ITT Annual Report 2017 | Quarterlytics

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FY2017 Annual Report · ITT

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outside back cover

outside front cover

1133 Westchester Avenue

White Plains, New York 10604

914.641.2000

www.itt.com

Annual Report 2017

153869 LABRADOR - OUTSIDE -- 1/4" HT -- CYAN MAGENTA YELLOW BLACK

inside front cover

inside back cover

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

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

Our journey continues to be defined by a focus on optimizing
Our journey continues to be defined by a focus on optimizing
our execution, driving innovation and growth, and deploying
our execution, driving innovation and growth, and deploying
our capital in a balanced and effective way, while building a
our capital in a balanced and effective way, while building a
winning culture. With that strategic approach, we generated
winning culture. With that strategic approach, we generated
solid results in 2017 and continued our multi-year track
solid results in 2017 and continued our multi-year track
record of performance.
record of performance.

All of our accomplishments have been made possible by the
All of our accomplishments have been made possible by the
talent and contributions of our 10,000 employees around the
talent and contributions of our 10,000 employees around the
world, who are committed every day to reflecting our princi-
world, who are committed every day to reflecting our princi-
ples of Impeccable character, Bold thinking and Collective
ples of Impeccable character, Bold thinking and Collective
know-how. Together, they are outstanding ambassadors for
know-how. Together, they are outstanding ambassadors for
our long-standing brands – including Goulds and Bornemann
our long-standing brands – including Goulds and Bornemann
pumps, Cannon connectors, KONI shock absorbers and
pumps, Cannon connectors, KONI shock absorbers and
Enidine energy absorption components, to name a few – that
Enidine energy absorption components, to name a few – that
are recognized and trusted globally.
are recognized and trusted globally.

At ITT, we are not only proud of the work we do, we are also
At ITT, we are not only proud of the work we do, we are also
inspired by the lasting impact we make in the world. It is
inspired by the lasting impact we make in the world. It is
rewarding to know that our efforts have a tangible impact
rewarding to know that our efforts have a tangible impact
every day by helping to power key industries, advance trans-
every day by helping to power key industries, advance trans-
portation safety and comfort, connect people to critical data
portation safety and comfort, connect people to critical data
and each other, and secure key infrastructure. We help our
and each other, and secure key infrastructure. We help our
customers and the world move forward, and that is a
customers and the world move forward, and that is a
commitment everyone across ITT embraces each day.
commitment everyone across ITT embraces each day.

Looking ahead, we will continue to make the right moves to
Looking ahead, we will continue to make the right moves to
meet the demands of an ever faster, more dynamic and
meet the demands of an ever faster, more dynamic and
complex world. Through this focus, we will ensure that we are
complex world. Through this focus, we’ll ensure that we are
well positioned to accelerate customer driven innovation and
well positioned to accelerate customer driven innovation and
growth, to drive continued value creation for shareholders,
growth, to drive continued value creation for shareholders,
and to extend and expand the ITT legacy far into the future.
and to extend and expand the ITT legacy far into the future.

Business Revenue Overview
Business Revenue Overview

ITT’s Global Manufacturing Footprint

Regions
Regions

North America
North America

39%
39%

Segments

Motion Technologies

46%

Motion Technologies

46%

End Markets
End Markets

Automotive & Rail
Automotive & Rail

44%
44%

Charts based on 2017 revenue of $2.6 billion.
Charts based on 2017 revenue of $2.6 billion.

ITT is a diversified leading global 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 100 facilities, including about 50 manufacturing sites, we are well positioned to solve the most critical

challenges of our customers around the world. Our locations include manufacturing facilities and global service

capabilities in 35 countries. Through these worldwide operations and building on our heritage of innovation, our

10,000 team members partner with customers to deliver enduring solutions that make a lasting difference and

help the world move forward. ITT is headquartered in White Plains, N.Y., with sales in well over 100 countries.

The company generated 2017 revenues of $2.6 billion. For more information, visit www.itt.com.

South America
South America

4%
4%

Middle East & Africa
Middle East & Africa

5%
5%

Asia Pacific
Asia Pacific

15%
15%

Europe
Europe

37%
37%

Connect and Control
Technologies

23%

46%

Industrial Process

31%

46%

Industrial Process

31%

Oil & Gas
Oil & Gas

10%
10%

General Industrial
General Industrial

12%
12%

Aerospace & Defense
Aerospace & Defense

14%
14%

Chemical
& Industrial Pumps

Chemical
& Industrial Pumps
44%
44%

20%
20%

10%
10%

12%
12%

20%
20%

23%

31%

INDUSTRIAL PROCESS

Designs and manufactures pumps, valves,

monitoring and control systems, water

treatment and aftermarket services for the

chemical, oil and gas, mining and other

industrial process markets, as well as

global service capabilities

global service capabilities.

Amory, Mississippi

Axminster, United Kingdom

Buenos Aires, Argentina

Dammam, Saudi Arabia

Lancaster, Pennsylvania

Los Angeles, California

Obernkirchen, Germany

Oksan, South Korea

Salto, Brazil

Seneca Falls, New York

The Woodlands, Texas

Tizayuca, Mexico

Vadadora, India

Zachary, Louisiana

MOTION TECHNOLOGIES

Designs and manufactures brake pads,

shock absorbers and sealing solutions

for the automotive and rail markets

for the automotive and rail markets.

Barge, Italy

Öhringen, Germany

Blacksburg, Virginia

Ostrava, Czech Republic

Changshu, China

Oud-Beijerland, Netherlands

Dearborn, Michigan

Prostejov, Czech Republic

Hebron, Kentucky

Silao, Mexico

Kańczuga, Poland

Stalowa Wola, Poland

Leesburg, Florida

Termoli, Italy

Lünen, Germany

Vauda Canavese, Italy

Novi, Michigan

Wuxi, China

Neitersen, Germany

CONNECT AND CONTROL

TECHNOLOGIES

Designs and manufactures harsh-environment

connectors and critical energy absorption and

flow control components primarily for the

aerospace, defense and industrial markets

aerospace, defense and industrial markets.

Bad König, Germany

Irvine, California

Lainate, Italy

Nogales, Mexico

Orchard Park, New York

Santa Rosa, California

Shenzhen, China

Valencia, California

Weinstadt, Germany

Westminster, South Carolina

Wuxi, China

Zama, Japan

ITT WORLD HEADQUARTERS

White Plains, New York

ITT has a concentrated global footprint representing

manufacturing, ofﬁce and sales, and global service

facilities, including the identiﬁed locations by segment

facilities, including the identiﬁed locations by segment.

CEO AND PRESIDENT

WORLDWIDE EMPLOYEES

Denise Ramos

10,000

FOUNDED

1920

NYSE SYMBOL: ITT

153869 LABRADOR - INSIDE -- 1/4" HT -- CYAN MAGENTA YELLOW BLACK

Dear Shareholders, Employees, Customers and Friends,

Throughout 2017, ITT continued to optimize execution while leveraging those accomplishments to drive momentum and
share gains with key customers, end markets and geographies. Our strong performance is reflected in our ability to deliver
solid 2017 financial results while advancing our essential long-term growth plans.

We demonstrated our executional capability by driving strong operational improvements in Industrial Process (IP) and
Connect and Control Technologies (CCT), while continuing to leverage the benefits of proactive restructuring in both
businesses. We also improved productivity and efficiency across the enterprise.

In addition, we implemented several structural enhancements in 2017 that have helped drive our success. We simplified
our structural framework by strategically combining two of our segments to create CCT, which provided new opportunities
to optimize operations and leverage shared resources and talent to enhance our long-term growth in the global aerospace
and industrial markets. All of this work is being enhanced by our new Chief Operating Officer structure, which has driven
more robust and consistent processes and performance across the enterprise.

Just as important, we continued to innovate with our customers to drive future growth in markets including automotive,
rail and general industrial. For example, in our Motion Technologies (MT) business, we grew revenue by winning 75 new
automotive friction platforms, including 42 in China and nine in North America, through our ability to partner effectively
with our customers. We also launched our revolutionary ITT Smart Pad™, which is already generating significant interest
across the automotive market.

Further, we secured significant multi-year awards in rotorcraft and the aerospace and defense markets, won a growing
number of electric vehicle connector awards in the North American and EMEA markets, and achieved a record award
in our KONI shock absorber business. These multi-year awards – and others like them – are accelerating our forward
momentum in exciting markets that will help drive our future growth.

From a capital deployment standpoint, we maintained our balanced and effective approach to both position us for
long-term success and return value to shareholders. In 2017, we made strategic organic investments to expand our global
friction business in China, North America and the Czech Republic to support our extensive share gains in those regions, and
we acquired Axtone Railway Components to enhance our position in the global railway market. In addition, we returned
$75 million to shareholders through a solid quarterly dividend and discretionary share repurchases.

In 2017, we continued our commitment to shaping a healthy and high-performing culture, defined by our Purpose of
“We Solve It” and our Principles of Impeccable character, Bold thinking and Collective know-how. We also advanced our
efforts around employee engagement to energize our teams and recognize the contributions they make every day to
solve our customers’ most critical challenges in areas ranging from safety to sustainability to efficiency and total cost of
ownership.

As we look ahead to 2018, we expect to continue to build on the momentum we’ve generated over the past few years to
accelerate our customer-focused innovation and growth and to continue to create long-term value for shareholders. Across
ITT, 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

SHAREHOLDER INFORMATION

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

TRANSFER AGENT & REGISTRAR
Equiniti Group PLC
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
(888) 217-2614

ANNUAL MEETING OF SHAREHOLDERS
The annual meeting will be held at 9 a.m. EDT on
Wednesday, May 23, 2018 at ITT Inc. 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 Inc.
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:
Jessica Kourakos
Investor Relations
jessica.kourakos@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, ITT Inc.

Orlando D. Ashford
President, Holland America Line

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.

Nicholas C. Fanandakis
Executive Vice President,
Dow DuPont

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

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

Mario Longhi
Former President and Chief Executive Officer,
United States Steel Corporation

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

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 Chief Operating Officer

Thomas M. Scalera
Executive Vice President and Chief Financial Officer

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, 2017
OR

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

For the Transition period from to

Commission File No. 001-05672

ITT INC.

Incorporated in the State of Indiana

81-1197930

(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, a smaller reporting company,
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging
growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Smaller reporting company

(Do not check if a smaller reporting company)

Non-accelerated filer

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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, 2017 was approximately $3.5
billion. As of February 14, 2018, there were outstanding 88.2 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
2018 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
16 Form 10-K Summary
Exhibit Index
Signatures

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

PAGE

1
8
15
16
17
17
18

22
23
53
53
53
54
55

57
57
57
57
57

58
58
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. 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 the industry in which we operate, and other legal, regulatory and economic
developments. These forward-looking statements include, but are not limited to, future strategic plans and other
statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any
discussion of future operating or financial performance.

We use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "future," "may,"
"will," "could," "should," "potential," "continue," "guidance" and other similar expressions to identify such forward-looking
statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve known and
unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those
expressed or implied in, or reasonably inferred from, such forward-looking statements.

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 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 Inc. and its subsidiaries.

ITT is a diversified manufacturer of highly engineered critical components and customized technology solutions
for the transportation, industrial, and oil and gas 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 10,000 employees in approximately 35 countries and 2017 revenue
of $2.6 billion, which we derived from sales in more than 100 countries. In 2017, 67% of our sales were outside the
U.S., including 33% from emerging markets. Accordingly, approximately half of our manufacturing facilities are outside
of the U.S. in order to achieve strategic proximity to customers, further increase global sales and market share, and
lower costs.

We have a balanced and diversified portfolio of businesses, which are organized in three segments – Industrial
Process, Motion Technologies, and Connect & 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 into our
customers' requirements and enables us to develop solutions to better assist our customers to 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 possess strong leading brands, such as Goulds Pumps, Bornemann, Engineered Valves, Cannon, VEAM,
BIW Connector Systems, KONI, Axtone, Wolverine, Enidine, Aerospace Controls, and ITT, in many of our niche markets.
These brands are associated with quality, reliability, durability, and engineering excellence. Our brands extend
internationally and participate in emerging 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 (herein referred to as Lean) 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 in 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 before 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.

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 aftermarket
parts and service provider offering an extensive portfolio of industrial pumps, valves, plant optimization systems, and
related services. IP is aligned around three product categories – 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 and end-user customers. IP has a global
manufacturing footprint with significant operations located in the United States, South Korea, and Germany. IP's
customers operate in global infrastructure and natural resource markets such as oil and gas, chemical and
petrochemical, pharmaceutical, general industrial, mining, pulp and paper, food and beverage, and power generation.
Brands include Goulds Pumps, Bornemann, Engineered Valves, PRO Services, and C'treat.

Industrial Products

Industrial Products designs and manufactures configured-to-order industry standards-based industrial pumps,
valves, and equipment for both original equipment installations and replacement parts and pumps. These products
include a broad portfolio of centrifugal process pumps and engineered industrial and sanitary valves.

Engineered Systems

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 and positive displacement pumps, and
water systems. Our pumping systems are generally part of larger capital projects, which have longer lead times and
are generally managed by EPC firms.

Aftermarket Solutions

Aftermarket Solutions provides customers with parts, services, and plant optimization 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 control and monitor
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 one-third 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 distributors and end-
user customers.

The pump and valve markets served are highly competitive, especially in the last few years, due to uncertainty
and volatility in the oil and gas market. 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
overcapacity, fewer investment projects, and 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, and energy absorption components, and sealing technologies primarily for the transportation industry,
including passenger cars, light- and heavy-duty commercial and military vehicles, buses, and rail. MT consists of three
business units, Friction Technologies, Wolverine, and KONI.

Friction Technologies

Our Friction Technologies business manufactures a range of brake pads installed as original equipment (OE) pads
on passenger 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 original equipment
manufacturers (OEMs) or to Tier-1 brake manufacturers. Our OE pads are designed to meet customer specifications
and environmental regulations, and to satisfy an array of performance standards and 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 a
range of braking performance levels. Within the service and repairs market, pads are sold either directly to OE
manufacturers or Tier-1 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 35% of 2017 MT revenue, however,
43% of the Continental and TRW derived revenue is directly attributable to OES supply agreements signed directly
with OEMs. Also, in many cases OEMs specify the use of our pads in a braking system with brake manufacturers,
such as Continental and TRW.

Wolverine

Wolverine is a manufacturer of customized damping technologies for automotive braking systems and specialized
gasket 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.

KONI & Axtone

The KONI and Axtone businesses are organized 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 customized energy absorption solutions, hydraulic shock absorbers (primary,
lateral, and inter-car), yaw dampers, springs, visco-elastic and hydraulic buffers, and coupler components. Revenue
opportunities for our rail damping systems are balanced between OE and AM customers. Sales are either directly to
train manufacturers, 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, and are now also being incorporated into OEM 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, for sale to both OEM and AM customers.

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

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 leader in the rail dampers component of the complete rail damper system in Europe and continues
to gain market share in China.

Connect & Control Technologies

During the first quarter of 2017, we combined our former Interconnect Solutions and Control Technologies segments
to form Connect & Control Technologies. The Connect & Control Technologies segment, commonly referred to as CCT,
designs and manufactures a range of highly engineered connectors and specialized control components for critical
applications supporting various markets including aerospace, defense, industrial, transportation, medical, and oil and
gas. CCT’s products are often part of long-lived platforms that provide for recurring aftermarket and replacement
opportunities. CCT has organized its business around product offerings and end-user markets, with dedicated teams
that specialize in solutions for their specific markets, providing focused customer support and expertise.

CCT has a global production footprint, including major facilities in the United States, Mexico, Germany, and China,
which provides close geographic proximity to key customers. CCT competes with a large number of competitors in
highly fragmented industries. CCT’s competitors can range from large public multi-national corporations to small
privately held local firms, depending on the product line and region. CCT's ability to compete successfully depends
upon numerous factors, including quality, price, availability, performance, brand recognition, customer service,
innovation, application expertise and previous installation history. In addition, collaboration with customers to deliver
a wide range of product offerings has allowed CCT to compete effectively, to cultivate and maintain customer
relationships, and to expand into new markets. CCT products are sold directly and through numerous channels including
distributors. CCT has long-lasting relationships with distributors, as many have been selling certain CCT products for
over 70 years. Sales to distributors represented approximately 30% of 2017 CCT revenue.

Connector Products

The connector product portfolio includes high performance electrical connectors of the following types: Circular,
Rectangular, Radio Frequency, Fiber Optic, D-sub Miniature, Micro-Miniature and cable assemblies. Brands include
Cannon, VEAM and BIW Connector Systems, which deliver solutions to enable the transfer of data, signal, and power
into various end-user markets including aerospace, defense, industrial, transportation, medical, and oil and gas. These
brands are known for high-performance, high-reliability solutions which withstand high vibrations and are resistant to
dirt and fluids. In certain harsh environment niche markets, our connector products are considered market leaders
because of their technological capabilities, cost performance, and global footprint.

Products for the aerospace and defense markets include industry standards-based connectors and customized
solutions for most segments of the commercial aviation and defense industries. 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.

Products for the industrial markets include connectors for industrial production equipment, industrial electronics
and instruments, and other industrial and medical applications. Products for the transportation markets include
connectors for high-speed, mainline, metro and light passenger rail, heavy-duty vehicles, and electric vehicle
applications.

Products for the oil and gas markets include connectors that provide power for electric submersible pumps in oil
and gas wells, reservoir monitoring instruments, and electrical downhole heaters. Oil and gas 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.

Control Products

The control product portfolio provides actuation, fuel management, noise and energy absorption, and environmental
control system applications, with a specialized set of design and application engineering skills and capabilities that
enables CCT to engineer differentiated custom solutions for unique applications for the aerospace and defense, and
industrial markets.

Control products for the aerospace and defense markets consist of fuel and water pumps, valves, electro-
mechanical rotary and linear actuators, and pressure, temperature, limit, and flow switches for various aircraft systems.
These products also include stowage bin rate controls, rotary hinge dampers and actuators, seat recline locks and
control cables, electromechanical seat actuation, a variety of engineered elastomer isolators to protect equipment and
keep the interior of the aircraft quiet, certain energy absorption products and other aerospace components. Other
control products for this market include environmental control systems such as climate control and ice protection
heaters, composite conveyance ducting and acoustically engineered inlets and exhausts for auxiliary power units.

Control products for the industrial markets include 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 production, packaging, and factory automation. The process control products primarily serve the chemical,
petrochemical, and energy segments of the industrial market.

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, tin, and rubber, 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 material 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 fluctuations due to inflation of prices for raw materials and commodities. 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 according to 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

Our backlog represents firm orders that have been received, acknowledged and entered into our production
systems. Our backlog may vary due to market volatility or other changes in macroeconomic conditions. In addition,
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 IP 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 as of December 31, 2017 and 2016 was $869.7 and $785.1,
respectively. Total backlog by segment as of December 31, 2017 and 2016 was: IP - $336.5 and $347.2; MT - $299.7
and $201.2; and CCT - $233.5 and $236.7. We expect to satisfy nearly all December 31, 2017 backlog commitments
during 2018.

Intellectual Property

We generally seek patent protection for certain 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 our 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
2017, 2016 and 2015, we recognized R&D expenses of $93.7, $80.8, and $78.9, respectively, which were 3.6%, 3.4%,
and 3.2%, 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 connector products in our CCT segment 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 at 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 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, and 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, 2017, we had approximately 10,000 employees, of which approximately 3,100 were located
in the U.S. Approximately 20% 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 11% of ITT's total revenues. Although
our relations with our employees are strong and we have not experienced any material strikes or work stoppages
recently, we can provide no assurance that we will not experience these or other types of conflict 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

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).

On May 16, 2016, we consummated a corporate reorganization into a holding company structure. As a result of
the reorganization ITT Inc., an Indiana corporation formed in 2016 that was previously a wholly owned subsidiary of
ITT Corporation, became the publicly traded holding company of ITT Corporation and its subsidiaries and the successor
issuer to ITT Corporation under Rule 12g-3(a) under the Securities Exchange Act of 1934 (Exchange Act). As the
successor issuer, ITT Inc. common stock was deemed to be registered under Section 12(b) of the Exchange Act and
ITT Inc. succeeded to ITT Corporation’s obligation to file reports, proxy statements and other information required by
the Exchange Act with the SEC. For additional information regarding the holding company reorganization, please refer
to the Current Report on Form 8-K that we filed with the SEC on May 16, 2016.

Acquisitions

On March 31, 2015, we completed the acquisition of Environmental Control Systems (f/k/a Hartzell Aerospace),
a designer and manufacturer of products to support aerospace applications. Environmental Control Systems is included
as part of our Connect & Control Technologies segment.

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. Wolverine is included as part of our Motion Technologies segment.

On January 26, 2017, we completed the acquisition of Axtone Railway Components (Axtone), a leading
manufacturer of highly engineered and customized components for railway and other harsh-environment industrial
markets. Axtone is included as part of our Motion 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.

Subsidiaries of ITT, including ITT LLC (f/k/a ITT Corporation) and Goulds Pumps LLC (f/k/a Goulds Pumps, Inc.),
have 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 certain ITT subsidiaries. We expect they will be sued in similar actions in the future. As
such, 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. 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.

In addition, 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 cost, including potential recoveries, of
resolving pending and unasserted asbestos claims. Changes in estimates related to these uncertainties may result in
increases or decreases to the net asbestos liability, particularly if the quality, 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. The resolution of asbestos claims may take many years. 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 condition, results of operations, or cash flows in any given period.

As part of the 2011 spin-off, ITT Corporation (n/k/a ITT LLC) 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 or uncertain global economic and capital market conditions.

We have experienced and expect to continue to experience volatility in revenues, operating results and profitability.
We have undertaken measures to reduce the impact of this volatility through diversification of markets and expansion
of geographic regions in which we operate. The end markets we serve include automotive, aerospace, oil and gas,
industrial, mining, chemical, and defense, each of which is impacted by specific industry and general economic cycles.
Important factors impacting our businesses include, but are not limited to, the overall strength of the global economy
and our customers’ confidence in local and global macroeconomic conditions, industrial spending, tax rates, interest
rates, the availability of commercial financing, and regulations in the jurisdictions in which we operate. Instability in the
global credit markets and geopolitical environment in many parts of the world may put pressure on global economic
conditions. If global economic and market conditions, or economic conditions in key markets or regions deteriorate,
we may experience material impacts on our financial statements.

We closely monitor the credit worthiness of our insurers and customers and evaluate their ability to service their
obligations to us. However, adverse changes to financial conditions could jeopardize these counterparty obligations.
A tightening of credit markets may reduce funds available to our customers to pay for our products and services for a

prolonged and perhaps unknown period of time. 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.

Should market conditions deteriorate, this may also 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.

We are subject to inherent business risks due to our operations and sales outside the U.S. and in emerging
markets.

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 markets such as Mexico, South America, China, Russia, and the Middle East. In 2017, 67% 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, some of which could be impacted by changes in international trade agreements between the United
States and other countries:

• possibility of unfavorable circumstances arising from host country laws or regulations;
• restrictions, regulations, or tax liabilities 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.

In addition to the general risks that we face outside the U.S., we now conduct more of our operations in emerging
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 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.

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.

Our business is impacted by our customers' 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 those in the oil and gas, chemical, and mining industries,
which represent approximately 10%, 6%, and 3%, respectively, of our 2017 revenue, 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 and other macroeconomic
factors 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.

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., therefore, 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, Polish zloty, British pound, and Mexican peso. From time to
time, we may enter into derivative contracts to hedge some of these foreign currency exposures. However, our hedging
strategy may fail to reduce our exposure or could result in unfavorable impact to our operating results.

As we continue to grow our business internationally, our operating results could be affected by the relative strength
or weakness of global economies and the impact of foreign 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 foreign currency exchange rates may also impact our results when
the currency of a transaction differs from the functional currency of our operating unit, or when financial statements in
the functional currency 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 or weakening of the U.S. dollar against other major foreign currencies could
adversely affect our results of operations.

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.

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 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, defense, aerospace, and industrial markets. Our products provide enabling functionality
for applications for which 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 potentially 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 Connect & Control Technologies and Motion Technologies segments derive a portion of their revenue from
sales to U.S. government customers and 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, or suspension or debarment from government
contracting. Failure to comply with applicable requirements also could harm our reputation and our ability to compete
for future government contracts or sell commercial equivalent products. 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
limited 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.

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 approximately 700 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 inventory levels and strategic decisions, including pricing, capital deployment, 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 11% of our total revenue is derived from a single customer, Continental ATE, whom we sell to
through OE brake 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, or 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 in 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 withholding or other

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; or

• 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 also require 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 ERP 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.

Information technology security breaches and changes in laws relating to the use and transfer of personal
information 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, but not limited to, those by computer hackers and
cyber terrorists utilizing techniques such as phishing, ransomware or denial of service attacks. 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 or 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 or 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.

The regulatory environment surrounding information security and privacy is increasingly demanding, with frequent
imposition of new and changing requirements. For example, the European Union's General Data Protection Regulation
(GDPR), which will become effective in May 2018, imposes significant new requirements on how we collect, process
and transfer personal data, as well as significant fines for non-compliance. The costs of compliance with the GDPR
and the potential for fines and other related costs in the event of a breach of the GDPR or other information security
or privacy requirements may have an adverse effect on our financial results.

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 actions. 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. In addition, restructuring activities may
result in a loss of knowledge or expertise of existing products or business processes or could negatively impact
employee performance and retention.

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.

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.
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.

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), the U.S. Department of State and the U.S. Department of Commerce. Any such
violation could result in substantial fines, sanctions, civil and/or criminal penalties, suspension or debarment from
government contracts, or 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.

Past divestitures and spin-offs may expose us to potential liabilities.

Over our more than 100 year history, we have divested a number of businesses, including as part of spin-offs in
1995 and 2011. With respect to some of these former businesses, we have contractually agreed to indemnify the
counterparties against, or otherwise retain, certain liabilities, including, for example certain lawsuits, tax liabilities,
product liability claims, asbestos claims or environmental matters. Even without ongoing contractual indemnification
obligations, we could be exposed to liabilities arising out of such divestitures. In addition, the counterparties to those
divestitures may have agreed to indemnify us or assume certain liabilities relating to those divestitures. Similarly, there
can be no assurance that the indemnity or assumption of liability by the counterparties will be sufficient to protect us
against the full amount of these liabilities, or that a counterparty will be able to fully satisfy its obligations. Third parties
also could seek to hold us responsible for any of the liabilities that a counterparty agreed to assume. Even if we
ultimately succeed in recovering any amounts for which we were initially held liable, we may be temporarily required
to bear these losses ourselves. For example, as part of the Distribution Agreement that we signed in 2011, ITT LLC,
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. As a result of these
types of arrangements, conditions outside our control could have a material adverse effect on our future financial
results.

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 as of December 31, 2017.

Location
Manufacturing:
North America
Europe
Asia
South America

Non-Manufacturing:

North America
Europe

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

Connect &
Control
Technologies

Other

Total

Area

3
1
1
1
6

3
—
3

1,109.0
356.8
670.9
68.0
2,204.7

112.5
—
112.5

4
10
1
—
15

—
1
1

813.6
1,609.1
8.8
—
2,431.5

—
38.5
38.5

4
1
1
—
6

—
—
—

540.4
231.3
13.4
—
785.1

—
—
—

—
—
—
—
—

—
—
—

—
—
—
—
—

—
—
—

11
12
3
1
27

3
1
4

2,463.0
2,197.2
693.1
68.0
5,421.3

112.5
38.5
151.0

Number of Facilities - Leased

Industrial
Process

Motion
Technologies

Connect &
Control
Technologies

Other

Total

Area

3
—
2
1
6

16
10
2
10
6
44

156.0
—
221.5
31.8
409.3

421.6
133.0
14.8
140.9
220.9
931.2

3
4
2
—
9

2
1
—
2
—
5

56.6
350.7
348.6
—
755.9

58.0
28.0
—
5.5
—
91.5

9
3
1
—
13

—
—
—
4
—
4

442.1
69.0
294.4
—
805.5

—
—
—
7.2
—
7.2

—
—
—
—
—

2
1
—
2
—
5

—
—
—
—
—

64.6
3.2
—
11.9
—
79.7

15
7
5
1
28

20
12
2
18
6
58

654.7
419.7
864.5
31.8
1,970.7

544.2
164.2
14.8
165.5
220.9
1,109.6

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are involved in litigation, claims, government inquiries, investigations and proceedings,
including but not limited to those relating to environmental exposures, intellectual property matters, personal injury
claims, regulatory matters, commercial and government contract issues, employment and employee benefit matters,
commercial or contractual disputes, and securities matters.

Asbestos Proceedings

Subsidiaries of ITT, including ITT LLC and Goulds Pumps LLC, have been joined as defendants with numerous
other companies in product liability lawsuits alleging personal injury due to asbestos exposure. These claims allege
that certain of their products sold 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. Frequently, the plaintiffs are unable to identify any ITT LLC or Goulds
Pumps LLC products as a source of asbestos exposure. In addition, a large majority of claims pending against the
Company's subsidiaries have been placed on inactive dockets because the plaintiff cannot demonstrate a significant
compensable loss. Our experience to date is that a substantial portion of resolved claims have been dismissed without
payment by the Company's subsidiaries.

We have recorded 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, a
liability for potential future claims beyond the next 10 years is not reasonably estimable due to the uncertainties and
variables inherent in the long-term projection of the Company's asbestos exposures and potential recoveries. As of
December 31, 2017, we have recorded an undiscounted asbestos-related liability for pending claims and unasserted
claims estimated to be filed over the next 10 years of $877.2, which includes expected legal fees and we have recorded
an associated asset of $368.7, which represents estimated recoveries from insurers, resulting in a net exposure of
$508.5. See information provided in Note 18, Commitments and Contingencies, to the Consolidated Financial
Statements for further information.

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. See information provided in Note 18, Commitments and Contingencies, to the
Consolidated Financial Statements for further information.

Other Matters

The Company received a civil subpoena from the Department of Defense, Office of the Inspector General, in the
second quarter of 2015 as part of an investigation being led by the Civil Division of the U.S. Department of Justice
(DOJ). The subpoena and related investigation involve certain connector products manufactured by the Company’s
Connect & Control Technologies segment that are purchased or used by the U.S. government. In addition, in the third
quarter of 2017, the Company learned that the Criminal Division of DOJ is also investigating this matter. The Company
is cooperating with the government and has produced documents responsive to the subpoena to the Civil Division.
Based on its current analysis following discussions with DOJ to resolve the civil matter, the Company has accrued $5
as its current best estimate of the minimum amount of probable loss. It is reasonably possible that any actual loss
related to this matter may be higher than this amount, but at this time management is unable to estimate a range of
potential loss in excess of the amount accrued.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The current executive officers of the Company, as of February 1, 2018, are listed below.

Name
Denise L. Ramos

Farrokh Batliwala

Victoria L. Creamer

Steven C. Giuliano

Mary Beth Gustafsson

David Malinas

Luca Savi

Thomas M. Scalera

Age
61

Chief Executive Officer and President

Current Title

Senior Vice President and President, Connect & Control Technologies

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, Industrial Process

Executive Vice President and Chief Operating Officer

Executive Vice President and Chief Financial Officer

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 is currently a director of the following public company: Phillips 66, since 2016 (Audit and
Finance Committee, Nominating and Governance Committee and Public Policy Committee). She serves on the
Board of Trustees for the Manufacturers Alliance for Productivity and Innovation and is also a member of the
Business Council. Ms. Ramos was included in the Top 100 CEO Leaders in Science, Technology, Engineering
and Math publication by STEMconnector, she 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. She also served on the board
of the following public company within the last five years: Praxair, Inc. from 2014 to 2016.

Farrokh Batliwala has served as our Senior Vice President and President, Connect & Control Technologies since May
2017. Prior to the consolidation of ITT's Control Technologies and Interconnect Solutions segments, Mr. Batliwala
served as the Senior Vice President and President of Control Technologies and Interconnect Solutions, from
November 2016 to May 2017, and previously served as Senior Vice President and President, Control Technologies
from October 2015 to November 2016. 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.

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,
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. (American Standard) from 2005 to 2008, and held various other positions of increasing levels of
responsibility at American Standard since 2001.

David Malinas has served as our Senior Vice President and President, Industrial Process since June 2017. He previously
served as Vice President and General Manager of Thermo Fisher Scientific, a leading provider of scientific tools
and services, from April 2008 through June 2017. In addition, while at Thermo Fisher Scientific, he held a variety
of leadership roles across the United States and Japan. Mr. Malinas also previously held a variety of management
roles at Danaher Corporation in the Environmental and Motion platforms in the USA, England, Germany and
Mexico.

Luca Savi has served as our Executive Vice President and Chief Operating Officer since January 2017 and previously
as Executive Vice President, Motion Technologies since February 2016. He joined ITT in November 2011 as Senior
Vice President and President, Motion Technologies. 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 Executive Vice President and Chief Financial Officer since February 2016 and
previously 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.

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

2017

2016

High

Low

High

Low

$ 44.00
42.73
44.95
54.79

$ 38.52
36.93
38.66
44.06

$ 38.96
39.70
36.98
43.07

$ 29.15
30.31
30.06
32.46

We declared dividends of $0.128 and $0.124 per share of common stock in each of the four quarters of 2017 and
2016, respectively. In the first quarter of 2018, we declared a dividend of $0.134 per share for shareholders of record
on March 12, 2018. 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 9,136 holders of record of our common stock on February 14, 2018.

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 2018 Annual Meeting of Shareholders.

During the fiscal year ended December 31, 2017, 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, 2017.

(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)

PERIOD
10/1/2017 - 10/31/2017
11/1/2017 - 11/30/2017
12/1/2017 - 12/31/2017

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)
$ 140.6
$ 140.6
$ 140.6

(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. On
December 16, 2008, our Board of Directors modified the provisions of the Share Repurchase Program to replace
the original three-year term with an indefinite term. As of December 31, 2017, we had repurchased 21.2 shares
for $859.4, including commissions, under the 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 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, 2012 of $100 with dividends reinvested

ITT Inc.
S&P 400 Mid-Cap

S&P 400 Capital Goods

12/31/2012
$ 100.00

$ 100.00

12/31/2013
$ 187.38
$ 133.46
$ 141.36

12/31/2014
$ 176.37

12/31/2015
$ 160.26

12/31/2016
$ 172.46

12/31/2017
$ 241.55

$ 146.45

$ 143.25

$ 172.95

$ 201.02

$ 141.71

$ 133.91

$ 176.66

$ 220.29

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(c)
Other operating costs

Operating income

Operating margin

Income tax expense (benefit)(d)
Income from continuing operations
attributable to ITT Inc.

(Loss) income from discontinued operations,
net of tax(e)
Net income attributable to ITT Inc.

Income from continuing operations per basic
share

(Loss) income from discontinued operations
per basic share

Net income per basic share

Income from continuing operations per
diluted share

(Loss) income from discontinued operations
per diluted share

Net income per diluted share

Dividends declared

Financial Position

Cash and cash equivalents

Total assets

Total debt and capital leases

2017(a)

2016(b)

2015

2014

2013

$ 2,585.3

$ 2,405.4

$ 2,485.6

2,654.6

2,496.9

817.2

31.6%

(19.9)

527.4

309.7

12.0%

194.6

115.0

(1.5)

113.5

1.30

(0.01)

1.29

(0.01)

1.28

0.512

389.8

3,700.2

171.9

758.2

31.5%

(25.6)

524.9

258.9

10.8%

76.0

181.9

4.2

186.1

2.04

0.05

2.09

2.02

0.05

2.07

0.496

460.7

3,601.7

216.3

809.1

32.6%

(91.4)

520.4

380.1

15.3%

70.1

312.4

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

866.4

32.6%

3.9

596.1

266.4

10.0%

71.3

188.4

(3.9)

184.5

2.06

(0.04)

2.02

2.03

(0.04)

1.99

0.44

584.0

3,631.5

8.5

799.8

32.0%

32.8

583.4

183.6

7.4%

(309.6)

487.7

0.8

488.5

5.36

0.01

5.37

5.28

0.01

5.29

0.40

507.3

3,740.2

48.9

(a) On January 26, 2017, we acquired Axtone Railway Components (Axtone). Our 2017 Consolidated Financial Statements
include an additional 11 months of operations compared to 2016 related to this acquisition. See Note 21, Acquisitions,
in our Notes to Consolidated Financial Statements for further information.

(b) On October 5, 2015, we acquired Wolverine Automotive Holdings Inc. (Wolverine). Our 2016 Consolidated Financial
Statements include an additional nine months of operations compared to 2015 related to this acquisition. See Note
21, Acquisitions, in our Notes to Consolidated Financial Statements for further information.

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

(d) The 2017 income tax expense includes a $129.2 impact associated with the Tax Cuts and Jobs Act of 2017 that was
signed into U.S. law in December 2017. See Note 5, Income Taxes, in our Notes to the Consolidated Financial
Statements for further information. The 2013 income tax benefit of $309.6 includes the release of a U.S. deferred tax
valuation allowance of $374.6.

(e) The 2015 income from discontinued operations of $39.4, principally related to the settlement of the U.S. income tax

audit.

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 Inc., through its worldwide subsidiaries, 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.

EXECUTIVE SUMMARY

During 2017, we continued to focus on optimizing execution across the enterprise while advancing our long-term
strategies and driving growth and share gains with key customers, end markets, and geographies. In early 2017, we
created a new operating model and Chief Operating Officer structure, which has been successfully driving more robust
processes and performance across the company. The benefits generated from increased volume, productivity
improvements across our businesses, and proactive restructuring actions more than offset unfavorable headwinds
experienced during the year.

Our 2017 results include:

• Revenue of $2.6 billion, reflecting growth of $179.9, or 7.5%, and organic revenue growth of $76.4, or 3.2%,
which excludes an incremental benefit of $74 from our acquisition of Axtone and $29.5 from favorable foreign
exchange translation. Organic revenue growth was driven by a 7% increase to our transportation markets, led
by automotive brake pads and KONI high speed rail, partially offset by lower aerospace revenues. Organic
revenue to our industrial markets decreased 1% due to weaker chemical and industrial pumps, partially offset
by strength in general industrial connectors and mining. Organic revenue to our oil & gas markets declined
4% amid project pump declines, partially offset by increased connector sales.

• Operating income of $309.7 and operating margin of 12.0%, reflecting growth of $50.8 and 120 basis points,
respectively, as sales volume growth, lower restructuring costs coupled with the benefits from current and
prior year actions, and productivity improvements at all three segments, were partially offset by higher
commodity costs, unfavorable price and sales mix, incremental investments to support long-term growth,
higher incentive compensation costs, and unfavorable impacts from foreign currency fluctuations.

•

Income from continuing operations was $1.29 per diluted share that includes provisional tax expense impact
of $129.2 ($1.45 per diluted share) from the Tax Cuts and Jobs Act of 2017 (herein referred to as the "Tax
Act"). Adjusted income from continuing operations was $2.59 per diluted share for 2017, reflecting a 27 cent
per share increase over the prior year.

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.

During 2017, we advanced our strategic goals to drive long-term growth and share gains. The following highlights a
few examples of strategic actions that occurred during the year that will help position us well for continued value
creation:

• We aligned the operations and management of our connectors and control technologies businesses creating
a new business segment, Connect & Control Technologies, to increase focus on aerospace and industrial
markets, optimize operations, leverage shared infrastructure, and drive long-term growth.

• At our Industrial Process segment, we continued our strategic transformation led by our structural reset and

focused heavily on optimizing our project execution, leading to operating margin expansion.

• Despite ongoing pricing and commodity cost headwinds, our Motion Technologies segment delivered
exceptional operating results due to our World-Class Manufacturing Excellence Program, which began almost
three years ago.

During the year, we drove market share gains by expanding in new and existing key end markets and geographies,
including:

• Advancing key strategies in rotorcraft, aerospace and defense, electric vehicle, and high speed rail markets.
In all categories, we were awarded significant multi-year awards that may also generate attractive aftermarket
opportunities.

•

In the transportation market, we significantly outpaced global OEM production rates in China, North America
and Europe. We were also awarded 75 new automotive platforms, including 42 in China and 15 for electric
vehicles.

• We launched the innovative ITT SMART Pad and are working with customers on both development and on-

board opportunities.

In 2017, we continued to deploy our capital in balanced and effective ways, including:

• Funding organic investments, such as our phased investments in Mexico, China, and the Czech Republic

to efficiently align our friction footprint with the automotive platforms we have already secured.

• Completing our acquisition of Axtone Railway Components, which will expand and complement our existing

capabilities in the global railway market.

• Returning $75 to shareholders; $45 in the form of quarterly dividends and $30 in share repurchases.

As we enter 2018, we plan to build on our operational and strategic momentum by focusing heavily on execution
under our new operating model, by driving innovation & growth strategies through our businesses, and by deploying
capital in a balanced and efficient way. We will also continue to leverage the benefits of our global and end-market
diversification. We expect our primary top-line drivers of growth in 2018 to include global friction and rail share gains
and improved short-cycle industrial and chemical pump demand, and we are encouraged by indications of stabilization
in our key end markets. While higher commodity costs, price pressures, and non-functional corporate costs are expected
to provide challenges in the coming year, we will direct our focus to areas that are within our control by continuing to
drive productivity across all three of our business segments and initiating proactive restructuring actions as necessary.
In addition, we plan to focus more of our efforts on growth and innovation, increasing research and development
activities in 2018 as part of our long-term growth strategy. Finally, we will continue our track record of balanced and
effective capital deployment by funding major organic investments that extend our global reach, expand our production
capabilities in key end-markets such automotive friction and rotorcraft, and by focusing on our acquisition pipeline.
We also raised our first quarter 2018 quarterly dividend by 5%, which would represent our sixth consecutive year of
dividend increases, and anticipate returning up to approximately $50 to shareholders in the form of share repurchases.

DISCUSSION OF FINANCIAL RESULTS
2017 VERSUS 2016

Revenue
Gross profit

Gross margin

Operating expenses

Operating expense to revenue ratio

Operating income
Operating margin
Income tax expense
Effective tax rate

2017
$ 2,585.3
817.2

2016
$ 2,405.4
758.2

31.6%

507.5

19.6%

309.7

12.0%

194.6

62.9%

115.0
(1.5)
113.5

31.5%

499.3

20.8%

258.9

10.8%
76.0
29.4%

181.9
4.2
186.1

Change

7.5 %
7.8 %
10bp
1.6 %
(120)bp
19.6 %
120bp
156.1 %
3,350bp
(36.8 )%
(135.7 )%
(39.0 )%

Income from continuing operations attributable to ITT Inc.
(Loss) income from discontinued operations, net of tax

Net income attributable to ITT Inc.

All comparisons included with the Discussion of Financial Results 2017 versus 2016 refer to results for the year

ended December 31, 2017 compared to the year ended December 31, 2016, 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, 2017 and 2016.

Industrial Process
Motion Technologies
Connect & Control Technologies
Eliminations
Total Revenue

2017
807.2
1,176.0
605.6
(3.5)
$ 2,585.3

2016
830.1
983.4
596.3
(4.4)
$ 2,405.4

Change
(2.8)%
19.6 %
1.6 %
(20.5)%
7.5 %

Organic
(decline)
growth(a)
(3.4)%
9.8 %
1.4 %
— %
3.2 %

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

of organic revenue and organic orders.

Industrial Process

Industrial Process revenue for the year ended December 31, 2017 was $807.2, reflecting a decrease of $22.9, or
2.8%, including a favorable foreign currency translation impact of $5.7. Organic revenue decreased 3.4%, due to a
17% decline in project pump revenue primarily stemming from lower North American oil and gas projects in backlog
entering the year and lower mining project revenue, but also reflected an 11% decline in revenue from valves partially
related to a significant prior year contract. Partially offsetting this decline was organic revenue growth of 4% in short-
cycle baseline pumps driven by stronger demand in the industrial and mining markets and growth of 3% from aftermarket
parts driven by oil & gas in Europe and Middle East regions and growth of 6% from service due to strength in all North
American markets.

Upon adoption of the new revenue standard in the first quarter of 2018, the timing of revenue recognition for certain
projects in the Industrial Process business will vary and may be recorded upon shipment based on contract terms,
when previously such projects were recorded over time. The impact to future revenue trends is uncertain as it will
depend on future orders and contract terms. However, cash flows and overall profitability of a contract at completion
are unchanged by the new standard.

Orders for the year ended December 31, 2017 were $799.8, reflecting an increase of $20.7, or 2.7% including
favorable foreign currency translation impact of $4.6. Organic orders increased 2.1%, driven by an 8% increase in
short-cycle baseline pumps stemming from higher distributor activity across all end markets in North America and in
the paper and general industrial markets. Positive organic order growth of 5% from aftermarket parts and service was
driven by increases in the North America pulp and paper, Europe and Middle East oil & gas, and Asia mining markets.

Organic order growth was partially offset by an 8% decline in project activity reflecting the continued competitive and
challenging conditions in chemical and oil and gas markets.

The level of order and shipment activity related to project pumps can vary significantly from period to period.
Backlog as of December 31, 2017 was $336.5, reflecting a decrease of $10.7, or 3.1%, compared to December 31,
2016.

Motion Technologies

Motion Technologies revenue for the year ended December 31, 2017 was $1,176.0, reflecting an increase of
$192.6, or 19.6%, including incremental revenue of $74.0 from the acquisition of Axtone, which was completed in the
first quarter of 2017, and favorable foreign currency translation impact of $22.7. Organic revenue increased $95.9, or
9.8%, driven by a 12% increase from our Friction Technologies business. The increase was primarily driven by continued
strength in automotive OEM sales channel due to market growth and share gains in China, Europe and North America.
The OES and independent aftermarket channels were also strong as revenues grew approximately 8% and 13%,
respectively. Wolverine contributed organic revenue growth of approximately 5% due to global share gains in sealing
solutions. Organic revenue from our KONI business increased approximately 5% primarily in the rail market due to
growth in Europe and higher demand in the high speed rail market in China. Activity on a U.S. defense program also
contributed to the growth in KONI revenue.

Orders for the year ended December 31, 2017 were $1,198.8, reflecting an increase of $200.4, or 20.1%, including
incremental orders of $70.2 from the acquisition of Axtone and favorable foreign currency translation impacts of $22.0.
Organic orders grew $108.2, or 10.8%, primarily due to continued strength in our Friction Technologies business. KONI
order activity grew approximately 16% due to a large multi-year order on a U.S. defense program and strength from
new products in the China high speed rail market.

Connect & Control Technologies

Connect & Control Technologies revenue for the year ended December 31, 2017 was $605.6, reflecting an increase
of $9.3, or 1.6%, including favorable foreign currency translation impacts of $1.0. The increase in revenue was primarily
driven by strength in oil and gas connectors which increased approximately 31% due to stronger demand in North
America and the Middle East upstream market. In addition, revenue from the general industrial market grew
approximately 2% due to heavy vehicle and electric vehicle connector strength. Revenue from the aerospace and
defense market decreased 1% due to weaker commercial aerospace demand and impacts from restrictions on the
sales of certain military-specification connectors, but was partially offset by rotorcraft share gains and defense
component strength.

Orders received during the year ended December 31, 2017 were $624.1, reflecting an increase of $21.7, or 3.6%,
including favorable foreign currency translation impacts of $1. The increase was primarily driven by strong order activity
in the aerospace and defense market due to defense component strength as well as rotorcraft share gains. Offsetting
this increase were impacts from restrictions on the sales of certain military-specification connectors and weaker
commercial aerospace demand. Orders for connectors associated with the oil and gas market grew 31%. In the general
industrial markets, orders grew approximately 2% due energy absorption projects, actuation components, and heavy
vehicle connectors in China.

On July 11, 2017, the U.S. Defense Logistics Agency, Land and Maritime (DLA) issued a notice that it has removed
our connectors business from the Qualified Products List (QPL) with respect to six military-specification connector
products. At the time of this notice, these products had been subject to a previously-disclosed stop shipment/stop
production order issued by DLA earlier in 2017. Annual sales of these military-specification connectors are estimated
to range from $8 to $10. The Company will seek to restore its status on the QPL as expeditiously as possible but is
unable to estimate how long this process will take. At this time, there is uncertainty whether there will be any further
negative impacts to our revenue and results of operations related to the QPL removal.

GROSS PROFIT

Gross profit for 2017 was $817.2, reflecting a gross margin of 31.6%. Gross profit for 2016 was $758.2, reflecting
a gross margin of 31.5%. Higher automotive sales volumes, lower labor costs as a result of restructuring benefits from
our structural cost reset at our Industrial Process segment, operational improvements at our Connect & Control
Technologies segment, and incremental activity from our 2017 acquisition of Axtone were partially offset by unfavorable
automotive and aerospace pricing and sales mix impacts, increased direct material costs due to higher commodity
prices impacting our Motion Technologies segment, and unfavorable impacts from certain military-specification
connectors.

OPERATING EXPENSES

The following table provides further information by expense type, as well as a breakdown of operating expense

by segment.

General and administrative expenses

Sales and marketing expenses

Research and development expenses

Asbestos-related benefit, net
Total operating expenses

By Segment:

Industrial Process

Motion Technologies

Connect & Control Technologies

Corporate & Other

2017
$ 264.0

2016
$ 274.1

169.7

93.7

(19.9)

170.0

80.8

(25.6)

$ 507.5

$ 499.3

$ 175.7

$ 212.3

177.9

147.4

6.5

139.0

136.7

11.3

Change
(3.7)%

(0.2)%

16.0 %

(22.3)%

1.6 %

(17.2)%

28.0 %

7.8 %

(42.5)%

General and administrative ("G&A") expenses were $264.0 for the year ended December 31, 2017, reflecting a
decrease of $10.1, or 3.7%. The year-over-year decrease was primarily due to an insurance related settlement of $16
received in the fourth quarter of 2017, lower restructuring costs of $13.2, and cost savings from our past restructuring
actions. In addition, in the prior year we recorded pension settlement charges of $12.7 and a trade name impairment
of $4.1. These items were partially offset by higher incentive compensation of approximately $20, unfavorable foreign
currency impacts of approximately $13, a legal accrual of $5, and a pension curtailment of $3.7. In addition, G&A
expenses increased $10.6 due to the Axtone acquisition in early 2017.

Sales and marketing expenses for the year ended December 31, 2017 were $169.7, reflecting a decrease of 0.2%,
as lower personnel and commission costs at Industrial Process were partially offset by higher overall selling costs at
Motion Technologies attributable to strong sales growth and incremental costs related to our acquisition of Axtone of
$4.3.

Research and development ("R&D") expenses for the year ended December 31, 2017 were $93.7, reflecting an
increase of $12.9, or 16.0%. The increase was primarily driven by increased product development activity at our Motion
Technologies and Connect and Control segments. Incremental costs related to our acquisition of Axtone were $1.4
during 2017.

During 2017, we recognized a net asbestos-related benefit of $19.9, compared to a benefit of $25.6 in the prior
year. The decrease was primarily due to a lower current year benefit from our annual remeasurement. 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

The following table illustrates the 2017 and 2016 operating income and operating margin by segments and at the

consolidated level.

Industrial Process

Motion Technologies

Connect & Control Technologies

Segment operating income

Asbestos-related benefit, net

Other corporate costs

Total corporate and other cost, net

Total operating income

Operating margin:

Industrial Process

Motion Technologies

Connect & Control Technologies

Segment operating margin

Consolidated operating margin

2017

2016

59.5

33.5

190.0

66.7

316.2

19.9

(26.4)

(6.5)

171.4

65.2

270.1

25.6

(36.8)

(11.2)

$ 309.7

$ 258.9

7.4%

16.2%

11.0%

12.2%

12.0%

4.0%

17.4%

10.9%

11.2%

10.8%

Change
77.6 %

10.9 %

2.3 %

17.1 %

(22.3 )%

(28.3 )%

(42.0 )%

19.6 %

340bp

(120)bp

10bp

100bp

120bp

Industrial Process operating income for the year ended December 31, 2017 increased $26.0, or 77.6%, to $59.5.
IP's operating margin of 7.4% reflected an increase of 340 basis points. The increase in operating income and margin
was primarily driven by net savings of $15 due to restructuring benefits, productivity, and sourcing initiatives, a decrease
in restructuring costs of $13.1, improved project performance, and a trade name impairment of $4.1 recorded in 2016.
These items were partially offset by an unfavorable impact of approximately $9 from lower sales volume, higher
incentive compensation of $6.4 and unfavorable foreign currency impacts of approximately $4. In addition, pension
termination charges increased slightly as IP recorded curtailment charges of $3.7 in 2017, compared to a pension
settlement charge of $3.4 in 2016.

Motion Technologies operating income for the year ended December 31, 2017 increased $18.6, or 10.9%, to
$190.0, but MT's operating margin decreased 120 basis points to 16.2%. The increase in operating income was
primarily driven by higher sales volume, which provided a benefit of approximately $44, and productivity improvements
at our brake component facilities. These items were partially offset by unfavorable pricing and sales mix, higher material
costs, and incremental investments to support recent long-term global automotive platform wins including startup costs
for our new North American facility. Foreign currency fluctuations provided an unfavorable impact of approximately $4
during 2017. In addition, our acquisition of Axtone produced incremental operating income of $1.3 during 2017.

Connect & Control Technologies operating income for the year ended December 31, 2017 increased $1.5, or 2.3%,
to $66.7 and resulted in an operating margin of 11.0%. Operating income was favorably impacted by net savings of
approximately $23, due to restructuring benefits, productivity, and sourcing initiatives, primarily at our North American
Connector facility, as well as higher sales volumes that provided a benefit of approximately $8. These items were offset
by unfavorable sales mix and pricing of approximately $12, unfavorable impacts related to certain military-specification
connectors and a $5 legal accrual. In addition, unfavorable foreign currency impacts of approximately $3 impacted
operating income.

Other corporate costs for the year ended December 31, 2017 decreased $10.4, or 28.3%, to $26.4, primarily
reflecting an insurance related settlement of $16, pension settlement costs of $9.3 in the prior year, and income of
$3.8 related to an amendment to the environmental Qualified Settlement Fund (QSF) in the second quarter of 2017.
These items were partially offset by higher incentive compensation, certain insurance related benefits recorded in
2016, and disposal costs associated with a pending sale of property.

INCOME TAX EXPENSE

Income tax expense of $194.6 was recognized during the year ended December 31, 2017, representing an effective
tax rate of 62.9%, which included a $129.2 provisional tax expense related to the Tax Act that was signed into U.S.
law on December 22, 2017. The $129.2 provisional tax expense, includes $86.0 related to measuring our U.S. net
deferred tax assets at the 21% rate (versus the prior 35% rate), and one-time provisional U.S. tax expenses of $57.9
on existing post-1986 foreign earnings and $37.6 for the future distribution of such earnings to the U.S., which were
partially reduced by the reversal of a previously recorded $52.3 liability for foreign earnings that were not considered
permanently reinvested. For further information on the Tax Act refer to Note 5, Income Taxes, to our Consolidated
Financial Statement and the section titled "Critical Accounting Estimates" within Management's Discussion and
Analysis. Excluding the impact of the U.S. Tax Act, income tax expense for 2017 was $65.4, representing an effective
tax rate of 21.1%, compared to 2016 income tax expense of $76.0, and an effective tax rate of 29.4%. The lower
effective tax rate in 2017, excluding the impact from the Tax Act, was due to tax benefits from an Italian patent box
strategy, excess tax deduction on equity compensation, and a decrease in the deferred tax liability on foreign earnings
which are not considered indefinitely reinvested.

The Tax Act limits deductibility of net interest expense and officer compensation, adopts certain additional rules
to tax low-taxed foreign earnings and provides reduced tax rates for certain earnings from intangibles and export
activities. These new rules are applicable to the tax year 2018 and forward and the Company is in the process of
evaluating their impact on its financial statements. We anticipate that negative impacts of the Tax Act will reduce the
tax benefit resulting from the reduced U.S. corporate income tax rate.

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

DISCUSSION OF FINANCIAL RESULTS
2016 VERSUS 2015

Revenue
Gross profit

Gross margin

Operating expenses

Operating expense to revenue ratio

Operating income
Operating margin
Income tax expense
Effective tax rate

2016
$ 2,405.4
758.2

2015
$ 2,485.6
809.1

31.5%

499.3

20.8%

258.9

10.8%
76.0
29.4%

181.9
4.2
186.1

32.6%

429.0

17.3%

380.1

15.3%
70.1
18.3%

312.4
39.4
351.8

Change

(3.2 )%
(6.3 )%
(110)bp
16.4 %
350bp
(31.9 )%
(450)bp
8.4 %
1,110bp
(41.8 )%
(89.3 )%
(47.1 )%

Income from continuing operations attributable to ITT Inc.

Income from discontinued operations, net of tax

Net income attributable to ITT Inc.

All comparisons included with the Discussion of Financial Results 2016 versus 2015 refer to results for the year

ended December 31, 2016 compared to the year ended December 31, 2015, 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, 2016 and 2015.

Industrial Process
Motion Technologies
Connect & Control Technologies
Eliminations
Total Revenue

2016
830.1
983.4
596.3
(4.4)
$ 2,405.4

2015
$ 1,113.8
767.2
609.3
(4.7)
$ 2,485.6

Change
(25.5)%
28.2 %
(2.1)%
(6.4)%
(3.2)%

Organic
Revenue
Growth(a)
(22.9)%
12.3 %
(3.3)%
—
(7.3)%

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

of organic revenue and organic orders.

Industrial Process

Industrial Process revenue for the year ended December 31, 2016 was $830.1, reflecting a decrease of $283.7,
or 25.5%, including an unfavorable foreign currency translation impact of $28.7. Organic revenue decreased 22.9%,
reflecting challenging conditions within oil and gas, mining, and chemical and industrial markets that have driven lower
demand for original equipment and replacement parts, as well as the postponement of customer maintenance activities.
These challenging conditions resulted in a decline in revenue from project pumps, baseline pumps and aftermarket
of 44%, 18% and 12%, respectively. Our revenues derived from the oil and gas market declined approximately 36%.
Our revenue in the mining market was down approximately 41%, due to low metal prices as well as strong prior year
bookings in Latin America. Revenue stemming from the chemical market declined approximately 15% globally, which
reflects significant impacts within North America driven by a decline in large projects.

Orders for the year ended December 31, 2016 were $779.1, reflecting a decrease of $157.6, or 16.8% including
unfavorable foreign currency translation impact of $23.6. Organic orders decreased 14.3%, from the prior year, primarily
due to the challenging market conditions which drove delays and cancellations of capital projects and customer
maintenance and replacement activities. Partially offsetting these declines was a 27% increase in orders from the
chemical market due to weak orders activity in the prior year.

Backlog

The level of order and shipment activity related to engineered pumps can vary significantly from period to period.
Backlog as of December 31, 2016 was $347.2, reflecting a decrease of $63.7, or 15.5%. The decrease reflects lower
project order intake due to global capital project delays and lower oil and gas and mining activity due to market
uncertainty and volatility.

Motion Technologies

Motion Technologies revenue for the year ended December 31, 2016 was $983.4, reflecting an increase of $216.2,
or 28.2% including incremental revenue of $126.4 from the acquisition of Wolverine, which was completed in the
beginning of the fourth quarter of 2015, and unfavorable foreign currency translation impact of $4.7. Organic revenue
increased $94.5, or 12.3%, driven primarily by strength in automotive brake pads due to OEM share gains in China,
Europe, and North America that increased OEM revenue approximately 21%. Sales grew in OES approximately 10%
while sales in independent aftermarket were flat compared to the prior year. Sales from our KONI business were also
flat as growth in our automotive FSD (frequency selective damping) shock absorber product line was offset by a decline
in the China rail market.

Orders for the year ended December 31, 2016 were $998.4, reflecting an increase of $218.4, or 28.0%, including
incremental orders of $126.8 from the acquisition of Wolverine and unfavorable foreign currency translation impact of
$4.5. Organic orders grew $96.1, or 12.3%, due to overall strength in Friction Technologies as recent automotive
platform wins began to enter the production cycle as well as an expanding customer base. KONI orders increased
approximately 5% due to strength in the U.S. defense market related to an existing position on a U.S. military platform
as well as continued growth in the automotive FSD product line. This was slightly offset by a weaker China rail market.

Connect & Control Technologies

Connect & Control Technologies revenue for the year ended December 31, 2016 was $596.3, reflecting a decrease
of $13.0, or 2.1%. Organic revenue decreased $20.4, or 3.3%, which excludes the first quarter 2016 incremental benefit
from our 2015 acquisition of Hartzell Aerospace of $8.8, as well as revenue of $3.4 from the 2015 period generated
by an industrial motors product line that was divested in May 2015 and favorable foreign currency translation impacts
of $2. The decline in organic revenue was primarily driven by revenue derived from the oil and gas market which
decreased approximately 34% due to weak demand for upstream connectors, and a 7% decline in revenue for
commercial aerospace components due to difficult comparisons to the previous year. This was partially offset by
connector revenues in the transportation and industrial markets which grew approximately 3% due to strength in
applications for electric vehicles as well as medical products. Revenue from the defense market increased slightly as
higher component revenue was slightly offset by weaker connectors.

Orders for the year ended December 31, 2016 were $602.4, reflecting a decrease of $16.2, or 2.6%. Organic
orders decreased $26.7, or 4.3%, which excludes the first quarter 2016 incremental benefit from our 2015 acquisition
of Hartzell Aerospace of $13.4, orders from the prior year of $4.6 associated with the industrial product line sold in
May 2015 and favorable foreign currency translation of $1.7. The decline in orders was primarily due to weakness in
the upstream oil and gas market, lower order activity in the defense market, and difficult comparisons to the prior year
due to a large project.

GROSS PROFIT

Gross profit for 2016 was $758.2, reflecting a gross margin of 31.5%. Gross profit for 2015 was $809.1, reflecting
a gross margin of 32.6%. Lower project pump sales volumes and unfavorable impacts from project pump performance
at our Industrial Process segment and unfavorable automotive pricing were only partially offset by lower labor costs
as a result of restructuring benefits from our structural rest at our Industrial Process segment.

OPERATING EXPENSES

The following table provides further information by expense type, as well as a breakdown of operating expense

by segment.

General and administrative expenses

Sales and marketing expenses

Research and development expenses

Asbestos-related benefit, net
Total operating expenses

By Segment:

Industrial Process

Motion Technologies

Connect & Control Technologies

Corporate & Other

2016
$ 274.1

170.0

80.8

(25.6)

2015
258.3

183.2

78.9

(91.4)

$ 499.3

$ 429.0

$ 212.3

$ 221.6

139.0

136.7

11.3

101.5

162.8

(56.9)

Change
6.1 %

(7.2)%

2.4 %

(72.0)%

16.4 %

(4.2)%

36.9 %

(16.0)%

** Resulting percentage not considered meaningful.

G&A expenses were $274.1 for the year ended December 31, 2016, reflecting an increase of $15.8, or 6.1%. The
year-over-year increase was primarily impacted by incremental costs from the 2015 acquisition of Wolverine of $14.6.
In addition, a trade name impairment of $4.1 recorded in 2016 in our Industrial Process segment as the result of
challenging conditions experienced within the upstream oil and gas market, unfavorable foreign currency impacts of
$2.4 and a favorable warranty resolution in 2015 of approximately $5 were nearly offset by lower incentive based
compensation of $5.7, as well as lower acquisition-related costs of $3.3.

Sales and marketing expenses for the year ended December 31, 2016 were $170.0, reflecting a decrease of $13.2,
or 7.2%, mainly due to focused cost reductions and lower headcount from our structural reset at Industrial Process,
partially offset by incremental sales and marketing costs of $3.7, related to our fourth quarter 2015 acquisition of
Wolverine.

R&D expenses for the year ended December 31, 2016 were $80.8, reflecting an increase of $1.9, or 2.4%. The
increase was primarily driven by incremental costs of $3.3 related to our acquisition of Wolverine in 2015. In addition,
increased product development activities at Motion Technologies were offset by lower R&D spending at Connect &
Control Technologies during 2016 due to the progress made on the development of a major aerospace program.

During 2016, we recognized a net asbestos-related benefit of $25.6, compared to a benefit of $91.4 in the prior
year. The change was primarily due to a $100.7 benefit recognized in 2015, reflecting a new single firm defense strategy
and streamlined case management to assist in reducing asbestos related defense costs. This was partially offset by
our annual remeasurement which resulted in a benefit of $81.8 in 2016 compared to a benefit of $44.8 in 2015. 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

The following table illustrates the 2016 and 2015 operating income and operating margin by segments and at the

consolidated level.

Industrial Process

Motion Technologies

Connect & Control Technologies

Segment operating income

Asbestos-related benefit, net

Other corporate costs

Total corporate and other (cost) benefit, net

Total operating income

Operating margin:

Industrial Process

Motion Technologies

Connect & Control Technologies

Segment operating margin

Consolidated operating margin

2016

2015

33.5

$ 141.2

171.4

65.2

270.1

25.6

(36.8)

(11.2)

126.4

54.6

322.2

91.4

(33.5)

57.9

$ 258.9

$ 380.1

4.0%

17.4%

10.9%

11.2%

10.8%

12.7%

16.5%

9.0%

13.0%

15.3%

Change
(76.3 )%

35.6 %

19.4 %

(16.2 )%

(72.0 )%

9.9 %

(119.3 )%

(31.9 )%

(870)bp

90bp

190bp

(180)bp

(450)bp

Industrial Process operating income for the year ended December 31, 2016 decreased $107.7, or 76.3%, to $33.5
and resulted in an operating margin of 4.0%, reflecting a decline of 870 basis points. The decrease in operating income
and margin was primarily the result of lower volume which negatively impacted operating income and operating margin
by approximately $132, or 1,150 basis points, respectively. Further impacting operating income were unfavorable
foreign currency impacts of $9, lower contract profitability of approximately $8, a trade name impairment of $4.1
recorded during 2016 as the result of challenging conditions experienced within the upstream oil and gas market,
favorable adjustments made in 2015 to reserves established in purchase accounting for a prior acquisition of $6.7,
and a favorable product warranty resolution during 2015 of approximately $5. In addition, restructuring costs in 2016
increased $8.3 compared to the prior year and pension settlement charges of $3.4 were recorded in 2016. These items
were partially offset by net savings from restructuring, Lean, sourcing, and cost control initiatives and lower incentive
compensation of $3.3.

Motion Technologies operating income for the year ended December 31, 2016 increased $45.0, or 35.6%, to
$171.4 and resulted in an operating margin of 17.4%, reflecting an increase of 90 basis points. The increase in operating
income was primarily driven by higher sales volumes which provided approximately $48, and was partially offset by
unfavorable pricing and mix, as well as a gain of $3 recorded in 2015 related to an insurance recovery and unfavorable
foreign currency impacts of approximately $3. Net savings from Lean, sourcing, and cost control initiatives was
approximately $26 and the 2015 acquisition of Wolverine provided a benefit of $13.4.

Connect & Control Technologies operating income for the year ended December 31, 2016 increased $10.6, or
19.4%, and resulted in an operating margin of 10.9%, reflecting an increase of 190 basis points. The result reflects
net savings from restructuring, Lean, sourcing, and cost control initiatives of approximately $18 which reflected a
reduced disruption impact from the relocation of certain North American operations. In addition, restructuring costs
declined $10.1 while an unfavorable legal settlement impact of $2 and an impairment charge of $2, both associated
with a non-core product line, were recorded in 2015 and further contributed to the increase in 2016 over the prior year.
This was offset by a negative impact from sales volume, price and mix of approximately $12 as well as incremental
costs in 2016 of approximately $5 associated with the relocation and consolidation of certain operations to an existing
lower-cost facility. In addition, postretirement-related costs were higher primarily due to a $5 benefit recognized in
2015 from a plan curtailment.

Other corporate costs for the year ended December 31, 2016 increased $3.3, or 9.9%, to $36.8, primarily reflecting
pension settlement costs of $9.3 which was partially offset by lower environmental-related costs of approximately $2
(see Note 18, Commitments and Contingencies, for additional information) as well as lower employee incentive-based
costs of approximately $5.

INCOME TAX EXPENSE

For the year ended December 31, 2016, the Company recognized income tax expense of $76.0 representing an
effective tax rate of 29.4%, compared to income tax expense of $70.1, and an effective tax rate of 18.3% for 2015.
The higher effective tax rate in 2016 was primarily driven by an increase in the deferred tax liability on foreign earnings
which were not considered indefinitely reinvested, whereas the lower effective tax rate in 2015 was primarily driven
by the settlement of a U.S. income tax audit and the release of valuation allowances on certain net deferred tax assets
in China due to positive income in recent years. The Company continued to benefit from a larger mix of earnings in
non-U.S. jurisdictions with favorable tax rates.

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

Results from discontinued operations reflect a gain of $4.2, net of tax, for the year ended December 31, 2016,
primarily related to favorable resolutions of certain legacy liabilities in 2016. Results from discontinued operations for
the year ended December 31, 2015 reflect a gain of $39.4, principally related to the settlement of the U.S. income tax
audit. 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.

LIQUIDITY AND CAPITAL RESOURCES

Funding and Liquidity Strategy

We monitor our funding needs and design and execute strategies 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 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 plan to transfer cash between certain international subsidiaries and the U.S. and other international
subsidiaries when it is cost effective to do so. The passage of the U.S. Tax Act will allow us greater flexibility around
our global cash management strategy related to the amount and timing of transfers, however we will continue 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. In connection with the Tax Act, we have estimated a
one-time U.S. provisional tax expense of $57.9 on existing post-1986 foreign earnings and potential future distributions
of such earnings to the U.S., however we expect that existing foreign tax credits, research and development tax credits,
and net operating losses will offset most of this tax liability. Accordingly, we expect the net cash outflow resulting from
this tax liability will be approximately $7. Net cash distributions from foreign countries amounted to $111.8 and $100.0
during 2017 and 2016, respectively. The timing and amount of future distributions 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 2017 were $45.4, compared to $44.6 in 2016 and $42.8 in 2015, reflecting per
share amounts of $0.512, $0.496, and $0.4732, respectively. In the first quarter of 2018, we declared a quarterly
dividend of $0.134 per share for shareholders of record on March 12, 2018.

In 2017 and 2016, we repurchased 0.8 and 2.0 shares of ITT common stock, respectively, at a total cost of $30.0
and $70.0, respectively, through our share repurchase program. To date, under the program the Company has
repurchased 21.2 shares for $859.4.

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.

Commercial Paper

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 $162.4 and $113.5 of commercial paper
outstanding as of December 31, 2017 and 2016, respectively. Our average daily outstanding commercial paper balance
for the years ended 2017 and 2016 was $136.6 and $127.5, respectively, and the maximum outstanding commercial
paper during each of those respective years was $165.5 and $183.0, respectively.

Credit Facilities

Our $500 revolving credit agreement (the 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 Revolving Credit Agreement is intended to provide
access to additional liquidity to 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 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 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, 2017, we had no outstanding obligations
under the Revolving Credit Agreement. Our interest coverage ratio and leverage ratio were within the prescribed
thresholds as of December 31, 2017. 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. On November 29, 2016, we amended the Revolving Credit Agreement to extend
the maturity date from November 25, 2019 to November 25, 2021. The interest rate and fee structure associated with
drawn amounts are unchanged.

Our credit ratings as of December 31, 2017 were as follows:

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

Short-Term
Ratings
A-2
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, 2017, 2016, and 2015.

Operating activities
Investing activities
Financing activities
Foreign exchange

Total net cash flow (used in) provided by continuing operations

Net cash (used in) provided by discontinued operations

Net change in cash and cash equivalents

2017
$ 247.4
(223.2)
(112.5)
19.8
(68.5)
(2.4)
(70.9)

2016
$ 240.7
(54.4)
(141.9)
(11.4)
33.0
12.0
45.0

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

Net cash provided by operating activities was $247.4 for the year ended December 31, 2017, representing an
increase of $6.7, or 2.8%, from 2016. The change in net cash provided by operating activities was primarily driven by
higher segment operating income of approximately $41, after adjustments for non-cash charges, such as depreciation
and amortization. Higher incentive compensation payments in the prior year and lower restructuring payments of $12.5
were partially offset by higher discretionary postretirement contributions of $27.2, higher asbestos-related payments
of $13.8 due to the timing of insurance recoveries and higher net income taxes paid of $5.9.

Net cash provided by operating activities was $240.7 for the year ended December 31, 2016, representing an
increase of $11.0, or 4.8%, from 2015. The change in net cash provided by operating activities was primarily driven
by improvements in the working capital balance, especially as it relates to collections of past due accounts receivables.
This was partially offset by lower segment operating income of approximately $41, after adjustments for non-cash
charges, such as depreciation and amortization as well as higher net income taxes paid of $7.6, higher asbestos-
related payments of $6.9, and higher restructuring cash payments of $5.9.

Net cash used in investing activities increased $168.8 from $54.4 in 2016 to $223.2 in 2017. The year-over-year
increase reflects our acquisition of Axtone for $113.7 (net of cash acquired) and cash provided by the maturity of
investments (net of purchases) in 2016 of $62.9. Capital expenditure spending of $113.3 increased $1.9 compared to
the prior year.

Net cash used in investing activities decreased from $485.5 in 2015 to $54.4 in 2016. The decrease was primarily
due to our acquisitions of Wolverine for $298.1 and Hartzell Aerospace for $52.9 during 2015 as well as higher maturities
of short-term investments (net of purchases) of $124.5. This was offset by higher year-over-year capital expenditure
spending of $24.7 due to the construction of our Motion Technologies North American plant. In addition, the sale of an
industrial product line in 2015 within our Connect & Control Technologies segment resulted in proceeds of $8.9.

Net cash used for financing activities decreased $29.4 to $112.5 in 2017. The change reflects a $44.9 decrease

in repurchases of ITT common stock, which was slightly offset by a decrease in net borrowings of $12.7.

Net cash used for financing activities was $141.9 for the year ended December 31, 2016, compared to net cash
provided by financing activity in 2015 of $120.4. The change reflects lower net borrowings from our revolving credit
facility and commercial paper program of $200.6 and $75.5, respectively. Partially offsetting this was a $6.2 decrease
in repurchases of ITT common stock and a $6.1 increase in proceeds from the issuance of common stock.

Net cash used by discontinued operations for the year ended December 31, 2017 of $2.4 was primarily related to
environmental-related payments for sites formerly owned by ITT. Net cash provided by discontinued operations for
the year ended December 31, 2016 of $12.0 was primarily related to net receipts during 2016 of $14.8 related to the
settlement of the U.S. income tax audit in 2015 that was reimbursed by Xylem and Exelis in accordance with the Tax
Matters Agreement. Net cash used by discontinued operations for the year ended December 31, 2015 of $1.3 was
primarily related to environmental-related payments for sites formerly owned by ITT.

Asbestos

Based on the estimated undiscounted asbestos liability as of December 31, 2017 for claims filed or estimated to
be filed over the next 10 years, we have estimated that we will be able to recover approximately 42% 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 tenth year of our estimate, our insurance
recoveries are currently projected to be approximately 18%. 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, 2017, the Company has entered into coverage-in-place agreements and policy buyout
agreements representing approximately 42% 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 certain coverage, those overall limits were not reached by the estimated
liability recorded by the Company at December 31, 2017.

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 2031.

Although asbestos cash outflows can vary significantly from year to year, our current net cash outflows for defense
and indemnity, net of tax benefits, are projected to average $20 to $30 over the next five years, and increase to an
average of approximately $35 to $45 per year over the remainder of the projection period, including the impact of the
new lower U.S. tax rate. Total net cash outflows for defense and indemnity, net of tax, averaged $16 over the past
three annual periods. Total net asbestos cash outflows also include certain administrative costs such as legal related
costs for insurance asset recoveries.

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
2027.

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,

2017 and 2016.

2017

2016

Fair value of plan assets
Projected benefit obligation

U.S.
Pension
$ 320.9
325.7

Funded status

(4.8) $

Non-U.S.
Pension
0.6
93.3
(92.7) $ (132.9) $ (230.4) $ (50.1) $

Other
Benefits
5.2
$
138.1

U.S.
Pension
$ 262.2
312.3

Total
$ 326.7
557.1

Other
Non-U.S.
Total
Benefits
Pension
269.2
6.1
$
0.9
79.9
531.0
138.8
(79.0) $ (132.7) $ (261.8)

The funded status of our U.S. pension plans improved by $45.3 during 2017 primarily due to discretionary company
contributions. Our non-U.S. pension plans, which are typically not funded due to local regulations, had a decrease in
funded status of $13.7 during 2017 due to foreign currency impacts.

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. As of December 31, 2017, the minimum funding percentages of all ITT U.S. Qualified pension plans had
been satisfied.

We make contributions to our postretirement benefit plans when considered necessary or advantageous to do so.
However, 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 2017 and 2016, we contributed $38.9 and $12.8 to our global pension plans, respectively.
During 2017 and 2016 we made discretionary contributions to our U.S. pension plans of $35.0 and $7.8, respectively.
We anticipate making contributions to our global pension plans of approximately $5 during 2018.

The funded status of our other employee-related defined benefit plans decreased $0.2 during 2017. We contributed
$6.1 and $6.2 to our other employee-related defined benefit plans during both 2017 and 2016, respectively. We currently
estimate that the 2018 contributions to our other employee-related defined benefit plans will be approximately $8. 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, 2017, 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 $500, as well as general market access to longer-
term markets. Our commercial paper program is supported by the 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, 2017 and

2016.

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

2017
1.2
8.3
9.5

2016
0.8
2.0
2.8

Contractual Obligations

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

December 31, 2017:

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

Total

10.1
151.2
105.8
108.3
$ 375.4

Payments Due By Period

Less Than
1 Year

1.4
24.8
85.8
13.0
125.0

1-3 Years

3-5 Years

3.2
37.2
15.2
25.0
80.6

2.5
31.0
4.8
23.9
62.2

More Than
5 Years

3.0
58.2
—
46.4
107.6

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 $877.2 and $31.2,
respectively, in our Consolidated Balance Sheet at December 31, 2017. 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, 2017 Consolidated Balance Sheet,
including estimated environmental payments and employee compensation agreements. We estimate based on
historical experience that we will spend between $10 and $12 per year on environmental investigation and
remediation, a portion of which we are legally mandated to perform through various orders and agreements with
state and federal oversight agencies. At December 31, 2017, our recorded environmental liability was $73.9.

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, 2017, consist of indemnities related to acquisition and disposition agreements and certain third-party
guarantees.

Indemnities

Since our founding in 1920, we have acquired and disposed of numerous entities. The related acquisition and
disposition agreements allocate certain assets and liabilities among the parties and contain various representation
and warranty clauses and may provide indemnities for a misrepresentation or breach of the representations and
warranties by either party or for assumed or excluded liabilities. These provisions address a variety of subjects. The
term and monetary amounts of each such provision are defined in the specific agreements and may be affected by
various conditions and external factors. Many of the provisions 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 provisions and are not aware of
any claims or other information that would give rise to material payments under such provisions.

As part of the 2011 spin-off, ITT LLC agreed to assume certain liabilities and provide certain indemnifications and
cross-indemnifications among ITT LLC, Exelis and Xylem, subject to limited exceptions with respect to employee
claims. The provisions address a variety of subjects, including asserted and unasserted product liability matters (e.g.,
asbestos claims, product warranties) which relate to certain products manufactured, repaired and/or sold prior to the
date of the 2011 spin-off. These provisions last indefinitely and are not affected by Harris' acquisition of Exelis. In
addition, ITT LLC, Exelis and Xylem agreed to certain cross-indemnifications with respect to other liabilities and
obligations. ITT LLC 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 assumed or 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 LLC; such claims are included in our estimate of asbestos liabilities.

Guarantees

We have $144.6 of guarantees, letters of credit and similar arrangements outstanding at December 31, 2017,
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,
2017 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 a variety of key performance indicators including revenue, segment operating income and
margins, earnings per share, order growth, adjusted free cash flow, and backlog, some of which are non-GAAP. In
addition, we consider certain measures to be useful to management and investors when evaluating our operating
performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and
management of assets from period to period. This information can assist investors in assessing our financial
performance and measures our ability to generate capital for deployment among competing strategic alternatives and
initiatives, including, but not limited to, acquisitions, dividends, 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. 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, 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. Management
believes that reporting organic revenue and organic orders provides useful information to investors by helping
identify underlying trends in our business and facilitating easier comparisons of our revenue performance with
prior and future periods and to our peers.

Reconciliations of organic revenue for the years ended December 31, 2017 and 2016 are provided below.

2017 Revenue

(Acquisitions)/divestitures, net

Foreign currency translation

2017 Organic revenue

2016 Revenue

Industrial
Process

Motion
Technologies

Connect &
Control
Technologies

Eliminations

Total
ITT

807.2

1,176.0

605.6

(3.5)

2,585.3

—

(5.7)

801.5

830.1

(74.0)

(22.7)

1,079.3

983.4

—

(1.0)

604.6

596.3

—

(0.1)

(3.6)

(4.4)

(74.0)

(29.5)

2,481.8

2,405.4

Organic revenue (decline)/growth

(28.6)

95.9

8.3

0.8

76.4

Percentage change

(3.4)%

9.8%

1.4 %

3.2 %

2016 Revenue

(Acquisitions)/divestitures, net

Foreign currency translation

2016 Organic revenue

2015 Revenue

830.1

983.4

596.3

(4.4)

2,405.4

—

28.7

858.8

1,113.8

(126.4)

4.7

861.7

767.2

(5.4)

(2.0)

588.9

609.3

—

0.1

(4.3)

(4.7)

(131.8)

31.5

2,305.1

2,485.6

Organic revenue (decline)/growth

(255.0)

94.5

(20.4)

0.4

(180.5)

Percentage change

(22.9)%

12.3%

(3.3)%

(7.3)%

Reconciliations of organic orders for the years ended December 31, 2017 and 2016 are provided below.

2017 Orders

(Acquisitions)/divestitures, net

Foreign currency translation

2017 Organic orders

2016 Orders

Organic orders growth

Percentage change

2016 Orders

(Acquisitions)/divestitures, net

Foreign currency translation

2016 Organic orders

2015 Orders

Industrial
Process

Motion
Technologies

Connect &
Control
Technologies

Eliminations

Total
ITT

799.8

1,198.8

624.1

(3.3)

2,619.4

—

(4.6)

795.2

779.1

16.1

(70.2)

(22.0)

1,106.6

998.4

108.2

—

(1.0)

623.1

602.4

20.7

—

(3.3)

(5.1)

(70.2)

(27.6)

2,521.6

2,374.8

1.8

146.8

2.1 %

10.8%

3.4 %

6.2 %

779.1

998.4

602.4

(5.1)

2,374.8

—

23.6

802.7

936.7

(126.8)

4.5

876.1

780.0

(8.8)

(1.7)

591.9

618.6

—

0.1

(5.0)

(4.7)

(0.3)

(135.6)

26.5

2,265.7

2,330.6

(64.9)

(2.8)%

Organic orders (decline)/growth

(134.0)

96.1

(26.7)

Percentage change

(14.3)%

12.3%

(4.3)%

•

"adjusted segment operating income" is defined as operating income, adjusted to exclude special items that include,
but are not limited to, restructuring costs, realignment costs, certain acquisition-related expenses, and unusual or
infrequent operating items. Special items represent significant charges or credits that impact current results, which
management views as unrelated to the Company's ongoing operations and performance. We believe that adjusted
segment operating income is useful to investors and other users of our financial statements in evaluating ongoing
operating profitability, as well as in evaluating operating performance in relation to our competitors

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

December 31, 2017, 2016 and 2015 are provided in the tables below.

Year Ended December 31, 2017

Segment operating income

Restructuring costs

Acquisition-related expenses
Realignment costs and other(a)
Adjusted segment operating income

Year Ended December 31, 2016

Segment operating income

Restructuring costs

Acquisition-related expenses
Realignment costs and other(a)
Adjusted segment operating income

Year Ended December 31, 2015

Segment operating income

Restructuring costs

Acquisition-related expenses

Realignment costs and other

Industrial
Process

Motion
Technologies

Connect &
Control
Technologies

Total
Segment

59.5

7.4

(2.7)

4.8

69.0

33.5

20.5

—

7.5

61.5

141.2

12.2

(6.7)

(0.8)

190.0

66.7

316.2

2.3

6.4

—

198.7

171.4

2.5

4.3

(0.1)

178.1

126.4

—

13.1

—

3.3

0.4

9.4

79.8

65.2

1.5

4.5

72.7

54.6

11.6

1.4

1.2

13.0

4.1

14.2

347.5

270.1

24.5

5.8

11.9

312.3

322.2

23.8

7.8

0.4

Adjusted segment operating income

145.9

139.5

68.8

354.2

(a) The adjustments for our Industrial Process business segment include a pension curtailment charge of $3.7
and costs of $1.1 associated with a management reorganization in 2017; and an impairment of intangible
assets of $4.1 and pension settlement costs of $3.4 in 2016. The adjustments for our Connect & Control
business segment include a legal accrual of $5 in 2017 and realignment costs associated with an action to
move certain acquired production lines of $4.4 and $4.5 during 2017 and 2016, respectively.

•

"adjusted income from continuing operations" and "adjusted income from continuing operations per diluted share"
are defined as income from continuing operations attributable to ITT Inc. and income from continuing operations
attributable to ITT Inc. per diluted share, adjusted to exclude special items that include, but are not limited to,
asbestos-related costs, restructuring costs, realignment costs, pension settlement and curtailment costs, certain
acquisition-related expenses, income tax settlements or adjustments, and unusual or infrequent 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. The after-tax basis of each special
item is determined using the jurisdictional tax rate of where the expense or benefit occurred. We believe that
adjusted income from continuing operations is useful to investors and other users of our financial statements in
evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our
competitors.

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, 2017, 2016 and 2015 are provided in the table below.

Income from continuing operations attributable to ITT Inc.

2017

2016

2015

$ 115.0

$ 181.9

$ 312.4

Tax-related special items(b)
Asbestos-related benefit, net of tax expense of $7.4, $9.5, and $33.8, respectively

116.1

(12.5)

Restructuring costs, net of tax benefit of $3.9, $7.1, and $5.5,respectively
Realignment costs, net of tax benefit of $4.2, $2.4, and $0.9, respectively(a)
Acquisition-related costs, net of tax benefit of $0.8, $2.2, and $5.3, respectively

Pension curtailment, settlement, or special termination benefit, net of tax benefit of
$1.4, $4.7, and $0.0, respectively

9.2

7.1

3.4

2.3

Other unusual or infrequent items, net of tax of (expense) benefit of $(7.5), $(0.1),
and $2.0, respectively(c)

(10.2)

5.9

(16.1)

19.2

4.8

3.6

8.0

0.8

(37.1)

(57.6)

18.5

1.4

2.5

—

(8.4)

Adjusted income from continuing operations

Income from continuing operations attributable to ITT Inc. per diluted share

Adjusted income from continuing operations per diluted share

$ 230.4

$ 208.1

$ 231.7

1.29

2.59

2.02

2.32

3.44

2.55

(a) Realignment costs include expenses to relocate certain production lines as well as 2017 costs associated with
the pending sale of excess property and 2017 costs associated with a management reorganization at our Industrial
Process segment.

(b) 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.

U.S. federal tax law change

Charge on undistributed foreign earnings

Change in uncertain tax positions

Excess tax benefit from equity compensation activity

Change in deferred tax asset valuation allowance

Impacts of tax audit closure

Other

Net tax-related special items

2017

$ 143.9

(14.7)

(3.6)

(2.7)

(0.1)

0.4

(7.1)

$ 116.1

2016

—

24.7

(14.5)

—

(0.2)

0.1

(4.2)

5.9

2015

—

(7.4)

(15.1)

—

(7.3)

(7.0)

(0.3)

(37.1)

(c) Other unusual or infrequent items, net of tax, for 2017 include income from an insurance receivable, a legal
accrual, income related to an amendment to the environmental QSF, and a reversal of accrued interest related
to uncertain tax positions.

Other unusual or infrequent items, net of tax, for 2016 include an impairment of a trade name and a reversal of
accrued interest related to uncertain tax positions.

Other unusual or infrequent items, net of tax, for 2015 primarily reflect the reversal of accrued interest related
to uncertain tax positions and a gain from an environmental insurance settlement.

•

"adjusted free cash flow" is defined as net cash provided by operating activities less capital expenditures, adjusted
for cash payments for restructuring costs, realignment actions, 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. We believe that adjusted free cash flow provides useful
information to investors as it provides insight into the primary cash flow metric used by management to monitor
and evaluate cash flows generated by our operations. 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 - Operating activities

Capital expenditures
Net asbestos cash flows

Restructuring cash payments
Other cash payments(a)

Adjusted free cash flow

Adjusted income from continuing operations

Adjusted free cash flow conversion

2017

2016

2015

$ 247.4

$ 240.7

$ 229.7

(113.3)

(111.4)

45.3

17.8

33.4

31.5

30.3

9.4

(86.7)

24.6

24.4

7.6

$ 230.6

$ 200.5

$ 199.6

230.4

100.1%

208.1

96.3%

231.7

86.1%

(a) Other cash payments include discretionary pension contributions, net of tax and realignment-related cash

payments.

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

Subsidiaries of ITT, including ITT LLC and Goulds Pumps LLC, have 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 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 subsidiaries 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 11
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 98% of the estimated asbestos exposure, but only 37% 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, 2017 (for claims filed or estimated to
be filed over the next 10 years), we have estimated that we will be able to recover approximately 42% 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 to 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 18%. Future recovery rates may be impacted (positively and negatively) 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 2027.

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 generally 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.

In May 2014, the FASB issued ASU 2014-09 amending the existing accounting standards for revenue recognition,
which is effective for the Company beginning in its first quarter of 2018. Based on our assessment, the timing of revenue
recognition of certain design and build contracts, currently recognized using the percentage of completion method,
are dependent on contract terms and therefore will vary based on the new guidance. See Note 2, Recent Accounting
Pronouncements, to the Consolidated Financial Statements for additional information regarding the ASU.

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 these earnings are considered indefinitely reinvested 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. and foreign 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.

Provisional Estimates Associated with the U.S. Tax Act

The Tax Act significantly changes the U.S. corporate income tax rules most of which are effective January 1,
2018. On December 22, 2017 the SEC issued guidance under Staff Accounting Bulletin No. 118 (“SAB 118”) to address
the application of U.S. GAAP in situations when a registrant does not have the necessary information available,
prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act.
The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things,
additional analysis, changes in interpretations and assumptions a company has made, additional regulatory guidance
that may be issued, and actions a company may take as a result of the Tax Act.

Quantifying the impact of the Tax Act is subject to guidance and regulations to be issued by the U.S. Treasury and
possible changes to state tax laws. The Company is unable to compute with certainty the impact of the Tax Act on its
financial statements. The Company has performed provisional computations of the impact of the Tax Act and has
recorded the provisional amounts in its financial statements. SAB 118 provides a measurement period that should not
extend beyond one year from the Tax Act enactment date.

The Tax Act adopts a new system of taxation for taxing foreign source income by providing a 100% dividend
received deduction for dividends received from foreign subsidiaries; however, it imposes a one-time tax on existing
post-1986 earnings albeit at reduced tax rates. The Company has recognized the following provisional tax impacts
related to deemed repatriated post-1986 foreign earnings and future distribution of these earnings to the U.S.

• The Company’s provisional computations show that approximately $1.2 billion of the Company’s existing

post-1986 foreign earnings to be subject to a one-time US tax.

• The Company recorded one-time provisional U.S. tax expense of $57.9 on existing post-1986 foreign
earnings, tax expense of $37.6 on undistributed foreign earnings, reflecting foreign withholding taxes,
foreign and U.S. state income taxes on future distributions of such earnings.

• The Company also reversed a previously recorded tax liability of $52.3 on undistributed foreign earnings

that were previously considered not permanently reinvested in foreign countries.

The Company intends to distribute all post-1986 earnings to the U.S. in future years, and therefore is no longer
asserting permanent reinvestment of these earnings outside the U.S. Further, the Company will provide for any U.S.
state and foreign taxes on distributions of future earnings of its foreign subsidiaries as these earnings will not be
considered permanently reinvested in the foreign countries.

The Company has performed provisional computations and has not provided deferred taxes on its remaining
excess of financial reporting over tax bases of investments in its foreign subsidiaries of approximately $218 that it
intends to permanently reinvest outside the U.S. The Company anticipates that foreign earnings of $1.2 billion and
future earnings of its foreign subsidiaries that are considered not permanently reinvested will be sufficient to meet its
U.S. cash needs. In the event additional foreign funds are needed to support U.S. operations, and if U.S. tax has not
already been previously provided, we would be required to accrue and pay additional U.S. taxes.

The Tax Act limits deductibility of net interest expense and officer compensation, adopts certain additional rules
to tax low-taxed foreign earnings and provides reduced tax rates for certain earnings from intangibles and export
activities. The company continues to maintain approximately $3.6 of deferred tax assets on its books that may not be
realizable due to new limitations under the Tax Act on the deductibility of officer’s compensation. The Company will
wait for further guidance from the Internal Revenue Service before deciding on the realizability of these deferred tax
assets. These new rules are applicable to the tax year 2018 and forward and the Company is in the process of evaluating
their impact on its financial statements. We anticipate that negative impacts of the Tax Act will reduce the tax benefit
resulting from the reduced U.S. corporate income tax rate.

The Tax Act adopts a new rule “Global Intangible Low Taxed Income” (GILTI) that requires certain income of
controlled foreign corporations to be subject to U.S. taxation. We are allowed under ASC 740 to make an accounting
policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current
period expense when incurred or (2) factoring such amounts into the Company’s measurement of its deferred taxes.
Because of the complexity of these rules, and anticipated guidance from U.S. Treasury we will continue to evaluate
the impact on the Company’s financial statements. Therefore, we have not recorded any deferred taxes related to
GILTI and have not made a policy decision regarding whether to record deferred taxes on GILTI.

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 based on years of service. International 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 25 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 $14.5. We estimate
that every 25 basis point change in the expected rate of return on plan assets impacts net periodic postretirement
costs by approximately $0.8.

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
Connect & 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 2017, 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. See Note 11, Goodwill and
Other Intangible Assets, net, for more information.

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
reserve for environmental liabilities. Our environmental reserve of $73.9 at December 31, 2017, represents
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 and that share can be reasonably estimated. 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.

We closely monitor our environmental responsibilities, 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, 2017 was $126.3.

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.

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, Polish zloty, British pound, and Mexican peso. Based on a sensitivity analysis at
December 31, 2017, a hypothetical 10% change in the foreign currency exchange rates for the year ended
December 31, 2017 would have resulted in translation impact to our pre-tax earnings of approximately $23, 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 and we did not have any such contracts in place as of December 31, 2017.

Interest Rate Exposures

As of December 31, 2017, our outstanding variable rate debt was $162.4. We estimate that a hypothetical increase
in interest rates of 100 basis points would result in approximately $1 to $2 of additional annual interest expense based
on current borrowing levels.

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, tin, and rubber as well as specialty alloys, including titanium that we purchase in the raw form,
or that are used in purchased component parts. When practical, we attempt to control such costs through fixed-price
contracts with suppliers; 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. Assuming all other variables remain constant, we estimate that a hypothetical 10% change in steel prices,
excluding any impact of purchased component parts, would impact pre-tax earnings by approximately $6 to $8. We
estimate that a hypothetical 10% change in prices for any other commodity would not be material to our 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, 2017. 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, 2017. Management based this assessment on criteria for effective internal control over financial reporting
described in the 2013 "Internal Control — Integrated Framework" released by the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission. Management's assessment 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 Axtone Railway Components (Axtone), which the Company acquired on January 26, 2017, would be excluded
from the internal control assessment as of December 31, 2017, 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, 2017, Axtone constituted 4.2% of total assets and 3.1% of total revenues of the Company.

Based on this assessment, management determined that, as of December 31, 2017, 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, 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, 2017, 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
which added subsection (r) to Section 13 of the Exchange Act (Section 13(r)). Section 13(r) requires an issuer to
disclose in its annual or quarterly reports whether it or any of its affiliates have knowingly engaged in certain activities,
transactions or dealings relating to Iran. Disclosure of such activities, transactions or dealings is required even when
conducted outside the United States by non-U.S. persons in compliance with applicable law, and whether or not such
activities are sanctionable under U.S. law.

In its 2012 Annual Report, ITT described its acquisition of all the shares of Joh. Heinr. Bornemann GmbH
(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 the Office of Foreign
Assets Control. 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 Bond
in any subsequent periods through December 31, 2017, however, Bornemann did pay annual fees of approximately
Euros 11 thousand in 2017, 2016 and 2015 to the German financial institution which is maintaining the Bond.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of ITT Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of ITT Inc. and subsidiaries (the "Company") as of December
31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). As described in Management’s Report on Internal
Control Over Financial Reporting, management excluded from its assessment the internal control over financial
reporting at Axtone Railway Components (“Axtone”), which was acquired on January 26, 2017 and whose financial
statements constitute 4.2% of total assets and 3.1% of total revenues of the consolidated financial statement amounts
as of and for the year ended December 31, 2017. Accordingly, our audit did not include the internal control over financial
reporting at Axtone. In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework
(2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, and the
related notes (collectively referred to as the “financial statements”), of the Company and our report dated February
16, 2018, expressed an unqualified opinion on those financial statements.

Basis of Opinion

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 are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

Definition and Limitations of Internal Control over Financial Reporting

A 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
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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ Deloitte & Touche LLP
Stamford, Connecticut
February 16, 2018

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 2018
Annual Meeting of Shareholders (2018 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 2017. 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 "2017 Non-
Management Director Compensation," "Compensation Tables," "Compensation Discussion and Analysis,"
"Compensation and Personnel Committee Report" and "Corporate Governance and Related Matters-Compensation
Committee Interlocks and Insider Participation" in our 2018 Proxy Statement.

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 2018 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 2018 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information about the fees for 2017 and 2016 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 2018 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 2018 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 59 for a list of the financial statements

filed as a part of this report.

2. See Exhibit Index on page II-1 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.

ITEM 16. FORM 10-K SUMMARY

Not Applicable.

PAGE

61
62

64
65

102

103

104

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

ITEM
Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
Consolidated Balance Sheets as of December 31, 2017 and 2016

Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2017, 2016 and 2015

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)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of ITT Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ITT Inc. and subsidiaries (the "Company") as of
December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, stockholders'
equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2017, 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) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, 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 16, 2018, expressed an unqualified opinion
on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP
Stamford, Connecticut
February 16, 2018
We have served as the Company's auditor since 2002.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Costs of revenue

Gross profit

General and administrative expenses

Sales and marketing expenses

Research and development expenses

Asbestos-related benefit, net

Operating income

Interest and non-operating expenses (income), net

Income from continuing operations before income tax

Income tax expense

Income from continuing operations

(Loss) income from discontinued operations, including tax benefit
(expense) of $1.9, $(0.3), and $24.5, respectively

Net income

Less: (Loss) income attributable to noncontrolling interests

2017
$ 2,585.3

1,768.1

2016
$ 2,405.4

1,647.2

2015
$ 2,485.6

1,676.5

817.2

264.0

169.7

93.7

(19.9)

309.7

0.3

309.4

194.6

114.8

(1.5)

113.3

(0.2)

758.2

274.1

170.0

80.8

(25.6)

258.9

0.5

258.4

76.0

182.4

4.2

186.6

0.5

809.1

258.3

183.2

78.9

(91.4)

380.1

(2.2)

382.3

70.1

312.2

39.4

351.6

(0.2)

Net income attributable to ITT Inc.

$ 113.5

$ 186.1

$ 351.8

Amounts attributable to ITT Inc.:

Income from continuing operations, net of tax

$ 115.0

$ 181.9

$ 312.4

(Loss) income from discontinued operations, net of tax

(1.5)

4.2

39.4

Net income

$ 113.5

$ 186.1

$ 351.8

Earnings (loss) per share attributable to ITT Inc.:

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

1.30

(0.01)

1.29

(0.01)

1.28

88.3

89.0

2.04

0.05

2.09

2.02

0.05

2.07

89.2

89.9

3.48

0.44

3.92

3.44

0.44

3.88

89.8

90.7

$ 0.512

$ 0.496

$ 0.4732

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 income (loss):

Net foreign currency translation adjustment

2017
$ 113.3

2016
$ 186.6

2015
$ 351.6

95.4

(35.9)

(93.4)

Net change in postretirement benefit plans, net of tax impacts of $(5.5),
$(6.9), and $9.8, respectively

Net change investment securities, net of tax impacts of $0.0, $0.1, and
$0.0, respectively

Other comprehensive income (loss)

Comprehensive income

7.6

—

103.0

216.3

Less: Comprehensive (loss) income attributable to noncontrolling interests

(0.2)

8.5

0.2

(27.2)

159.4

0.5

(9.5)

—

(102.9)

248.7

(0.2)

Comprehensive income attributable to ITT Inc.

$ 216.5

$ 158.9

$ 248.9

Disclosure of reclassification adjustments and other adjustments to

postretirement benefit plans (See Note 15)

Reclassification adjustments:

Amortization of prior service benefit, net of tax expense of $1.8, $2.1, and
$3.8, respectively

(3.0)

(3.5)

Amortization of net actuarial loss, net of tax benefit of $(4.1), $(4.4), and
$(4.5), respectively

Loss (gain) on plan curtailment, net of tax (benefit) expense of $(1.4),
$0.0, and $1.6, respectively

Loss on plan settlement, net of tax benefit of $0.0, $(4.7), and $0.0,
respectively

Other adjustments:

Prior service cost, net of tax benefit of $0.8, $0.0, and $0.7, respectively

Net actuarial gain (loss), net of tax (expense) benefit of $(2.6), $0.1, and
$8.2, respectively

Unrealized change from foreign currency translation

Net change in postretirement benefit plans, net of tax

Disclosure of reclassification adjustments to investment securities

Realized loss on investing securities, net of tax benefit of $0.0, $0.1, and
$0.0, respectively

7.9

2.3

—

(1.3)

4.6

(2.9)

7.6

8.0

—

8.0

(0.4)

(4.1)

0.5

8.5

(6.2)

8.6

(2.6)

—

(1.3)

(10.5)

2.5

(9.5)

—

0.2

—

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:

2017

2016

389.8

629.6

311.9

147.4

460.7

523.9

295.2

122.0

1,478.7

1,401.8

521.7

886.8

156.2

304.0

149.9

464.5

774.7

160.3

314.6

297.4

202.9
2,221.5

188.4
2,199.9

$ 3,700.2

$ 3,601.7

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:

163.6

351.4

384.4

899.4

800.1

227.3

175.6

214.3

301.7

350.2

866.2

877.5

248.6

181.0

1,203.0

2,102.4

1,307.1

2,173.3

Authorized – 250.0 shares, $1 par value per share

Issued and Outstanding – 88.2 and 88.4 shares, respectively

Retained earnings

Accumulated other comprehensive loss:

Postretirement benefit plans

Cumulative translation adjustments

Total ITT Inc. shareholders' equity

Noncontrolling interests

Total shareholders’ equity

Total liabilities and shareholders’ equity

88.2

88.4

1,856.1

1,789.2

(137.6)

(210.6)

(145.2)

(306.0)

1,596.1

1,426.4

1.7

2.0

1,597.8

1,428.4

$ 3,700.2

$ 3,601.7

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: (Loss) income from discontinued operations
Less: (Loss) income attributable to noncontrolling interests

Income from continuing operations attributable to ITT Inc.
Adjustments to income from continuing operations

Depreciation and amortization
Equity-based compensation
Asbestos-related benefit, 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
Short-term revolving loans, borrowings
Short-term revolving loans, repayments
Long-term debt issued
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 from discontinued operations – operating activities

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

2017

2016

2015

$ 113.3
(1.5)
(0.2)
115.0

$ 186.6
4.2
0.5
181.9

$ 351.6
39.4
(0.2)
312.4

105.3
18.1
(19.9)
147.0
(45.3)
(45.0)

(59.3)
14.2
16.8
17.2
(14.8)
(1.9)
247.4

(113.3)
(113.7)
—
—
3.8
—
—
(223.2)

48.9
77.3
(177.3)
7.0
(1.3)
(32.9)
(45.4)
11.2
—
—
(112.5)
19.8
(2.4)
(70.9)
460.7
$ 389.8

102.0
12.6
(25.6)
20.9
(31.5)
(19.0)

22.5
(7.2)
0.7
(27.4)
(5.7)
16.5
240.7

(111.4)
(8.8)
(60.6)
123.5
3.0
—
(0.1)
(54.4)

19.0
27.7
(78.3)
—
(1.1)
(77.8)
(44.6)
12.3
3.2
(2.3)
(141.9)
(11.4)
12.0
45.0
415.7
$ 460.7

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

3.8
62.0

4.5
56.1

4.3
48.5

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

SHARES
2016

2017

2015

2017

DOLLARS
2016

88.4
0.7
(0.9)
88.2

89.5
1.1
(2.2)
88.4

91.0 $

0.6
(2.1)
89.5 $

88.4 $

0.7
(0.9)
88.2 $

89.5 $

1.1
(2.2)
88.4 $

2015

91.0
0.6
(2.1)
89.5

Retained earnings, beginning balance

$ 1,789.2 $1,696.7 $ 1,445.1

Cumulative adjustment for accounting change (See
Note 2)
Net income attributable to ITT Inc.
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

Net change in investment securities

Unrealized (loss) gain on investment securities,

ending balance

Total accumulated other comprehensive loss
Noncontrolling Interests

Noncontrolling interests, beginning balance

Income (loss) attributable to noncontrolling interests
Dividend to noncontrolling interest shareholders
Noncontrolling interest acquired
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

1.0
113.5
(45.5)
29.9
(32.0)
—

—
351.8
(42.8)
24.5
(81.9)
—
$ 1,856.1 $1,789.2 $ 1,696.7

—
186.1
(44.6)
27.0
(75.6)
(0.4)

7.6

8.5

$ (145.2) $ (153.7) $ (144.2)
(9.5)
$ (137.6) $ (145.2) $ (153.7)
$ (306.0) $ (270.1) $ (176.7)
(93.4)
$ (210.6) $ (306.0) $ (270.1)

(35.9)

95.4

— $

(0.3) $

(0.3)

—

0.3

—

— $

(0.3)
$
$ (348.2) $ (451.2) $ (424.1)

— $

2.0 $
(0.2)
—
—
(0.1)
1.7 $

3.3 $
0.5
(1.9)
—
0.1
2.0 $

5.4
(0.2)
(3.3)
1.4
—
3.3

$ 1,428.4 $1,365.4 $ 1,220.3
(1.5)
251.6
(102.9)
(2.1)
$ 1,597.8 $1,428.4 $ 1,365.4

(0.2)
66.9
103.0
(0.3)

(1.1)
92.5
(27.1)
(1.3)

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

On May 16, 2016, we consummated a corporate reorganization into a holding company structure. As a result of
the reorganization ITT Inc., an Indiana corporation that was previously a wholly owned subsidiary of ITT Corporation,
became the publicly traded holding company of ITT Corporation and its subsidiaries and the successor issuer to ITT
Corporation under Rule 12g-3(a) under the Securities Exchange Act of 1934 (Exchange Act). As the successor issuer,
ITT Inc. common stock was deemed to be registered under Section 12(b) of the Exchange Act and ITT Inc. succeeded
to ITT Corporation’s obligation to file reports, proxy statements and other information required by the Exchange Act
with the SEC. For additional information regarding the holding company reorganization, please refer to the Current
Report on Form 8-K that we filed with the SEC on May 16, 2016.

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, 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 generally 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

Subsidiaries of ITT, including ITT LLC and Goulds Pumps LLC, have 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 numerous pension and other employee-related defined benefit plans (collectively, postretirement
benefit plans). The majority of these plans are closed to new participants. 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 11% and 12% of the December 31, 2017 and 2016 outstanding trade accounts
receivable balance, respectively. 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.

Factoring of Trade Receivables

Factoring arrangements, whereby substantially all economic risks and rewards associated with trade receivables
are transferred to a third party, are accounted for by derecognizing the trade receivables upon receipt of cash proceeds
from the factoring arrangement. Factoring arrangements, whereby some, but not substantially all, of the economic
risks and rewards are transferred to a third party and the assets subject to the factoring arrangement remain under
the Company's control are accounted for by not derecognizing the trade receivables and recognizing any related
obligations to the third party.

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 12.1% and 12.9% of total 2017 and 2016 inventories, respectively. We have a LIFO reserve of $9.6 and
$8.1 recorded as of December 31, 2017 and 2016, 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 – 5 to 40 years, machinery and equipment – 2 to 10 years, and furniture and office
equipment – 3 to 7 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 3 to 7 years.

Investments

Investments in fixed-maturity time deposits having an original maturity exceeding three months at the time of
purchase, referred to as short-term time deposits, are classified as held-to-maturity and are recorded at amortized
cost, which approximates fair value. There were no short-term time deposits held as of December 31, 2017 and
December 31, 2016. Short-term time deposits are presented in other current assets as short-term investments on the
Consolidated Balance Sheet. We did not realize any gains or losses from the maturity of these short-term time deposits
during 2017 or 2016 and interest income recognized during 2017 or 2016 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 $101.0 and $96.5 at December 31, 2017 and 2016, 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 $3.8, $3.0, and $3.6 were recorded within general
and administrative expenses in the Consolidated Statements of Operations during years ended December 31, 2017,
2016 and 2015, respectively. The COLI policy investments were made with the intention of utilizing them as a long-
term funding source for deferred compensation obligations, which as of December 31, 2017 and 2016 were
approximately $12.5 and $12.6, 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 in the reporting period in which the
adjustment amounts are determined. 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 when it is probable that a liability has been incurred
and the amount of loss 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, and these assessments can involve a series of complex judgments about
future events and may rely on estimates and assumptions that have been deemed reasonable by management. 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. See Note 18, Commitments and Contingencies for additional 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, and that share can be reasonably estimated. 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; Statement of Operations 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 in the Consolidated Statements of Operations. During 2017 and 2016,
we recognized transaction losses of $12.4 and $1.0, respectively. During 2015, we recognized transaction gains of
$2.8.

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 March 2016, the FASB issued ASU 2016-09 to simplify several aspects of the accounting standard for employee
share-based payment transactions, including the classification of excess tax benefits and deficiencies and the
accounting for employee forfeitures. ITT elected to adopt this guidance as of January 1, 2017 which includes the
following:

• Excess tax benefits and deficiencies are no longer recognized as a change in additional paid-in-capital in the
equity section of the Balance Sheet. Instead they are recognized on the Statements of Operations as a tax
expense or benefit. On the Statement of Cash Flows, excess tax benefits and deficiencies are no longer classified
as a financing activity. Instead they are classified as an operating activity. These provisions were adopted using
a prospective method of transition. During 2017, we recorded an income tax benefit of $2.7, on the Statement
of Operations and classified this benefit on the Statement of Cash Flows as an operating activity. The excess
tax benefit of $3.2 and $3.4 for 2016 and 2015 was recorded as a change in equity on the Balance Sheet and
was classified as a financing activity on the Statement of Cash Flows.

Previously unrecognized tax benefits due to net operating loss carryforwards were recognized during the first
quarter of 2017 using a modified retrospective approach, resulting in a cumulative-effect adjustment to increase
retained earnings by $2.1 as of January 1, 2017. In addition, a corresponding deferred tax asset of $25.6 was
partially offset by a valuation allowance of $23.5 during the first quarter of 2017 as the newly recognized net
operating losses were not considered more likely than not realizable.

• The impact of forfeitures are now recognized as they occur as opposed to previously estimating future employee
forfeitures. We adopted this provision utilizing a modified retrospective approach, resulting in a cumulative-
effect adjustment reducing retained earnings by $1.1, net of tax, as of January 1, 2017.

• The ASU also provides new guidance to other areas including minimum statutory tax withholding rules and the
calculation of diluted common shares outstanding. The adoption of these provisions were reflected prospectively
in the financial statements and did not have a material impact.

Accounting Pronouncements Not Yet Adopted

In March 2017, the FASB issued ASU 2017-07 which amends the Statement of Operations presentation for the
components of net periodic benefit cost for entities that sponsor defined benefit pension and other postretirement
plans. Under the ASU, entities will be required to disaggregate the service cost component and present it with other
current compensation costs for the related employees. All other components of net periodic benefit cost will no longer
be classified as an operating expense. In addition, only the service cost component will be eligible for capitalization
on the balance sheet. The ASU is effective for the Company beginning in first quarter of 2018 and requires a retrospective
transition method to adopt the requirement to present service costs separately from the other components of net
periodic benefit cost in the statements of operations, and a prospective transition method to adopt the requirement
that prohibits capitalization of all components of net periodic benefit cost on the balance sheet except service costs.
As a result of the adoption of the new standard, certain net periodic benefit costs will be reclassified as non-operating
expenses resulting in an increase to operating income of approximately $10 and $18 for 2017 and 2016, respectively,
with an offsetting impact to non-operating expense (income). In addition, service costs eligible for capitalization on the
balance sheet in 2018 is expected to be immaterial.

In February 2016, the FASB issued ASU 2016-02 impacting the accounting for leases intending to increase
transparency and comparability of organizations by requiring balance sheet presentation of leased assets and increased
financial statement disclosure of leasing arrangements. The revised standard will require entities to recognize a liability
for their lease obligations and a corresponding asset representing the right to use the underlying asset over the lease
term. Lease obligations are to be measured at the present value of lease payments and accounted for using the
effective interest method. The accounting for the leased asset will differ slightly depending on whether the agreement
is deemed to be a financing or operating lease. For finance leases, the leased asset is depreciated on a straight-line
basis and recorded separately from the interest expense in the Statements of Operations, resulting in higher expense
in the earlier part of the lease term. For operating leases, the depreciation and interest expense components are
combined, recognized evenly over the term of the lease, and presented as a reduction to operating income. The ASU

requires that assets and liabilities be presented or disclosed separately and classified appropriately as current and
noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related
to lease agreements. The ASU is effective for the Company beginning in the first quarter 2019, at which time we expect
to adopt the new standard. We are currently assessing our existing lease agreements and related financial disclosures
to evaluate the impact of these amendments on our financial statements.

In May 2014, the FASB issued ASU 2014-09 amending 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. Based on the
evaluation of our current contracts and revenue streams, most will be recorded consistently under both the current
and new standard. However, the timing of revenue recognition of certain design and build contracts, recognized using
the percentage of completion method under the current standard, will be dependent on contract terms and therefore
will vary based on the new guidance. We plan to adopt the new guidance using a modified retrospective approach in
the first quarter of 2018. As of the date of adoption, we estimate we have recognized approximately $40 of revenue
and $5 of operating income on open contracts in the Industrial Process segment using the percentage of completion
method that under the new guidance will not qualify for over time recognition. As a result, we estimate the cumulative
effect of adopting the new guidance will decrease the opening balance of retained earnings by $4, net of tax. The
revenue and operating income related to these open contracts will be recognized in future periods upon shipment.
Additionally, the new guidance will result in a change in balance sheet presentation. Certain progress payments,
currently presented as a reduction of inventory, will be presented within accrued liabilities. Unbilled receivables, currently
presented within Receivables, net, will be presented within other current or non-current assets.

NOTE 3
SEGMENT INFORMATION

During the first quarter of 2017, we combined our former Interconnect Solutions and Control Technologies segments
to form Connect & Control Technologies. All prior year segment information has been reclassified based on our current
segment structure. The Company’s segments are reported on the same basis used by our chief operating decision
maker, for evaluating performance and for allocating resources. Our three reportable segments are referred to as:
Industrial Process, Motion Technologies, and Connect & 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.

Connect & Control Technologies manufactures harsh-environment connector solutions and critical energy
absorption and flow control components for the aerospace and defense, general industrial, medical, and oil
and gas 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, deferred taxes, and certain property, plant and equipment.

Revenue

Operating Income (Loss)

Operating Margin

Industrial Process

$ 807.2

$ 830.1

$ 1,113.8

$ 59.5

$ 33.5

$ 141.2

2017

2016

2015

2017

2016

2015

2017

7.4%

2016

2015

4.0% 12.7%

Motion Technologies

1,176.0

983.4

767.2

190.0

171.4

126.4

16.2% 17.4% 16.5%

Connect & Control
Technologies

605.6

596.3

609.3

Total segment results

2,588.8

2,409.8

2,490.3

Asbestos-related benefit, net

—

66.7

316.2

19.9

65.2

270.1

25.6

91.4

Eliminations / Other
corporate costs

Total Eliminations / Corporate
and Other costs

(3.5)

(4.4)

(4.7)

(26.4)

(36.8)

(33.5)

(3.5)

(4.4)

(4.7)

(6.5)

(11.2)

57.9

54.6

11.0% 10.9%

9.0%

322.2

12.2% 11.2% 13.0%

—

Total

$ 2,585.3

$ 2,405.4

$ 2,485.6

$ 309.7

$ 258.9

$ 380.1

12.0% 10.8% 15.3%

Industrial Process

Motion Technologies

Connect & Control Technologies

Corporate and Other

Total

Assets

2017

$ 1,025.7

1,140.4

694.8

839.3

2016

998.1

838.4

678.4

1,086.8

Capital
Expenditures

Depreciation
and Amortization

2017

2016

2015

2017

2016

2015

$ 19.3

$ 24.4

$ 20.4

$ 27.5

$ 27.9

79.1

10.6

4.3

73.5

11.7

1.8

39.3

23.7

3.3

49.4

22.8

5.6

43.2

24.3

6.6

32.4

23.4

6.3

$ 3,700.2

$ 3,601.7

$ 113.3

$ 111.4

$ 86.7

$ 105.3

$ 102.0

$ 90.0

Geographic Information

United States

Germany

Other developed markets

Other emerging markets

Total

Revenue(a)
2016

2017

2015

853.6

900.3

941.1

389.3

495.5

846.9

324.4

459.6

721.1

290.7

476.8

777.0

$ 2,585.3

$ 2,405.4

$ 2,485.6

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

delivery.

Geographic Information
United States
Italy
China
Germany
Mexico
Czech Republic
South Korea
Other developed markets
Other emerging markets
Total

Plant, Property &
Equipment, Net
2017
$ 168.3
102.9
52.1
39.1
34.5
27.9
27.8
41.8
27.3
$ 521.7

2016
$ 181.6
81.0
40.2
38.5
28.7
16.8
28.0
36.0
13.7
$ 464.5

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
Aerospace control components
Industrial control components
Total

2017
718.8
88.4
979.7
196.0
317.9
223.1
61.4
$ 2,585.3

2016
745.1
84.7
873.4
109.6
309.1
220.8
62.7
$ 2,405.4

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

During 2017, 2016, and 2015, a single external customer accounted for 11.1%, 10.5%, and 9.1% of consolidated

ITT revenue, respectively. The revenue from this customer is reported within the Motion Technologies segment.

NOTE 4
RESTRUCTURING ACTIONS

Restructuring costs are included as a component of general and administrative expense in our Consolidated
Statements of Operations. 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

Connect & Control Technologies

Corporate and Other

2017

2016

2015

9.5

1.9

1.7

$ 24.3

$ 21.7

0.7

1.3

1.0

1.3

$ 13.1

$ 26.3

$ 24.0

7.4

2.3

3.3

0.1

$ 20.5

$ 12.2

2.5

1.5

1.8

—

11.6

0.2

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

2017
$ 14.6

13.1

(17.8)

(1.9)

0.9

8.9

8.0

0.9

2016
$ 20.0

26.3

(30.3)

(0.7)

$ 14.6

$ 14.3

0.3

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 in the
past three years include various reduction in force initiatives and the relocation of certain manufacturing facilities.

Industrial Process Restructuring Actions

Since early 2015, we have been executing a series of restructuring actions focused on achieving efficiencies and
reducing the overall cost structure of the Industrial Process segment in an effort to align with the declining oil and gas
market conditions experienced over the past three years. During 2017, we continued to pursue these objectives and
we recognized $7.4 of restructuring costs related to severance for approximately 70 employees, the exit of certain
office space, and an asset write-off. During 2016 and 2015, we recognized restructuring costs of $20.5 and $12.2,
respectively, primarily related to employee severance costs. Cash payments related to these actions are expected to
be substantially complete in 2018. We will continue to monitor and evaluate the need for any additional restructuring
actions.

Restructuring accruals - beginning balance

Restructuring costs

Cash payments

Asset write-offs

Foreign exchange translation and other

Restructuring accruals - ending balance

NOTE 5
INCOME TAXES

2017
6.5

7.4

(7.3)

(1.8)

(0.9)

3.9

2016
4.9

20.5

(18.0)

(0.5)

(0.4)

6.5

For each of the years ended December 31, 2017, 2016, and 2015 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 components:

Current income tax expense (benefit):

United States – federal
United States – state and local
International

Total current income tax expense
Deferred income tax expense components:

United States – federal
United States – state and local
International

Total deferred income tax expense

Income tax expense
Effective income tax rate

2017

2016

2015

89.2
220.2
309.4

87.5
170.9
258.4

$ 159.3
223.0
382.3

7.7
1.3
38.6
47.6

105.9
4.4
36.7
147.0
194.6

62.9%

4.3
(0.3)
51.1
55.1

26.4
(2.1)
(3.4)
20.9
76.0
29.4%

(8.5)
0.1
52.9
44.5

31.9
6.0
(12.3)
25.6
70.1
18.3%

A reconciliation of the income tax expense 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, 2017, 2016, and 2015:

Tax provision at U.S. statutory rate
Federal deferred taxes remeasurement - Tax Act
One-time tax on foreign earnings - Tax Act
Foreign tax rate differential
Tax exempt interest
Valuation allowance on deferred tax assets
Tax on undistributed foreign earnings
U.S. permanent items
Italy patent box prior year benefit
Audit settlements and unrecognized tax benefits
U.S. tax on foreign earnings
State and local income tax
Foreign tax holiday
Other adjustments

Effective income tax rate

2017
35.0 %
27.8 %
18.8 %
(8.6)%
(7.8)%
7.2 %
(4.8)%
(2.2)%
(1.1)%
(0.8)%
0.3 %
0.3 %
— %
(1.2)%
62.9 %

2016
35.0 %
— %
— %
(3.5)%
(5.2)%
1.4 %
4.9 %
(1.9)%
— %
(5.2)%
4.7 %
(0.1)%
— %
(0.7)%
29.4 %

2015
35.0 %
— %
— %
(4.7)%
(6.7)%
3.3 %
(5.6)%
(1.0)%
— %
(5.0)%
3.8 %
1.0 %
(1.1)%
(0.7)%
18.3 %

Our effective tax rate in 2017 includes the significant impact related to the Tax Cuts and Jobs Act of 2017 (the “Tax
Act”) that was approved by Congress on December 20, 2017 and signed into law by the U.S. President on December
22, 2017. The Tax Act significantly changes the U.S. corporate income tax rules most of which are effective January
1, 2018. On December 22, 2017 the SEC issued guidance under Staff Accounting Bulletin No. 118 (“SAB 118”) to
address the application of U.S. GAAP in situations when a registrant does not have the necessary information available,
prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act.
The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things,
additional analysis, changes in interpretations and assumptions a company has made, additional regulatory guidance
that may be issued, and actions a company may take as a result of the Tax Act.

• The Company’s provisional computations show that approximately $1.2 billion of the Company’s existing

post-1986 foreign earnings to be subject to a one-time US tax.

• The Company also reversed a previously recorded tax liability of $52.3 on undistributed foreign earnings

that were previously considered not permanently reinvested in foreign countries.

U.S. cash needs. In the event additional foreign funds are needed to support U.S. operations, and if U.S. tax has not
already been previously provided, we would be required to accrue and pay additional U.S. taxes.

The Tax Act reduced the U.S. corporate income tax rate to 21% from 35%. The Company has recorded tax expense
of $86.0 in its consolidated financial statements for the year ended December 31, 2017 resulting from a decrease in
its U.S. net deferred tax assets.

The Tax Act limits deductibility of net interest expense and officer compensation, adopts certain additional rules
to tax low-taxed foreign earnings and provides reduced tax rates for certain earnings from intangibles and export
activities. The company continues to maintain approximately $3.6 of deferred tax assets on its books that may not be
realizable due to new limitations under the Tax Act on the deductibility of officer’s compensation. The Company will
wait for further guidance from the Internal Revenue Service before deciding on the realizability of these deferred tax
assets. These new rules are applicable to the tax year 2018 and forward and the Company is in the process of evaluating
their impact on its financial statements. We anticipate that negative impacts of the Tax Act will reduce the tax benefit
resulting from the reduced U.S. corporate income tax rate.

Deferred tax assets and liabilities include the following:

Deferred Tax Assets:
Loss carryforwards
Asbestos
Employee benefits
Accruals
Credit carryforwards
Other

Gross deferred tax assets

Less: Valuation allowance

Net deferred tax assets
Deferred Tax Liabilities:

Intangibles
Undistributed earnings
Accelerated depreciation
Investment

Total deferred tax liabilities
Net deferred tax assets

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

Non-current assets

Other non-current liabilities

Net deferred tax assets

2017

2016

$ 165.5
118.7
70.8
51.3
5.7
23.1
435.1
170.0
$ 265.1

(45.4)
(39.0)
(31.8)
(0.2)
$ (116.4)
$ 148.7

$ 112.3
209.8
98.9
74.8
50.7
21.2
567.7
113.3
$ 454.4

(68.3)
(52.3)
(36.5)
(0.4)
$ (157.5)
$ 296.9

2017
$ 149.9

2016
$ 297.4

(1.2)

(0.5)

$ 148.7

$ 296.9

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

December 31, 2014 to December 31, 2017.

DTA valuation allowance - December 31, 2014
Change in assessment
Current year operations
DTA valuation allowance - December 31, 2015
Change in assessment
Current year operations
DTA valuation allowance - December 31, 2016
Current year operations
DTA valuation allowance - December 31, 2017

Federal
—
$
—
—
—
—
—
—
—
—

State
45.0
—
(3.5)
41.5
—
4.4
45.9
26.5
72.4

Foreign
$ 102.1
(7.4)
(0.5)
94.2
(0.3)
(26.5)
67.4
30.2
97.6

Total
$ 147.1
(7.4)
(4.0)
135.7
(0.3)
(22.1)
113.3
56.7
$ 170.0

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,
China and India which are not expected to be realized.

We have the following tax attributes available for utilization at December 31, 2017:

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(a)

Amount
$
0.1
$ 1,326.2
0.2
$
5.5
$
350.0
$

First Year of
Expiration
12/31/2033
12/31/2018
12/31/2021
12/31/2020
12/31/2018

(a) Included are approximately $228.1 of net operating loss carryforwards in Luxembourg as of December 31,

2017 that do not expire.

Excess tax benefits related to stock-based compensation of $2.7 for 2017 were recorded as an income tax benefit
in the statement of operations, whereas the 2016 and 2015 amounts of $3.2 and $3.4, respectively, were recorded as
an adjustment to retained earnings in the balance sheet. The change in presentation is due to the January 1, 2017
adoption of ASU 2016-09 that simplified several aspects of the accounting for employee share-based payment
transactions. The 2017 income tax benefit has been reflected in the caption “U.S. permanent items” within the effective
tax rate reconciliation table.

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, 2017, 2016, and 2015 is as follows:

Unrecognized tax benefits – January 1
Additions for:

Current year tax positions
Prior year tax positions
Assumed in acquisition

Reductions for:

Prior year tax positions
Expiration of statute of limitations

Settlements
Unrecognized tax benefits – December 31

2017
69.5

2016
87.6

2015
$ 160.1

1.1
—
—

1.2
0.2
0.2

3.4
1.8
1.9

(12.7)
(5.8)
(0.2)
51.9

(3.8)
(5.0)
(10.9)
69.5

(56.6)
(4.0)
(19.0)
87.6

As of December 31, 2017, $24.7 and $2.5 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 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 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, 2017:

Jurisdiction
China
Czech Republic
Germany
Italy
Korea
Luxembourg
Mexico
United States

Earliest Open Year
2012
2011
2010
2005
2012
2012
2012
2014

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 2017, 2016, and 2015 we recognized a
net interest benefit of $2.4, $2.9, and $5.7, respectively, related to tax matters. We had $4.1, $6.8, and $9.8 of interest
expense accrued from continuing and discontinued operations related to tax matters as of December 31, 2017, 2016,
and 2015, 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 was entitled to reimbursement for a portion of
the tax liability and recorded an aggregate receivable of $14.8 from Exelis and Xylem as of December 31, 2015. During
2016, ITT collected the receivables from Exelis and Xylem. Exelis reimbursed ITT for an additional $1.5 of Tax Matters
Agreement balances related to compliance and audit service fees and U.S. state refunds. The settlement of future
examinations in state or foreign jurisdictions and additional audit service fees may 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, 2017, 2016 and 2015.

Basic weighted average common shares outstanding

Add: Dilutive impact of outstanding equity awards

Diluted weighted average common shares outstanding

2017
88.3

0.7

89.0

2016
89.2

0.7

89.9

2015
89.8

0.9

90.7

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, 2017, 2016 and 2015 because they were anti-
dilutive.

Anti-dilutive stock options

Average exercise price

Year(s) of expiration

2017
0.3

2016
0.7

2015
0.4

42.43 $

38.34 $

42.50

2024 - 2025

2024 - 2026

2024 - 2025

In addition, 0.1 of outstanding employee PSU awards (see Note 16, Long-Term Incentive Employee Compensation,
for additional information on PSU awards) were excluded from the computation of diluted earnings per share for the
years ended December 31, 2017, 2016 and 2015, respectively, as the necessary performance conditions had not yet
been satisfied.

NOTE 7
RECEIVABLES, NET

Trade accounts receivable

Notes receivable
Other(a)
Receivables, gross

Less: allowance for doubtful accounts

Receivables, net

2017
$ 601.4

2016
$ 513.5

3.9

40.4

645.7

16.1

4.2

21.6

539.3

15.4

$ 629.6

$ 523.9

(a) Other includes an insurance-related settlement receivable of $19.0 recorded in 2017.

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

2017, 2016, and 2015.

Allowance for doubtful accounts – January 1

Charges to income

Write-offs

Foreign currency and other

2017
15.4

3.6

(4.4)

1.5

2016
16.1

1.5

(1.5)

(0.7)

2015
13.3

3.6

(0.8)

—

Allowance for doubtful accounts – December 31

16.1

15.4

16.1

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

NOTE 9
OTHER CURRENT AND NON-CURRENT ASSETS

Asbestos-related current assets

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

NOTE 10
PLANT, PROPERTY AND EQUIPMENT, NET

Machinery and equipment

Buildings and improvements

Furniture, fixtures and office equipment

Construction work in progress

Land and improvements
Other

Plant, property and equipment, gross

Less: accumulated depreciation

Plant, property and equipment, net

2017
55.9

54.8

184.4

38.1

333.2

(21.3)

2016
53.0

60.5

166.0

33.5

313.0

(17.8)

$ 311.9

$ 295.2

2017
64.7

30.3

52.4

$ 147.4

$ 111.3

41.9

24.5

6.7

18.5

2016
66.0

7.6

48.4

$ 122.0

96.5

38.1

33.4

5.6

14.8

$ 202.9

$ 188.4

2017
$ 1,039.9

262.5

74.5

58.4

28.7

10.9

2016
898.6

244.6

68.0

68.5

28.2

5.3

1,474.9

(953.2)

1,313.2

(848.7)

521.7

464.5

Depreciation expense of $78.3, $74.1 and $70.7 was recognized in 2017, 2016 and 2015, respectively.

During 2017 the Company entered into an agreement to sell excess property for a cash purchase price of
approximately $41. The purchaser’s due diligence period has ended, however there are remaining conditions to closing
which are anticipated to be finalized in the first half of 2018. At closing, the Company will receive the cash proceeds
and is expected to record a gain of approximately $38 to $40.

NOTE 11
GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 by segment are

as follows:

Goodwill - December 31, 2015

Adjustments to purchase price allocations

Foreign currency

Goodwill - December 31, 2016

Goodwill acquired

Adjustments to purchase price allocations

Foreign currency

Goodwill - December 31, 2017

Industrial
Process

Motion
Technologies
201.0

312.6 $

Connect &
Control
Technologies
$

264.7 $

—

(4.2)

2.6

(1.3)

0.4

(1.1)

Total

778.3

3.0

(6.6)

308.4 $

202.3

264.0 $

774.7

—

16.1

91.2

(8.2)

10.3

—

2.7

91.2

(8.2)

29.1

324.5 $

295.6

266.7 $

886.8

Goodwill acquired during 2017 relates to our acquisition of Axtone and represents the excess of the purchase
price over the net assets acquired, the valuation of which is expected to be completed in the first quarter of 2018. Upon
completion of the valuation, goodwill acquired will be adjusted to reflect the final fair value of the net assets acquired.
See Note 21, Acquisitions, for further information.

Other Intangible Assets

Information regarding our other intangible assets is as follows:

December 31, 2017

December 31, 2016

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

166.2

(74.4) $

54.4

13.5

234.1

27.5

(21.8)

(9.2)

(105.4)

—

91.8

32.6

4.3

128.7

27.5

155.8

(59.3) $

52.5

9.0

217.3

26.7

(16.8)

(7.6)

(83.7)

—

Other Intangible Assets

261.6

(105.4) $

156.2

244.0

(83.7) $

96.5

35.7

1.4

133.6

26.7

160.3

Indefinite-lived intangibles primarily consist of brands and trademarks.

During the second quarter of 2016, we recognized an impairment loss of $4.1 related to indefinite-lived trade
names within our Industrial Process segment. The impairment loss was the result of the challenging economic conditions
within the upstream oil and gas market. The impairment was recorded within general and administrative expenses.

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

weighted average lives of approximately 12.3 years, 13.2 years and 11.3 years, respectively.

The fair value of intangible assets acquired in connection with the purchase of Axtone, include $7.6 of customer
relationships and $2.3 of trademarks. These intangible assets will be amortized over their estimated useful lives of 12
years and 10 years, respectively. See Note 21, Acquisitions, for further information.

Amortization expense related to intangible assets for 2017, 2016 and 2015 was $18.9, $20.1 and $14.0,

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

Year
2018

2019

2020

2021

2022

Thereafter

NOTE 12
ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

Compensation and other employee-related benefits

Asbestos-related liability

Customer-related liabilities

Accrued income taxes and other tax-related liabilities

Environmental and other legal matters

Accrued warranty costs

Other accrued liabilities

Accrued and other current liabilities

Environmental liabilities

Compensation and other employee-related benefits

Deferred income taxes and other tax-related liabilities

Other

Other non-current liabilities

NOTE 13
LEASES AND RENTALS

Estimated
Amortization
Expense

18.1

17.9

16.2

40.5

2017
$ 147.2

2016
$ 120.5

77.1

45.5

36.1

22.8

17.0

38.7

76.8

39.9

31.0

25.1

17.4

39.5

$ 384.4

$ 350.2

63.6

36.4

19.3

56.3

63.2

33.0

24.9

59.9

$ 175.6

$ 181.0

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 $25.4, $21.1 and $18.6 for 2017, 2016 and 2015, respectively. Future minimum operating lease payments
under non-cancellable operating leases with an initial term in excess of one year as of December 31, 2017 are shown
below.

2018
2019
2020
2021
2022
2023 and thereafter
Total minimum lease payments

$ 24.8
20.2
17.0
16.6
14.4
58.2
$ 151.2

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

2017
$ 162.4

—

0.9

0.3

163.6

8.2

0.1

8.3

2016
$ 113.5

100.0

0.6

0.2

214.3

1.8

0.2

2.0

$ 171.9

$ 216.3

Commercial paper outstanding was $162.4 and $113.5, with an associated weighted average interest rate of 2.09%
and 1.14% and maturity terms less than one month from the date of issuance as of December 31, 2017 and 2016,
respectively.

Short-term Loans

On November 25, 2014, we entered into a competitive advance and revolving credit facility agreement (the
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. On November 29, 2016, we amended the Revolving
Credit Agreement to extend the maturity date from November 25, 2019 to November 25, 2021. The interest rate and
fees associated with drawn amounts are unchanged. The Revolving Credit Agreement provides for 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, Euros or British pound 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, 2017, we had no outstanding obligations under the credit facility. As of December 31, 2016, we had
$100 outstanding under the credit facility, with an associated interest rate of 1.87%.

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 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, 2017, 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 $16.7, $17.3, and $18.4 for 2017, 2016 and 2015, respectively.

The ITT Stock Fund, an investment option for certain ITT defined contribution plans, 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, 2017.

Defined Benefit Plans

ITT sponsors numerous defined benefit pension plans which have approximately 2,000 active participants; however,
most of these plans have been closed to new participants. As of December 31, 2017, of our total projected benefit
obligation, the ITT Consolidated Hourly Pension Plan represented 39%, the ITT Industrial Process Pension Plan
represented 35%, other U.S. plans represented 4% and international pension plans represented 22%. 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, 2017 and
2016.

Fair value of plan assets

Projected benefit obligation

Funded status

Amounts reported within:

Non-current assets

Accrued liabilities
Non-current liabilities

2017

Other
Benefits
5.2
$
138.1
$ (132.9)

—
(8.6)
(124.3)

Pension
$ 321.5
419.0
$ (97.5)

10.3
(4.8)
(103.0)

Total
$ 326.7

557.1

Pension
$ 263.1

392.2

2016

Other
Benefits
6.1

138.8

Total
$ 269.2

531.0

$ (230.4)

$ (129.1)

$ (132.7)

$ (261.8)

10.3

—

(13.4)
(227.3)

(3.7)
(125.4)

(9.5)
(123.2)

(13.2)
(248.6)

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, 2017 and 2016.

Net actuarial loss

Prior service cost (benefit)

Total

2017

Other
Benefits
56.3
$

Total
$ 197.4

(44.3)

(42.3)

Pension
$ 154.0

5.1

12.0

$ 155.1

$ 159.1

2016

Other
Benefits
59.6

Total
$ 213.6

(50.5)

(45.4)

9.1

$ 168.2

Pension
$ 141.1
2.0
$ 143.1

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, 2017 and 2016.

Change in benefit obligation

Benefit obligation – January 1

$312.3

$ 79.9

$ 138.8

$ 531.0

$339.9

$ 78.0

$ 143.4

$ 561.3

2017

2016

U.S.

Int’l

Other
Benefits

Total

U.S.

Int’l

Other
Benefits

Total

Service cost

Interest cost

Amendments

Actuarial loss (gain)

Benefits and expenses paid

Acquired

Settlement

Curtailment

Foreign currency translation

4.6

10.5

1.6

19.1

(22.4)

—

1.4

1.6

—

(0.3)

(3.0)

3.5

(0.4)

—

10.6

0.8

4.4

0.4

1.9

6.8

16.5

2.0

20.7

4.1

11.9

—

5.9

1.3

1.5

0.4

4.2

(8.2)

(33.6)

(21.5)

(2.7)

—

3.5

(0.4)

—

10.6

—

(28.0)

—

(0.5)

(0.2)

(2.1)

0.9

4.9

—

(1.9)

(8.5)

—

6.3

18.3

0.4

8.2

(32.7)

—

(28.5)

(0.2)

(2.1)

Benefit obligation – December 31

$325.7

$ 93.3

$ 138.1

$ 557.1

$312.3

$ 79.9

$ 138.8

$ 531.0

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, 2017 and 2016.

2017

2016

U.S.

Int’l

Other
Benefits

Total

U.S.

Int’l

Other
Benefits

Total

Change in plan assets

Plan assets – January 1

Actual return on plan assets

Employer contributions

Benefits and expenses paid

Settlement

Foreign currency translation

$ 262.2

0.9

$ 269.2

$ 278.1

0.9

6.1

1.2

6.1

46.4

45.0

(8.2)

(33.6)

—

(0.4)

0.1

24.0

9.6

(21.5)

(28.0)

—

3.2

(2.7)

(0.5)

—

7.9

0.5

6.2

(8.5)

—

$ 286.9

24.5

19.0

(32.7)

(28.5)

—

45.2

35.9

(22.4)

—

3.0

(3.0)

(0.4)

0.1

0.6

Plan assets – December 31

$ 320.9

5.2

$ 326.7

$ 262.2

0.9

6.1

$ 269.2

Funded status at end of year

(4.8) $ (92.7) $ (132.9) $ (230.4) $ (50.1) $ (79.0) $ (132.7) $ (261.8)

The accumulated benefit obligation for all defined benefit pension plans was $416.7 and $389.4 at December 31,
2017 and 2016, respectively. Information for pension plans with an accumulated benefit obligation in excess of plan
assets is included in the following table.

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

2017
$ 107.8

105.4

—

2016
$ 391.6

388.8

262.2

Statements of Operations Information

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, 2017, 2016 and 2015 as they pertain to our
defined benefit pension plans.

Net periodic postretirement cost - pension

2017

2016

2015

U.S.

Int’l

Total

U.S.

Int’l

Total

U.S.

Int’l

Total

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

Service cost

Interest cost

Expected return on plan assets

Amortization of net actuarial loss

Amortization of prior service cost

Net periodic postretirement cost

Curtailment or settlement charges

Total net periodic postretirement cost

Net actuarial (gain) loss

Prior service cost

Amortization of net actuarial (loss) gain

Amortization of prior service cost

Foreign currency translation

Total change recognized in other
comprehensive income

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

4.6

10.5

(18.3)

1.4

1.6

6.0

4.1

12.1

11.9

1.3

1.5

5.4

3.5

13.4

13.0

— (18.3)

(20.1)

— (20.1)

(20.8)

6.6

1.0

4.4

3.7

8.1

1.0

—

4.0

—

4.0

(7.9)

1.6

(6.6)

(4.7)

—

(0.3)

—

(1.0)

—

2.9

7.6

1.0

8.4

3.7

12.1

(8.2)

1.6

(7.6)

(4.7)

2.9

7.1

0.9

3.9

12.7

16.6

2.1

—

(19.8)

(0.9)

—

0.7

—

3.5

—

3.5

4.0

0.4

7.8

0.9

7.4

12.7

20.1

6.1

0.4

(0.7)

(20.5)

—

(0.5)

(0.9)

(0.5)

7.5

1.0

4.2

—

4.2

13.9

—

(7.5)

(1.0)

—

1.5

—

1.0

—

4.0

0.1

4.1

5.0

14.5

(20.8)

8.5

1.0

8.2

0.1

8.3

(2.9)

11.0

—

(1.1)

—

(2.5)

—

(8.6)

(1.0)

(2.5)

(17.6)

1.6

(16.0)

(18.6)

3.2

(15.4)

5.4

(6.5)

(1.1)

$ (9.5) $

5.6

$ (3.9) $ (2.0) $

6.7

4.7

9.6

$ (2.4) $

7.2

In the third quarter of 2017, we recorded a curtailment loss of $3.7 related to a freeze of benefit accruals for certain
employees at our Industrial Process segment. During 2016, we recognized a non-cash pretax pension settlement
charge of $12.7 as the result of a program offering certain former U.S. employees with a vested pension benefit an
option to take a one-time lump sum distribution as part of ITT's overall plan to de-risk its pension plans. Approximately
1,100 participants accepted the offer, resulting in a payment of $28.0 from the plan and a reduction in the Company's
projected benefit obligation of $26.6, including an actuarial loss of $1.4.

Net periodic postretirement cost - other postretirement

Service cost

Interest cost

Expected return on plan assets

Amortization of net actuarial loss

Amortization of prior service credit

Net periodic postretirement cost (benefit)

Gain due to curtailment

Total net periodic postretirement cost (benefit)

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

Net actuarial (gain) loss

Prior service cost

Amortization of net actuarial loss

Amortization of prior service credit

Acceleration of prior service costs

Total changes recognized in other comprehensive income

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

2017

2016

2015

0.8

4.4

(0.3)

4.4

(5.8)

3.5

—

3.5

1.0

0.5

(4.4)

5.8

—

2.9

0.9

4.9

(0.5)

4.6

(6.5)

3.4

—

3.4

(1.9)

—

(4.6)

6.5

—

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

6.4

3.4

14.7

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

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 2018.

Net actuarial loss

Prior service cost (credit)

Total

Postretirement Plan Assumptions

Pension

5.9

0.9

6.8

Other
Benefits

4.3

(5.3)

(1.0)

Total

10.2

(4.4)

5.8

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. Periodically, the Company performs experience studies to validate
certain actuarial assumptions such as age of retirement, rates of turnover, utilization of optional forms of payments. In
2015, the Company performed such study for its U.S. pension plans and reflected the results in its valuation. The
actuarial assumptions are based on the provisions of the applicable accounting pronouncements, review of various
market data and discussion with our external advisors. Assumptions are reviewed annually and adjusted as necessary.
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

2017

2016

U.S.

Int’l

Other
Benefits

U.S.

Int’l

Other
Benefits

3.6%

N/A

4.2%

7.0%

1.7%

3.3%

1.7%

1.0%

3.6%

N/A

4.1%

7.0%

4.2%

N/A

4.3%

7.2%

1.7%

3.4%

2.3%

4.8%

4.1%

N/A

4.1%

7.2%

The discount rate is used to calculate the present value of expected future benefit payments at the measurement
date. The discount rate assumption is based on current investment yields of high-quality fixed income investments
during the retirement benefits maturity period. The pension discount rate is determined by considering an interest rate
yield curve comprising AAA/AA bonds, with maturities that are generally between zero and thirty years, developed by
the plan's actuaries. Annual benefit payments are then discounted to present value using this yield curve to develop
a single discount rate matching the plan's characteristics.

Effective as of December 31, 2015, we changed the approach used to estimate the service and interest components
of net periodic benefit cost of the U.S. defined benefit plans. This estimation approach discounts the individual expected
cash flows underlying the service cost and interest cost using the applicable spot rates from the yield curve used to
discount the cash flows in measuring the benefit obligation. Historically, we estimated these service and interest cost
components utilizing a single weighted average discount rate derived from the yield curve used to measure the benefit
obligation at the beginning of the period. The impact of this change was not material.

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 flat dollar benefit and years of service approach.

The Company has updated the mortality assumption to reflect the most recent projection update.

The assumed rate of future increases in the per capita cost of health care (the health care trend rate) is 7.0% for
pre-age 65 retirees and 6.5% for post-age 65 retirees for 2018, decreasing ratably to 4.5% in 2026. Increasing the
health care trend rates by one percent per year would have the effect of increasing the benefit obligation by $7.5 and
the aggregate annual service and interest cost components by $0.3. A decrease of one percent in the health care trend
rate would reduce the benefit obligation by $6.4 and the aggregate annual service and interest cost components by
$0.3. 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.

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

2017

7.0%

18.0%

2016

7.2%

9.2%

2015

8.0 %

(2.8)%

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.

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 percentage points with a corresponding decrease in allocations to equity investments. During 2017,
the investment policy was further updated to reduce risk by increasing the target allocation in fixed income by
approximately 20 percentage points. Our current target allocation is 30% equity investment and 70% fixed income.
Based on this approach, the long-term annual rate of return on assets was estimated at 7.0% and 7.2% for fiscal 2017
and 2016, respectfully. In fiscal 2018, we expect our estimate of the long term annual return on assets to be 6.0% for
the U.S. defined benefit plans reflecting the current asset allocation.

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, 2017 and 2016, and the current asset allocation ranges by asset category.

U.S. equities

International equities

Fixed income

Cash and other

Fair Value of Plan Assets

2017

2016

Asset Allocation
Range

22%

68%

26%

22%

51%

0-50 %

0-25 %

50-100 %

0-10 %

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.

Collective trusts are valued at NAV as a practical expedient and thus are not leveled in this table, but are
included in the totals column to assist in reconciling to fair value of plan assets. Mutual funds are valued at quoted
market prices that represent the net asset value (NAV) of shares and are classified within level 1 of the fair value
hierarchy. Cash and cash equivalents are held in money market or short-term investment funds and are classified
within level 1 of the fair value hierarchy.

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

2017 and 2016, by asset class.

2017
Collective Trusts:

U.S. equity
International equity
Fixed income

Mutual funds
Cash and other
Total

2016
Collective Trusts:

U.S. equity
International equity
Fixed income

Mutual funds
Cash and other
Total

Contributions

Pension

Measured
at NAV

Level 1

— $
—
—
—
5.6
5.6

70.6
26.6
218.7
—
—
315.9

Pension

Measured
at NAV

Level 1

— $
—
—
—
1.8
1.8

67.4
58.9
135.0
—
—
261.3

Other Benefits

Total

Level 1

Total

70.6
26.6
218.7
—
5.6
321.5

— $
—
—
5.2
—
5.2

—
—
—
5.2
—
5.2

Other Benefits

Total

Level 1

Total

67.4
58.9
135.0
—
1.8
263.1

— $
—
—
6.1
—
6.1

—
—
—
6.1
—
6.1

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 defined benefit pension plans in the U.S. In addition, we fund certain of
our international pension plans in countries where funding is allowable and tax-efficient. During 2017 and 2016, we
contributed $38.9 and $12.8 to our global pension plans, respectively. The 2017 and 2016 contributions included a
$35.0 and $7.8 discretionary contribution to our U.S. pension plans, respectively. We anticipate making contributions
to our global pension plans of approximately $5 during 2018.

We contributed $6.1 and $6.2 to our other employee-related defined benefit plans during 2017 and 2016,
respectively. We estimate that the 2018 contributions to our other employee-related defined benefit plans will be
approximately $8.

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.

2018
2019
2020
2021
2022
2023 - 2027

U.S.
Pension
24.9
24.2
23.1
22.8
22.3
103.2

Int’l
Pension
3.9
3.6
4.4
3.9
4.2
19.5

Other
Benefits
10.8
10.4
10.2
10.0
9.5
41.7

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,
2017, 38.2 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.

Our long-term incentive plan (LTIP) is comprised of two components: restricted stock units (RSUs) and performance
unit awards (PSUs). Prior to 2017, our LTIP also included non-qualified stock options (NQOs). The majority of RSUs
settle in shares; however RSUs and PSUs granted to international employees are settled in cash. We account for
NQOs and equity-settled RSUs and PSUs as equity-based compensation awards and cash-settled RSUs and PSUs
are accounted for as liability-based awards. PSUs granted prior to 2016 were based on both a relative total shareholder
return (TSR) metric as well as a return on invested capital (ROIC) metric, equally weighted. In 2017 and 2016, PSUs
granted were based on a relative TSR and relative ROIC metric, equally weighted. 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 forfeitures as they occur. 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

2017
$ 18.1
2.8
$ 20.9

2016
$ 12.6
1.8
$ 14.4

2015
$ 15.7
1.1
$ 16.8

At December 31, 2017, there was $17.1 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 1.8 years. Additionally,
unrecognized compensation cost related to liability-based awards was $2.9, which is expected to be recognized ratably
over a weighted-average period of 1.8 years.

Non-Qualified Stock Options

Options generally vest over or at the conclusion of a 3-year period and are exercisable over 10 years, except in
certain instances of death, retirement or disability. 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, 2017, 2016 and 2015 and changes during the years

then ended is presented below.

2017

2016

2015

Stock Options
Outstanding – January 1

Granted

Exercised

Canceled or expired

Outstanding – December 31

Options exercisable – December 31

Weighted
Average
Exercise
Price
27.10

33.01

20.88

39.03

30.57

24.41

Weighted
Average
Exercise
Price
24.20

41.52

19.87

35.95

27.10

21.75

Shares
1.9

0.2

(0.3)

(0.1)

1.7

1.1

Shares
1.7

0.4

(0.6)

(0.1)

1.4

0.8

Shares
1.4
—
(0.5)
—

0.9

0.5

Weighted
Average
Exercise
Price
30.57

—
22.95

—
34.07

32.24

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 2017, 2016 and 2015 was $10.6, $9.6 and $6.6, respectively.

The amount of cash received from the exercise of stock options was $11.2, $12.3 and $6.2 for 2017, 2016 and
2015, respectively. The income tax benefit realized during 2017, 2016 and 2015 associated with stock option exercises
and lapses of restricted stock was $7.0, $10.5 and $6.3, respectively. In 2017, we adopted new guidance prospectively
which classifies cash flows attributable to excess tax benefits arising from stock option exercises and restricted stock
lapses as an operating activity. In 2016 and 2015, we classified the cash flows attributable to excess tax benefits as
a financing activity. Excess tax benefits arising from stock option exercises and restricted stock lapses were $2.7, $3.2
and $3.4 for 2017, 2016 and 2015, respectively.

The following table summarizes information about ITT’s stock options at December 31, 2017:

Exercise Prices
Less than $23.00
$26.76
$33.01
$41.52
$43.52

Options Outstanding

Options Exercisable

Weighted
Average
Remaining
Contractual Life
(in years)
3.5
5.2
8.1
7.2
6.2
6.5 $

Aggregate
Intrinsic
Value
3.4
4.2
6.1
2.2
1.4
17.3

Number
0.1
0.1
0.3
0.2
0.2
0.9

Weighted
Average
Remaining
Contractual Life
(in years)
3.5
5.2
8.1
7.2
6.2
5.4 $

Aggregate
Intrinsic
Value
3.4
4.2
0.6
0.4
1.4
10.0

Number
0.1
0.1
0.1
0.1
0.1
0.5

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on ITT’s
closing stock price of $53.37 as of December 31, 2017, which would have been received by the option holders had
all option holders exercised their options as of that date. There were no options "out-of-the-money" as of December 31,
2017. Substantially all options outstanding as of December 31, 2017 are expected to vest.

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. There were no NQOs granted in 2017. The following are
weighted-average assumptions for 2016 and 2015:

Dividend yield

Expected volatility

Expected life (in years)

Risk-free rates

2016
1.5%

32.2%

6.0

1.5%

2015
1.1%

29.4%

5.8

1.7%

Weighted-average grant date fair value

9.16

11.23

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 1.23% was assumed
based on ITT's annualized dividend payment of $0.512 per share and the February 23, 2017 closing stock price of
$41.68. 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 February
22, 2017, 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 1.23% was assumed based
on ITT's annualized dividend payment of $0.512 per share and the February 23, 2017 closing stock price of $41.68.

The table below provides a rollforward of outstanding RSUs and PSUs for each of the years ended December 31,

2017, 2016 and 2015.

2017

2016

2015

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
38.24

1.1 $

0.5

—
(0.2)
(0.2)
1.2 $

0.1 $

42.52

—

41.42

41.75

38.74

42.90

Weighted
Average Grant
Date Fair
Value
36.56

33.28

45.47

29.86

39.20

38.24

—

1.3 $

0.5

(0.1)

(0.5)

(0.1)

1.1 $

— $

1.1 $

0.5

0.1

(0.3)

(0.1)

1.3 $

0.3 $

Weighted
Average
Grant Date
Fair Value
31.70

41.34

29.59

24.09

35.89

36.56

29.59

(a) Represents the adjustment to the number of shares to be issued above or below target for performance results
achieved relative to PSUs granted in 2015 that vested on December 31, 2017, PSUs granted in 2014 that
vested on December 31, 2016 and 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, 2017, 2016 and 2015.

Equity settled RSUs

Cash settled RSUs

PSU awards

2017
0.7

0.1

0.4

2016
0.7

0.1

0.3

2015
0.7

0.1

0.5

As of December 31, 2017, substantially all RSUs outstanding are expected to vest. As of December 31, 2017, the
total number of PSUs expected to vest based on current performance estimates, including those vested but pending
issuance, was 0.3.

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, 2017 and 2016.

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 $0.512, $0.496 and $0.4732 per common share in
2017, 2016, and 2015, respectively.

On October 27, 2006, a three-year $1 billion share repurchase program (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 2017, 2016,
and 2015, we repurchased 0.8 shares, 2.0 shares, and 2.0 shares of common stock for $30.0, $70.0 and $80.0,
respectively. Through December 2017, we had repurchased 21.2 shares for $859.4, including commissions, under
the Share Repurchase Program.

Separate from the Share Repurchase Program, the Company repurchased 0.1 shares, 0.2 shares, and 0.1 shares
for an aggregate price of $2.9, $7.8, and $4.0, during 2017, 2016 and 2015, respectively, in settlement of employee
tax withholding obligations due upon the vesting of restricted stock or stock units. All repurchase shares are canceled
immediately following the repurchase.

NOTE 18
COMMITMENTS AND CONTINGENCIES

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. However, there can be no assurance that an adverse outcome in any of the proceedings
described below will not result in material fines, penalties or damages, changes to the Company's business practices,
loss of (or litigation with) customers or a material adverse effect on our financial statements.

Asbestos Matters

Subsidiaries of ITT, including ITT LLC and Goulds Pumps LLC, have 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 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, 2017, there were 26 thousand pending active
claims against ITT subsidiaries, 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

2017
30
4
(2)
(6)
26

2016
37
4
(1)
(10)
30

2015
62
4
(1)
(28)
37

Frequently, plaintiffs are unable to identify any ITT LLC or Goulds Pumps LLC products as a source of asbestos
exposure. Our experience to date is that a majority of resolved claims are dismissed without any payment from ITT
subsidiaries. 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.

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 10 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, 2017, approximately 23% of the recorded
asbestos liability relates to pending claims, with the remainder relating to claims estimated to be filed over the next 10
years.

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 77% of our estimated receivables are due from insurers that had credit ratings of A- or
better from A.M. Best as of December 31, 2017.

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, 2017,
approximately 42% 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.

Settlement Agreements

During 2016 and 2015, ITT entered into settlement agreements with insurers to settle responsibility for multiple
insurance claims. Under the terms of the settlements, the insurers agreed to a payment or specified series of payments
to a QSF, resulting in a net loss of $2.1 and a benefit of $8.9, respectively.

Defense Strategy Cost Adjustment

During 2015, the Company changed its asbestos defense strategy and retained a single firm to defend the Company
in all asbestos litigation. This long-term strategy streamlined the Company’s management of cases and significantly
reduced defense costs. Our agreement with the defense firm was initially limited to a certain set of claims and the
remaining claims were expected to transition within the next four years; however, the Company was able to transition
the remaining claims during the second quarter of 2016 as a result of one of the settlements described above. Based
on the terms of the agreement, the Company adjusted its asbestos liability and related assets and recognized a net
benefit of $4.9 and $100.7 in 2016 and 2015, respectively, for the revised estimate of the cost to defend pending claims
and claims expected to be filed over the next 10 years.

Statements of Operations Charges

The table below summarizes the total net asbestos charge for the years ended December 31, 2017, 2016 and

2015.

Asbestos provision

Asbestos remeasurement, net

Defense cost adjustment

Settlement agreements

Asbestos-related benefit, net

Changes in Financial Position

2017
56.5

(76.4)

—

2016
59.0

(81.8)

(4.9)

2.1

2015
63.0

(44.8)

(100.7)

(8.9)

$ (19.9)

$ (25.6)

$ (91.4)

The following table provides a rollforward of the estimated asbestos liability and related assets for the years ended

December 31, 2017 and 2016.

Balance as of January 1

Asbestos provision

Asbestos remeasurement

Settlement agreements

Defense cost adjustment

Net cash activity and other

Balance as of December 31

Current portion

Noncurrent portion

Environmental Matters

Liability
954.3

67.1
(66.4)
—

—
(77.8)
877.2

77.1

800.1

2017

Asset
380.6

10.6

10.0

—

—
(32.5)
368.7

64.7

304.0

Net
573.7

56.5

(76.4)

—

(45.3)

Liability
$ 1,042.8

2016

Asset

Net

412.0

630.8

68.8

(75.9)

—

(4.9)

(76.5)

9.8

5.9

(2.1)

—

(45.0)

59.0

(81.8)

2.1

(4.9)

(31.5)

508.5

954.3

380.6

573.7

76.8

877.5

66.0

314.6

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.

100

The following table provides a rollforward of the estimated current and long-term environmental liability for the

years ended December 31, 2017 and 2016.

Balance as of January 1
Changes in estimates for pre-existing accruals(a)
Net cash activity

Foreign currency

Balance as of December 31

2017
76.6

8.8

(11.7)

0.2

73.9

2016
82.6

5.9

(11.9)

—

76.6

(a) Changes in estimates for pre-existing accruals includes environmental-related costs of $3.7 and a reversal of
prior accruals of $0.7 reported within results of discontinued operations for the years ended December 31,
2017 and 2016, respectively.

Environmental-related assets represent estimated recoveries from insurance providers and other third parties. 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 $34.2.
In the first quarter of 2016, the Company received $2.0 in cash and $32.2 was deposited into a QSF which can be
drawn upon only to pay future environmental expenses associated with remediation sites covered under the policy,
including sites owned by a former subsidiary of the Company. The Company recorded $23.0 of deferred income related
to the settlement representing the excess of QSF monies over the probable liabilities associated with the covered
remediation sites. During the first quarter of 2017, ITT entered into a settlement agreement with a former subsidiary
to settle all claims covered by the environmental QSF. The former subsidiary no longer has rights to the funds in the
QSF. The settlement resulted in a reduction to both our environmental-related asset and the corresponding deferred
income liability balance of $5.2. During the second quarter of 2017, the QSF was amended resulting in income of $3.8.
The total environmental-related asset as of December 31, 2017 and 2016 was $24.5 and $33.4, respectively.

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

2017
$ 126.3

2016
$ 127.6

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

101

NOTE 19
GUARANTEES, INDEMNITIES AND WARRANTIES

Indemnities

As part of the 2011 spin-off, ITT LLC agreed to assume certain liabilities and provide certain indemnifications and
cross-indemnifications among ITT LLC, Exelis and Xylem, subject to limited exceptions with respect to certain employee
claims and other liabilities and obligations. These provisions address a variety of subjects, including asserted and
unasserted product liability matters (e.g., asbestos claims, product warranties) which relate to certain products
manufactured, repaired or sold prior to the 2011 spin-off. These provisions last indefinitely and are not affected by
Harris' acquisition of Exelis. ITT LLC 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 assumed or 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 LLC; such claims are included in our estimate of asbestos liabilities.

Guarantees

We have $144.6 of guarantees, letters of credit and similar arrangements outstanding at December 31, 2017,
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,
2017 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 warranty accrual for December 31, 2017 and
2016.

Warranty accrual – January 1

Warranty expense

Payments

Foreign currency and other

Warranty accrual – December 31

NOTE 20
DISCONTINUED OPERATIONS

2017
$ 19.8

7.2

(10.0)

1.3

2016
$ 23.5

7.4

(10.1)

(1.0)

$ 18.3

$ 19.8

Results from discontinued operations for the year ended December 31, 2017 reflect a loss of $1.5, net of tax,
primarily driven by environmental related liabilities. Results from discontinued operations for the year ended
December 31, 2016 reflect a gain of $4.2, net of tax, primarily related to favorable resolutions of certain legacy liabilities
in 2016. Results from discontinued operations for the year ended December 31, 2015 reflect a gain of $39.4, principally
related to the settlement of the U.S. income tax audit. 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.

102

NOTE 21
ACQUISITIONS

Axtone Railway Components

On January 26, 2017, we acquired 100% of the privately held stock of Axtone Railway Components (Axtone) for
a purchase price of $123.1, including cash acquired. The purchase price allocation is subject to change during the
measurement period (up to one year from the acquisition date). Axtone, which had 2016 revenue of approximately
$72, is a manufacturer of highly engineered and customized energy absorption solutions, including springs, buffers,
and coupler components for the railway and industrial markets.

The purchase price for Axtone was allocated to net tangible assets acquired and liabilities assumed based on their
preliminary fair values as of January 26, 2017, with the excess of the purchase price of $83.0 recorded as goodwill.
The primary areas of purchase price allocation that are not yet finalized relate to the valuation of certain contingent
liabilities, income tax, and residual goodwill. We expect to obtain the information necessary to finalize the fair value
of the net assets and liabilities during the measurement period. Changes to the preliminary estimates of the fair value
during the measurement period will be recorded as adjustments to those assets and liabilities with a corresponding
adjustment to goodwill in the period they occur. The goodwill arising from this acquisition, which is not expected to be
deductible for income tax purposes, has been assigned to the Motion Technologies segment.

Preliminary Allocation of Purchase Price for Axtone

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 Automotive Holdings

9.4
11.5
13.6
13.1
83.0
9.9
6.0
(14.9)
(4.2)
(4.3)
123.1

On October 5, 2015, we completed the acquisition of Wolverine Automotive Holdings Inc., the parent company of
Wolverine Advanced Materials LLC (Wolverine). The purchase price of $307.0 net of cash acquired, was funded through
a combination of cash and borrowings from our revolving credit facility. The excess of the purchase price over the
estimated fair value of net assets acquired of $164.2 was recorded as goodwill. 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 Environmental Control Systems (f/k/a Hartzell Aerospace)
for a purchase price of $52.9 that was funded through additional commercial paper borrowings. The excess of the
purchase price over the estimated fair value of net assets acquired of $13.7 was recorded as goodwill. All of the goodwill
has been assigned to the Control Technologies segment.

Pro forma results of operations have not been presented because the acquisitions were not deemed material at

the acquisition date.

103

SUPPLEMENTAL FINANCIAL DATA

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Revenue

Gross profit

(Loss) income from continuing

operations attributable to ITT Inc.

(Loss) income from discontinued

operations

Net (loss) income attributable to ITT

Inc.

Basic (loss) earnings per share

attributable to ITT Inc.:

Continuing operations

Discontinued operations

Net (loss) income

Diluted (loss) earnings per share

attributable to ITT Inc.:

Continuing operations

Discontinued operations

Net (loss) income

Common stock price per share:

2017 Quarters

2016 Quarters

Fourth

Third

Second

First

Fourth

Third

Second

First

$ 683.6

$ 645.0

$ 630.9

$ 625.8

$ 588.4

$ 581.7

$ 626.2

$ 609.1

207.4

203.1

204.4

202.3

173.4

183.9

205.6

195.3

(66.0)

87.0

47.9

46.1

23.6

88.3

32.3

37.7

(1.2)

(0.1)

2.2

1.8

0.5

(0.3)

(67.2)

86.9

47.8

46.0

25.8

90.1

32.8

37.4

$ (0.75) $

0.99

0.54

0.52

(0.01)

—

$ (0.76) $

0.99

0.54

0.52

$ (0.75) $

0.98

0.54

0.52

(0.01)

—

$ (0.76) $

0.98

0.54

0.52

0.27

0.02

0.29

0.27

0.02

0.29

0.99

0.02

1.01

0.98

0.02

1.00

0.36

0.42

—

0.36

0.42

0.36

0.42

—

(0.01)

0.36

0.41

High

Low

$ 54.79

$ 44.95

$ 42.73

$ 44.00

$ 43.07

$ 36.98

$ 39.70

$ 38.96

$ 44.06

$ 38.66

$ 36.93

$ 38.52

$ 32.46

$ 30.06

$ 30.31

$ 29.15

$ 53.37

$ 44.27

$ 40.18

$ 41.02

$ 38.57

$ 35.84

$ 31.98

$ 36.89

Dividends per share

$ 0.128

$ 0.124

104

EXHIBIT INDEX

Exhibit
Number Description
2.1

Agreement and Plan of Merger, effective May 16, 2016 among ITT Corporation, ITT Inc. and ITT LLC

3.1

3.2

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.1

10.11

10.12

10.13*

10.14*

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

10.32*

10.33*

10.34

23.1

ITT Inc.’s Amended and Restated Articles of Incorporation, effective as of May 16, 2016

Amended and Restated By-laws of ITT Inc., effective as of May 16, 2016

Distribution Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc.

Benefits and Compensation Matters Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc.
and Exelis Inc.

First Amendment to Benefits and Compensation Matters Agreement, dated as of October 25, 2011

Tax Matters Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc.

Master Transition Services Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis
Inc.

ITT Transitional Trademark License Agreement - Exelis, dated as of October 25, 2011, between ITT Manufacturing
Enterprises LLC and Exelis Inc.

Master Lease Agreement and Master Sublease Agreement, dated as of October 25, 2011 and September 30, 2011,
respectively

Five Year Competitive Advance and Revolving Credit Facility Agreement, dated as of November 25, 2014 among ITT
Corporation and the Other Parties Signatory Thereto

Instrument of Assumption and Amendment Agreement, dated as of May 16, 2016, to the Five-Year Competitive
Advance and Revolving Credit Facility Agreement, dated as of among ITT Inc., ITT LLC and the Administrative Agent

First Amendment to Five-Year Competitive Advance and Revolving Credit Facility Agreement, dated as of November
29, 2016, among ITT Inc. and the lenders party thereto

Indenture between ITT Corporation and Union Bank N.A., as Trustee dated May 1, 2009

First Supplemental Indenture, dated as of May 16, 2016, between ITT Corporation, ITT Inc. and MUFG Union Bank,
N.A. as Trustee

ITT Annual Incentive Plan for Executive Officers, amended and restated as of May 16, 2016

ITT Retirement Savings Plan for Salaried Employees (effective January 1, 2016)

Supplemental Retirement Savings Plan, amended and restated as of January 1, 2016

ITT Senior Executive Severance Pay Plan, amended and restated as of May 16, 2016

ITT Senior Executive Change in Control Severance Pay Plan, amended and restated as of May 16, 2016

ITT Change in Control Severance Plan, amended and restated as of May 16, 2016

ITT Deferred Compensation Plan, as amended and restated as of May 16, 2016

ITT Deferred Compensation Plan for Non-Employee Directors, amended and restated as of May 16, 2016

Non-Employee Director Compensation Summary

2011 Omnibus Incentive Plan

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

Omnibus Amendment to Long-Term Incentive Plans, dated as of May 16, 2016

Form of 2017 Performance Unit Award Agreement

Form of 2017 Restricted Stock Unit Award Agreement

Form of 2016 Performance Unit Award Agreement

Form of 2016 Non-Qualified Stock Option Award Agreement

Form of 2016 Restricted Stock Unit Agreement

Form of 2015 Performance Unit Award Agreement

Form of 2015 Non-Qualified Stock Option Award Agreement

Form of 2015 Restricted Stock Unit Agreement

Amended and Restated Employment Agreement, dated as of May 16, 2016, between ITT Inc. and Denise L. Ramos.

Form of ITT Inc. Indemnification Agreement with its directors and officers

Subsidiaries of the Registrant

Consent of Deloitte & Touche LLP

II-1

Exhibit
Number Description
31.1

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

31.2

32.1

32.2

101

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

The following materials from ITT Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017,
formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations,
(ii) Consolidated Statements of Comprehensive Income, (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.

II-2

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 Inc.
(Registrant)

By:

/S/ STEVEN C. GIULIANO

Steven C. Giuliano
Vice President and Chief Accounting Officer
(Principal accounting officer)

February 16, 2018

II-3

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

Executive Vice President and
Chief Financial Officer

Vice President and
Chief Accounting Officer

February 16, 2018

/S/ ORLANDO D. ASHFORD

Director

February 16, 2018

Orlando D. Ashford

/S/ GERAUD DARNIS

Director

February 16, 2018

Geraud Darnis

/S/ DONALD DEFOSSET, JR.

Director

February 16, 2018

Donald DeFosset, Jr.

/S/ NICHOLAS C. FANANDAKIS
Nicholas C. Fanandakis

Director

February 16, 2018

/S/ CHRISTINA A. GOLD

Director

February 16, 2018

Christina A. Gold

/S/ RICHARD P. LAVIN

Director

February 16, 2018

Richard P. Lavin

/S/ MARIO LONGHI

Director

February 16, 2018

Mario Longhi

/S/ FRANK T. MACINNIS

Director

February 16, 2018

Frank T. MacInnis

/S/ REBECCA A. MCDONALD

Director

February 16, 2018

Rebecca A. McDonald

/S/ TIMOTHY H. POWERS

Director

February 16, 2018

Timothy H. Powers

II-4

inside front cover

inside back cover

Business Revenue Overview

At ITT, we have a clear purpose as a company and as a team

– to partner with our customers in key global end markets to

solve their most critical problems. That vision is core to who

we are and over the past few years, it has driven our focus

on continually building our foundation and capabilities as a

growth-oriented, multi-industrial manufacturing 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, durability and balance,

whether it’s by business mix, geography or end market. In

addition, our businesses are aligned with global growth

drivers – including urbanization, a growing middle class and

sustainable development – that underpin our modern way of

life.

Our journey continues to be defined by a focus on optimizing

our execution, driving innovation and growth, and deploying

our capital in a balanced and effective way, while building a

winning culture. With that strategic approach, we generated

solid results in 2017 and continued our multi-year track

record of performance.

All of our accomplishments have been made possible by the

talent and contributions of our 10,000 employees around the

world, who are committed every day to reflecting our princi-

ples 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.

At ITT, we are not only proud of the work we do, we are also

inspired by the lasting impact we make in the world. It is

rewarding to know that our efforts have a tangible impact

every day by helping to power key industries, advance trans-

portation safety and comfort, connect people to critical data

and each other, and secure key infrastructure. We help our

customers and the world move forward, and that is a

commitment everyone across ITT embraces each day.

Looking ahead, we will continue to make the right moves to

meet the demands of an ever faster, more dynamic and

complex world. Through this focus, we will ensure that we are

complex world. Through this focus, we’ll ensure that we are

well positioned to accelerate customer driven innovation and

growth, to drive continued value creation for shareholders,

and to extend and expand the ITT legacy far into the future.

Regions

North America

39%

Segments

Motion Technologies

46%

Motion Technologies

End Markets

Automotive & Rail

44%

Charts based on 2017 revenue of $2.6 billion.

South America

Middle East & Africa

Asia Pacific

15%

Europe

37%

Connect and Control

Technologies

23%

Technologies

23%

46%

Industrial Process

31%

46%

Industrial Process

31%

23%
23%

31%
31%

Oil & Gas

10%

General Industrial

12%

Aerospace & Defense

14%

Chemical

& Industrial Pumps

20%

44%

10%

12%
12%

20%

ITT’s Global Manufacturing Footprint
ITT’s Global Manufacturing Footprint
ITT is a diversified leading global manufacturer of highly engineered critical components and customized
ITT is a diversified leading global manufacturer of highly engineered critical components and customized
technology solutions for the transportation, industrial, and oil and gas markets. With a strong global footprint
technology solutions for the transportation, industrial, and oil and gas markets. With a strong global footprint
of more than 100 facilities, including about 50 manufacturing sites, we are well positioned to solve the most critical
of more than 100 facilities, including about 50 manufacturing sites, we are well positioned to solve the most critical
challenges of our customers around the world. Our locations include manufacturing facilities and global service
challenges of our customers around the world. Our locations include manufacturing facilities and global service
capabilities in 35 countries. Through these worldwide operations and building on our heritage of innovation, our
capabilities in 35 countries. Through these worldwide operations and building on our heritage of innovation, our
10,000 team members partner with customers to deliver enduring solutions that make a lasting difference and
10,000 team members partner with customers to deliver enduring solutions that make a lasting difference and
help the world move forward. ITT is headquartered in White Plains, N.Y., with sales in well over 100 countries.
help the world move forward. ITT is headquartered in White Plains, N.Y., with sales in well over 100 countries.
The company generated 2017 revenues of $2.6 billion. For more information, visit www.itt.com.
The company generated 2017 revenues of $2.6 billion. For more information, visit www.itt.com.

INDUSTRIAL PROCESS
INDUSTRIAL PROCESS
Designs and manufactures pumps, valves,
Designs and manufactures pumps, valves,
monitoring and control systems, water
monitoring and control systems, water
treatment and aftermarket services for the
treatment and aftermarket services for the
chemical, oil and gas, mining and other
chemical, oil and gas, mining and other
industrial process markets, as well as
industrial process markets, as well as
global service capabilities.
global service capabilities

Amory, Mississippi
Amory, Mississippi
Axminster, United Kingdom
Axminster, United Kingdom
Buenos Aires, Argentina
Buenos Aires, Argentina
Dammam, Saudi Arabia
Dammam, Saudi Arabia
Lancaster, Pennsylvania
Lancaster, Pennsylvania
Los Angeles, California
Los Angeles, California
Obernkirchen, Germany
Obernkirchen, Germany
Oksan, South Korea
Oksan, South Korea
Salto, Brazil
Salto, Brazil
Seneca Falls, New York
Seneca Falls, New York
The Woodlands, Texas
The Woodlands, Texas
Tizayuca, Mexico
Tizayuca, Mexico
Vadadora, India
Vadadora, India
Zachary, Louisiana
Zachary, Louisiana

MOTION TECHNOLOGIES
MOTION TECHNOLOGIES

Designs and manufactures brake pads,
Designs and manufactures brake pads,
shock absorbers and sealing solutions
shock absorbers and sealing solutions
for the automotive and rail markets.
for the automotive and rail markets

Barge, Italy
Barge, Italy
Öhringen, Germany
Öhringen, Germany
Blacksburg, Virginia
Blacksburg, Virginia
Ostrava, Czech Republic
Ostrava, Czech Republic
Changshu, China
Changshu, China
Oud-Beijerland, Netherlands
Oud-Beijerland, Netherlands
Dearborn, Michigan
Dearborn, Michigan
Prostejov, Czech Republic
Prostejov, Czech Republic
Hebron, Kentucky
Hebron, Kentucky
Silao, Mexico
Silao, Mexico
Kańczuga, Poland
Kańczuga, Poland
Stalowa Wola, Poland
Stalowa Wola, Poland
Leesburg, Florida
Leesburg, Florida
Termoli, Italy
Termoli, Italy
Lünen, Germany
Lünen, Germany
Vauda Canavese, Italy
Vauda Canavese, Italy
Novi, Michigan
Novi, Michigan
Wuxi, China
Wuxi, China
Neitersen, Germany
Neitersen, Germany

CONNECT AND CONTROL
CONNECT AND CONTROL
TECHNOLOGIES
TECHNOLOGIES
Designs and manufactures harsh-environment
Designs and manufactures harsh-environment
connectors and critical energy absorption and
connectors and critical energy absorption and
flow control components primarily for the
flow control components primarily for the
aerospace, defense and industrial markets.
aerospace, defense and industrial markets

Bad König, Germany
Bad König, Germany
Irvine, California
Irvine, California
Lainate, Italy
Lainate, Italy
Nogales, Mexico
Nogales, Mexico
Orchard Park, New York
Orchard Park, New York
Santa Rosa, California
Santa Rosa, California
Shenzhen, China
Shenzhen, China
Valencia, California
Valencia, California
Weinstadt, Germany
Weinstadt, Germany
Westminster, South Carolina
Westminster, South Carolina
Wuxi, China
Wuxi, China
Zama, Japan
Zama, Japan

ITT WORLD HEADQUARTERS
ITT WORLD HEADQUARTERS
White Plains, New York
White Plains, New York

ITT has a concentrated global footprint representing
ITT has a concentrated global footprint representing
manufacturing, ofﬁce and sales, and global service
manufacturing, ofﬁce and sales, and global service
facilities, including the identiﬁed locations by segment.
facilities, including the identiﬁed locations by segment

CEO AND PRESIDENT
CEO AND PRESIDENT
Denise Ramos
Denise Ramos

WORLDWIDE EMPLOYEES
WORLDWIDE EMPLOYEES
10,000
10,000

FOUNDED
FOUNDED
1920
1920

NYSE SYMBOL: ITT
NYSE SYMBOL: ITT

153869 LABRADOR - INSIDE -- 1/4" HT -- CYAN MAGENTA YELLOW BLACK

outside back cover

outside front cover

1133 Westchester Avenue
White Plains, New York 10604
914.641.2000
www.itt.com

Annual Report 2017

153869 LABRADOR - OUTSIDE -- 1/4" HT -- CYAN MAGENTA YELLOW BLACK