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Document and Company Information - USD ($) shares in Millions, $ in Billions	12 Months Ended
	Dec. 31, 2009	Jun. 30, 2009	Jan. 29, 2009
Document and Company Information [Abstract]
Entity Registrant Name	ITT CORP
Entity Central Index Key	0000216228
Document Type	10-K
Document Period End Date	Dec. 31, 2009
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 8.1
Entity Common Stock, Shares Outstanding			182.9

Consolidated Income Statements - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Consolidated Income Statements
Product revenue	$ 8,243.5	$ 9,181.2	$ 7,057.5
Service revenue	2,661.0	2,513.6	1,945.8
Total revenue	10,904.5	11,694.8	9,003.3
Cost of product revenue	5,527.6	6,255.1	4,746.4
Cost of service revenue	2,316.2	2,184.3	1,688.6
Total costs of revenue	7,843.8	8,439.4	6,435.0
Gross profit	3,060.7	3,255.4	2,568.3
Selling, general and administrative expenses	1,576.4	1,709.2	1,328.9
Research and development expenses	258.1	244.3	182.3
Asbestos-related costs, net	237.5	14.3	13.8
Restructuring and asset impairment charges, net	79.3	77.5	66.1
Operating income	909.4	1,210.1	977.2
Interest expense	99.5	140.8	114.9
Interest income	24.3	31.3	49.6
Miscellaneous expense, net	9.0	13.1	13.4
Income from continuing operations before income tax expense	825.2	1,087.5	898.5
Income tax expense	174.5	312.3	265.5
Income from continuing operations	650.7	775.2	633.0
Discontinued operations:
(Loss) income from discontinued operations, including tax benefit of $5.1, $6.9 and $26.1, respectively	(7.0)	19.5	109.1
Net income	$ 643.7	$ 794.7	$ 742.1
Income from continuing operations:
Basic	$ 3.56	$ 4.26	$ 3.49
Diluted	3.54	4.21	3.43
Discontinued operations:
Basic	(0.03)	0.11	0.6
Diluted	(0.04)	0.11	0.59
Net income:
Basic	3.53	4.37	4.09
Diluted	3.5	4.32	4.02
Cash dividends declared per common share	$ 0.85	$ 0.7	$ 0.56
Average Common Shares - Basic	182.5	181.9	181.5
Average Common Shares - Diluted	183.9	184.0	184.5

Consolidated Balance Sheets - USD ($)
$ in Millions

Dec. 31, 2009

Dec. 31, 2008

Current assets:

Cash and cash equivalents

$ 1,215.6

$ 964.9

Receivables, net

1,796.7

1,961.1

Inventories, net

802.3

803.8

Deferred income taxes

234.1

203.4

Other current assets

207.1

131.0

Total current assets

4,255.8

4,064.2

Plant, property and equipment, net

1,051.0

993.9

Deferred income taxes

583.2

608.5

Goodwill

3,864.0

3,831.3

Other intangible assets, net

518.9

616.5

Asbestos-related assets

604.3

201.2

Other non-current assets

251.9

164.6

Total non-current assets

6,873.3

6,416.0

Total assets

11,129.1

10,480.2

Liabilities and Shareholders' Equity

Accounts payable

1,291.3

1,234.6

Accrued expenses

1,034.7

991.2

Accrued taxes

105.0

30.2

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

75.0

1,679.0

Postretirement benefits

73.2

68.8

Deferred income taxes

36.4

26.7

Total current liabilities

2,615.6

4,030.5

Postretirement benefits

1,788.5

2,141.6

Long-term debt

1,430.8

467.9

Asbestos-related liabilities

867.2

225.9

Other non-current liabilities

548.7

554.4

Total non-current liabilities

4,635.2

3,389.8

Total liabilities

7,250.8

7,420.3

Shareholders' Equity:

Common stock: Authorized - 500 shares, $1 par value per share, outstanding - 182.9 shares and 181.7 shares, respectively(1)

^[1]

181.6

180.6

Retained earnings

4,736.8

4,203.0

Accumulated other comprehensive (loss) income:

Postretirement benefits

(1,388.2)

(1,534.1)

Cumulative translation adjustments

336.0

209.8

Unrealized gain on investment securities

12.1

0.6

Total accumulated other comprehensive loss

(1,040.1)

(1,323.7)

Total shareholders' equity

3,878.3

3,059.9

Total liabilities and shareholders' equity

$ 11,129.1

$ 10,480.2

[1]	Shares outstanding include unvested restricted common stock of 1.3 and 1.1 at December 31, 2009 and 2008, respectively.

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Operating Activities
Net income	$ 643.7	$ 794.7	$ 742.1
Less: (Loss) income from discontinued operations	(7.0)	19.5	109.1
Income from continuing operations	650.7	775.2	633.0
Adjustments to income from continuing operations:
Depreciation and amortization	292.6	278.3	185.4
Stock-based compensation	31.3	30.8	34.6
Asbestos-related costs, net	237.5	14.3	13.8
Restructuring and asset impairment charges, net	79.3	77.5	66.1
Payments for restructuring	(81.9)	(54.1)	(51.5)
Contributions to pension plans	(161.0)	(24.1)	(83.1)
Change in receivables	187.2	(112.9)	(236.7)
Change in inventories	20.9	70.4	111.8
Change in accounts payable	29.9	(40.4)	153.0
Change in accrued expenses	3.0	101.7	(15.8)
Change in accrued and deferred taxes	(9.2)	19.7	(34.1)
Change in other assets	(21.2)	(6.0)	(9.1)
Change in other liabilities	(13.1)	(6.9)	19.6
Other, net	23.7	(3.9)	11.1
Net Cash - Operating activities	1,269.7	1,119.6	798.1
Investing Activities
Capital expenditures	(271.6)	(248.7)	(239.3)
Acquisitions, net of cash acquired	(34.3)	(275.7)	(2,009.2)
Proceeds from sale of assets and businesses	20.6	21.6	283.6
Other, net	0.2	(0.1)	6.8
Net Cash - Investing activities	(285.1)	(502.9)	(1,958.1)
Financing Activities
Short-term debt, net	(1,603.0)	(1,229.0)	2,311.9
Long-term debt repaid	(29.3)	(23.3)	(15.2)
Long-term debt issued	992.5	0.6	0.5
Repurchase of common stock		(75.0)	(299.0)
Proceeds from issuance of common stock	14.7	34.4	65.4
Dividends paid	(147.9)	(120.9)	(96.6)
Tax benefit from stock option exercises and restricted stock award lapses	3.0	6.7	15.0
Other, net	(1.9)	(0.9)	(0.9)
Net Cash - Financing activities	(771.9)	(1,407.4)	1,981.1
Exchange Rate Effects on Cash and Cash Equivalents	40.0	(73.4)	103.0
Net Cash - Discontinued Operations:
Operating Activities	(2.0)	(9.1)	(16.2)
Investing Activities		(1.9)	(4.0)
Financing Activities			(1.0)
Net change in cash and cash equivalents	250.7	(875.1)	902.9
Cash and cash equivalents - beginning of year	964.9	1,840.0	937.1
Cash and Cash Equivalents - End of Year	1,215.6	964.9	1,840.0
Cash paid during the year for:
Interest	89.6	135.5	96.0
Income taxes (net of refunds received)	$ 181.7	$ 281.6	$ 313.6

Consolidated Statements of Changes in Shareholders Equity - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Shares:
Beginning balance, shares	180.6	180.7	182.6
Stock incentive plans, shares	1.0	1.1	2.2
Repurchases, shares		(1.2)	(4.1)
Ending balance, shares	181.6	180.6	180.7
Dollars:
Beginning balance	$ 3,059.9	$ 3,944.8	$ 2,869.4
Stock incentive plans	1.0	1.1	2.2
Repurchases		(1.2)	(4.1)
Net income	643.7	794.7	742.1
Cash dividends declared on common stock	(155.1)	(127.3)	(101.7)
Net repurchase of common stock and other	45.2	6.8	(141.1)
Change in pension and other benefits plans, net of tax	145.9	(1,337.7)	300.9
Change in foreign currency translation	126.2	(221.2)	276.1
Change in unrealized (loss) gain on investment securities, net of tax	11.5	(0.1)	1.0
Ending balance	$ 3,878.3	$ 3,059.9	$ 3,944.8
Common Stock
Shares:
Beginning balance, shares	180.6	180.7	182.6
Stock incentive plans, shares	1.0	1.1	2.2
Repurchases, shares		(1.2)	(4.1)
Ending balance, shares	181.6	180.6	180.7
Dollars:
Beginning balance	$ 180.6	$ 180.7	$ 182.6
Stock incentive plans	1.0	1.1	2.2
Repurchases		(1.2)	(4.1)
Ending balance	181.6	180.6	180.7
Retained Earnings
Dollars:
Beginning balance	4,203.0	3,528.8	3,029.5
Net income	643.7	794.7	742.1
Cash dividends declared on common stock	(155.1)	(127.3)	(101.7)
Net repurchase of common stock and other	45.2	6.8	(141.1)
Ending balance	4,736.8	4,203.0	3,528.8
Accumulated Other Comprehensive (Loss) Income
Dollars:
Beginning balance	(1,323.7)	235.3	(342.7)
Change in pension and other benefits plans, net of tax	145.9	(1,337.7)	300.9
Change in foreign currency translation	126.2	(221.2)	276.1
Change in unrealized (loss) gain on investment securities, net of tax	11.5	(0.1)	1.0
Ending balance	$ (1,040.1)	$ (1,323.7)	$ 235.3

Summary of Significant Accounting Policies	12 Months Ended
Summary of Significant Accounting Policies	Dec. 31, 2009
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 1 Summary of Significant Accounting Policies *Consolidation Principles* ITT Corporation is a global multi-industry leader in high-technology engineering and manufacturing, operating through three principal business segments; Defense Electronics & Services (Defense segment), Fluid Technology (Fluid segment) and Motion & Flow Control (Motion & Flow segment). The Consolidated Financial Statements include the accounts of ITT Corporation and all majority-owned subsidiaries, and are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Unless the context otherwise indicates, references herein to “ITT,” “the Company,” and such words as “we,” “us,” and “our” include ITT Corporation and its subsidiaries. ITT consolidates companies in which it owns more than 50% of the voting shares or we are considered the primary beneficiary. 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. All intercompany transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation. *Use of Estimates* 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. Significant estimates and assumptions are used for, but not limited to, revenue recognition, pension benefits, income tax contingency accruals and valuation allowances, asbestos-related liabilities and insurance recoveries, asset impairment, and product liability and other litigation-related accruals. Actual results could differ from these estimates. *Revenue Recognition* ITT recognizes revenue as services are rendered and when title transfers for products, subject to any special terms and conditions of specific contracts. The Defense segment and certain businesses within the Fluid segment generally recognize revenue and anticipated profits under long-term fixed-price contracts based on the units of delivery, the completion of scheduled performance milestones, or percentage of costs incurred to total costs. Estimated contract profits are recorded into earnings in proportion to recorded revenue. During the performance of such contracts, estimated final contract prices and costs are periodically reviewed and revisions are made as required. The effect of these revisions to estimates is included in earnings in the period in which the revisions are made. Revenue under cost-reimbursement contracts are recorded as costs are incurred and include estimated earned fees or profits calculated on the basis of the relationship between costs incurred and total estimated costs. For time-and-material contracts, revenue is recognized to the extent of billable rates times hours incurred plus material and other reimbursable costs incurred. The fees under certain contracts may be increased or decreased in accordance with cost or performance incentive provisions which measure actual performance against established targets or other criteria. Such incentive fee awards or penalties are included in sales when there is sufficient information to reasonably assess anticipated contract performance. Anticipated losses on contracts are recorded when first identified by ITT. Revenue arising from the claims process is not recognized either as income or as an offset against a potential loss until it can be reliably estimated and realization is probable. Accruals for estimated expenses related to warranties are made at the time products are sold or services are rendered and are recorded as a component of cost of revenue. These accruals are established using historical information on the nature, frequency and average cost of warranty claims and estimates of future costs. *Research and Development* Significant costs are incurred each year in connection with research and development (R&D) programs that are expected to contribute to future earnings. R&D costs not specifically covered by contracts are charged to expense as incurred and totaled $258.1, $244.3 and $182.3 for 2009, 2008 and 2007, respectively. R&D costs incurred under contracts with customers are charged directly to the related contracts and are reported as a component of costs of revenue. *Cash and Cash Equivalents* ITT considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Included within cash and cash equivalents are marketable securities of $72.3 and $28.3 as of December 31, 2009 and 2008, respectively. *Inventories* Inventories are recorded at the lower of cost or market generally on a first-in, first-out (FIFO) basis or estimated net realizable value. A full absorption policy is employed using standard cost techniques that are periodically reviewed and adjusted when required. Potential losses from obsolete and slow-moving inventories are recorded when identified. Domestic inventories valued under the last-in, first-out (LIFO) method represent 6.4% and 7.6% of total 2009 and 2008 inventories, respectively. There would not have been a material difference in the value of inventories if the FIFO method had been used to value all inventories. Inventoried costs related to long-term contracts are stated at the actual production cost, including overhead and other related non-recurring costs incurred to date reduced by amounts identified with revenue recognized on units delivered or progress completed. General and administrative costs applicable to cost-reimbursement type contracts are also included in inventories. Inventoried costs relating to long-term contracts and programs are reduced by charging any amounts in excess of estimated realizable value to cost of sales. *Plant, Property and Equipment* Plant, property and equipment, including capitalized interest applicable to major project expenditures, are recorded at cost. For financial reporting purposes, depreciation is provided on a straight-line basis over the economic useful lives of the assets involved as follows: buildings and improvements – five to 40 years, machinery and equipment – two to 10 years, furniture and office equipment – three to seven years, and other – five to 40 years. Fully depreciated assets are retained in property and accumulated depreciation accounts until disposal. Plant, property and equipment are tested for impairment whenever events or changes in circumstances indicate the carrying value of an asset 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 acquired businesses. Intangible assets include customer relationships, proprietary technology, trademarks, patents and other intangible assets. Certain of our intangible assets have an indefinite life, namely brands and trademarks. Intangible assets with a finite life are amortized on a straight-line basis over an estimated economic useful life, which generally ranges from 15-20 years. Goodwill and indefinite-lived intangibles are not amortized, but instead are reviewed 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 quarter. The impairment test is a two-step test for goodwill. In the first step, the fair value of each reporting unit is compared to its carrying value. If the 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 exceed its fair value, then the second step of the impairment test is performed in order to measure the impairment loss to be recorded. 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. We estimate the fair value of our reporting units and purchased intangible assets with indefinite lives using an income approach. Under the income approach, we calculate fair value based on the present value of estimated future cash flows. *Foreign Currency Translation* Balance sheet accounts are translated at the exchange rate in effect at the end of each period; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains and losses on foreign currency translations are reflected in the cumulative translation adjustments component of shareholders’ equity. The national currencies of our foreign companies are generally the functional currencies. Net (losses)/gains from foreign currency transactions are reported currently in selling, general and administrative expenses (SG&A) and were ($1.2), $3.9 and $1.7 in 2009, 2008, and 2007, respectively. *Postretirement Plans* ITT sponsors numerous pension and other employee-related defined benefit plans (collectively, postretirement benefit plans) for employees around the world. The determination of projected benefit obligations and the recognition of expenses related to postretirement plans are dependent on various assumptions. The major assumptions primarily relate to discount rates, long-term expected rates of return on plan assets, rate of future compensation increases, mortality, termination, health care inflation trend 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. All assumptions are reviewed periodically with third-party actuarial consultants and adjusted as necessary. For the recognition of net periodic pension 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 five years. Actual results that differ from our assumptions are accumulated and amortized over the estimated future working life of the plan participants. The funded or unfunded position 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. The fair value of plan assets is determined based on market prices or estimated fair value at the measurement date. *Stock-Based Compensation* Stock-based awards issued to employees and non-employee directors include non-qualified stock options, restricted stock awards and certain liability-based awards. Compensation costs resulting from share-based payment transactions are recognized primarily within SG&A, at fair value over the requisite service period (typically three years). The calculated compensation cost is adjusted based on an estimate of awards ultimately expected to vest. The fair value of a non-qualified stock option is determined on the date of grant using a binomial lattice pricing model incorporating multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The fair value of restricted stock awards are determined using the closing price of the Company’s common stock on date of grant. The fair value of our liability-based awards, including cash awards under our Long-Term Incentive Plan, is reassessed at the end of each reporting period. Similarly the liability maintained at the end of each reporting period corresponds to the fair value of the liability-based awards ultimately expected to vest. *Income Taxes* We determine the provision for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. We record a valuation allowance to reduce deferred tax assets when uncertainty regarding their realizability exists. We recognize tax benefits from uncertain tax positions 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. 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. *Asbestos-Related Contingencies and Insurance Receivables* ITT is a defendant in product liability lawsuits alleging personal injury due to asbestos exposure. We recognize an undiscounted liability for any asbestos-related contingency that is probable of occurrence and reasonably estimable. We have accrued for the estimated value of current pending claims and unasserted claims to be filed over the next 10 years, including legal fees. Factors utilized in determining the liability for both pending and unasserted claims include: disease type, average settlement costs, percentage of claims settled or dismissed, and the number of new claims filed against the Company. In light of the uncertainties and variables inherent in the long-term projection of the Company’s total asbestos liability, 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 those costs at this time. As part of our ongoing review of asbestos claims, each quarter we will reassess the projected liability of unasserted asbestos claims to be filed over the next 10 years based upon the trends we are experiencing in those factors to which the liability is most sensitive, maintaining a rolling 10-year projection. Annually, in the third quarter each year, we will conduct a detailed study with the assistance of an outside consultant to review and update as appropriate the underlying assumptions used in our liability estimate. Additionally, we will periodically reassess the time horizon over which a reasonable estimate of unasserted claims can be projected. In connection with the recognition of liabilities for asbestos-related matters, we record asbestos-related insurance recoveries that are probable. In assessing the probability of insurance recovery, we make judgments concerning insurance coverage that we believe are reasonable and consistent with our historical experience with our insurers, our knowledge of any pertinent solvency issues surrounding insurers, various judicial determinations relevant to our insurance programs and our consideration of the impacts of any settlements with our insurers. *Commitments and Contingencies* We record accruals for commitments and loss contingencies for those which are both probable and the amount can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related fees can be reasonably estimated. 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 anticipated 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. These accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures. Accruals for environmental liabilities are primarily included in other liabilities at undiscounted amounts and exclude claims for recoveries from insurance companies or other third parties. Recoveries from insurance companies or other third parties are included in other assets when the recovery is probable. *Earnings Per Share* Basic earnings per common share considers the weighted average number of common shares outstanding, as well as outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends. 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. *Fair Value Measurements* We determine fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. We use a hierarchical structure to prioritize the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), then to quoted market prices for similar assets or liabilities in active markets (Level 2) and gives the lowest priority to unobservable inputs (Level 3). *Derivative Financial Instruments* The nature of our business activities necessarily involves the management of various financial and market risks, including those related to changes in currency exchange rates, interest rates and commodity prices. ITT uses derivative financial instruments to mitigate or eliminate some of those risks. We do not hold or issue derivative instruments for trading or speculative purposes. Our counterparty credit risk associated with these derivative contracts is generally limited to the net unrealized gain on those contracts with a positive fair market value, should any counterparty fail to perform as contracted. The counterparties to our derivative contracts consist of a number of major, international financial institutions. We record derivatives at their fair value as either a current asset or current liability. We include adjustments to reflect changes in fair values of derivatives in earnings. At December 31, 2009 and 2008, we had foreign currency forward contracts with notional amounts of $177.7 and $153.1, respectively, to hedge the value of recognized assets, liabilities and firm commitments. The fair values associated with the foreign currency contracts have been determined using the net position of the contracts and the applicable spot rates and forward rates as of the reporting date. The amount of gains and losses recorded related to our foreign currency exchange contracts and the net fair value of our outstanding contracts were not material as of and for the years ended 2009, 2008 and 2007. ITT, at times, uses interest rate swaps to manage its debt portfolio, the related financing costs and interest rate structure. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net payments are recognized as an adjustment to interest expense. When the swaps are terminated, unrealized gains or losses are deferred and amortized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt instrument. Such gains or losses are reflected in net interest expense. As of December 31, 2009 and 2008 we did not have any material open interest rate swap contracts.

New Accounting Pronouncements

12 Months Ended

Dec. 31, 2009

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

NOTE 2

New Accounting Pronouncements

On July 1, 2009, the GAAP hierarchy was codified under the Accounting Standards Codification (Codification or ASC). The Codification is now considered the single source of authoritative U.S. accounting and reporting standards, except for additional authoritative rules and interpretive releases issued by the Securities and Exchange Commission (SEC). The Codification was developed to provide a logical organization of GAAP pronouncements by topic.

Pronouncements Not Yet Adopted

In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2009-13, which amended the accounting requirements for multiple element arrangements under the Revenue Recognition Topic, ASC 605-25. The objective of this update is to address the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The amendments establish a hierarchy for determining the selling price of a deliverable and will allow for the separation of products and services in more instances than previously permitted. The guidance provided within ASU 2009-13 is effective for fiscal years beginning on or after June 15, 2010 and allows for either prospective or retrospective application, with early adoption permitted. We are currently evaluating the impact that adoption of this guidance will have on our Consolidated Financial Statements.

In October 2009, the FASB issued ASU 2009-14 which amended the accounting requirements for revenue recognition under the Software Topic, ASC 985-605. The objective of this update is to address the accounting for revenue arrangements that contain tangible products and software. Specifically, products that contain software that is “more than incidental” to the product as a whole will be removed from the scope of ASC subtopic 985-605. The amendments align the accounting for these revenue transaction types with the amendments under ASU 2009-13 mentioned above. The guidance provided within ASU 2009-14 is effective for fiscal years beginning on or after June 15, 2010 and allows for either prospective or retrospective application, with early adoption permitted. We are currently evaluating the impact that adoption of this guidance will have on our Consolidated Financial Statements.

Effective January 1, 2010, the Consolidation Topic, ASC 810-10 Variable Interest Entities, amends requirements pertaining to the consolidation of variable interest entities (VIE(s)). The amendments include replacing the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a VIE(s) with an approach focused on identifying which enterprise has the power to direct the activities of a VIE(s) that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. In addition, the amended guidance will require ongoing assessments of whether an enterprise is the primary beneficiary of a VIE(s) and requires additional disclosures about an enterprise’s involvement in VIE(s). This pronouncement was adopted on January 1, 2010 and will not have a material impact on our Consolidated Financial Statements based on our current involvement in variable interest entities.

Recently Adopted Accounting Pronouncements

In September 2009, the FASB issued ASU 2009-12 which provides guidance under the Fair Value Measurements and Disclosures Topic, ASC 820-10. The new guidance provides investors a practical expedient for measuring the fair value of investments in certain entities that calculate net asset value per share (NAV). This ASU is effective for periods ending after December 15, 2009. Adoption did not have a material effect on our Consolidated Financial Statements.

In August 2009, the FASB issued ASU 2009-05 which provides additional guidance on the application of fair value techniques for liabilities under the Fair Value Measurements and Disclosures Topic, ASC 820-10. The guidance clarifies that the quoted price for the liability when traded as an asset in an active market is a Level 1 measurement, when no adjustment to the quoted price is required. In the absence of a Level 1 (quoted price) measurement, an entity must use one or more valuation techniques to estimate fair value in a manner consistent with the principles in ASC 820. The requirements under this ASU were effective for our fourth quarter period beginning October 1, 2009. Adoption did not have a material effect on our Consolidated Financial Statements.

Effective January 1, 2009, the Earnings Per Share Topic, ASC 260, clarified that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders and therefore are considered participating securities for purposes of computing earnings per share. Entities that have participating securities that are not convertible into common stock are required to use the “two-class” method of computing earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Application of the clarifying guidance did not have a material effect on our financial statements. For comparability purposes, prior period earnings per share amounts have been adjusted to reflect the impact of adoption as follows:


	2008		2007
Earnings Per Share – As Previously Reported
Basic earnings per share from continuing operations	$	4.29	$	3.51
Basic earnings per share from net income	$	4.40	$	4.11
Average common shares outstanding – Basic		180.7		180.6
Diluted earnings per share from continuing operations	$	4.23	$	3.44
Diluted earnings per share from net income	$	4.33	$	4.03
Average common shares outstanding – Diluted		183.4		184.0
Earnings Per Share – As Adjusted
Basic earnings per share from continuing operations	$	4.26	$	3.49
Basic earnings per share from net income	$	4.37	$	4.09
Average common shares outstanding – Basic		181.9		181.5
Diluted earnings per share from continuing operations	$	4.21	$	3.43
Diluted earnings per share from net income	$	4.32	$	4.02
Average common shares outstanding – Diluted		184.0		184.5

Effective January 1, 2009, the Business Combinations Topic, ASC 805, provided amended guidance pertaining to the method of applying the acquisition method of accounting in a number of significant areas. These amendments included that acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. While the new business combination accounting guidance did not have a material impact on our Consolidated Financial Statements upon adoption, the effects on future periods will depend upon the nature and significance of future business combinations.

Effective January 1, 2009, the Consolidations Topic, ASC 810-10-45, Nature and Classification of the Noncontrolling Interest in the Consolidated Statement of Financial Position, requires the recognition of a noncontrolling interest (previously a minority interest) as a separate component of the equity section within the consolidated balance sheet. This guidance also requires the amount of consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented within the consolidated statement of income, as well as amends certain consolidation requirements to conform with ASC 805, Business Combinations. Adoption did not have a material effect on our Consolidated Financial Statements.

Restructuring and Asset Impairment Charges

12 Months Ended

Dec. 31, 2009

Restructuring and Asset Impairment Charges [Abstract]

Restructuring and Asset Impairment Charges

NOTE 4

Restructuring and Asset Impairment Charges

2009 Restructuring Activities

During 2009, we recorded a net restructuring charge of $79.3, reflecting costs of $70.7 related to new actions and $11.4 related to prior years’ plans, as well as the reversal of $2.8 of restructuring accruals that management determined would not be required. The charges associated with actions announced during 2009 primarily represent severance costs for reductions in headcount associated with the strategic relocation of certain production operations within our Fluid and Motion & Flow segments to lower cost regions, as well as other various planned reductions in headcount associated with our lean fulfillment initiative. Planned position eliminations total 1,092, including 528 factory workers, 530 office workers and 34 management employees. The costs recognized during 2009 related to prior years’ plans of $11.4 primarily reflect additional severance and lease cancellation related costs. The following table details the components of restructuring charges recorded during 2009.

2009 ACTIONS

PRIOR

OTHER

LEASE

PLANNED

YEARS’ PLANS

EMPLOYEE-

CANCELLATION &

ASSET

POSITION

ADDITIONAL

REVERSAL OF

COMPONENTS OF CHARGES

SEVERANCE

RELATED COSTS

OTHER COSTS

WRITE-OFFS

TOTAL

ELIMINATIONS

COSTS

ACCRUALS

Fluid

31.0

0.4

2.4

0.4

34.2

506

3.9

(1.3

)

Motion & Flow

31.3

0.5

1.5

0.7

34.0

496

3.3

(0.7

)

Defense

1.3

–

0.3

–

1.6

4.2

(0.6

)

Corporate and Other

0.6

0.2

0.1

–

0.9

–

(0.2

)

64.2

1.1

4.3

1.1

70.7

1,092

11.4

(2.8

)

2008 Restructuring Activities

During 2008, we recorded a net restructuring charge of $74.6, reflecting costs of $66.9 related to new actions and $9.3 related to prior years’ plans, as well as the reversal of $1.6 of restructuring accruals that management determined would not be required. The charges associated with actions announced during 2008 primarily represent a reduction of structural costs in all business segments and the planned closure of a facility in the Motion & Flow segment and a facility in the Defense segment. Planned position eliminations total 1,360, including 614 factory workers, 704 office workers and 42 management employees. The costs associated with the prior years’ plans primarily reflect severance and lease cancellation related costs. The following table details the components of restructuring charges recorded during 2008.


	2008 ACTIONS
													PRIOR
			OTHER		LEASE						PLANNED		YEARS’ PLANS
			EMPLOYEE-		CANCELLATION &		ASSET				POSITION		ADDITIONAL		REVERSAL OF
COMPONENTS OF CHARGES	SEVERANCE		RELATED COSTS		OTHER COSTS		WRITE-OFFS		TOTAL		ELIMINATIONS		COSTS		ACCRUALS
Fluid	$	30.7	$	0.4	$	0.9	$	0.1	$	32.1		600	$	3.2	$	(1.0	)
Motion & Flow		20.5		0.6		0.4		0.8		22.3		589		6.0		(0.4	)
Defense		9.6		0.7		0.6		–		10.9		157		0.1		(0.2	)
Corporate and Other		1.4		0.1		0.1		–		1.6		14		–		–

	$	62.2	$	1.8	$	2.0	$	0.9	$	66.9		1,360	$	9.3	$	(1.6	)

2008 Asset Impairment Charges

During 2008, we recognized $2.9 of charges related to the impairment of long-lived assets. During the fourth quarter of 2008, we recognized an asset impairment charge of $1.8 related to the write-down of software due to a decision to cancel a project as a result of an organizational realignment. During the third quarter of 2008, we recognized an impairment charge of $1.1 related to one of our Motion & Flow Control businesses, reflecting the reduction of our expected future earnings for this business.

2007 Restructuring Activities

During 2007, we recorded a net restructuring charge of $61.1, reflecting costs of $57.9 related to new actions and $7.4 related to prior year plans, as well as the reversal of $4.2 of restructuring accruals that management determined would not be required. The charges associated with actions announced during 2007 represent a reduction of structural costs in all business segments and the planned closure of four facilities in the Fluid segment, one facility in the Motion & Flow segment and two facilities in the Defense segment. Planned position eliminations total 729, including 341 factory workers, 345 office workers and 43 management employees. The costs associated with prior years’ plans primarily reflect additional costs related to an adjustment to the write-off of leased space as well as asset write-offs and severance costs. The following table details the components of restructuring charges recorded during 2007.


	2007 ACTIONS
													PRIOR
			OTHER		LEASE						PLANNED		YEARS’ PLANS
			EMPLOYEE-		CANCELLATION &		ASSET				POSITION		ADDITIONAL		REVERSAL OF
COMPONENTS OF CHARGES	SEVERANCE		RELATED COSTS		OTHER COSTS		WRITE-OFFS		TOTAL		ELIMINATIONS		COSTS		ACCRUALS
Fluid	$	32.7	$	0.5	$	1.4	$	2.1	$	36.7		410	$	3.5	$	(1.1	)
Motion & Flow		9.5		–		0.3		0.4		10.2		201		1.0		(0.5	)
Defense		6.2		–		1.5		–		7.7		115		2.9		(0.9	)
Corporate and Other		3.3		–		–		–		3.3		3		–		(1.7	)

	$	51.7	$	0.5	$	3.2	$	2.5	$	57.9		729	$	7.4	$	(4.2	)

2007 Asset Impairment Charges

During the fourth quarter of 2007, we recognized $5.0 of charges related to the impairment of long-lived assets. The impairment was the result of our determination that two businesses, one within the Motion & Flow segment and one within the Fluid segment, were experiencing lower than expected financial results, and as a result certain long-lived assets of those businesses may be impaired. After revising the earnings forecasts for those businesses to reflect current business conditions, asset impairment charges of $4.2 and $0.8 were recorded within the Motion & Flow and Fluid segments, respectively.

Rollforward of restructuring accrual


				MOTION						CORPORATE
	FLUID			& FLOW			DEFENSE			AND OTHER			TOTAL
Balance, January 1 2007	$	22.4		$	7.3		$	3.3		$	1.6		$	34.6
Additional charges for prior year plans		3.5			1.0			2.9			–			7.4
Cash payments and other related to prior charges		(17.9	)		(5.3	)		(2.0	)		(1.2	)		(26.4	)
Charges for 2007 actions		36.7			10.2			7.7			3.3			57.9
Reversal of prior charges		(1.1	)		(0.5	)		(0.9	)		(1.7	)		(4.2	)
Cash payments and other related to 2007 charges		(20.5	)		(3.2	)		(3.1	)		–			(26.8	)
Asset write-offs		(2.1	)		(0.4	)		–			–			(2.5	)

Balance December 31, 2007		21.0			9.1			7.9			2.0			40.0
Additional charges for prior year plans		3.2			6.0			0.1			–			9.3
Cash payments and other related to prior charges		(20.8	)		(10.4	)		(5.1	)		(1.5	)		(37.8	)
Charges for 2008 actions		32.1			22.3			10.9			1.6			66.9
Reversal of prior charges		(1.0	)		(0.4	)		(0.2	)		–			(1.6	)
Cash payments and other related to 2008 charges		(8.5	)		(5.5	)		(3.1	)		(0.4	)		(17.5	)
Asset write-offs		(0.1	)		(0.8	)		–			–			(0.9	)

Balance December 31, 2008		25.9			20.3			10.5			1.7			58.4
Additional charges for prior year plans		3.9			3.3			4.2			–			11.4
Cash payments and other related to prior charges		(25.8	)		(17.7	)		(8.7	)		(1.4	)		(53.6	)
Charges for 2009 actions		34.2			34.0			1.6			0.9			70.7
Reversal of prior charges		(1.3	)		(0.7	)		(0.6	)		(0.2	)		(2.8	)
Cash payments and other related to 2009 charges		(18.3	)		(7.7	)		(2.7	)		(0.5	)		(29.2	)
Asset write-offs		(0.4	)		(0.7	)		(0.5	)		–			(1.6	)

Balance December 31, 2009	$	18.2		$	30.8		$	3.8		$	0.5		$	53.3

The accrual balance as of December 31, 2009 of $53.3 includes $46.3 for severance and $7.0 for facility carrying costs and other.

We expect that the remaining planned headcount reductions as of the end of 2009 from our past restructuring activities will be substantially completed by mid-2010.

As of the end of 2009, there are no planned facility closures remaining associated with the actions taken during 2009 or prior.

The following is a reconciliation of employee position eliminations associated with restructuring activities through 2009:


Planned reductions as of December 31, 2006	270
Planned reductions from 2007 actions	729
Actual reductions, January 1 – December 31, 2007	(686	)

Planned reductions as of December 31, 2007	313
Planned reductions from 2008 actions	1,360
Actual reductions, January 1 – December 31, 2008	(1,163	)

Planned reductions as of December 31, 2008	510
Planned reductions from 2009 actions	1,092
Actual reductions, January 1 – December 31, 2009	(1,195	)

Planned reductions as of December 31, 2009	407

Income Taxes

12 Months Ended

Dec. 31, 2009

Income Taxes [Abstract]

Income Taxes

NOTE 6

Income Taxes

Income tax data from continuing operations is as follows:


YEAR ENDED DECEMBER 31	2009			2008			2007
Income components:
U.S.	$	447.1		$	662.6		$	454.9
Foreign		378.1			424.9			443.6

	$	825.2		$	1,087.5		$	898.5

Current provision:
U.S. federal	$	130.9		$	160.2		$	89.8
State and local		8.2			4.8			8.1
Foreign		108.6			130.6			133.5

	$	247.7		$	295.6		$	231.4

Deferred benefit:
U.S. federal	$	(41.6	)	$	23.0		$	21.8
State and local		(13.7	)		(0.4	)		4.1
Foreign		(17.9	)		(5.9	)		8.2

		(73.2	)		16.7			34.1

Total income tax expense	$	174.5		$	312.3		$	265.5

A reconciliation of the tax provision for continuing operations at the U.S. statutory rate to the effective income tax expense rate as reported is as follows:


YEAR ENDED DECEMBER 31	2009			2008			2007
Tax provision at U.S. statutory rate		35.0	%		35.0	%		35.0	%
International restructurings		(7.0	)		—			—
Foreign tax rate differential		(4.3	)		(2.2	)		(1.4	)
Effect of repatriation of foreign earnings		(0.4	)		(0.4	)		(0.7	)
State and local income tax		(1.3	)		0.4			1.4
Research credit		(0.8	)		(0.2	)		(0.3	)
Tax examinations		–			–			(4.9	)
Domestic manufacturing deduction		(1.3	)		(0.3	)		(1.0	)
Tax account validation adjustment		–			(3.8	)		–
Other		1.2			0.2			1.4

Effective income tax expense rate		21.1	%		28.7	%		29.5	%

Deferred income taxes are established for temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and for tax reporting purposes and for carryforwards.

Deferred tax assets and liabilities include the following:


DECEMBER 31	2009			2008
Deferred Tax Assets:
Employee benefits	$	736.0		$	936.5
Accruals		281.3			198.3
Loss carryforwards		199.7			293.0
Uniform capitalization		13.0			11.7
State credit carryforwards		11.5			7.8
Foreign tax credit		–			1.1
Other		14.1			–

Subtotal		1,255.6			1,448.4
Valuation allowance		(149.9	)		(265.4	)

Net deferred tax assets	$	1,105.7		$	1,183.0

Deferred Tax Liabilities:
Intangibles	$	324.2		$	322.4
Accelerated depreciation		46.7			6.3
Investment		15.7			108.5
Other		–			22.3

Total deferred tax liabilities	$	386.6		$	459.5

Deferred taxes in the Consolidated Balance Sheets consist of the following:


DECEMBER 31	2009			2008
Current assets	$	234.1		$	203.4
Non-current assets		583.2			608.5
Current liabilities		(36.4	)		(26.7	)
Other non-current liabilities		(61.8	)		(61.7	)

	$	719.1		$	723.5

No provision was made for U.S. taxes payable on accumulated undistributed foreign earnings of certain subsidiaries amounting to approximately $1,744.6 because these amounts are indefinitely reinvested. While the amount of federal income taxes, if such earnings are distributed in the future, cannot be determined, such taxes may be reduced by tax credits and other deductions. Taxes have not been provided for other basis differences since these differences are not expected to reverse in the foreseeable future.

We have the following attributes available for utilization:


ATTRIBUTE:	AMOUNT		FIRST YEAR OF EXPIRATION
U.S. net operating loss	$	22.9		December 31, 2020
State net operating losses	$	3,041.2		December 31, 2010
Federal and state capital loss	$	109.0		December 31, 2012
State tax credits	$	11.5		December 31, 2012
Foreign net operating loss	$	309.7		December 31, 2010

As of December 31, 2009, a valuation allowance of approximately $149.9 had been established to reduce the deferred income tax asset related to certain U.S. state and foreign net operating losses and US federal capital loss carryforwards. During 2009, the valuation allowance decreased by $115.5 resulting from the following: decrease of $9.8 attributable to foreign net operating loss carryforwards and foreign investments, decrease of $93.7 attributable to state net operating loss and credit carryforwards (see statement below for main components of this amount) and a decrease of $12.0 attributable to U.S. federal capital loss carryforwards that were utilized in 2009.

During 2009, the Company completed a study of its state tax attributes. As a result of the study, the Company determined that $21.6 of state deferred tax assets are unrecognized tax benefits, approximately $20.5 of state deferred tax assets are attributable to excess tax benefits on stock-based compensation that have not been realized, identified additional state net operating losses of $15.6 and refined the state tax attributable to minimum pension liability by $57.0 and has, accordingly, changed its valuation allowance. In addition, the Company, as a result of expected future income, has determined that it is more likely than not that a portion of its state deferred tax assets, in the amount of $13.7, will be realized and a valuation allowance is not necessary.

Shareholders’ equity at December 31, 2009 and 2008 reflects excess tax benefits related to stock-based compensation in 2009 and 2008 of approximately $3.0 and $8.6, respectively.

Uncertain Tax Positions

We recognize tax benefits from uncertain tax positions 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. 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 as of December 31, 2009 and 2008 is as follows:


	2009			2008			2007
Balance at January 1	$	144.9		$	103.3		$	88.8
Additions based on tax positions related to the current year		5.3			6.6			11.2
Additions for tax positions of prior years		28.0			66.2			45.3
Reductions for tax positions of prior years		(6.0	)		(13.5	)		(39.6	)
Settlements		(1.3	)		(15.3	)		(12.1	)
Additions based on tax positions related to purchase accounting		–			2.4			9.7
Reductions based on tax positions related to purchase accounting		–			(2.2	)		–
Lapse of statute of limitations		–			(2.6	)		–

Balance at December 31	$	170.9		$	144.9		$	103.3

Subsequent recognition, if any, of a previously unrecognized tax position will be reflected in tax expense attributable to continuing or discontinued operations. As of December 31, 2009, the recognition of the uncertain tax positions that would affect the effective tax rate is $81.3. Included in the balance at December 31, 2009 are tax positions of $81.4, which, because of deferred tax accounting would not impact the annual effective rate, but could accelerate the payment of cash to the taxing authority. In addition, tax positions of $8.2 attributable to discontinued operations would not impact the annual effective tax rate.

We do not believe that the unrecognized tax benefits will significantly change within twelve months of the reporting date.

In many cases, uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The following table summarizes these open tax years by major jurisdiction:


JURISDICTION	EARLIEST OPEN YEAR
Austria		2004
Canada		2004
Germany		2000
Italy		2004
Netherlands		2005
Sweden		2004
United Kingdom		2003
United States		2004

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 Income Statement. During 2009 and 2008, we recognized net interest income of $2.9 primarily due to an interest settlement claim with the IRS and $9.7 of interest expense, respectively. We had $23.2 and $28.1 for the payment of interest accrued as of December 31, 2009 and 2008, respectively.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2009

Employee Benefit Plans [Abstract]

Employee Benefit Plans

NOTE 16

Employee Benefit Plans

Defined Contribution Plans

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. Matching contributions charged to income amounted to $53.3, $55.0 and $36.6 for 2009, 2008 and 2007, respectively.

The ITT Stock Fund, an investment option under the ITT Salaried Investment and Savings Plan, is considered an Employee Stock Ownership Plan and, as a result, participants in the ITT Stock Fund may receive dividends in cash or may reinvest such dividends into the ITT Stock Fund. The ITT Stock Fund held approximately 9.2 shares of ITT common stock at December 31, 2009.

Defined Benefit Plans

Pension Plans

ITT sponsors numerous defined benefit pension plans around the world, the most significant of which is the U.S. Salaried Retirement Plan. We fund employee pension benefits, except in some countries outside the U.S., where funding is not required. In addition to sponsored pension plans, certain employees participate in multi-employer pension plans sponsored by local or national unions. Our contribution to such plans amounted to $0.8, $0.6 and $0.8 for 2009, 2008 and 2007, respectively.

Postretirement Health and Life Insurance Plans

ITT provides health care and life insurance benefits for certain eligible employees upon retirement. We have pre-funded a portion of the health care and life insurance obligations, where such pre-funding can be accomplished on a tax-effective basis.

Balance Sheet and Income Statement Items

Changes in projected benefit obligations, plan assets, and funded status of the pension and other employee-related benefit plans (collectively, postretirement benefit plans) for the years ended 2009 and 2008 were as follows:


	PENSION						OTHER BENEFITS
	2009			2008			2009			2008
Change in benefit obligation
Benefit obligation at beginning of year	$	5,323.0		$	5,380.7		$	702.7		$	740.9
Service cost		98.7			98.9			6.9			7.6
Interest cost		329.3			324.7			42.0			41.9
Amendments made during the year/other		2.5			3.5			(11.7	)		(2.4	)
Actuarial loss (gain)		286.9			(9.9	)		6.8			(36.6	)
Benefits paid		(383.1	)		(359.8	)		(46.0	)		(48.7	)
Effect of currency translation		42.4			(115.1	)		–			–

Benefit obligation at end of year	$	5,699.7		$	5,323.0		$	700.7		$	702.7

Change in plan assets
Fair value of plan assets at beginning of year	$	3,611.6		$	5,653.5		$	205.4		$	310.6
Actual return on plan assets		823.5			(1,654.8	)		47.4			(98.6	)
Employer contributions		161.0			24.1			–			–
Employee contributions		2.0			3.4			–			–
Benefits paid		(319.5	)		(333.6	)		(5.6	)		(6.6	)
Effect of currency translation		29.2			(81.0	)		–			–

Fair value of plan assets at end of year	$	4,307.8		$	3,611.6		$	247.2		$	205.4

Funded status at end of year	$	(1,391.9	)	$	(1,711.4	)	$	(453.5	)	$	(497.3	)

Amounts recognized in the Consolidated Balance Sheets as of December 31, 2009 and 2008 consist of:


	PENSION						OTHER BENEFITS
	2009			2008			2009			2008
Other non-current assets	$	16.3		$	1.7		$	–		$	–
Current liabilities		(24.1	)		(23.2	)		(49.1	)		(45.6	)
Non-current liabilities		(1,384.1	)		(1,689.9	)		(404.4	)		(451.7	)

	$	(1,391.9	)	$	(1,711.4	)	$	(453.5	)	$	(497.3	)

Amounts recognized in accumulated other comprehensive loss at December 31, 2009 and 2008 consist of:


	PENSION				OTHER BENEFITS
	2009		2008		2009			2008
Net loss	$	2,033.9	$	2,219.5	$	161.6		$	200.0
Prior service cost		28.8		25.6		(7.5	)		6.4

	$	2,062.7	$	2,245.1	$	154.1		$	206.4

The estimated net loss and prior service cost that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is as follows:


	PENSION		OTHER BENEFITS
Net loss	$	80.9	$	11.2
Prior service cost		4.2		(1.8	)

The accumulated benefit obligation for all defined benefit pension plans was $5,377.7 and $5,075.4 at December 31, 2009 and 2008, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets:


DECEMBER 31	2009		2008
Projected benefit obligation	$	5,465.1	$	5,139.9
Accumulated benefit obligation		5,171.2		4,898.2
Fair value of plan assets		4,057.6		3,426.3

Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) for the years 2009, 2008 and 2007, were as follows:


	PENSION									OTHER BENEFITS
	2009			2008			2007			2009			2008			2007
Net periodic benefit cost
Service cost	$	98.7		$	98.9		$	97.8		$	6.9		$	7.6		$	7.6
Interest cost		329.3			324.7			297.4			42.0			41.9			41.9
Expected return on plan assets		(432.9	)		(445.2	)		(399.5	)		(18.1	)		(27.5	)		(25.1	)
Amortization of net actuarial loss		48.0			17.6			63.3			15.1			3.8			2.4
Amortization of prior service cost		4.1			3.7			2.7			3.5			2.8			5.3

Net periodic benefit cost (income)		47.2			(0.3	)		61.7			49.4			28.6			32.1

Effect of curtailment		2.5			–			–			(0.6	)		–			–

Total net periodic benefit cost (income)		49.7			(0.3	)		61.7			48.8			28.6			32.1

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss)
Net (gain) loss		(137.6	)		2,059.5			(365.9	)		(23.3	)		89.7			(4.8	)
Prior service cost (benefit)		7.3			–			13.2			(10.4	)		(2.5	)		4.0
Amortization of net actuarial loss		(48.0	)		(17.6	)		(63.3	)		(15.1	)		(3.8	)		(2.4	)
Amortization of prior service cost		(4.1	)		(3.7	)		(2.7	)		(3.5	)		(2.8	)		(5.3	)

Total (income) loss recognized in other comprehensive income (loss)		(182.4	)		2,038.2			(418.7	)		(52.3	)		80.6			(8.5	)

Total change recognized in net periodic benefit cost and other comprehensive income (loss)	$	(132.7	)	$	2,037.9		$	(357.0	)	$	(3.5	)	$	109.2		$	23.6

Assumptions

Weighted-average assumptions used to determine benefit obligations at December 31:


	PENSION						OTHER BENEFITS
	2009			2008			2009			2008
Discount rate		5.98	%		6.24	%		6.00	%		6.25	%
Rate of future compensation increase		3.99	%		3.97	%		4.00	%		4.00	%

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:


	PENSION									OTHER BENEFITS
	2009			2008			2007			2009			2008			2007
Discount rate		6.24	%		6.19	%		5.87	%		6.25	%		6.00	%		6.00	%
Expected return on plan assets		8.87	%		8.87	%		8.87	%		9.00	%		9.00	%		9.00	%
Rate of future compensation increase		3.97	%		4.45	%		4.48	%		4.00	%		4.50	%		4.50	%

Management develops each assumption using relevant company experience in conjunction with market-related data for each individual country in which such plans exist. Assumptions are reviewed annually and adjusted as necessary.

The 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. Specifically, we analyze the plan’s actual historical annual return on assets, net of fees, over the past 10, 15, 20 and 25 years; make estimates of future returns using a Capital Asset Pricing Model; and evaluate historical broad market returns over the past 75 years based on our asset allocation range. Based on this approach, our estimate of the long-term annual rate of return on assets for domestic pension plans is 9.0%. For reference, our actual geometric average annual return on plan assets for domestic pension plans as of December 31, 2009 were 4.4%, 9.3%, 9.3% and 10.8%, for the past 10, 15, 20, and 25 year periods, respectively.

The chart below shows actual versus the expected long-term returns for our domestic pension plans that are utilized in the calculation of the net periodic benefit cost.


	2009			2008			2007
Expected rate of return on plan assets		9.0	%		9.0	%		9.0	%
Actual rate of return on plan assets		24.1	%		(31.2	)%		12.7	%

The assumed rate of future increases in the per capita cost of health care (the health care trend rate) is 7.0% for 2010, decreasing ratably to 5.0% in 2016. Increasing the health care trend rates by one percent per year would have the effect of increasing the benefit obligation by $38.0 and the aggregate annual service and interest cost components by $3.0. A decrease of one percent in the health care trend rate would reduce the benefit obligation by $32.4 and the aggregate annual service and interest cost components by $2.5. To the extent that actual experience differs from these assumptions, the effect will be amortized over the average future service of the covered active employees.

The determination of the assumptions shown in the table above and the discussion of health care trend rates are based on the provisions of the applicable accounting pronouncements, the review of various market data and discussion with our actuaries. Changes in these assumptions could materially affect the financial position and results of operations.

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.

Substantially all of the postretirement benefit plan assets are attributable to its U.S. salaried and hourly pension plans, which are managed on a commingled basis in a master investment trust. With respect to these U.S. plans, the Company allows itself broad discretion to invest tactically to respond to changing market conditions, while staying reasonably within the 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 Company engages a large number of managers to gain broad exposure to the markets, while generating excess-of-market returns and mitigating manager-concentration risk.

The asset allocations of these U.S. plans, as of December 31, 2009 and 2008, and the related asset allocation ranges were as follows:


	ACTUAL						ASSET
	ALLOCATION						ALLOCATION
ASSET CATEGORY	2009			2008			Range
Domestic equities		25	%		24	%		25%-75%
Alternative investments		47			53			20%-45%
International equities		17			14			10%-45%
Fixed income		4			3			0%-60%
Cash and other		7			6			0%-30%

		100	%		100	%

The strategies and allocations of plan assets outside of the U.S. are managed locally and may differ significantly from those in the U.S. In general and as of December 31, 2009, non-U.S. plans are managed closely to their strategic allocations.

Fair Value of Plan Assets

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:


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

	n	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.

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

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

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


	n	Equity securities – Equities (including common and preferred shares, domestic listed and foreign listed, closed end mutual funds and exchange traded funds) are generally valued at the closing price reported on the major market on which the individual securities are traded at the measurement date. As all equity securities held by the Company are publicly traded in active markets, the securities are classified within Level 1 of the fair value hierarchy.

	n	Open ended mutual funds, collective trusts and commingled funds – Open ended mutual funds, collective trusts and commingled funds are measured at net asset value (NAV). These funds are generally classified within Level 2 of the fair value hierarchy.

	n	Private equity – The valuation of limited partnership interests in private equity funds may require significant management judgment. The NAV reported by the asset manager is adjusted when management determines that NAV is not representative of fair value. In making such an assessment, a variety of factors are reviewed by management, including, but not limited to, the timeliness of NAV as reported by the asset manager and changes in general economic and market conditions subsequent to the last NAV reported by the asset manager. These funds are generally classified within Level 3 of the fair value hierarchy.

	n	Absolute return (hedge funds) – The valuation of limited partnership interests in hedge funds may require significant management judgment. The NAV reported by the asset manager is adjusted when management determines that NAV is not representative of fair value. In making such an assessment, a variety of factors are reviewed by management, including, but not limited to, the timeliness of NAV as reported by the asset manager and changes in general economic and market conditions subsequent to the last NAV reported by the asset manager. Depending on how quickly ITT can redeem these investments and the extent of any adjustments to NAV, hedge funds are classified within either Level 2 (redeemable within 90 days) or Level 3 (redeemable beyond 90 days) of the fair value hierarchy.

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

The fair value of plan assets held by our postretirement benefit plans, at December 31, 2009, by asset class were as follows:


	PENSION									OTHER BENEFITS
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2009	Total		Level 1		Level 2			Level 3		Total		Level 1		Level 2			Level 3
Asset Category
Equities Securities:
Domestic	$	956.8	$	737.0	$	141.8		$	78.0	$	74.7	$	63.4	$	7.3		$	4.0
Developed markets		455.5		339.3		23.0			93.2		15.2		10.1		0.3			4.8
Emerging markets		396.6		157.4		210.8			28.4		19.9		7.7		10.8			1.4
ITT Stock		49.3		49.3		–			–		2.5		2.5		–			–

Subtotal – equity securities		1,858.2		1,283.0		375.6			199.6		112.3		83.7		18.4			10.2
Private equity:
Buyout funds^(a)		884.2		–		1.4			882.8		44.3		–		0.1			44.2
Distressed funds^(b)		180.6		–		–			180.6		8.9		–		–			8.9
Venture/growth equity funds^(c)		33.2		–		–			33.2		1.7		–		–			1.7
Mezzanine funds^(d)		28.2		–		–			28.2		1.4		–		–			1.4

Subtotal – private equity		1,126.2		–		1.4			1,124.8		56.3		–		0.1			56.2
Absolute return (hedge funds):
Fund of funds^(e)		318.8		–		57.0			261.8		14.8		–		1.4			13.4
Fixed income/multi-strat^(f)		319.7		–		146.5			173.2		16.4		–		7.5			8.9
Equity long/short^(g)		119.9		–		79.6			40.3		6.1		–		4.1			2.0
Macro^(h)		37.8		–		37.8			–		1.9		–		1.9			–

Subtotal – absolute return		796.2		–		320.9			475.3		39.2		–		14.9			24.3
Fixed Income:
Fixed income		231.0		13.0		218.0			–		23.4		0.7		14.5			8.2
Other:
Commodities		179.2		–		153.0			26.2		9.1		–		7.8			1.3
Cash and other, net		117.0		109.2		(6.1	)		13.9		6.9		6.6		(0.5	)		0.8

Subtotal – other		296.2		109.2		146.9			40.1		16.0		6.6		7.3			2.1

Total	$	4,307.8	$	1,405.2	$	1,062.8		$	1,839.8	$	247.2	$	91.0	$	55.2		$	101.0


(a)		Private equity buyout funds, included within postretirement benefit plan assets, are partnership investment vehicles that take a controlling interest primarily in private companies with the intent of developing them for future sale at a higher price to a strategic or financial buyer or through an initial public offering. These investments include $482.4 where ownership of the partnership interest is directly held and $362.2 invested through funds of private equity funds.

(b)		Private equity distressed funds are partnership investment vehicles that purchase debt or preferred equity instruments of companies that are distressed, near bankrupt or bankrupt.

(c)		Venture and growth equity private equity funds are partnership investment vehicles that provide seed or growth capital to start-ups and early stage companies, usually in high growth industries, such as information and clean technology, health care and biotechnology.

(d)		Mezzanine private equity funds provide mezzanine loans to companies that need capital but do not want to sell or dilute their equity interests. Mezzanine loans are subordinated debt or preferred equity securities that represent a claim on the borrower’s assets which is senior to the common equity but subordinate to senior secured and unsecured debt.

(e)		Absolute return fund of funds include partnership investment vehicles that invest in a diversified portfolio of other hedge funds that employ a range of investment strategies.

(f)		Fixed income/multi-strat absolute return funds are partnership investment vehicles that invest in multiple investment strategies, such as macro, equity long/short, convertible arbitrage and event driven, often with the intent to diversify risk and reduce volatility.

(g)		Equity long/short absolute return funds include partnership investment vehicles that can purchase both long and short positions of publicly traded equities. Management of the fund has the ability to shift investments from value to growth strategies, from small to large capitalization companies, and from a net long position to a net short position.

(h)		Macro absolute return funds include partnership investment vehicles that make investments predicated on the managers views, either fundamentally or quantitatively derived, on different global factors, such as asset allocation (e.g., stocks vs. bonds) interest rates, currency, sovereign risk and commodities over a span of different time frames.

The following table presents a reconciliation of the beginning and ending balances of fair value measurement within our pension plans using significant unobservable inputs (Level 3):


	EQUITY			PRIVATE		HEDGE			FIXED
	SECURITIES			EQUITY		FUNDS			INCOME			OTHER			TOTAL
Beginning balance at December 31, 2008	$	274.2		$	987.6	$	783.5		$	39.7		$	125.5		$	2,210.5
Relating to assets sold during the period (realized gains and (losses))		(0.2	)		25.7		2.7			–			1.0			29.2
Relating to assets still held at the reporting date (unrealized gains and (losses))		70.2			19.6		83.6			–			2.3			175.7
Purchases, sales, and settlements, net		5.1			89.2		(185.9	)		–			7.9			(83.7	)
Transfers in and/or out of Level 3		(149.7	)		–		(208.6	)		(39.7	)		(96.6	)		(494.6	)
Foreign currency impact		–			2.7		–			–			–			2.7

Ending balance at December 31, 2009	$	199.6		$	1,124.8	$	475.3		$	–		$	40.1		$	1,839.8

The following table presents a reconciliation of the beginning and ending balances of fair value measurement within our other postretirement welfare plans using significant unobservable inputs (Level 3):


	EQUITY			PRIVATE		HEDGE			FIXED
	SECURITIES			EQUITY		FUNDS			INCOME			OTHER			TOTAL
Beginning balance at December 31, 2008	$	14.0		$	49.8	$	40.1		$	9.6		$	6.4		$	119.9
Relating to assets sold during the period (realized gains and (losses))		–			1.3		0.1			1.0			0.1			2.5
Relating to assets still held at the reporting date (unrealized gains and (losses))		3.6			0.8		4.3			(0.1	)		0.1			8.7
Purchases, sales, and settlements, net		0.3			4.3		(9.5	)		(0.3	)		0.4			(4.8	)
Transfers in and/or out of Level 3		(7.7	)		–		(10.7	)		(2.0	)		(4.9	)		(25.3	)

Ending balance at December 31, 2009	$	10.2		$	56.2	$	24.3		$	8.2		$	2.1		$	101.0

Contributions

Funding requirements under Internal Revenue Service rules are a major consideration in making contributions to our post-retirement plans. With respect to qualified pension plans, we intend to contribute annually not less than the minimum required by applicable law and regulations. We made contributions of $161.0 to pension plans during 2009, including a voluntary contribution to the U.S. Salaried Retirement Plan of $100.0 during the fourth quarter. We currently anticipate making contributions to our pension plans in the range of $10.0 to $15.0 during 2010, of which $3.0 is expected to be made in the first quarter.

Estimated Future Benefit Payments

The following benefit payments covering pension and other benefit plans have been projected based on benefits earned to date and the expectation that certain future service will be earned by currently active employees:


			OTHER
	PENSION		BENEFITS
2010	$	364.8	$	54.7
2011		369.7		55.4
2012		374.9		55.9
2013		382.9		56.6
2014		391.9		57.4
2015 – 2019		2,090.8		291.0

Long-Term Incentive Employee Compensation

12 Months Ended

Dec. 31, 2009

Long-Term Incentive Employee Compensation [Abstract]

Long-Term Incentive Employee Compensation

NOTE 17

Long-Term Incentive Employee Compensation

Our long-term incentive awards program is comprised of three components: non-qualified stock options (NQOs), restricted stock awards and units (RSAs and RSUs, respectively), and a target cash award (TSR). We account for NQOs and RSAs as equity-based compensation awards. RSU and TSR awards are cash settled and accounted for as liability-based compensation.

The NQO and RSA incentive plans provide for the awarding of options on common shares and restricted common shares to employees and non-employee directors. The ITT Amended and Restated 2003 Equity Incentive Plan (2003 Equity Incentive Plan) was approved by shareholders and established in May of 2003. The number of shares initially available for awards under this plan was 12.2. As of December 31, 2009, 3.6 shares were available for future grants. ITT makes available for the exercise of stock options or vesting of restricted shares by purchasing shares in the open market or by issuing shares from Treasury.

The 2003 Equity Incentive Plan replaced the 2002 ITT Stock Option Plan for Non-Employee Directors, the ITT 1996 Restricted Stock Plan for Non-Employee Directors and the 1994 ITT Incentive Stock Plan on a prospective basis. All outstanding awards granted under these prior plans are vested and exercisable. No future grants will be made under these prior plans.

Long-term incentive employee compensation costs are primarily recorded within SG&A expenses, and are reduced by an estimated forfeiture rate. These costs impacted our consolidated results of operations as follows:


YEAR ENDED DECEMBER 31	2009		2008		2007
Compensation costs on equity-based awards	$	29.4	$	31.5	$	35.5
Compensation costs on liability-based awards		4.1		23.7		22.4

Total compensation costs, pre-tax	$	33.5	$	55.2	$	57.9

Future tax benefit	$	10.4	$	18.2	$	19.0

At December 31, 2009, there was $38.1 of total unrecognized compensation cost related to non-vested awards granted under the stock option and restricted stock plans. This cost is expected to be recognized ratably over a weighted-average period of 1.7 years. RSU compensation costs and the related number of units granted, settled and outstanding for each of the periods presented are not considered material.

Non-Qualified Stock Options

Options generally vest over or at the conclusion of a three year period and are exercisable in seven or ten-year periods, except in certain instances of death, retirement or disability. 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 stock option and restricted stock shares as of December 31, 2009, 2008 and 2007 and changes during the years then ended is presented below.


	2009					2008					2007
				WEIGHTED-					WEIGHTED-					WEIGHTED-
				AVERAGE					AVERAGE					AVERAGE
				EXERCISE					EXERCISE					EXERCISE
STOCK OPTIONS	SHARES			PRICE		SHARES			PRICE		SHARES			PRICE
Outstanding at beginning of year		8.1		$	39.83		8.7		$	38.13		10.6		$	35.50
Granted		0.9			33.59		0.6			53.57		0.5			58.52
Exercised		(0.8	)		26.32		(1.0	)		32.82		(2.2	)		29.92
Canceled or expired		(0.1	)		45.94		(0.2	)		44.31		(0.2	)		42.14

Outstanding at end of year		8.1		$	40.29		8.1		$	39.83		8.7		$	38.13

Options exercisable at end of year		6.4		$	39.49		6.8		$	37.02		6.4		$	33.83

The 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 2009, 2008 and 2007 was $17.5, $29.5 and $70.7, respectively.

The amount of cash received from the exercise of stock options was $20.2 and $34.4 for 2009 and 2008, respectively. The tax benefit realized during 2009 and 2008 associated with stock option exercises and lapses of restricted stock was $10.7 and $12.1, respectively. We classify, as a financing activity, the cash flows attributable to excess tax benefits arising from stock option exercises and restricted stock lapses. Cash provided by operating activities decreased and cash provided by financing activities increased by $3.0, $6.7 and $15.0 for 2009, 2008 and 2007, respectively. The following table summarizes information about ITT’s stock options at December 31, 2009:


		OPTIONS OUTSTANDING									OPTIONS EXERCISABLE
				WEIGHTED-									WEIGHTED-
				AVERAGE		WEIGHTED-							AVERAGE		WEIGHTED-
				REMAINING		AVERAGE		AGGREGATE					REMAINING		AVERAGE		AGGREGATE
				CONTRACTUAL		EXERCISE		INTRINSIC					CONTRACTUAL		EXERCISE		INTRINSIC
RANGE OF EXERCISE PRICES		NUMBER		LIFE (IN YEARS)		PRICE		VALUE			NUMBER		LIFE (IN YEARS)		PRICE		VALUE
$	10-$20		0.4		0.9	$	18.26	$	11.4			0.4		0.9	$	18.26	$	11.4
$	20-$30		0.5		2.1		25.36		13.4			0.5		2.1		25.36		13.4
$	30-$40		3.1		3.4		34.34		48.2			2.3		3.8		34.75		34.2
$	40-$50		2.5		2.8		45.08		11.5			2.3		2.7		45.20		10.7
$	50-$60		1.5		4.1		54.46		(7.2	)		0.9		3.6		54.01		(3.8	)
$	60-$70		0.1		5.0		66.79		(0.8	)		–		–		–		–

			8.1		3.2		40.29	$	76.5			6.4		3.1		39.49	$	65.9

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on ITT’s closing stock price of $49.74 as of December 31, 2009, which would have been received by the option holders had all option holders exercised their options as of that date. The number of options “out-of-the-money” as of December 31, 2009, included as exercisable in the preceding table was 0.9 million.

As of December 31, 2009, the total number of stock options expected to vest (including those that have already vested) was 7.9 million. These stock options have a weighted-average exercise price of $40.09, an aggregate intrinsic value of $80.1, and a weighted-average remaining contractual life of 3.5 years.

The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model, as this is considered the preferred method, incorporating multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for 2009, 2008 and 2007:


	2009			2008			2007
Dividend yield		2.54	%		1.31	%		0.96	%
Expected volatility		38.77	%		28.69	%		23.09	%
Expected life (in years)		4.7			4.7			4.8
Risk-free rates		2.20	%		2.31	%		4.39	%
Weighted-average grant date fair value	$	9.60		$	13.46		$	14.68

Expected volatilities are based on ITT’s stock price history, including implied volatilities from traded options on our stock. ITT uses historical data to estimate option exercise and employee termination behavior within the valuation model. Employee groups and option characteristics are considered separately for valuation purposes. The expected life 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 certain 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 Awards

RSAs typically vest three years from the date of grant. ITT makes shares available for the vesting of restricted shares by purchasing shares in the open market or by issuing shares from Treasury. Holders of RSAs have the right to receive dividends and vote on the shares. If an employee leaves the Company prior to vesting, whether through resignation or termination for cause, the restricted stock is forfeited. If an employee retires or is terminated other than for cause, a pro rata portion of the RSA may vest.

Restricted shares and restricted stock unit awards were granted during December 31, 2009, 2008, and 2007 with fair market values based on ITT’s stock price on the date of grant.

YEAR ENDED DECEMBER 31, 2009

UNVESTED

OUTSTANDING

WEIGHTED-

AVERAGE

GRANT DATE

RESTRICTED SHARES/STOCK UNITS

AWARDS

FAIR VALUE

AWARDS

FAIR VALUE

Unvested/outstanding at beginning of year

1.2

53.75

1.5

51.96

Granted

0.7

33.88

0.7

33.88

Vested/lapsed

(0.4

)

53.07

(0.4

)

52.83

Canceled or expired

(0.1

)

54.94

(0.1

)

54.94

Unvested/outstanding at end of year

1.4

44.69

1.7

44.36


	YEAR ENDED DECEMBER 31, 2008
	UNVESTED					OUTSTANDING
				WEIGHTED-					WEIGHTED-
				AVERAGE					AVERAGE
				GRANT DATE					GRANT DATE
RESTRICTED SHARES/STOCK UNITS	AWARDS			FAIR VALUE		AWARDS			FAIR VALUE
Unvested/outstanding at beginning of year		1.1		$	52.64		1.3		$	50.93
Granted		0.4			53.57		0.4			53.57
Vested/lapsed		(0.2	)		47.65		(0.1	)		45.76
Canceled or expired		(0.1	)		55.89		(0.1	)		55.89

Unvested/outstanding at end of year		1.2		$	53.75		1.5		$	51.96


	YEAR ENDED DECEMBER 31, 2007
	UNVESTED					OUTSTANDING
				WEIGHTED-					WEIGHTED-
				AVERAGE					AVERAGE
				GRANT DATE					GRANT DATE
RESTRICTED SHARES/STOCK UNITS	AWARDS			FAIR VALUE		AWARDS			FAIR VALUE
Unvested/outstanding at beginning of year		0.9		$	48.45		1.0		$	46.87
Granted		0.4			59.16		0.4			59.16
Vested/lapsed		(0.2	)		45.89		(0.1	)		44.08

Unvested/outstanding at end of year		1.1		$	52.64		1.3		$	50.93

The outstanding restricted shares include 0.1 shares issued to non-employee directors in payment for part of their annual retainer. This cost is expected to be recognized ratably over a weighted average period of 1.0 years.

Total Shareholder Return Awards

The TSR award plan is a performance-based cash award incentive program provided to key employees of ITT. TSR awards are accounted for under stock-compensation principles of accounting as liability-based awards. The fair value of outstanding awards is determined at the conclusion of the three-year performance period by measuring ITT’s total shareholder return percentage against the total shareholder return performance of other stocks generally comprising the S&P Industrials Index. The number of companies included in the applicable benchmark group range from 305 to 357 as of December 31, 2009. We reassess the fair value of our TSR awards on a quarterly basis at the end of each reporting period using actual total shareholder return data over the elapsed performance period as well as a Monte Carlo simulation. The fair value of the outstanding awards at December 31, 2009 and 2008 was $27.3 and $46.0, respectively.

Payment, if any, is based on the TSR performance comparison measured against targets established at the time of the award. The total cash paid to settle the TSR liability was $21.1, $19.3 and $17.6, during the years ended 2009, 2008 and 2007, respectively. At December 31, 2009, total unrecognized compensation costs projected to be incurred, based on current performance measurements, over the remaining vesting period is $7.1. This cost is expected to be recognized ratably over a weighted-average period of 1.3 years.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2009

Commitments and Contingencies [Abstract]

Commitments and Contingencies

NOTE 19

Commitments and Contingencies

From time to time we are involved in legal proceedings that are incidental to the operation of our businesses. Some of these proceedings allege damages relating to environmental liabilities, intellectual property matters, copyright infringement, personal injury claims, employment and pension matters, government contract issues and commercial or contractual disputes, sometimes related to acquisitions or divestitures. We will continue to vigorously defend itself against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information including our assessment of the merits of the particular claim, as well as our current reserves and insurance coverage, we do not expect that such legal proceedings will have any material adverse impact on our cash flow, results of operations, or financial condition on a consolidated basis in the foreseeable future, unless otherwise noted below.

Asbestos Matters

ITT, including its subsidiary Goulds Pumps, Inc. (Goulds), has been joined as a defendant with numerous other companies in product liability lawsuits alleging personal injury due to asbestos exposure. These claims allege that certain of our products sold prior to 1985 contained a part manufactured by a third party, e.g., a gasket, 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. In certain other cases, it is alleged that former ITT companies were distributors for other manufacturers’ products that may have contained asbestos.

As of December 31, 2009, there were 104,679 open claims against ITT 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:


	2009			2008
Open claims* – January 1		103,006			102,568
New claims		4,274			6,332
Settlements		(1,081	)		(1,736	)
Dismissals		(4,728	)		(4,158	)
Adjustment**		3,208			–

Open claims* – December 31		104,679			103,006


*	Excludes 34,813 claims related to maritime actions that have been placed on inactive dockets, which the Company believes will not be litigated. Almost all of these claims were filed in the United States District Court for the Northern District of Ohio and transferred to the Eastern District of Pennsylvania pursuant to an order by the Federal Judicial Panel on Multi-District Litigation (MDL).


**	Reflects an adjustment to increase the number of open claims as a result of our transition to our own comprehensive database as we have assumed responsibility for administering our asbestos claims from our primary insurance companies.

Frequently, the plaintiffs are unable to identify any ITT or Goulds product as a source of asbestos exposure. In addition, in a large majority of the 104,679 pending claims against the Company, the plaintiffs are unable to demonstrate any injury. Many of those claims have been placed on inactive dockets (including 44,303 claims in Mississippi). Our experience to date is that a substantial portion of resolved claims have been dismissed without payment by the Company. As a result, management believes that approximately 90 percent of the 104,679 open claims have little or no value. The average payment per resolved claim for the year ended December 31, 2009 and 2008 was $11.6 thousand and $7.7 thousand, respectively. 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.

Historically, we have recorded a liability for pending asbestos claims only. As previously disclosed in our 2008 Annual Report on Form 10-K, while it was probable that we would incur additional costs for future claims to be filed against the Company, a liability for potential future claims was not reasonably estimable due to a number of factors. To begin with, our primary insurance carriers managed and paid all settlements and legal costs directly. This was compounded by the fact that, as part of their claims administration processes, the insurance companies maintained limited claims information and insufficient detail critical to estimate potential liability for future claims, such as disease type. Lastly, the insurers restricted our access to claim filings and related information.

Over the past several years, we have negotiated coverage-in-place agreements with several of our insurers under which we have assumed responsibility for administering the asbestos claims. Since taking over the claims administration process, we have, over time, gained considerable knowledge of the claims. In addition, at the end of 2008 we engaged an outside consultant to construct a comprehensive database of claims filed against the Company. With the completion of this work in early third quarter of 2009, we were able to develop and analyze key data, such as the settlements and dismissals by disease type, necessary to estimate our exposure to potential future asbestos claims. In the third quarter of 2009, we engaged a leading consultant of asbestos-related professional services to assist us in estimating our asbestos liability for both pending and unasserted claims. This firm reviewed information provided by the Company concerning claims filed, settled and dismissed, amounts paid in settlements, and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant and the time lag from filing to disposition of claims.

Specifically, the methodology used to estimate our total liability for pending and unasserted future asbestos claims relied upon and included the following key factors:


	n	interpretation of a widely accepted forecast of the population likely to have been occupationally exposed to asbestos;

	n	widely accepted epidemiological studies estimating the number of people likely to develop mesothelioma and lung cancer from exposure to asbestos;

	n	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;

	n	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 most recent claims experience history;

	n	an analysis of the Company’s pending cases, by disease type;

	n	an analysis of the Company’s most recent history to determine the average settlement and resolution value of claims, by disease type;

	n	an analysis of the Company’s defense costs in relation to its settlement costs and resolved claims;

	n	an adjustment for inflation in the future average settlement value of claims and defense costs at a 2.2% annual rate; and

	n	an analysis of the time over which the Company is likely to resolve asbestos claims.

The liability estimate is most sensitive to those factors surrounding mesothelioma claims as these claims represent nearly 90 percent of the total liability. These factors include the number of new mesothelioma claims filed against the Company, the average settlement costs for mesothelioma claims, and the percentage of mesothelioma claims dismissed against the Company. These factors are interdependent, and no one factor predominates in determining the liability estimate.

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. This experience is compared to the results of previously conducted epidemiological studies by estimating the number of individuals likely to develop asbestos-related diseases. Those studies were undertaken in connection with an independent analysis of the population of U.S. workers across eleven different industry and occupation categories believed to have been exposed to asbestos. Using that information for the industry and occupation categories relevant to the Company, an estimate was developed of the number of future claims to be filed against the Company, as well as the aggregate settlement costs that would be incurred to resolve both pending and future claims based upon 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 discussions with the Company’s defense counsel. 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 in estimating the liability. Our assessment of the underlying assumptions is based upon recent experience and future expectations, yielding only one value for each assumption.

Based on this methodology, in the third quarter of 2009, we increased our estimated total undiscounted asbestos liability, including legal fees, by $686.1, reflecting costs that the Company is estimated to incur to resolve all pending claims, as well as unasserted claims estimated to be filed over the next 10 years. While there are other potential estimates, our methodology does not create a range of estimates of reasonably possible outcomes as we have determined our point estimate based upon our assessment of the value of each underlying assumption. 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 factors discussed above, other factors include the long latency period prior to the manifestation of the asbestos-related disease, costs of medical treatment, the impact of bankruptcies of other companies that are 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. Furthermore, any predictions with respect to the variables impacting the estimate of the asbestos liability 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 total asbestos liability, 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 those costs at this time. As part of our ongoing review of asbestos claims, each quarter we will reassess the projected liability of unasserted asbestos claims to be filed over the next 10 years based upon the trends we are experiencing in those factors to which the liability is most sensitive, maintaining a rolling 10-year projection. Annually, in the third quarter each year, we will conduct a detailed study with the assistance of an outside consultant to review and update as appropriate the underlying assumptions used in our liability estimate. Additionally, we will periodically reassess the time horizon over which a reasonable estimate of unasserted claims can be projected.

In the third quarter of 2009, the Company recorded a $450.3 increase in its asbestos-related assets. These assets are comprised of an insurance asset, as well as receivables from former ITT entities for their portion of the asbestos liability related to a former business whose liability is shared in accordance with the Distribution Agreement (refer to ITT’s 2009 Annual Report on Form 10-K, Item 1. “— Company History and Certain Relationships” for a description of the Distribution and the Distribution Agreement). We will update our assessment of the asbestos-related assets on a quarterly and annual basis in conjunction with the aforementioned update of the asbestos liability.

The insurance asset represents our best estimate of probable insurance recoveries for the asbestos liabilities for pending claims, as well as unasserted claims to be filed over the next 10 years. In developing this estimate, the Company considered its coverage-in-place and other settlement agreements with its insurers, as well as a number of additional factors. These additional factors include current levels of recovery experience, 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 terms and limits and their interrelationships. The timing and amount of reimbursements will vary due to differing policy terms and certain gaps in coverage as a result of some insurer insolvencies. In addition, the Company retained an insurance consulting firm to assist management in the estimation of probable insurance recoveries based upon the analysis of policy terms, the likelihood of recovery provided by our legal counsel assuming the continued viability of those insurance carriers which are currently solvent and incorporating risk mitigation judgments where policy terms or other factors were not certain.

We have estimated that we have insurance which will cover 69 percent of the asbestos costs (defense and settlement costs) for pending claims as well as unasserted claims to be filed over the next 10 years. However, because there are gaps in our coverage, reflecting certain uninsured periods and prior insurance settlements, and we expect that certain policies from some of our primary insurers will exhaust within the next 10 years, the insurance coverage percent is expected to decline for potential additional asbestos liabilities. The tenth year of our projection of the unasserted asbestos claims liability against the related insurance asset declines to approximately 25 percent. Future recoverability rates may also 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 resultant third quarter 2009 net asbestos charge to income is summarized as follows:


	PRE-TAX		AFTER-TAX
Continuing operations	$	222.9	$	138.9
Discontinued operations		12.9		8.0

Total	$	235.8	$	146.9

The $222.9 pre-tax charge to continuing operations was comprised of $13.3 ($8.2 after-tax) for the updated assessment of the net liability for pending claims and $209.6 ($130.7 after-tax) for the initial recording in the quarter of the net liability for the estimated future claims to be filed over the next 10 years.

The Company’s estimated asbestos exposure, net of expected insurance recoveries and other recoveries from former ITT entities, for the resolution of all pending and estimated unasserted asbestos claims to be filed within the next 10 years was $266.9 as of December 31, 2009. The Company’s estimate of the cost of pending claims, net of insurance recoveries, was $26.9 as of December 31, 2008. A certain portion of the liability and corresponding asbestos asset relates to a business which we disposed of a number of years ago that is treated as discontinued operations.

The following table provides a rollforward of the asbestos liability and related assets for 2009.


	LIABILITY			ASSET			NET
Beginning balance, January 1, 2009	$	228.1		$	201.2		$	26.9
Third quarter charge		686.1			450.3		$	235.8	(a)
Other accruals added during the period		81.2			70.5			10.7	(a)
Cash activity		(62.2	)		(55.7	)		(6.5	)

Ending balance, December 31, 2009	$	933.2		$	666.3		$	266.9


(a)	The total of these amounts of $246.5 is comprised of a $237.5 charge to continuing operations and a $9.0 charge to discontinued operations.

Subject to the qualifications regarding uncertainties previously described, it is expected that future annual net cash outflows related to pending claims and unasserted claims to be filed over the next 10 years will extend through approximately 2023 due to the time lag between the filing of a claim and its resolution. These annual net cash outflows are projected to be $10 to $15 over the next several years, relatively constant with recent levels, and increase to $30 to $40 by 2019.

The underlying asbestos liability and corresponding insurance asset are based upon current, known information. However, future events affecting the key factors and other variables for either the asbestos liability or the insurance asset could cause the actual costs and insurance recoveries to be higher or lower than currently estimated. Due to these uncertainties, as well as our inability to reasonably estimate any additional asbestos liability for claims filed beyond the next 10 years, it is not possible to predict the ultimate outcome of the cost of resolving the pending and all unasserted asbestos claims. We believe it is possible that the cost of asbestos claims filed beyond the next 10 years, net of expected insurance recoveries, could have a material adverse effect on our financial position and on the results of operations or cash flows for a particular period.

Environmental Matters

In the ordinary course of business, ITT is subject to federal, state, local, and foreign environmental laws and regulations. ITT is responsible, or is alleged to be responsible, for ongoing environmental investigation and remediation of sites in various countries. These sites are in various stages of investigation and/or remediation and in many of these proceedings ITT’s liability is considered de minimis. ITT has 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 ITT has been identified as a potentially responsible party under federal and state environmental laws and regulations.

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. ITT’s accrued liabilities for these environmental matters represent the best estimates related to the investigation and remediation of environmental media such as water, soil, soil vapor, air and structures, as well as related legal fees. These estimates, and related accruals, are reviewed periodically and updated for progress of investigation and remediation efforts and changes in facts and legal circumstances. Liabilities for these environmental expenditures are recorded on an undiscounted basis.

It is difficult to estimate the final total costs of investigation and remediation due to various factors, including incomplete information regarding particular sites and other potentially responsible parties, uncertainty regarding the extent of investigation or remediation and our share, if any, of liability for such conditions, the selection of alternative remedial approaches, and changes in environmental standards and regulatory requirements. In management’s opinion, the total amount accrued is appropriate based on existing facts and circumstances. Management does not anticipate these liabilities will have a material adverse effect on the consolidated financial position, results of operations or cash flows.

The following table illustrates the activity related to ITT’s accrued liabilities for these environmental matters.


	2009			2008
Beginning balance January 1	$	135.0		$	124.7
Additional accruals attributable to acquisitions in the period		–			8.1
Accruals added during the period		1.0			0.5
Change in estimates for pre-existing accruals		17.6			19.6
Payments		(13.9	)		(17.9	)

Ending balance December 31	$	139.7		$	135.0

The following table illustrates the low- and high-end range of estimated liability, and number of active sites for these environmental matters as of December 31, 2009.


YEAR ENDED DECEMBER 31	2009		2008
Low-end range	$	113.4	$	101.2
High-end range	$	248.6	$	229.3
Number of active environmental investigation and remediation sites		98		102

Other Matters

The Company is involved in coverage litigation with various insurers seeking recovery of costs incurred in connection with certain environmental and product liabilities. In a suit filed in 1991, ITT Corporation, et al. v. Pacific Indemnity Corporation et al, Sup. Ct., Los Angeles County, we are seeking recovery of costs related to environmental losses. Discovery, procedural matters, changes in California law, and various appeals have prolonged this case. For several years, the case was on appeal before the California Court of Appeals from a decision by the California Superior Court dismissing certain claims made by ITT. The case is now back before the Superior Court and the parties are engaged in further discovery.

On February 13, 2003, we commenced an action, Cannon Electric, Inc. v. Affiliated FM Ins. Co., Sup. Ct., Los Angeles County, seeking recovery of costs related to asbestos product liability loses described above. During this coverage litigation, ITT has entered into coverage-in-place settlement agreements with ACE, Wausau and Utica Mutual dated April 2004, September 2004, and February 2007, respectively. These agreements provide specific coverage for the Company’s legacy asbestos liabilities. The Company is prepared to pursue legal remedies against the remaining defendants where reasonable negotiations are not productive.

We provide an indemnity to U.S. Silica Company for silica personal injury suits filed prior to September 12, 2005 against our former subsidiary Pennsylvania Glass Sand (PGS). ITT sold the stock of PGS to U.S. Silica Company in 1985. Over the past several years, the majority of the silica cases involving PGS have been dismissed without payment. Currently there are less than 4,000 cases pending against PGS. The Company expects that the majority of the remaining cases will also be dismissed. Our indemnity had been paid in part by our historic product liability carrier, however, in September 2005, the carrier communicated to us that it would no longer provide insurance for these claims. On October 4, 2005, we filed a suit against the insurer, ITT v. Pacific Employers Insurance Co., CA No. 05CV 5223, in the Superior Court for Los Angeles, CA, seeking defense costs and indemnity from the insurance carrier for PGS product liabilities. In April 2007, the Court granted our motion for summary judgment on the carrier’s duty to defend the silica cases; however, that decision was overturned on appeal. The matter was returned to the Superior Court in part for determination of several factual issues. We will continue to seek past and future defense costs for these cases from this carrier. We believe that these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. All silica-related costs, net of insurance recoveries, are shared pursuant to the Distribution Agreement. Further information on the Distribution Agreement is provided within the “Business — Company History and Certain Relationships” section of our 2009 Annual Report on Form 10-K.

On October 25, 2006, Fencourt Reinsurance Company (Fencourt), a subsidiary of The Hartford, filed a contribution claim against ITT for losses incurred by Fencourt as a result of a reinsurance contract obligation it owes to Century Indemnity Company, in the U.S. District Court for the Eastern District of Pennsylvania, Fencourt Reinsurance Co., Ltd. v. ITT Industries, Inc. (C.A. No. 06-4786 U.S. D.Ct E.D.PA). Century Indemnity Company was an insurer of ITT’s Domestic Casualty Program from 1978 through 1992. Fencourt, formed in 1978, was a captive insurer of the predecessor ITT Corporation and provided reinsurance to Century for certain ITT self-insured losses. Fencourt was transferred to The Hartford in the demerger of ITT in 1995. This matter is covered by the 1995 Distribution Agreement and that agreement contains clear language that The Hartford agreed to assume the liabilities of Fencourt and indemnify ITT against all claims against Fencourt. The case is stayed pending the resolution of an arbitration proceeding pending before the American Arbitration Association in New Jersey. On January 20, 2009, the arbitrator issued a favorable decision that ITT is not liable for the losses incurred by Fencourt. In a subsequent decision on Fencourt’s second Motion for Summary Judgment, the arbitrator agreed with our position and ruled that certain liabilities are shared liabilities under the terms of the Distribution Agreement. The parties have asked the arbitrator to resolve several other issues related to the interpretation of the Distribution Agreement. Management believes that this matter will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

On March 27, 2007, we reached a settlement relating to an investigation of our ITT Night Vision Division’s compliance with the International Traffic in Arms Regulations (ITAR) pursuant to which we pled guilty to two violations based on the export of defense articles without a license and the omission of material facts in required export reports. The Company was assessed a total of $50.0 in fines, forfeitures and penalties, which was accrued for fully as of December 31, 2006. We also entered into a Deferred Prosecution Agreement with the U.S. Government which deferred action regarding a third count of violations related to ITAR pending our implementation of a remedial action plan, including the appointment of an independent monitor. ITT was also assessed a deferred prosecution monetary penalty of $50.0 which ITT will reduce for monies spent over the five years following the date of the Plea Agreement, to accelerate and further the development and fielding of advanced night vision technology. On October 11, 2007, ITT and the Department of Defense finalized an Administrative Compliance Agreement wherein we agreed to take certain remedial actions including implementing compliance programs and appointing an independent monitor for the oversight of our compliance programs. On December 28, 2007, we finalized a Consent Agreement with the Department of State wherein we agreed to undertake certain remedial actions, including appointment of a Special Compliance Official. The Company continues to perform under the terms of the agreements. On February 22, 2010, the Department of State issued a notice that it terminated the ineligible status and statutory debassment which it had previously imposed on the Company on April 11, 2007. 75 Fed. Reg. 7650 (2010). Management believes that these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

On April 17, 2007, ITT’s Board of Directors received a letter on behalf of a shareholder requesting that the Board take appropriate action against the employees responsible for the violations at our Night Vision facility described above, which were disclosed on Form 8-K filed on March 30, 2007. The Board of Directors appointed a Special Litigation Committee to evaluate the request. The Special Litigation Committee conducted an investigation with the assistance of independent counsel and concluded that no legal actions should be brought by ITT.

During 2007 and 2008, the Company received notice of four shareholder derivative actions each filed in the U.S. District Court for the Southern District of New York, known variously as, Sylvia Piven trustee under trust agreement dated April 3, 1973 f/b/o Sylvia B. Piven, derivatively on behalf of ITT Corporation v. Steven R. Loranger et al. and ITT Corporation (the Piven action), Norman Levy, derivatively on behalf of ITT Industries, Inc. v. Steven R. Loranger et al. and ITT Industries, Inc., Anthony Reale v. Steven R. Loranger et al. and ITT Company [sic], and Robert Wilkinson v. Steven R. Loranger et al. and ITT Corporation. The cases allege that ITT’s Board of Directors breached their fiduciary duties by failing to properly oversee ITT’s compliance programs at its Night Vision business. The Complaints seeks compensatory and punitive damages for ITT from its Directors, the removal of the Directors, and the election of new directors. Three cases were consolidated into one action In Re ITT Corporation Derivative Litigation, CA No. 07-CV-2878 (CLB) (the Levy complaint was dropped on consolidation). On motion by the Company, the Piven action was dismissed for lack of diversity. On April 10, 2008, the Court denied the Company’s Motion to Dismiss the consolidated Complaint. ITT filed a Motion for Reconsideration and on November 25, 2008, the Court granted that motion and dismissed the matter without prejudice. The Court provided the plaintiffs the opportunity to refile the case upon the development of certain additional facts. The plaintiffs refiled the case on December 23, 2008. In its order dated September 8, 2009, the Court granted the Company’s subsequent Motion to Dismiss and dismissed the Wilkinson complaint. The Defendants filed a Motion to Terminate the Reale action based on the Special Litigation Committee’s report referenced above. Also in its September 8, 2009 order, the Court denied the Defendants’ motion. The Defendants then filed a Motion for Reconsideration or, in the alternative, requested that the matter be certified to the Indiana Supreme Court for its interpretation of the Indiana Business Code. On October 9, 2009, the Court denied the Motion for Reconsideration, however, it certified the matter for appeal. The matter is now pending before the Indiana Supreme Court. Management believes that the derivative suit will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Business Segment Information

12 Months Ended

Dec. 31, 2009

Business Segment Information [Abstract]

Business Segment Information

NOTE 21

Business Segment Information

The Company’s business segments are reported on the same basis used internally for evaluating performance and for allocating resources. Our three reporting segments are referred to as: Defense Electronics & Services (Defense segment), Fluid Technology (Fluid segment), and Motion & Flow Control (Motion & Flow segment). Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges which occur from time to time related to certain matters, such as asbestos and environmental liabilities, that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. Assets of the business segments exclude general corporate assets, which principally consist of cash, deferred tax assets, insurance receivables, certain property, plant and equipment, and certain other assets.

Defense – The businesses in this segment are those that directly serve the military and government agencies with products and services. These include air traffic control systems, jamming devices that guard military planes against radar-guided missiles, digital combat radios, night vision devices, satellite instruments, defense electronics, communications, aircraft armament systems, undersea warfare, integrated composite structures, and professional and engineering services. Approximately 39% of the sales and revenues in this business segment are generated through contracts for technical and support services which ITT provides for the military and other government agencies. The Defense segment had revenue from the U.S. Government of $5,789.8, $5,893.8 and $3,920.3, for 2009, 2008 and 2007, respectively. Apart from the U.S. Government, no other government or commercial customer accounted for more than 10% of revenue. The Defense segment comprises approximately 58% of consolidated revenue and 60% of segment operating income in 2009.

Fluid — Our Fluid segment is a provider of water and wastewater treatment systems, pumps and related technologies, and other water and fluid control products with residential, commercial, and industrial applications. This segment comprises approximately 31% of consolidated revenue and approximately 31% of segment operating income for 2009.

Motion & Flow — Our Motion & Flow segment is comprised of a group of businesses providing products and services for the areas of transportation, defense, aerospace, industrial, computer, telecommunications, marine and beverage. The Motion & Flow businesses primarily serve the high end of their markets, with highly engineered products, high brand recognition, a focus on new product development and operational excellence. The Motion & Flow segment comprises approximately 11% of consolidated revenue and approximately 9% of segment operating income for 2009.


					MOTION &		CORPORATE
	DEFENSE		FLUID		FLOW		AND OTHER			ELIMINATIONS			TOTAL
2009
Product revenue	$	3,786.5	$	3,220.4	$	1,245.2	$	–		$	(8.6	)	$	8,243.5
Service revenue		2,510.3		142.9		7.8		–			–			2,661.0

Total revenue		6,296.8		3,363.3		1,253.0		–			(8.6	)		10,904.5
Operating income (loss)		776.0		392.9		118.2		(377.7	)		–			909.4
Plant, property and equipment, net		402.9		392.9		235.1		20.1			–			1,051.0
Total assets		4,292.3		2,929.9		1,322.9		2,584.0			–			11,129.1
Capital expenditures		115.8		74.2		55.9		25.7			–			271.6
Depreciation		66.9		57.3		45.9		3.3			–			173.4
Amortization		90.5		16.2		10.7		1.8			–			119.2

2008
Product revenue	$	3,924.9	$	3,692.7	$	1,575.1	$	–		$	(11.5	)	$	9,181.2
Service revenue		2,357.4		147.9		8.3		–			–			2,513.6

Total revenue		6,282.3		3,840.6		1,583.4		–			(11.5	)		11,694.8
Operating income (loss)		727.0		468.7		191.7		(177.3	)		–			1,210.1
Plant, property and equipment, net		369.3		372.3		229.1		23.2			–			993.9
Total assets		4,464.5		2,878.3		1,357.8		1,779.6			–			10,480.2
Capital expenditures		88.0		80.5		63.7		16.5			–			248.7
Depreciation		65.8		63.0		48.7		2.1			–			179.6
Amortization		85.2		6.4		7.3		(0.2	)		–			98.7

2007
Product revenue	$	2,381.7	$	3,358.2	$	1,332.1	$	–		$	(14.5	)	$	7,057.5
Service revenue		1,794.5		150.9		0.4		–			–			1,945.8

Total revenue		4,176.2		3,509.1		1,332.5		–			(14.5	)		9,003.3
Operating income (loss)		502.7		432.7		187.4		(145.6	)		–			977.2
Plant, property and equipment, net		353.5		394.8		224.9		7.1			–			980.3
Total assets		4,466.2		3,106.4		1,364.5		2,615.6			–			11,552.7
Capital expenditures		57.7		88.6		45.2		47.8			–			239.3
Depreciation		48.4		61.1		44.6		1.4			–			155.5
Amortization		20.7		6.1		2.9		0.2			–			29.9


							PLANT, PROPERTY AND
	REVENUE^(a)						EQUIPMENT, NET
	YEAR ENDED DECEMBER 31						DECEMBER 31
	2009		2008		2007		2009		2008		2007
Geographical Information
United States	$	7,592.3	$	7,998.0	$	5,814.3	$	603.9	$	581.4	$	557.5
Western Europe		1,814.0		2,098.3		1,896.4		317.2		313.7		337.1
Asia Pacific		576.8		603.6		474.4		64.7		64.5		58.3
Other		921.4		994.9		818.2		65.2		34.3		27.4

Total	$	10,904.5	$	11,694.8	$	9,003.3	$	1,051.0	$	993.9	$	980.3

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

Revenue by product category, net of intercompany balances, is as follows:


YEAR ENDED DECEMBER 31	2009		2008		2007
Pumps & Complementary Products	$	3,363.2	$	3,840.3	$	3,508.9
Defense Products		3,784.7		3,923.6		2,380.1
Defense Services		2,510.3		2,357.4		1,794.5
Connectors		335.2		444.6		417.1
Flow Control		342.4		382.0		243.5
Friction Materials		386.2		447.8		393.4
Marine Products		78.4		185.7		121.5
Shock Absorbers		104.1		113.4		144.3

Total	$	10,904.5	$	11,694.8	$	9,003.3

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Consolidated Statements of Comprehensive Income (Loss)
Tax expense (benefit) of changes in postretirement benefit plans	$ 88.8	$ (781.1)	$ 126.3
Tax expense of unrealized gain (loss) on investment securities	$ 7.5		$ 0.5

Capital Stock	12 Months Ended
Capital Stock	Dec. 31, 2009
Capital Stock [Abstract]
Capital Stock	NOTE 18 Capital Stock ITT has authority to issue an aggregate of 550 shares of capital stock, of which 500 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, 2009 and 2008. As of December 31, 2009 and 2008, 24.0 and 25.2 shares of Common Stock were held in Treasury, respectively.

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2009
Subsequent Events [Abstract]
Subsequent Events	NOTE 23 Subsequent Events On February 17, 2010, the Company announced that it signed an agreement to purchase Nova Analytics Corporation (Nova), a privately held company. The purchase price is approximately $390, subject to normal and customary closing conditions. We expect that the purchase price will be funded through a mix of cash and commercial paper. Nova is a leading manufacturer of premium quality field, portable, on-line and laboratory analytical instruments used in water and wastewater, environmental, industrial, food and beverage, pharmaceutical and medical applications. Nova provides ITT brands, technologies, distribution and aftermarket content in the $6 billion analytical instrumentation market. The addition of Nova will broaden the solutions we offer customers in key markets such as municipal water and wastewater, industrial processing, and food & beverage. The transaction is projected to be completed by the end of March 2010 pending customary regulatory approvals. Nova employs approximately 725 people across Germany, Norway, France, the United Kingdom, the United States and China.

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions	Dec. 31, 2009	Dec. 31, 2008
Common stock:
Common stock, Par value per share	$ 1	$ 1
Common stock, Shares authorized	500.0	500.0
Common stock, Shares outstanding	182.9	181.7
Common stock, Unvested restricted common stock included in shares outstanding	1.3	1.1