assets

Equity method investments

Other

Other non-current assets

2015
74.5

—

64.9

14.3

50.7

2014
$ 102.4

56.2

5.4

25.9

59.9

$ 204.4

$ 249.8

92.9

28.2

10.8

5.6

15.8

93.0

26.8

7.7

3.9

18.4

$ 153.3

$ 149.8

(a) In the fourth quarter of 2015, we adopted a new accounting pronouncement related to the balance sheet
presentation of deferred income taxes. We have applied the provisions of the guidance on a prospective basis.
Refer to Note 2, Recent Accounting Pronouncements for further information.

NOTE 10
PLANT, PROPERTY AND EQUIPMENT, NET

Land and improvements

Machinery and equipment

Buildings and improvements

Furniture, fixtures and office equipment

Construction work in progress

Other

Plant, property and equipment, gross

Less: accumulated depreciation

Plant, property and equipment, net

2015
25.4

909.3

242.0

66.3

42.3

6.7

2014
24.0

870.3

228.8

65.8

44.5

7.8

1,292.0

(848.5)

1,241.2

(797.3)

443.5

443.9

Depreciation expense of $70.7, $72.9 and $63.4 was recognized in 2015, 2014 and 2013, respectively.

NOTE 11
GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 by segment are

as follows:

Goodwill - December 31, 2013

Goodwill acquired

Foreign currency

Goodwill - December 31, 2014

Goodwill acquired
Allocated to divestiture
Foreign currency

Goodwill - December 31, 2015

Industrial
Process

Motion
Technologies
49.8

351.0 $
1.2
(20.3)
331.9 $
—
—
(19.3)
312.6 $

—
(5.9)

43.9
161.6
—
(4.5)

201.0

Interconnect
Solutions

Control
Technologies

Total

73.9 $

185.1 $

—
(2.7)

71.2 $
—
—
(2.2)

69.0 $

—
—

185.1 $

13.3
(2.7)
—

195.7 $

659.8

1.2
(28.9)

632.1
174.9
(2.7)
(26.0)

778.3

Goodwill acquired during 2015 relates to the Wolverine acquisition at Motion Technologies and the Hartzell
Aerospace acquisition at Control Technologies. See Note 21, "Acquisitions", for further information. Goodwill of $2.7
was written-off during the second quarter of 2015 in connection with the sale of an industrial product line within our
Control Technologies segment. The sale of this product line resulted in a net gain of $0.1, which included the allocation
of goodwill.

Based on the results of our annual impairment test, we determined that no impairment of goodwill existed as of
the measurement date in 2015 or 2014. However, future goodwill impairment tests could result in a charge to earnings.
We will continue to evaluate goodwill on an annual basis as of the beginning of our fourth fiscal quarter and whenever
events and changes in circumstances indicate there may be a potential impairment.

Other Intangible Assets

Information regarding our other intangible assets is as follows:

December 31, 2015

December 31, 2014

Gross
Carrying
Amount

Accumulated
Amortization

Net
Intangibles

Gross
Carrying
Amount

Accumulated
Amortization

Net
Intangibles

Customer relationships

Proprietary technology

Patents and other

Finite-lived intangible total

Indefinite-lived intangibles

157.4

(45.3) $

112.1

54.9

8.6

220.9

30.9

(12.7)

(6.6)

(64.6)

—

42.2

2.0

156.3

30.9

83.1

28.1

15.2

126.4

26.3

(38.3) $

(9.9)

(13.1)

(61.3)

—

Other Intangible Assets

251.8

(64.6) $

187.2

152.7

(61.3) $

44.8

18.2

2.1

65.1

26.3

91.4

Indefinite-lived intangibles primarily consist of brands and trademarks.

During 2015 we recognized an impairment loss of $1.8, within general and administrative expenses, for various
identified intangibles within our Control Technologies segment. The impairment loss resulted from the expected decline
of a non-core product line related to a customer settlement. There was no impairment of intangible assets in 2014.

Customer relationships, proprietary technology and patents and other intangible assets are amortized over

weighted average lives of approximately 12.3 years, 12.9 years and 9.5 years, respectively.

The preliminary fair value of intangible assets and their respective weighted average lives with respect to the

acquisition of Wolverine and Hartzell Aerospace during 2015 are as follows:

Customer relationships

Proprietary technology

Backlog

Brand and trademarks

Indefinite-lived trade name

Total

Hartzell Aerospace

Wolverine

Fair Value
Acquired

Useful Life
(in Years)

Fair Value
Acquired

Useful Life
(in Years)

16.9

9.6

1.9

0.2

—

28.6

—

62.0

20.0

—

7.0

89.0

—

Amortization expense related to intangible assets for 2015, 2014 and 2013 was $14.0, $11.1 and $17.6, respectively.

Estimated amortization expense for each of the five succeeding years is as follows:

Year
2016

2017

2018

2019

2020

Thereafter

NOTE 12
ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

Compensation and other employee-related benefits

Asbestos-related liability

Customer-related liabilities

Environmental and other legal matters

Accrued warranty costs

Accrued income taxes and other tax-related liabilities

Other accrued liabilities

Accrued and other current liabilities

Deferred income taxes and other tax-related accruals
Environmental liabilities
Compensation and other employee-related benefits
Other

Other non-current liabilities

Estimated
Amortization
Expense

20.2

18.6

17.4

17.2

65.7

2015
$ 138.6

88.0

38.0

24.0

21.7

30.9

51.5

$ 392.7

44.5

72.0

35.6

37.8

2014
$ 176.5

106.6

41.3

31.6

29.4

28.0

50.9

$ 464.3

$ 112.2

80.2

38.6

38.5

$ 189.9

$ 269.5

NOTE 13
LEASES AND RENTALS

ITT leases certain offices, manufacturing buildings, land, machinery, automobiles, computers and other equipment.
The majority of leases expire at various dates through 2027 and may include renewal and payment escalation clauses.
ITT often pays maintenance, insurance and tax expense related to leased assets. Rental expenses under operating
leases were $18.6, $18.7 and $14.7 for 2015, 2014 and 2013, respectively. Future minimum operating lease payments
under non-cancellable operating leases with an initial term in excess of one year as of December 31, 2015 are shown
below.

2016
2017
2018
2019
2020
2021 and thereafter
Total minimum lease payments

NOTE 14
DEBT

Commercial Paper

Short-term loans

Current maturities of long-term debt

Current capital leases

Short-term loans and current maturities of long-term debt

Non-current maturities of long-term debt

Non-current capital leases

Long-term debt and capital leases

Total debt and capital leases

Commercial Paper

$ 21.7
18.2
17.6
14.9
11.9
72.6
$ 156.9

2014
—

—

1.1

0.4

1.5

6.0

1.0

7.0

8.5

2015
94.5

150.0

0.7

0.5

245.7

2.3

0.5

2.8

$ 248.5

Commercial paper outstanding as of December 31, 2015 was $94.5, with an associated weighted average interest
rate of 1.04% and maturity terms less than one month from the date of issuance. There was no commercial paper
outstanding as of December 31, 2014.

Short-term Loans

On November 25, 2014, we entered into a competitive advance and revolving credit facility agreement (2014
Revolving Credit Agreement) with a consortium of third party lenders including JP Morgan Chase Bank, N.A., as
administrative agent, and Citibank, N.A. as syndication agent. Upon its effectiveness, this agreement replaced our
existing $500 four-year revolving credit facility due October 2015. The 2014 Revolving Credit Agreement provides for
a five-year maturity with a one-year extension option upon satisfaction of certain conditions, and comprises an aggregate
principal amount of up to $500 of (i) revolving extensions of credit (the revolving loans) outstanding at any time,
(ii) competitive advance borrowing option which will be provided on an uncommitted competitive advance basis through
an auction mechanism (the competitive advances), and (iii) letters of credit in a face amount up to $100 at any time
outstanding. Subject to certain conditions, we are permitted to terminate permanently the total commitments and reduce
commitments in minimum amounts of $10. We are also permitted, subject to certain conditions, to request that lenders
increase the commitments under the facility by up to $200 for a maximum aggregate principal amount of $700.
Borrowings under the credit facility are available in U.S. dollars, Euro or Sterling.

At our election, the interest rate per annum applicable to the competitive advances will be obtained from bids in
accordance with competitive auction procedures. At our election, interest rate per annum applicable to the revolving
loans will be based on either (i) a Eurodollar rate determined by reference to LIBOR, adjusted for statutory reserve
requirements, plus an applicable margin or (ii) a fluctuating rate of interest determined by reference to the greatest of
(a) the prime rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate plus one-half of 1% or (c) the 1-
month LIBOR rate, adjusted for statutory reserve requirements, plus 1%, in each case, plus an applicable margin. As
of December 31, 2015, we had $150 outstanding under the credit facility, with an associated interest rate of 1.55%.

The credit facility contains customary affirmative and negative covenants that, among other things, will limit or
restrict our ability to: incur additional debt or issue guarantees; create liens; enter into certain sale and lease-back
transactions; merge or consolidate with another person; sell, transfer, lease or otherwise dispose of assets; liquidate
or dissolve; and enter into restrictive covenants. Additionally, the 2014 Revolving Credit Agreement requires us not to
permit the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA) (leverage ratio) to exceed 3.00 to 1.00 at any time, or the ratio of consolidated EBITDA to
consolidated interest expense (interest coverage ratio) to be less than 3.00 to 1.00. At December 31, 2015, our interest
coverage ratio and leverage ratio were within the prescribed thresholds. In the event of certain ratings downgrades of
the Company, to a level below investment grade, the direct and indirect significant U.S. subsidiaries of the Company
would be required to guarantee the obligations under the credit facility.

NOTE 15
POSTRETIREMENT BENEFIT PLANS

Defined Contribution Plans

Substantially all of ITT’s U.S. and certain international employees are eligible to participate in a defined contribution
plan. ITT sponsors numerous defined contribution savings plans, which allow employees to contribute a portion of
their pre-tax and/or after-tax income in accordance with specified guidelines. Several of the plans require us to match
a percentage of the employee contributions up to certain limits. Company contributions charged to income amounted
to $18.4, $17.3, and $15.3 for 2015, 2014 and 2013, respectively.

The ITT Stock Fund, an investment option under the ITT Corporation Retirement Savings Plan, is considered an
employee stock ownership plan and, as a result, participants in the ITT Stock Fund may receive dividends in cash or
may reinvest such dividends into the ITT Stock Fund. The ITT Stock Fund held approximately 0.2 shares of ITT common
stock at December 31, 2015.

Defined Benefit Plans

ITT sponsors several defined benefit pension plans which have approximately 2,200 active participants; however,
most of these plans have been closed to new participants for several years. As of December 31, 2015, of our total
projected benefit obligation, the ITT Industrial Process Pension Plan represented 35%, the ITT Consolidated Hourly
Pension Plan represented 35%, other U.S. plans represented 11% and international pension plans represented 19%.
The U.S. plans are generally for hourly employees with a flat dollar benefit formula based on years of service.
International plan benefits are primarily determined based on participant years of service, future compensation, and
age at retirement or termination.

ITT also provides health care and life insurance benefits for eligible U.S. employees upon retirement. In some
cases, the plan is still open to certain union employees, but for the majority of our businesses these plans are closed
to new participants. The majority of the liability pertains to retirees with postretirement medical insurance.

Balance Sheet Information

Amounts recognized as assets or liabilities in the Consolidated Balance Sheets for postretirement benefit plans
reflect the funded status. The following table provides a summary of the funded status of our postretirement benefit
plans and the presentation of the funded status within our Consolidated Balance Sheet as of December 31, 2015 and
2014.

Fair value of plan assets

Projected benefit obligation

Funded status

Amounts reported within:

Accrued liabilities

Non-current liabilities

2015

Other
Benefits
7.9
$
143.4
$ (135.5)

Pension
$ 279.0
417.9
$ (138.9)

Total
$ 286.9

561.3

Pension
$ 273.9

411.6

2014

Other
Benefits
9.5

134.5

Total
$ 283.4

546.1

$ (274.4)

$ (137.7)

$ (125.0)

$ (262.7)

(4.3)
(134.6)

(9.7)
(125.8)

(14.0)

(260.4)

(4.4)

(133.3)

(8.6)

(116.4)

(13.0)

(249.7)

A portion of our projected benefit obligation includes amounts that have not yet been recognized as expense in
our results of operations. Such amounts are recorded within accumulated other comprehensive loss until they are
amortized as a component of net periodic postretirement cost. The following table provides a summary of amounts
recorded within accumulated other comprehensive loss at December 31, 2015 and 2014.

Net actuarial loss

Prior service cost (benefit)

Total

2015

Other
Benefits
66.6
$

Total
$ 235.5

Pension
$ 169.1

2014

Other
Benefits
63.0

Total
$ 232.1

(57.4)

(51.8)

6.6

(74.2)

(67.6)

9.2

$ 183.7

$ 175.7

$ (11.2)

$ 164.5

Pension
$ 168.9
5.6
$ 174.5

The following table provides a rollforward of the projected benefit obligations for our U.S. and international pension

plans and our other employee-related defined benefit plans for the years ended December 31, 2015 and 2014.

Change in benefit obligation

Benefit obligation – January 1

$324.1

$ 87.5

$ 134.5

$ 546.1

$281.2

$ 84.8

$ 166.6

$ 532.6

2015

2014

U.S.

Int’l

Other
Benefits

Total

U.S.

Int’l

Other
Benefits

Total

Service cost

Interest cost
Amendments(a)

Actuarial (gain) loss

Benefits and expenses paid

Acquired

Settlement

Curtailment

Foreign currency translation

3.5

13.0

—

(14.9)

(18.5)

32.7

—

1.5

—

(2.9)

(2.7)

2.8

(1.1)

—

(8.6)

0.9

5.0

—

7.0

5.9

19.5

—

(10.8)

3.2

13.1

4.5

39.0

(7.9)

(29.1)

(16.9)

1.9

—

2.0

—

37.4

(1.1)

2.0

(8.6)

1.6

2.4

—

13.7

(3.0)

—

(1.6)

—

— (10.4)

1.5

7.4

6.3

22.9

(58.7)

(54.2)

25.9

78.6

(8.2)

(28.1)

—

(1.6)

—

(10.4)

Benefit obligation – December 31

$339.9

$ 78.0

$ 143.4

$ 561.3

$324.1

$ 87.5

$ 134.5

$ 546.1

(a) During 2014, management approved changes to certain other employee-related defined benefit plans, reducing
certain retiree medical benefits, resulting in a decrease to ITT's other employee-related defined benefit liability
of $58.7.

The following table provides a rollforward of our U.S. and international pension plan and other employee-related

defined benefit plan assets and the funded status as of and for the years ended December 31, 2015 and 2014.

Change in plan assets

Plan assets – January 1

Actual return on plan assets

Employer contributions

Benefits and expenses paid

Acquired

Settlement

Foreign currency translation

2015

2014

U.S.

Int’l

Other
Benefits

Total

U.S.

Int’l

Other
Benefits

Total

$ 272.9

1.0

(8.0)

8.6

(18.5)

23.1

—

3.8

(2.7)

—

(1.1)

(0.1)

9.5

0.1

6.2

$ 283.4

$ 266.8

(7.9)

18.6

22.1

0.9

(7.9)

(29.1)

(16.9)

—

23.1

(1.1)

(0.1)

—

2.0

0.1

3.5

(3.0)

—

(1.6)

—

9.2

0.3

8.2

$ 278.0

22.5

12.6

(8.2)

(28.1)

—

(1.6)

—

Plan assets – December 31

$ 278.1

0.9

7.9

$ 286.9

$ 272.9

1.0

9.5

$ 283.4

Funded status at end of year

$ (61.8) $ (77.1) $ (135.5) $ (274.4) $ (51.2) $ (86.5) $ (125.0) $ (262.7)

The accumulated benefit obligation for all defined benefit pension plans was $415.4 and $408.3 at December 31,
2015 and 2014, respectively. The following table provides information for pension plans with an accumulated benefit
obligation in excess of plan assets.

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

Income Statement Information

2015
$ 417.9

415.4

279.0

2014
$ 411.6

408.3

273.9

The following table provides the components of net periodic postretirement cost and other amounts recognized
in other comprehensive loss for each of the years ended December 31, 2015, 2014 and 2013 as they pertain to our
defined benefit pension plans.

2015

2014

2013

U.S.

Int’l

Total

U.S.

Int’l

Total

U.S.

Int’l

Total

Net periodic postretirement cost

Service cost

Interest cost

Expected return on plan assets

Amortization of net actuarial loss (gain)

Amortization of prior service cost

Net periodic postretirement cost

Effect of settlement, curtailment, or

special termination benefit

Total net periodic postretirement cost

3.5

13.0

(20.8)

1.5

5.0

3.2

14.5

13.1

1.6

2.4

4.8

4.9

15.5

12.1

1.7

2.5

6.6

14.6

— (20.8)

(20.0)

(0.1)

(20.1)

(19.5)

(0.1)

(19.6)

7.5

1.0

4.2

—

4.2

1.0

—

4.0

0.1

4.1

8.5

1.0

8.2

0.1

8.3

5.8

0.6

2.7

—

2.7

0.4

—

4.3

0.4

4.7

6.2

0.6

7.0

0.4

7.4

8.3

0.8

6.6

1.2

7.8

0.6

—

4.7

—

4.7

8.9

0.8

11.3

1.2

12.5

Other changes in plan assets and benefit obligations
recognized in other comprehensive loss

Net actuarial loss (gain)

Prior service cost

Amortization of net actuarial (loss) gain

Amortization of prior service cost

Foreign currency translation

Total change recognized in other
comprehensive loss

Total impact from net periodic
postretirement cost and changes in other
comprehensive loss

13.9

—

(7.5)

(1.0)

—

(2.9)

11.0

—

(1.1)

—

(2.5)

—

(8.6)

(1.0)

(2.5)

37.0

4.5

(5.8)

(0.6)

—

13.7

—

(0.9)

—

(1.8)

50.7

4.5

(6.7)

(0.6)

(1.8)

(40.0)

(1.8)

(41.8)

—

(8.3)

(0.8)

—

(0.6)

—

0.5

—

(8.9)

(0.8)

0.5

5.4

(6.5)

(1.1)

35.1

11.0

46.1

(49.1)

(1.9)

(51.0)

9.6

$ (2.4) $

7.2

$ 37.8

$ 15.7

$ 53.5

$ (41.3) $

2.8

$ (38.5)

Net periodic postretirement cost

Service cost

Interest cost

Expected return on plan assets

Amortization of net actuarial loss

Amortization of prior service credit

Net periodic postretirement (benefit) cost

Gain due to curtailment(a)

Total net periodic postretirement (benefit) cost

Other changes in plan assets and benefit obligations recognized in other
comprehensive loss

Net actuarial (gain) loss

Prior service credit

Amortization of net actuarial loss

Amortization of prior service credit

Acceleration of prior service costs

Total changes recognized in other comprehensive loss

2015

2014

2013

0.9

5.0

(0.9)

4.6

(11.0)

(1.4)

(4.2)

(5.6)

7.7

—

(4.6)

11.0

6.2

20.3

1.5

7.4

(0.7)

2.7

(6.6)

4.3

—

4.3

26.3

(58.7)

(2.7)

6.6

—

2.9

8.3

(0.6)

4.3

(0.4)

14.5

—

14.5

(31.1)

(19.0)

(4.3)

0.4

—

(28.5)

(54.0)

Total impact from net periodic postretirement cost and changes in other
comprehensive loss

14.7

(24.2)

(39.5)

(a) During 2015, we recognized a benefit of $4.2 from a curtailment gain related to a reduction in force in our ICS

segment.

The following table provides the estimated net actuarial loss and prior service cost that is expected to be amortized

from accumulated other comprehensive loss into net periodic postretirement cost during 2016.

Net actuarial loss

Prior service cost (credit)

Total

Pension

7.4

0.9

8.3

Other
Benefits

4.9

(6.5)

(1.6)

Total

12.3

(5.6)

6.7

Postretirement Plan Assumptions

The determination of projected benefit obligations and the recognition of expenses related to postretirement benefit
plans are dependent on various assumptions that are judgmental and developed in consultation with external advisors.
Management develops each assumption using relevant Company experience in conjunction with market-related data
for each individual country in which such plans exist. Assumptions are reviewed annually and adjusted as necessary.
The actuarial assumptions are based on the provisions of the applicable accounting pronouncements, review of various
market data and discussion with our external advisors. Changes in these assumptions could materially affect our
financial statements.

The following table provides the weighted-average assumptions used to determine projected benefit obligations
and net periodic postretirement cost, as they pertain to our U.S. and non-U.S. defined benefit pension plans and other
employee-related defined benefit plans.

Obligation Assumptions:

Discount rate

Rate of future compensation increase

Cost Assumptions:

Discount rate

Expected return on plan assets

2015

2014

U.S.

Int’l

Other
Benefits

U.S.

Int’l

Other
Benefits

4.3%

N/A

4.0%

8.0%

2.3%

3.4%

1.9%

4.8%

4.1%

N/A

3.8%

8.0%

4.0%

N/A

4.8%

8.0%

1.9%

3.3%

3.2%

4.7%

3.8%

N/A

4.7%

8.0%

The assumed discount rates reflect our expectation of the present value of expected future cash payments for
benefits at the measurement date. We base the discount rate assumption on investment yields of high-quality fixed
income securities at the measurement date during the expected benefits payment period. Effective December 31,
2015, the Company elected to utilize a yield curve rather than a single weighted discount rate in determining liabilities
and future service cost and interest cost associated with plan liabilities for the pension and other employee-related
defined benefit plans in the U.S.

The rate of future compensation increase assumption for foreign plans reflects our long-term actual experience
and future and near-term outlook. The rate of future compensation increase assumption is not applicable for U.S. plans
because the benefit formula is based on a years of service approach.

The expected long-term rate of return on assets reflects the expected returns for each major asset class in which
the plans invest, the weight of each asset class in the target mix, the correlations among asset classes, and their
expected volatilities. Our expected return on plan assets is estimated by evaluating both historical returns and estimates
of future returns based on our target asset allocation. Specifically, we estimate future returns based on independent
estimates of asset class returns weighted by the target investment allocation.

The chart below shows actual returns compared to the expected long-term returns for our postretirement plans

that were utilized in the calculation of the net periodic postretirement cost for each respective year.

Expected rate of return on plan assets

Actual rate of return on plan assets

2015

8.0 %

(2.8)%

2014

8.0%

8.6%

2013

8.0%

14.2%

For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is
generally derived using a market-related value of plan assets based on average asset values at the measurement
date over the last five years. The use of fair value, rather than a market-related value, of plan assets could materially
affect net periodic postretirement cost.

During 2014, the Company adopted a revised mortality table, to reflect improved mortality, which increased the
Company’s projected benefit obligation by approximately $19 for its US pension and other employee related benefit
plans.

The assumed rate of future increases in the per capita cost of health care (the health care trend rate) is 8.5% for
pre-age 65 retirees and 6.5% for post-age 65 retirees for 2016, decreasing ratably to 4.5% in 2024. Increasing the
health care trend rates by one percent per year would have the effect of increasing the benefit obligation by $6.6 and
the aggregate annual service and interest cost components by $0.2. A decrease of one percent in the health care trend
rate would reduce the benefit obligation by $5.6 and the aggregate annual service and interest cost components by
$0.2. To the extent that actual experience differs from these assumptions, the effect will be amortized over the average
future working life or life expectancy of the plan participants.

Investment Policy

The investment strategy for managing worldwide postretirement benefit plan assets is to seek an optimal rate of
return relative to an appropriate level of risk for each plan. Investment strategies vary by plan, depending on the specific
characteristics of the plan, such as plan size and design, funded status, liability profile and legal requirements. During
2015, our investment policy was updated to reduce risk by increasing the target allocation in fixed income by
approximately 15% with a corresponding decrease in allocations to equity investments. This shift in the target asset
allocation is expected to reduce our rate of return on plan assets and result in higher 2016 net periodic pension costs
by approximately $2.0.

Substantially all of the postretirement benefit plan assets are managed on a commingled basis in a master
investment trust. With respect to the master investment trust, the Company allows itself broad discretion to invest
tactically to respond to changing market conditions, while staying reasonably within the target asset allocation ranges
prescribed by its investment guidelines. In making these asset allocation decisions, the Company takes into account
recent and expected returns and volatility of returns for each asset class, the expected correlation of returns among
the different investments, as well as anticipated funding and cash flows. To enhance returns and mitigate risk, the
Company diversifies its investments by strategy, asset class, geography and sector.

The following table provides the allocation of postretirement benefit plan assets by asset category, as of

December 31, 2015 and 2014, and the related targeted asset allocation ranges by asset category.

U.S. equities

International equities

Fixed income

Cash and other

Fair Value of Plan Assets

2015

31%

24%

43%

2014

Target Allocation
Range

36%

29%

35%

—%

30-40 %

20-40 %

25-45 %

0-5 %

In measuring plan assets at fair value, a fair value hierarchy is applied which categorizes and prioritizes the inputs
used to estimate fair value into three levels. The fair value hierarchy is based on maximizing the use of observable
inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value
hierarchy is based on the lowest level input that is significant to the fair value measurement. The three levels of the
fair value hierarchy are defined as follows:

•

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are other than quoted prices included within level 1 that are observable for the asset or liability,
either directly or indirectly. Level 2 inputs include quoted prices (in non-active markets or in active markets for
similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived
principally from or corroborated by observable market data by correlation or other means.

Level 3 inputs are unobservable inputs for the assets or liabilities.

In certain instances, fair value is estimated using quoted market prices obtained from external pricing services. In
obtaining such data from the pricing service, the Company has evaluated the methodologies used to develop the
estimate of fair value in order to assess whether such valuations are representative of fair value, including net asset
value (NAV). Additionally, in certain circumstances, the Company may adjust NAV reported by an asset manager when
sufficient evidence indicates NAV is not representative of fair value.

The following is a description of the valuation methodologies and inputs used to measure fair value for major

categories of investments.

•

Equities – Open ended mutual funds, collective trusts and commingled funds are measured at NAV. These
funds are classified within either Level 1 or 2 of the fair value hierarchy.

Fixed income – U.S. government securities are generally valued using quoted prices of securities with similar
characteristics. Corporate bonds and notes are generally valued by using pricing models (e.g., discounted
cash flows), quoted prices of securities with similar characteristics or broker quotes. Fixed income securities
are classified in Level 1 or 2 of the fair value hierarchy.

The following table provides the fair value of plan assets held by our postretirement benefit plans, at December 31,

2015 and 2014, by asset class.

2015
Equities:
U.S.
International
Emerging Markets

Fixed income
Cash and other(a)
Total

Total

$ 85.8
46.3
18.9
121.1
6.9
$ 279.0

Pension

Level 2

85.8
46.3
18.9
121.1
2.9
$ 275.0

Other Benefits

Level 3

Total

Level 1

—
—
—
—
4.0
4.0

2.6
1.9
0.8
2.6
—
7.9

(a) Pension plan assets as of December 31, 2015 include an investment in a hedge fund acquired from Wolverine.
The hedge fund is valued using broker quotes and classified within Level 3 of the fair value hierarchy due to
the significance of unobservable inputs involved in the broker quote.

2014
Equities:
U.S.
International
Emerging Markets

Fixed income
Cash and other
Total

Contributions

Pension

Other Benefits

Total

Level 2

Total

Level 1

97.6
53.0
24.9
97.1
1.3
273.9

2.8
1.9
0.9
2.8
1.1
9.5

While we make contributions to our postretirement benefit plans when considered necessary or advantageous to
do so, the minimum funding requirements established by local government funding or taxing authorities, or established
by other agreements, may influence future contributions. Funding requirements under IRS rules are a major
consideration in making contributions to our post-retirement plans. In addition, we fund certain of our international
pension plans in countries where funding is allowable and tax-efficient. During 2015 and 2014, we contributed $12.4
and $4.4 to our global pension plans, respectively. The 2015 contribution included a $7.5 discretionary contribution to
our U.S. pension plans. We anticipate making contributions to our global pension plans of $5.0 during 2016.

We contributed $6.2 and $8.2 to our other employee-related defined benefit plans during both 2015 and 2014,
respectively. We currently estimate that the 2016 contributions to our other employee-related defined benefit plans will
be approximately $10.0.

Estimated Future Benefit Payments

The following table provides the projected timing of payments for benefits earned to date and the expectation that
certain future service will be earned by current active employees for our pension and other employee-related benefit
plans.

2016
2017
2018
2019
2020
2021 - 2025

U.S.
Pension
19.7
20.2
20.7
21.1
21.4
108.0

Int’l
Pension
3.5
3.2
3.4
3.3
4.0
16.8

Other
Benefits
9.7
9.4
9.2
8.8
10.6
45.8

NOTE 16
LONG-TERM INCENTIVE EMPLOYEE COMPENSATION

The 2011 Omnibus Incentive Plan (2011 Incentive Plan) was approved by shareholders and established in May
of 2011 to provide for the awarding of options on common shares and full value restricted common shares or units to
employees and non-employee directors. The number of shares initially available for issuance to participants under the
2011 Incentive Plan was 4.6. The 2011 Incentive Plan replaced the ITT Amended and Restated 2003 Equity Incentive
Plan (2003 Incentive Plan) on a prospective basis and no future grants will be made under the 2003 Incentive Plan.
However, any shares remaining available for issuance under the 2003 Incentive Plan became available for grant under
the 2011 Incentive Plan as of the date the 2011 Incentive Plan was approved by shareholders. As of December 31,
2015, 39.3 shares were available for future grants under the 2011 Incentive Plan. ITT makes shares available for the
exercise of stock options or vesting of restricted shares or units by purchasing shares in the open market or by issuing
shares from treasury stock.

Our long-term incentive plan (LTIP) is comprised of three components: non-qualified stock options (NQOs),
restricted stock units (RSUs), and a Performance Unit awards (PSUs). The majority of RSUs settle in shares; however
RSUs granted to international employees are settled in cash. We account for NQOs, equity-settled RSUs, and PSUs
as equity-based compensation awards and cash-settled RSUs are accounted for as liability-based awards. PSUs are
based on both a relative total shareholder return (TSR) metric as well as a return on invested capital (ROIC) metric,
equally weighted, providing a balance between relative and absolute long-term performance. PSUs settle in shares,
dependent upon performance, following a three-year performance period to further align payouts with stock price
performance. PSUs are accounted for as two distinct awards, an ROIC award and a TSR award.

LTIP costs are primarily recorded within general and administrative expenses, at fair value over the requisite service
period (typically three years) on a straight-line basis and are reduced by an estimated forfeiture rate. These costs
impacted our consolidated results of operations as follows:

Share-based compensation expense, equity-based awards
Share-based compensation expense, liability-based awards
Total share-based compensation expense in operating income

2015
$ 15.7
1.1
$ 16.8

2014
$ 14.0
3.1
$ 17.1

2013
$ 13.3
3.8
$ 17.1

At December 31, 2015, there was $21.3 of total unrecognized compensation cost related to non-vested equity
awards. This cost is expected to be recognized ratably over a weighted-average period of 1.9 years. Additionally,
unrecognized compensation cost related to liability-based awards was $2.0, which is expected to be recognized ratably
over a weighted-average period of 1.9 years.

Non-Qualified Stock Options

Options generally vest over or at the conclusion of a three-year period and are exercisable in seven or ten-year
periods, except in certain instances of death, retirement or disability. Options granted between 2004 and 2009 were
awarded with a contractual term of seven years. Options granted prior to 2004 and after 2009 were awarded with a
contractual term of ten years. The exercise price per share is the fair market value of the underlying common stock
on the date each option is granted.

A summary of the status of our NQOs as of December 31, 2015, 2014 and 2013 and changes during the years

then ended is presented below.

Stock Options
Outstanding – January 1

Granted

Exercised
Cancelled or expired

Outstanding – December 31

Options exercisable – December 31

2015

2014

2013

Weighted
Average
Exercise
Price
24.20

41.52
19.87
35.95
27.10

21.75

Weighted
Average
Exercise
Price
20.46

43.52
17.67
24.46

24.20

20.26

Weighted
Average
Exercise
Price
18.46

26.82
17.37
16.15

20.46

18.34

Shares
4.3

0.4
(1.9)
(0.1)

2.7

1.5

Shares
2.7

0.2
(0.8)
(0.2)

1.9

1.1

Shares
1.9

0.2
(0.3)
(0.1)
1.7

1.1

The aggregate intrinsic value of options exercised (which is the amount by which the stock price exceeded the
exercise price of the options on the date of exercise) during 2015, 2014 and 2013 was $6.6, $22.5 and $26.3,
respectively.

The amount of cash received from the exercise of stock options was $6.2, $15.1 and $34.8 for 2015, 2014 and
2013, respectively. The income tax benefit realized during 2015, 2014 and 2013 associated with stock option exercises
and lapses of restricted stock was $6.3, $15.1 and $13.4, respectively. We classify the cash flows attributable to excess
tax benefits arising from stock option exercises and restricted stock lapses as a financing activity. Excess tax benefits
arising from stock option exercises and restricted stock lapses were $3.4, $10.4 and $8.7 for 2015, 2014 and 2013,
respectively.

The following table summarizes information about ITT’s stock options at December 31, 2015:

Options Outstanding

Options Exercisable

Exercise Prices
$12.39
$19.97
$20.28
$21.53
$22.80
$26.76
$41.52
$43.52

Number
0.1
0.1
0.4
0.2
0.3
0.2
0.2
0.2
1.7

Weighted
Average
Remaining
Contractual Life
(in years)

Aggregate
Intrinsic
Value
0.6
1.3
7.1
3.7
3.6
2.4
—
—
18.7

0.2 $
4.2
5.9
5.2
6.2
7.2
9.2
8.2
6.5 $

Number
0.1
0.1
0.4
0.2
0.2
0.1
—
—
1.1

Weighted
Average
Remaining
Contractual Life
(in years)

Aggregate
Intrinsic
Value
0.6
1.3
7.1
3.7
3.6
0.5
—
—
16.8

0.2 $
4.2
5.9
5.2
6.2
7.2
—
—
5.7 $

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on ITT’s
closing stock price of $36.32 as of December 31, 2015, which would have been received by the option holders had
all option holders exercised their options as of that date. There was 0.4 options "out-of-the-money" as of December 31,
2015.

As of December 31, 2015, the total number of stock options expected to vest (including those that have already
vested) was 1.7. These stock options have a weighted-average exercise price of $26.79, an aggregate intrinsic value
of $18.7 and a weighted-average remaining contractual life of 6.5 years.

The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model
which incorporates multiple and variable assumptions over time, including assumptions such as employee exercise
patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for 2015,
2014 and 2013:

Dividend yield

Expected volatility

Expected life (in years)

Risk-free rates

2015
1.1%

29.4%

5.8

1.7%

2014
1.0%

29.6%

5.8

1.8%

2013
1.5%

29.9%

6.4

1.1%

Weighted-average grant date fair value

11.23

11.93

6.62

Expected volatilities for option grants were based on a peer average of historical and implied volatility. ITT uses
historical data to estimate option exercise and employee termination behavior within the valuation model. The expected
life assumption represents an estimate of the period of time options are expected to remain outstanding. The expected
life provided above represents the weighted average of expected behavior for two separate groups of employees who
have historically exhibited different behavior. The risk-free rate is based on the U.S. Treasury yield curve in effect at
the time of option grant.

Restricted Stock Units and Performance Units

The fair value of equity-settled restricted stock units is determined using the closing price of the Company’s common
stock on date of grant. The fair value of cash-settled RSUs is remeasured using the closing price of the Company's
common stock at the end of each reporting period. Recipients do not have voting rights and do not receive cash
dividends during the restriction period. Dividend equivalents on RSUs, which are subject to forfeiture, are accrued and
paid in cash upon vesting of the RSU, which typically occurs three years from the date of grant. If an employee retires
or is terminated other than for cause, a pro rata portion of the RSU may vest.

The fair value of the ROIC awards was based on the closing price of ITT common stock on the date of grant less
the present value of expected dividend payments during the vesting period. A dividend yield of 1.1% was assumed
based on ITT's annualized dividend payment of $0.4732 per share and the February 25, 2015 closing stock price of
$41.52. The fair value of the ROIC award is fixed on the grant date; however, a probability assessment is performed
each reporting period to estimate the likelihood of achieving the ROIC targets and the amount of compensation to be
recognized. The ROIC award payout is subject to a payout factor which includes a maximum and minimum payout.

The fair value of the TSR award was measured using a Monte Carlo simulation on the date of grant, measuring
potential total shareholder return for ITT relative to the other companies in the S&P 400 Capital Goods Index (the TSR
Performance Group). The expected volatility of ITT's stock price was based on the historical volatility of a peer group
while expected volatility for the other companies in the TSR Performance Group was based on their own stock price
history. All volatility and correlation measures were based on three years of daily historical price data through March 4,
2014, corresponding to the three-year performance period of the award. The TSR award payout is subject to a multiplier
which includes a maximum and minimum payout. As the grant date occurs after the beginning of the performance
period, actual TSR performance between the beginning of the performance period (December average closing stock
price) and the grant date was reflected in the valuation. A dividend yield of 1.1% was assumed based on ITT's annualized
dividend payment of $0.4732 per share and the February 25, 2015 closing stock price of $41.52.

100

The table below provides a rollforward of outstanding RSUs, PSUs, and RSAs for each of the years ended December

31, 2015, 2014 and 2013.

2015

2014

2013

Restricted Stock and
Performance Units
Outstanding – January 1

Granted
Performance adjustment(a)
Lapsed
Canceled

Outstanding – December 31

Vested pending issuance

Weighted
Average Grant
Date Fair Value
31.70

1.1 $

0.5

0.1
(0.3)
(0.1)
1.3 $

0.3 $

41.34

29.59
24.09
35.89

36.56

29.59

Weighted
Average Grant
Date Fair
Value
24.17

43.88

—
21.62
27.33

31.70

—

1.3 $

0.4

—
(0.5)
(0.1)

1.1 $

— $

1.2 $

0.6

—
(0.4)
(0.1)

1.3 $

— $

Weighted
Average
Grant Date
Fair Value
21.06

28.16

—
20.25
22.68

24.17

—

(a) Represents the adjustment to the number of shares to be issued above target for performance results achieved

relative to PSUs granted in 2013 that vested on December 31, 2015.

The table below provides the number of the outstanding equity settled RSUs, cash settled RSUs, and PSUs as

of December 31, 2015, 2014 and 2013.

Equity settled RSUs

Cash settled RSUs

PSU awards

2015
0.7

0.1

0.5

2014
0.7

0.1

0.3

2013
1.0

0.1

0.2

As of December 31, 2015, the total number of RSUs and PSUs expected to vest (including those that have already
vested) was 0.8 and 0.5, respectively. The number of PSUs expected to vest is based on current performance estimates.

NOTE 17
CAPITAL STOCK

ITT has authority to issue an aggregate of 300 shares of capital stock, of which 250 shares have been designated
as Common Stock having a par value of $1 per share and 50 shares have been designated as Preferred Stock not
having any par or stated value. There was no Preferred Stock outstanding as of December 31, 2015 and 2014.

The stockholders of ITT common stock are entitled to receive dividends when and as declared by ITT’s Board of
Directors. Dividends are paid quarterly. Dividends declared were $0.4732, $0.44 and $0.40 per common share in 2015,
2014, and 2013, respectively.

On October 27, 2006, a three-year $1 billion share repurchase program (2006 Share Repurchase Program) was
approved by our Board of Directors. On December 16, 2008, the provisions of the share repurchase program were
modified by our Board of Directors to replace the original three-year term with an indefinite term. During 2015, 2014,
and 2013, we repurchased 2.0 shares, 1.1 shares, and 3.1 shares of common stock for $80.0, $50.0 and $85.2,
respectively. Through December 2015, we had repurchased 18.4 shares for $759.3, including commissions, under
the $1 billion share repurchase program.

Separate from the 2006 Share Repurchase Program, the Company repurchased 0.1 shares, 0.2 shares, and 0.1
shares for an aggregate price of $4.0, $10.2, and $2.7, during 2015, 2014 and 2013, respectively, in settlement of
employee tax withholding obligations due upon the vesting of restricted stock or stock units.

We make shares available for the exercise of stock options and vesting of restricted stock by purchasing shares
in the open market or by issuing shares from treasury stock. During 2015, 2014, and 2013, we issued 0.6 shares,
1.4 shares, and 2.3 shares, respectively, related to equity compensation arrangements. As of December 31, 2015 and
2014, 15.0 shares and 13.3 shares of Common Stock were held in our treasury account, respectively.

101

NOTE 18
COMMITMENTS AND CONTINGENCIES

From time to time, we are involved in legal proceedings that are incidental to the operation of our businesses.
Some of these proceedings allege damages relating to environmental exposures, intellectual property matters, copyright
infringement, personal injury claims, employment and employee benefit matters, government contract issues and
commercial or contractual disputes, sometimes related to acquisitions or divestitures. We will continue to defend
vigorously against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty,
based on present information including our assessment of the merits of the particular claim, as well as our current
reserves and insurance coverage, we do not expect that such legal proceedings will have any material adverse impact
on our financial statements, unless otherwise noted below.

Asbestos Matters

ITT, including its subsidiary Goulds Pumps, Inc., has been sued, along with many other companies in product
liability lawsuits alleging personal injury due to asbestos exposure. These claims generally allege that certain products
sold by us or our subsidiaries prior to 1985 contained a part manufactured by a third party (e.g., a gasket) which
contained asbestos. To the extent these third-party parts may have contained asbestos, it was encapsulated in the
gasket (or other) material and was non-friable. As of December 31, 2015, there were 37 thousand pending active
claims against ITT, including Goulds Pumps, filed in various state and federal courts alleging injury as a result of
exposure to asbestos. Activity related to these asserted asbestos claims during the period was as follows:

(in thousands)
Pending claims – Beginning

New claims
Settlements
Dismissals

Pending claims – Ending
Pending inactive claims(a)
Pending active claims

2015
62
4
(1)
(28)
37
—
37

2014
79
4
(2)
(19)
62
13
49

2013
96
5
(3)
(19)
79
13
66

(a) Inactive claims represent pending claims in Mississippi filed in 2004 or prior, which have been excluded from our
asbestos measurement because the plaintiffs cannot demonstrate a significant compensable loss. As of
December 31, 2015, all inactive claims have been dismissed.

Frequently, plaintiffs are unable to identify any ITT or Goulds Pumps product as a source of asbestos exposure.
Our experience to date is that a majority of resolved claims are dismissed without any payment from the Company.
Management believes that a large majority of the pending claims have little or no value. In addition, because claims
are sometimes dismissed in large groups, the average cost per resolved claim, as well as the number of open claims,
can fluctuate significantly from period to period. ITT expects more asbestos-related suits will be filed in the future, and
ITT will aggressively defend or seek a reasonable resolution, as appropriate.

102

Estimating the Liability and Related Asset

The Company records an asbestos liability, including legal fees, for costs estimated to be incurred to resolve all
pending claims, as well as unasserted claims estimated to be filed against the Company over the next ten years. The
asbestos liability has not been discounted to present value due to an inability to reliably forecast the timing of future
cash flows. The methodology used to estimate our asbestos liability for pending claims and claims estimated to be
filed over the next 10 years relies on and includes the following:

•

interpretation of a widely accepted forecast of the population likely to have been exposed to asbestos in the
workplace;

widely accepted epidemiological studies estimating the number of people likely to develop mesothelioma and
lung cancer from exposure to asbestos;

the Company’s historical experience with the filing of non-malignant claims against it and the historical
relationship between non-malignant and malignant claims filed against the Company;

analysis of the number of likely asbestos personal injury claims to be filed against the Company based on
such epidemiological and historical data and the Company’s recent claims experience;

analysis of the Company’s pending cases, by disease type;

analysis of the Company’s recent experience to determine the average settlement value of claims, by disease
type;

analysis of the Company's recent experience in the ratio of settled claims to total resolved claims, by disease
type;

analysis of the Company’s defense costs in relation to its indemnity costs and agreements in place with external
counsel;

adjustment for inflation in the average settlement value of claims and defense costs estimated to be paid in
the future; and

analysis of the Company’s recent experience with regard to the length of time to resolve asbestos claims.

Asbestos litigation is a unique form of litigation. Frequently, the plaintiff sues a large number of defendants and
does not state a specific claim amount. After filing of the complaint, the plaintiff engages defendants in settlement
negotiations to establish a settlement value based on certain criteria, including the number of defendants in the case.
Rarely do the plaintiffs seek to collect all damages from one defendant. Rather, they seek to spread the liability, and
thus the payments, among many defendants. As a result, the Company is unable to estimate the maximum potential
exposure to pending claims and claims estimated to be filed over the next 10 years.

The forecast period used to estimate our potential liability to pending and projected asbestos claims is a judgment
based on a number of factors, including the number and type of claims filed, recent experience with pending claims
activity and whether that experience is expected to continue into the future, the jurisdictions where claims are filed,
the effect of any legislative or judicial developments, and the likelihood of any comprehensive asbestos legislation at
the federal level. These factors have both positive and negative effects on the dynamics of asbestos litigation in the
tort system and, accordingly, our estimate of the asbestos exposure. Developments related to asbestos tend to be
long-cycle, changing over multi-year periods. Accordingly, we monitor these and other factors and periodically assess
whether an alternative forecast period is appropriate.

The Company retains a consulting firm to assist management in estimating the potential liability for pending asbestos
claims and for claims estimated to be filed over the next 10 years based on the methodology described above. Our
methodology determines a point estimate based on our assessment of the value of each underlying assumption, rather
than a range of reasonably possible outcomes. Projecting future asbestos costs is subject to numerous variables and
uncertainties that are inherently difficult to predict. In addition to the uncertainties surrounding the key assumptions
discussed above, additional uncertainty related to asbestos claims and estimated costs arises from the long latency
period prior to the manifestation of an asbestos-related disease, changes in available medical treatments and changes
in medical costs, changes in plaintiff behavior resulting from bankruptcies of other companies that are or could be co-
defendants, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and
the impact of potential legislative or judicial changes. At December 31, 2015, approximately 28% of the recorded
asbestos liability relates to pending claims, with the remainder relating to claims estimated to be filed over the next 10
years.

103

We record a corresponding undiscounted asbestos-related asset that represents our best estimate of probable
recoveries from our insurers for the estimated asbestos liabilities. In developing this estimate, the Company considers
coverage-in-place and other agreements with its insurers, as well as a number of additional factors. These additional
factors reviewed include the financial viability of our insurance carriers and any related solvency issues, the method
by which losses will be allocated to the various insurance policies and the years covered by those policies, the extent
to which settlement and defense costs will be reimbursed by the insurance policies and interpretation of the various
policy and contract terms and limits and their interrelationships, and various judicial determinations relevant to our
insurance programs. The timing and amount of reimbursements will vary due to a time lag between when ITT pays an
amount to defend or settle a claim and when a reimbursement is received from an insurer, differing policy terms and
certain gaps in our insurance coverage as a result of uninsured periods, insurer insolvencies, and prior insurance
settlements. Approximately 83% of our estimated receivables are due from insurers that had credit ratings of A- or
better from A.M. Best as of December 31, 2015.

In addition, the Company retains an insurance consulting firm to assist management in estimating probable
recoveries for pending asbestos claims and for claims estimated to be filed over the next 10 years based on the analysis
of policy terms, the likelihood of recovery provided by external legal counsel, and incorporating risk mitigation judgments
where policy terms or other factors are not certain. The aggregate amount of insurance available to the Company for
asbestos-related claims was acquired over many years and from many different carriers. Amounts deemed not
recoverable generally are due from insurers that are insolvent, or result from disagreements with the insurers over
policy terms, coverage limits or coverage disputes. Such limitations in our insurance coverage are expected to result
in projected payments to claimants substantially exceeding the probable insurance recovery.

The Company has negotiated with certain of its insurers to reimburse the Company for a portion of its indemnity
and defense costs through "coverage-in-place" agreements or policy buyout agreements. The agreements are designed
to facilitate the collection of ITT’s insurance portfolio, to mitigate issues that insurers may raise regarding their
responsibility to respond to claims, and to promote an orderly exhaustion of the policies. As of December 31, 2015,
approximately 53% of our asbestos-related assets were related to coverage-in-place agreements and buyout
agreements with insurers.

After reviewing our portfolio of insurance policies, with consideration given to applicable deductibles, retentions
and policy limits, the solvency and historical payment experience of various insurance carriers, existing insurance
settlements, and the advice of outside counsel with respect to the applicable insurance coverage law relating to the
terms and conditions of its insurance policies, ITT believes that its recorded receivable for insurance recoveries is
probable of collection.

The asbestos liability and related receivables reflect management’s best estimate of future events. However, future
events affecting the key factors and other variables for either the asbestos liability or the related receivables could
cause actual costs or recoveries to be materially higher or lower than currently estimated. Due to these uncertainties,
as well as our inability to reasonably estimate any additional asbestos liability for claims which may be filed beyond
the next 10 years, it is difficult to predict the ultimate cost of resolving all pending and unasserted asbestos claims. We
believe it is possible that future events affecting the key factors and other variables within the next 10 years, as well
as the cost of asbestos claims filed beyond the next 10 years, net of expected recoveries, could have a material adverse
effect on our financial statements.

104

Settlement Agreements

During 2015, ITT entered into settlement agreements with insurers to settle responsibility for certain insured
claims through a series of payments into a Qualified Settlement Fund (QSF) to be paid over the next three years,
resulting in a benefit of $8.9. During 2014, ITT executed a final settlement agreement with an insurer to settle
responsibility for multiple insurance claims, resulting in a one-time lump sum payment to a QSF of $2.2 in 2015. During
2013, ITT executed a final settlement agreement (the 2013 Settlement) with an insurer to settle responsibility for multiple
categories of insured claims, including pending and future product liability claims. Under the terms of the 2013
Settlement, the insurer agreed to a specified series of payments into a QSF over the course of the next five years,
resulting in a one-time benefit of $31.0.

Defense Cost Adjustment

During 2015, the Company changed its asbestos defense strategy to retain a single firm to defend the Company
in asbestos litigation. This long-term strategy streamlines the Company's management of cases and significantly
reduces defense costs. Our agreement with the defense firm is currently limited to a certain set of claims and the
remaining claims are expected to be transitioned to the firm within the next four years. Based on the terms of the
agreement, the Company adjusted its asbestos liability and related assets and recognized a net benefit of $100.7 in
2015 for the revised estimate of the cost to defend pending claims and claims expected to be filed over the next 10
years.

Income Statement Charges

The table below summarizes the total net asbestos charge for the years ended December 31, 2015, 2014 and

2013.

Asbestos provision

Defense cost adjustment

Asbestos remeasurement, net

Settlement agreements

Net asbestos (benefit) charge, net

Changes in Financial Position

2015
63.0

(100.7)

(44.8)

(8.9)

(91.4)

2014
64.9

—

(58.8)

(2.2)

3.9

2013
63.3

—

0.5

(31.0)

32.8

The following table provides a rollforward of the estimated asbestos liability and related assets for the years ended

December 31, 2015 and 2014.

Balance as of January 1

Changes in estimate

Settlement agreements

Net cash activity and other

Balance as of December 31

Current portion

Noncurrent portion

Liability
$ 1,223.2
(103.6)
—
(76.8)
$ 1,042.8
88.0

954.8

2015

Asset
476.4
(21.1)
8.9
(52.2)
412.0

74.5

337.5

Net
746.8

(82.5)

(8.9)

(24.6)

Liability
$ 1,264.7

32.4

—

(73.9)

2014

Asset

Net

517.8

746.9

26.3

2.2

(69.9)

6.1

(2.2)

(4.0)

630.8

$ 1,223.2

476.4

746.8

106.6

1,116.6

102.4

374.0

105

Environmental

In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and
regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and site
remediation. These sites are in various stages of investigation and/or remediation and in many of these proceedings
our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency,
and from similar state and foreign environmental agencies, that a number of sites formerly or currently owned and/or
operated by ITT, and other properties or water supplies that may be or have been impacted from those operations,
contain disposed or recycled materials or wastes and require environmental investigation and/or remediation. These
sites include instances where we have been identified as a potentially responsible party under federal and state
environmental laws and regulations.

The following table provides a rollforward of the estimated environmental liability and related assets for the years

ended December 31, 2015 and 2014.

Balance as of January 1

Changes in estimates for pre-
existing accruals(a):
Pre-existing accrual additions

Pre-existing accrual reversals

Accruals added during the period

for new matters

Net cash activity

Foreign currency

Balance as of December 31

Liability
89.9
$

2015

Asset
7.7

Net
82.2

Liability
$ 94.6

2014

Asset
$ 11.7

11.0
(5.6)

—
(12.1)
(0.6)
82.6

6.7

(0.9)

—
(0.7)

—

4.3

(4.7)

—
(11.4)

(0.6)

11.2

(2.9)

0.1
(12.6)

(0.5)

12.8

69.8

$ 89.9

(3.7)

—

—
(0.3)

—

7.7

Net
$ 82.9

14.9

(2.9)

0.1
(12.3)

(0.5)

$ 82.2

(a) Changes in estimates for pre-existing accruals includes environmental-related costs of $0.1 and $2.7 reported
within results of discontinued operations for the years ended December 31, 2015 and 2014, respectively.

In the fourth quarter of 2015, ITT entered into a settlement agreement with one of our insurance providers whereby
the provider agreed to pay the net present value of the remaining limits of the policy amounting to approximately $34.
Based on the terms of the agreement, substantially all of the settlement amount, which is expected to be received
during the first quarter of 2016, will be deposited into a QSF which can be drawn upon only to pay future environmental
expenses associated with remediation sites covered under the policy. As a result of the settlement agreement, we
recorded income of $6.3 representing a previously established reserve for this insurance asset.

The following table illustrates the reasonably possible high range of estimated liability, and number of active sites

for environmental matters.

High end range

Number of active environmental investigation and remediation sites

2015
$ 140.6
49

2014
$ 160.3
54

As actual costs incurred at identified sites in future periods may vary from our current estimates given the inherent
uncertainties in evaluating environmental exposures, management believes it is possible that the outcome of these
uncertainties may have a material adverse effect on our financial statements.

Other Matters

106

NOTE 19
GUARANTEES, INDEMNITIES AND WARRANTIES

Indemnities

As part of the 2011 spin-off, ITT agreed to provide certain indemnifications and cross-indemnifications among ITT,
Exelis and Xylem, subject to limited exceptions with respect to certain employee claims and other liabilities and
obligations. The indemnifications address a variety of subjects, including asserted and unasserted product liability
matters (e.g., asbestos claims, product warranties) which relate to products manufactured, repaired and/or sold prior
to the 2011 spin-off. These indemnifications last indefinitely and are not affected by Harris' acquisition of Exelis. ITT
expects Exelis and Xylem to fully perform under the terms of the Distribution Agreement and therefore has not recorded
a liability for matters for which we have been indemnified. In addition, both Exelis and Xylem have made asbestos
indemnity claims that could give rise to material payments under the indemnity provided by ITT; such claims are included
in our estimate of asbestos liabilities.

Guarantees

We have $167.1 of guarantees, letters of credit and similar arrangements outstanding at December 31, 2015,
primarily pertaining to commercial or performance guarantees and insurance matters. We have not recorded any
material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31,
2015 as the likelihood of nonperformance by ITT is considered remote. From time to time, we may provide certain
third-party guarantees that may be affected by various conditions and external factors, some of which could require
that payments be made under such guarantees. We do not consider the maximum exposure or current recorded
liabilities under our third-party guarantees to be material either individually or in the aggregate. We do not believe such
payments would have a material adverse impact on our financial statements.

Warranties

ITT warrants numerous products, the terms of which vary widely. In general, ITT warrants its products against
defect and specific non-performance. In certain markets, such as automotive, aerospace and rail, liability for product
defects could extend beyond the selling price of the product and could be significant if the defect interrupts production
or results in a recall. The table included below provides changes in the product warranty accrual for December 31,
2015 and 2014.

Warranty accrual – January 1

Warranty expense

Payments
Foreign currency and other

Warranty accrual – December 31

NOTE 20
DISCONTINUED OPERATIONS

2015
$ 29.4

5.6

(12.3)

0.8

2014
$ 28.6

14.7

(12.2)

(1.7)

$ 23.5

$ 29.4

Results from discontinued operations reflect a gain of $39.4 for the year ended December 31, 2015, principally
related to the settlement of the U.S. income tax audit during the third quarter of 2015. This includes a tax benefit of
$38.3 from the recognition of previously unrecognized tax positions, related net interest income of $3.2, and a $13.2
receivable due from Exelis and Xylem, partially offset by net tax expense of $17.4 from unfavorable audit adjustments.
Results from discontinued operations reflect a loss of $3.9 for the year ended December 31, 2014, primarily related
to a settlement payment to a former ITT entity.

107

NOTE 21
ACQUISITIONS

Wolverine Automotive Holdings

On October 5, 2015, we completed the acquisition of Wolverine Automotive Holdings Inc., the parent company of
Wolverine Advanced Materials LLC (Wolverine). Wolverine is a manufacturer of customized technologies for automotive
braking systems and specialized sealing solutions for harsh operating environments across a range of industries. The
purchase price of $298.1 net of cash acquired, which is subject to a post-closing working capital adjustment, was
funded through a combination of cash and a $200 borrowing from our revolving credit facility. Wolverine has
approximately 500 employees globally and reported 2014 revenues of $154, including $17 of sales to ITT.

The allocation of the purchase price is based on the fair value of assets acquired, liabilities assumed and non-
controlling interests in Wolverine as of October 5, 2015. Our assessment of fair value is preliminary, and may be
adjusted for information that is currently not available to us, primarily related to the valuation of intangible assets,
postretirement obligations, environmental liabilities, deferred tax matters, real estate, and residual goodwill. The
purchase price allocation presented below represents the effect of recording preliminary estimates for the fair value
of assets acquired, liabilities assumed, and non-controlling interests in Wolverine and related deferred income taxes.
We expect to obtain the information necessary to finalize the fair value of the net assets acquired at the acquisition
date during the measurement period. Changes to the preliminary estimates of the fair value of the net assets acquired
during the measurement period will be recorded as adjustments to those assets and liabilities with a corresponding
adjustment to goodwill.

The goodwill of $161.6 is not deductible for income tax purposes. All of the goodwill has been assigned to the
Motion Technologies segment. Other intangibles acquired include existing customer relationships, proprietary
technology, and trade names.

Hartzell Aerospace

On March 31, 2015, we completed the acquisition of Hartzell Aerospace for a purchase price of $52.9 that was
funded through additional commercial paper borrowings. Hartzell Aerospace, which reported 2014 revenues of $34,
designs and manufactures products to support aerospace applications,
featuring a differentiated portfolio of
environmental control system components and an established aftermarket business. The acquisition is being reported
within the Control Technologies segment and complements the ITT aerospace growth platform, with customer and
sales channel alignment and key high-growth and next-generation platform expansion opportunities.

The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the
acquisition date. The excess of the purchase price over the estimated fair value of net assets acquired of $13.3 was
recorded as goodwill (which is expected to be deductible for income tax purposes). All of the goodwill has been assigned
to the Control Technologies segment.

Allocation of Purchase Price for Wolverine and Hartzell Aerospace

Cash
Receivables
Inventory
Plant, property and equipment
Goodwill
Other intangible assets
Other assets
Accounts payable and accrued liabilities
Postretirement liabilities
Other liabilities

Net assets acquired

Wolverine

8.5 $

31.6
34.4
22.8
161.6
89.0
3.4
(21.3)
(14.6)
(8.8)
306.6 $

Hartzell
—
5.3
4.8
2.6
13.3
28.6
0.9
(2.6)
—
—
52.9

Pro forma results of operations have not been presented because the acquisitions were not deemed material,

either individually or in the aggregate, at the acquisition date.

108

SUPPLEMENTAL FINANCIAL DATA

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Revenue

Gross profit

Income from continuing

operations attributable to ITT
Corporation

Income (loss) from discontinued

operations

Net income attributable to ITT

Corporation

Basic earnings (loss) per share

attributable to ITT Corporation:

Continuing operations

Discontinued operations

Net income

Diluted earnings (loss) per share
attributable to ITT Corporation:

Continuing operations

Discontinued operations

Net income

Common stock price per share:

2015 Quarters

2014 Quarters

Fourth

Third

Second

First

Fourth

Third

Second

First

$ 666.8

$ 601.9

$ 628.2

$ 588.7

$ 660.0

$ 657.1

$ 663.0

$ 674.5

201.3

194.9

213.9

199.0

216.9

219.9

214.8

36.6

96.5

140.6

38.7

33.4

80.6

41.2

33.2

0.1

34.2

1.7

3.4

0.3

(0.3)

(2.9)

(1.0)

36.7

130.7

142.3

42.1

33.7

80.3

38.3

32.2

0.40

0.01

0.41

0.40

0.01

0.41

1.08

0.38

1.46

1.07

0.38

1.45

1.57

0.02

1.59

1.56

0.02

1.58

0.42

0.04

0.46

0.42

0.04

0.46

0.37

—

0.37

0.36

—

0.36

0.88

—

0.88

0.87

(0.01)

0.86

0.45

(0.03)

0.42

0.44

(0.03)

0.41

0.36

(0.01)

0.35

0.36

(0.01)

0.35

High

Low

$ 40.52

$ 42.43

$ 43.96

$ 42.97

$ 45.34

$ 49.42

$ 48.24

$ 44.87

$ 32.70

$ 32.86

$ 39.01

$ 35.30

$ 36.74

$ 44.93

$ 41.48

$ 37.87

$ 36.32

$ 33.43

$ 41.84

$ 39.91

$ 40.46

$ 44.94

$ 48.10

$ 42.76

Dividends per share

$ 0.1183

0.11

109

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has

duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

ITT Corporation
(Registrant)

By:

/S/ STEVEN C. GIULIANO

Steven C. Giuliano
Vice President and Chief Accounting Officer
(Principal accounting officer)

February 19, 2016

ll-1

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE

TITLE

DATE

/S/ DENISE L. RAMOS

Denise L. Ramos
(Principal executive officer)

/S/ THOMAS M. SCALERA

Thomas M. Scalera
(Principal financial officer)

/S/ STEVEN C. GIULIANO

Steven C. Giuliano
(Principal accounting officer)

Chief Executive Officer,
President and Director

Senior Vice President and
Chief Financial Officer

Vice President and
Chief Accounting Officer

February 19, 2016

/S/ ORLANDO D. ASHFORD

Director

February 19, 2016

Orlando D. Ashford

/S/ G. PETER D’ALOIA

Director

February 19, 2016

G. Peter D’Aloia

/S/ GERAUD DARNIS

Director

February 19, 2016

Geraud Darnis

/S/ DONALD DEFOSSET, JR.

Director

February 19, 2016

Donald DeFosset, Jr.

/S/ CHRISTINA A. GOLD

Director

February 19, 2016

Christina A. Gold

/S/ RICHARD P. LAVIN

Director

February 19, 2016

Richard P. Lavin

/S/ FRANK T. MACINNIS

Director

February 19, 2016

Frank T. MacInnis

/S/ REBECCA A. MCDONALD

Director

February 19, 2016

Rebecca A. McDonald

/S/ TIMOTHY H. POWERS

Director

February 19, 2016

Timothy H. Powers

ll-2

EXHIBIT INDEX

Exhibit
Number Description

Location

3.1

ITT Corporation’s Articles of Amendment and
Restated Articles of Incorporation, effective as of
October 31, 2011

Incorporated by reference to Exhibit 3.1 of ITT Corporation’s
Form 10-K for the year ended December 31, 2013 (File No.
001-05672).

3.2

Amended and Restated By-laws of ITT

Incorporated by reference to Exhibit 3.1 of ITT Corporation’s
Form 8-K Current Report dated October 5, 2011 (File No.
001-05672).

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9*

10.10*

10.11*

10.12*

10.13*

Distribution Agreement, dated as of October 25,
2011, among ITT Corporation, Xylem Inc. and Exelis
Inc.

Incorporated by reference to Exhibit 10.1 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2011 (File No.
001-05672).

Benefits and Compensation Matters Agreement,
dated as of October 25, 2011, among ITT
Corporation, Xylem Inc. and Exelis Inc.

Incorporated by reference to Exhibit 10.2 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2011 (File No.
001-05672).

First Amendment to Benefits and Compensation
Matters Agreement

Incorporated by reference as Exhibit 10.1 of ITT Corporation’s
Form 10-Q for the quarter ended June 30, 2013

Tax Matters Agreement, dated as of October 25,
2011, among ITT Corporation, Xylem Inc. and Exelis
Inc.

Incorporated by reference to Exhibit 10.3 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2011 (File No.
001-05672).

Master Transition Services Agreement, dated as of
October 25, 2011, among ITT Corporation, Xylem
Inc. and Exelis Inc.

Incorporated by reference to Exhibit 10.4 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2011 (File No.
001-05672).

ITT Transitional Trademark License Agreement -
Exelis, dated as of October 25, 2011, between ITT
Manufacturing Enterprises LLC and Exelis Inc.

Incorporated by reference to Exhibit 10.5 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2011 (File No.
001-05672).

Master Lease Agreement and Master Sublease
Agreement, dated as of October 25, 2011 and
September 30, 2011, respectively

Incorporated by reference to Exhibit 10.6 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2011 (File No.
001-05672).

Five Year Competitive Advance and Revolving
Credit Facility Agreement, dated as of November
25, 2014 among ITT Corporation and Other Parties
Signatory Thereto

Incorporated by reference to Exhibit 10.1 of ITT Corporation’s
Form 8-K dated November 25, 2014 (File No. 001-05672).

Indenture between ITT Corporation and Union Bank
N.A., as Trustee dated May 1, 2009

Incorporated by reference to Exhibit 4.3 of ITT Corporation's
Form S-3 dated September 18, 2015 (File No. 001-05672).

ITT Retirement Savings Plan for Salaried
Employees (effective January 1, 2016)

Filed herewith.

ITT Corporation Senior Executive Change in Control
Severance Pay Plan amended and restated as of
January 1, 2015 (formerly known as the ITT
Corporation Special Senior Executive Severance
Pay Plan)

ITT Corporation Senior Executive Severance Pay
Plan amended and restated effective as of January
1, 2015 (formerly known as the ITT Industries, Inc.
Senior Executive Severance Pay Plan, dated
December 20, 1995, amended and restated as of
December 31, 2008 and July 1, 2013)

ITT Corporation Change in Control Severance Plan
amended and restated as of January 1, 2015
(formerly known as ITT Corporation Enhanced
Severance Pay Plan (amended and restated as of
July 13, 2004).

Incorporated by reference to Exhibit 10.10 of ITT Corporation’s
Form 10-K for the year ended December 31, 2014 (File No.
001-05672).

Incorporated by reference to Exhibit 10.11 of ITT Corporation’s
Form 10-K for the year ended December 31, 2014 (File No.
001-05672).

Incorporated by reference to Exhibit 10.12 of ITT Corporation’s
Form 10-K for the year ended December 31, 2014 (File No.
001-05672).

10.14*

ITT Deferred Compensation Plan (Effective as of
January 1, 1995 as amended and restated as of
October 31, 2011)

Incorporated by reference to Exhibit 4.5 of ITT Corporation’s
Registration Statement on Form S-8 as filed on October 28,
2011 (File No. 001-05672).

ll-3

Exhibit
Number Description
10.15*

ITT Corporation Deferred Compensation Plan for
Non-Employee Directors

10.16*

ITT Excess Savings Plan amended and restated
effective December 31, 2008

10.17*

Non-Employee Director Compensation Summary

10.18*

2011 Omnibus Incentive Plan

10.19*

10.20*

ITT 1997 Annual Incentive Plan (amended and
restated as of July 13, 2004) formerly known as ITT
Industries 1997 Annual Incentive Plan (amended
and restated as of July 13, 2004)

ITT 2003 Equity Incentive Plan, amended and
restated as of February 15, 2008 and approved by
shareholders on May 13, 2008 (previously amended
and restated as of July 13, 2004 and subsequently
amended as of December 18, 2006) and previously
known as ITT Industries, Inc. 2003 Equity Incentive
Plan

10.21*

ITT Corporation Form of 2015 Performance Unit
Award Agreement

10.22*

ITT Corporation Form of 2015 Non-Qualified Stock
Option Award Agreement

10.23*

ITT Corporation Form of 2015 Restricted Stock Unit
Agreement

10.24*

ITT Corporation Form of 2014 Performance Unit
Award Agreement

10.25*

ITT Corporation Form of 2014 Non-Qualified Stock
Option Award Agreement

10.26*

ITT Corporation Form of 2014 Restricted Stock Unit
Award Agreement

10.27*

ITT Corporation Form of 2013 Performance Unit
Award Agreement

10.28*

ITT Corporation Form of 2013 Non-Qualified Stock
Option Award Agreement (Band A)

10.29*

ITT Corporation Form of 2013 Restricted Stock Unit
Agreement

10.30*

ITT Corporation Form of 2013 Restricted Stock Unit
Agreement (Cash Settled)

10.31*

Employment Agreement dated as of October 4,
2011 and effective as of October 31, 2011 between
ITT Corporation and Denise L. Ramos.

Location
Incorporated by reference to Exhibit 10.48 of ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2008 (File
No. 001-05672).

Incorporated by reference to Exhibit 10.17 of ITT Corporation’s
Form 10-K for the year ended December 31, 2008 (File No.
001-05672).

Incorporated by reference to Exhibit 10.16 of ITT Corporation’s
Form 10-K for the year ended December 31, 2014 (File No.
001-05672).

Incorporated by reference to Exhibit 4.3 of ITT Corporation’s
Registration Statement on Form S-8 as filed on October 28,
2011 (File No. 001-05672).

Incorporated by reference to Exhibit 10.13 of ITT Industries’
Form 10-Q for the quarter ended September 30, 2004 (File
No. 001-05672).

Incorporated by reference to Exhibit 10.5 of ITT Corporation’s
Form 10-Q for the quarter ended June 30, 2008 (File No.
001-05672).

Incorporated by reference to Exhibit 10.1 of ITT Corporation's
Form 10-Q for the quarter ended March 31, 2015 (File No.
001-05672).

Incorporated by reference to Exhibit 10.2 of ITT Corporation's
Form 10-Q for the quarter ended March 31, 2015 (File No.
001-05672).

Incorporated by reference to Exhibit 10.3 of ITT Corporation's
Form 10-Q for the quarter ended March 31, 2015 (File No.
001-05672).

Incorporated by reference to Exhibit 10.1 of ITT Corporation’s
Form 10-Q for the quarter ended March 31, 2014 (File No.
001-05672).

Incorporated by reference to Exhibit 10.2 of ITT Corporation’s
Form 10-Q for the quarter ended March 31, 2014 (File No.
001-05672).

Incorporated by reference to Exhibit 10.3 of ITT Corporation’s
Form 10-Q for the quarter ended March 31, 2014 (File No.
001-05672).

Incorporated by reference to Exhibit 10.01 of ITT Corporation’s
Form 10-Q for the quarter ended March 31, 2013 (File No.
001-05672).

Incorporated by reference to Exhibit 10.1 of ITT Corporation’s
Form 8-K/A dated October 17, 2011 (File No. 001-05672).

ll-4

Location
Incorporated by reference to Exhibit 10.1 to ITT Corporation’s
Form 10-Q for the quarter ended September 30, 2014 (File
No. 001-05672).

Filed herewith.

This Exhibit is intended to be furnished in accordance with
Regulation S-K Item 601(b) (32) (ii) and shall not be deemed
to be filed for purposes of Section 18 of the Securities
Exchange Act of 1934 or incorporated by reference into any
filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except as shall be expressly set forth
by specific reference.

Submitted electronically with this report.

Exhibit
Number Description
10.32

Form of indemnification agreement with directors
and officers

23.1

31.1

31.2

32.1

Subsidiaries of the Registrant

Consent of Deloitte & Touche LLP

Certification pursuant to Rule 13a-14(a)/15d-14(a)
of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002

101

The following materials from ITT Corporation’s
Annual Report on Form 10-K for the year ended
December 31, 2015, formatted in XBRL (Extensible
Business Reporting Language): (i) Consolidated
Statements of Operations, (ii) Consolidated
Statements of Comprehensive Income (Loss),
(iii) Consolidated Balance Sheets, (iv) Consolidated
Statements of Cash Flows, (v) Consolidated
Statements of Changes in Shareholders’ Equity and
(vi) Notes to Consolidated Financial Statements

* Management compensatory plan

** The registrant has requested confidential treatment with respect to portions of this exhibit. Those portions have

been omitted from the exhibit and filed separately with the U.S. Securities and Exchange Commission.

ll-5

ITT’s Global Manufacturing Footprint

ITT is a diversified leading manufacturer of highly engineered critical components and customized technology
solutions for the transportation, industrial, and oil and gas markets. With a strong global footprint of more than
120 facilities, ITT is well positioned to serve its customers around the world. These locations include 40
manufacturing facilities in 14 countries in addition to global service capabilities. Through its worldwide
operations, 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 sales in more than 100
countries. The company generated 2015 revenues of $2.5 billion. For more information, visit www.itt.com.

INDUSTRIAL PROCESS
Pumps, valves, monitoring and control systems, water treatment
and aftermarket services for the oil and gas, chemical, mining,
pulp and paper, power and biopharmaceutical markets.
Global Service Capabilities

CONTROL TECHNOLOGIES
Highly engineered motion control and vibration
isolation products and solutions for the industrial,
aerospace and defense markets

Bad König, Germany
Nogales, Mexico
Orchard Park, New York
Perris, California
Santa Clarita, California
Valencia, California
Westminster, South Carolina
Wuxi, China

South

Amory, Mississippi
Axminster, United Kingdom
Buenos Aires, Argentina
Choong-Buk,
Korea
City of Industry, California
Dammam, Saudi Arabia
Lancaster, Pennsylvania
Obernkirchen, Germany
Salto, Brazil
Seneca Falls, New York
The Woodlands, Texas
Tizayuca, Mexico
Vadadora, India
Zachary, Louisiana

INTERCONNECT SOLUTIONS
Connectors and interconnects for the oil and
gas, industrial and transportation, and
aerospace and defense markets

Irvine, California
Lainate, Italy
Nogales, Mexico
Santa Rosa, California
Shenzhen, China
Weinstadt, Germany
Zama, Japan

ITT WORLD HEADQUARTERS
White Plains, NY

ITT has a concentrated global footprint
representing manufacturing of ce and
sales, and global service facilities,
including the ident(cid:76)(cid:192)ed locations
by segment.

(cid:192)

MOTION TECHNOLOGIES
Shock absorbers, brake pads and friction
materials for the automotive and rail markets

Barge, Italy
Blacksburg, Virginia
Dearborn, Michigan
Hebron, Kentucky
Leesburg, Virginia
Öhringen, Germany
Ostrava, Czech Republic
Oud-Beijerland, Netherlands
Termoli, Italy
Vauda Canavese, Italy
Wuxi, China

Locations listed above include all manufacturing facilities.
Additional locations include sales, service and warehousing.

CEO AND PRESIDENT
Denise Ramos

WORLDWIDE EMPLOYEES
9,700

FOUNDED
1920

NYSE SYMBOL: ITT

1133 Westchester Avenue
White Plains, New York 10604
914.641.2000
www.itt.com