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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 2005
ITT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 1-5627 13-5158950
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4 West Red Oak Lane
White Plains, New York 10604
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 641-2000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 7.01 REGULATION FD DISCLOSURE
Attached hereto as Exhibit 99.1 and incorporated by reference herein is
financial information for ITT Industries, Inc. for the fourth quarter and full
year ending December 31, 2004 and forward-looking statements relating to 2005 as
presented in a press release dated January 28, 2005. This information shall not
be deemed filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such filing.
A copy of this press release is attached and incorporated by reference herein as
Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press release dated January 28, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned hereunto duly authorized.
ITT INDUSTRIES, INC.
By: /s/ Kathleen S. Stolar
------------------------------
Kathleen S. Stolar
Its: Vice President, Secretary
and Associate General Counsel
Date: January 28, 2005
Exibit 99.1
ITT Industries Reports Record Q4 EPS of $1.29, Up 12 Percent
- Q4 revenues up 28 percent to $1.94 billion; organic growth is 13
percent excluding acquisitions and foreign exchange
- FY 2004 EPS is $4.58, up from $4.29; FY adjusted earnings grow 17
percent
- FY 2004 revenue up 21 percent to $6.8 billion, on sales growth in
all segments
- Continued momentum in Water/Wastewater with strong order growth
- Steps underway to align cost structure to achieve company's
long-term targets
WHITE PLAINS, N.Y., Jan. 28 /PRNewswire/ -- ITT Industries, Inc. (NYSE:
ITT) reported fourth quarter 2004 net income of $121.6 million, up $13.5 million
or 12 percent over the period in 2003. Diluted earnings per share (EPS) for the
quarter, including the net impact of special items, was a record high $1.29, up
$0.14 per share from reported EPS in the fourth quarter 2003. During the fourth
quarter 2004, the company realized a $0.15 per share benefit from the gain on
the sale of an investment, which was partially offset by some special items,
including restructuring costs, discontinued operations and tax charges of
($0.14) per share. The net effect of these special items was a $0.01 per share
benefit to reported EPS for the fourth quarter. Adjusting results to exclude the
impact of these special items, earnings per share for the fourth quarter 2004
were $1.28, up 21 percent over the comparable adjusted figure of $1.06 for the
period in 2003.
"We finished 2004 on a positive note, continuing our long-term growth
trend in double digit earnings and revenue growth, and we begin 2005 with
noticeable momentum, riding a strong increase in order activity across all of
our businesses," said Steve Loranger, Chairman, President and Chief Executive
Officer. "Fourth quarter orders in our Fluid Technology business grew at the
highest rate of the year, particularly within our Water/Wastewater and
Industrial Products groups. Even excluding the impact of acquisitions, our
water/wastewater business orders continue to grow at a double-digit rate,
pointing to a strong year ahead. Our Defense group continues to grow, bringing
the backlog to a new record of $3.45 billion. The Motion & Flow Control and
Electronic Components segments posted significant revenue and profit gains
through targeted new product introductions and process improvements. In short,
the stage is set for continued growth in revenue, earnings and cash flow for
2005."
Fourth quarter 2004 segment operating income was $202.7 million;
excluding restructuring costs, segment operating income was $216.1 million, up
$39.9 million from the period in 2003. Fourth quarter revenues were up 28
percent to $1.94 billion, attributable to organic sales growth in all segments,
the impact of recent acquisitions in Defense and Fluid Technology, and the
positive impact of foreign currency translation. Excluding acquisitions and
foreign currency translation, sales grew 13 percent in the quarter.
Full Year 2004 Results
Reported net income for 2004 was $432.3 million and EPS was $4.58, up 7
percent and 7 percent respectively over 2003. The comparison includes the $0.35
per share favorable impact of tax items and net gain on the sale of an
investment, and was offset by $0.33 per share for net restructuring costs and
charges related to discontinued operations taken during the year. After
restating 2003 figures to adjust for discontinued operations, 2004 EPS grew 17
percent over the adjusted $3.89 for 2003.
Full year 2004 revenues were $6.76 billion, up 21 percent from the prior
year driven by increased sales in all four segments, recent acquisitions and the
positive impact of foreign currency translation. Excluding acquisitions and
currency translation, organic revenue growth was 12 percent in 2004. Segment
operating income for 2004 was $717.3 million; excluding restructuring, segment
operating income was $753.3 million, up $116.6 million over 2003. The company
said cash from operations was $528.6 million, which includes a $100 million
voluntary pre-funding of the company's U.S. salaried pension plan. Free cash
flow (defined as cash from operations before pension pre-funding, minus capital
spending) was $463.5 million, down from $626.4 million in 2003, due to the
occurrence of 2003 tax refunds and deferrals, and higher working capital
requirements to fund sales growth.
"We expect continued revenue growth and operational improvements in all
of our business areas, and have confidence in our full-year 2005 projected EPS
of $5.00 - $5.15 with revenue of $7.15 - $7.43 billion," Loranger said. "We've
begun reinforcing the successful ITT Management System, taking pro-active steps
in a series of initiatives, from realignment of our infrastructure to global
sourcing and expansion of our Value-Based Six Sigma capabilities, all in an
effort to ensure that our costs are in line to achieve our stated earnings
target of $7-$8 per share by 2008, reflecting our forecast 12 - 16 percent
annual EPS growth rate. Beyond our planned Value-Based Six Sigma savings, our
goal is to reduce costs by an additional $25 million per year."
Primary Business Results
Fluid Technology
- Fourth quarter 2004 Fluid Technology revenues rose 23 percent to
$749.1 million, helped by increased demand for water/wastewater
treatment systems, the impact of the WEDECO acquisition and the
positive impact of foreign currency translation. Organic revenue
grew by 9 percent over the fourth quarter 2003.
- Fluid Technology fourth quarter operating income was $80.3 million;
excluding restructuring costs, segment operating income rose 13
percent to $89.9 million, while operating margin declined 100 basis
points due to costs associated with acquisition integration and
foreign exchange transactions.
- ITT's water and wastewater businesses continue their growth pattern,
with 15 percent organic growth in fourth quarter orders, and 13
percent organic revenue growth. The Advanced Water Treatment unit
grew organic revenue by 27 percent. In October ITT was selected to
provide the world's largest UV disinfection system in British
Columbia, Canada, and was also selected to construct a 30-million
gallon/day desalination plant in the Middle East.
- Various business units within Fluid Technology have accelerated
their cross-selling activities in order to better leverage the
breadth of the company's expertise in fluid management. In the
fourth quarter, a joint effort between Goulds and Flygt resulted in
ITT capturing one of its largest pump orders to date -- a $7 million
order to supply vertical turbine pumps in California.
Defense Electronics & Services
- Revenues for Defense Electronics & Services rose 49 percent to
$746.6 million in the fourth quarter 2004, due to significant
revenue growth within the Systems, Communications and Night Vision
units, and the acquisition of Remote Sensing Systems (RSS).
- Fourth quarter segment operating income was $77.8 million; excluding
the effects of restructuring charges in the fourth quarter 2003,
segment operating income rose 32 percent on higher revenues and the
acquisition of RSS. Operating margin declined 140 basis points due
to mix favorability in the fourth quarter 2003.
- The Defense segment backlog reached a record $3.45 billion for the
full year following significant new orders within the unit's
Tactical Communications, Night Vision, Space and Systems business
units. Segment orders in the fourth quarter were up 18 percent. The
company expects to bid on business opportunities worth nearly $8
billion over the next 18 months.
- The company's Systems business grew revenues by more than 60 percent
in the fourth quarter, having won new contracts for military
maintenance and operations, as well as engineering services, such as
ITT's contract with the Jet Propulsion Laboratory's (JPL) Deep Space
Network. The ITT team at JPL tracks the communication of a number of
space probes, including the Mars rovers and the Cassini satellite,
which recently sent back signals from the European Space Agency
probe Huygens of the first ever surface photos of Saturn's moon
Titan.
Motion & Flow Control
- Fourth quarter Motion & Flow Control revenues increased 10 percent
to $272.4 million, with significant gains in the Friction Materials,
Aerospace Controls and Leisure Marine. Excluding the impact of
foreign currency translation, segment revenues grew by 4 percent.
- Segment operating income was $35.4 million; excluding restructuring
costs, segment operating income rose 20 percent to $37.8 million and
operating margin grew by 130 basis points on product mix and process
improvements.
- ITT's friction materials revenues increased 29 percent in the fourth
quarter, and orders grew 26 percent, as the business continues to
improve its competitive position in the OEM and aftermarket segments
of the brake pad business. Plans are in place to begin brake pad
production in the US in the second half of 2005, with shipments
beginning in the third quarter.
- New products, global sourcing and customer service continue to drive
growth in revenue and operating income in the Leisure Marine
business, particularly in the Spa/Whirlpool unit. New products
represented 35 percent of revenues in this business in 2004, up from
25 percent in 2003, and are expected to represent 45 percent of
revenues in 2005.
Electronic Components
- Electronic Components revenues for the fourth quarter 2004 rose 15
percent to $178.6 million, with growth particularly strong in mobile
handsets, industrial and aerospace connectors and switches. Organic
revenue grew 12 percent over the fourth quarter 2003.
- Fourth quarter 2004 segment operating income was $9.2 million;
excluding restructuring costs, segment operating income for the
fourth quarter 2004 grew 68 percent to $10.6 million as the company
begins to see the benefit of restructuring actions taken in recent
quarters. Similarly, operating margin grew by 180 basis points.
- The company is expanding its product offering and growing sales in
the high-end mechatronics field, which includes control panels,
joystick assemblies, multifunction grips and switches for a variety
of end products for customers such as Genie and Caterpillar. The
company realized greater than 30 percent growth in this business in
2004 and forecasts an additional 24 percent growth in 2005.
- The Electronic Components business continues executing its plan to
rationalize its manufacturing footprint and focus its product line
on more value-adding products in order to improve operating margins.
NOTE: ITT Industries believes that investors' understanding of the
company's operating performance is enhanced by the use of certain non-GAAP
financial measures, including adjusted GAAP net income and adjusted GAAP EPS,
which Management considers useful in providing insight into operating
performance, as it excludes the impact of special items that cannot be expected
to recur on a quarterly basis. Management also believes that investors can
better analyze the company's revenue growth by utilizing an organic revenue
growth measure that excludes the effect of foreign exchange translation and the
effect of recent acquisitions. In addition, Management considers the use of free
cash flow to be an important indication of the company's ability to make
acquisitions, fund pension obligations, buy back outstanding shares and service
debt. Free cash flow, adjusted net income, adjusted EPS and organic revenue are
not financial measures under GAAP, should not be considered as substitutes for
cash from operating activities, EPS, net income or revenue as defined by GAAP,
and may not be comparable to similarly titled measures reported by other
companies. A reconciliation to the GAAP equivalents of these non-GAAP measures
is set forth in the attached unaudited financial information.
About ITT Industries
ITT Industries, Inc. (http://www.itt.com) supplies advanced technology
products and services in key markets including: fluid and water management
including water treatment; defense communication, opto-electronics, information
technology and services; electronic interconnects and switches; and other
specialty products. Headquartered in White Plains, NY, the company generated
$6.8 billion in 2004 sales.
In addition to the New York Stock Exchange, ITT Industries stock is
traded on the Midwest, Pacific, Paris, London and Frankfurt exchanges.
For free B-roll/video content about ITT Industries, please log onto
http://www.thenewsmarket.com/ITT to preview and request video. You can receive
broadcast-standard video quality digitally or by tape from this site.
Registration and video is free to the media.
Certain material presented herein consists of forward-looking statements
which involve known and unknown risks, uncertainties and other important factors
that could cause actual results to differ materially from those expressed in, or
implied from, such forward-looking statements. Such factors include general
economic conditions, foreign currency exchange rates, competition and other
factors all as more thoroughly set forth in Item 1. Business and Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Forward-Looking Statements in the ITT Industries, Inc. Form 10-K
Annual Report for the fiscal year ended December 31, 2003, and other of its
filings with the Securities and Exchange Commission.
CONSOLIDATED CONDENSED INCOME STATEMENTS
(In millions, except per share)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Sales and revenues $ 1,943.0 $ 1,513.5 $ 6,764.1 $ 5,610.8
Costs of sales and
revenues 1,291.1 981.2 4,466.4 3,672.0
Selling, general and
administrative
expenses 284.7 228.0 991.1 817.2
Research, development
and engineering
expenses 172.8 149.7 634.0 558.3
Restructuring and
asset impairment
charges 13.4 12.6 37.7 30.1
Total costs and
expenses 1,762.0 1,371.5 6,129.2 5,077.6
Operating income 181.0 142.0 634.9 533.2
Interest expense 16.5 4.9 50.4 43.2
Interest income 3.7 0.4 22.5 53.3
Gain on sale of assets 20.8 - 20.8 -
Miscellaneous expense 7.0 3.1 17.8 7.9
Income from continuing
operations before
income taxes 182.0 134.4 610.0 535.4
Income tax expense 57.4 23.8 172.5 141.4
Income from continuing
operations 124.6 110.6 437.5 394.0
Discontinued operations,
including tax income
/(exp) of $1.8, $(4.8),
$2.9 and $2.4 in
each period,
respectively (3.0) (2.5) (5.2) 9.9
Net income $ 121.6 $ 108.1 $ 432.3 $ 403.9
Earnings Per Share:
Income from continuing
operations:
Basic $ 1.35 $ 1.20 $ 4.74 $ 4.27
Diluted $ 1.32 $ 1.18 $ 4.63 $ 4.18
Discontinued operations:
Basic $ (0.03) $ (0.03) $ (0.06) $ 0.11
Diluted $ (0.03) $ (0.03) $ (0.05) $ 0.11
Net income:
Basic $ 1.32 $ 1.17 $ 4.68 $ 4.38
Diluted $ 1.29 $ 1.15 $ 4.58 $ 4.29
Average Common Shares -
Basic 92.3 92.3 92.3 92.1
Average Common Shares -
Diluted 94.3 94.3 94.4 94.1
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
December 31, December 31,
2004 2003
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 262.9 $ 414.2
Receivables, net 1,174.3 971.5
Inventories, net 708.4 575.8
Current assets of discontinued
operations 7.3 8.3
Deferred income taxes 107.2 68.2
Other current assets 69.1 68.9
Total current assets 2,329.2 2,106.9
Plant, property and equipment, net 980.9 892.0
Deferred income taxes 212.1 373.2
Goodwill, net 2,514.1 1,629.1
Other intangible assets, net 246.6 74.8
Other assets 993.8 861.6
Total assets $ 7,276.7 $ 5,937.6
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 719.8 $ 633.1
Accrued expenses 717.2 652.7
Accrued taxes 277.4 253.5
Current liabilities of discontinued
operations - 1.1
Notes payable and current maturities of
long-term debt 729.2 141.5
Other current liabilities 2.2 4.6
Total current liabilities 2,445.8 1,686.5
Pension and postretirement benefits 1,378.5 1,403.9
Long-term debt 542.8 460.9
Other liabilities 566.6 538.6
Total liabilities 4,933.7 4,089.9
Shareholders' equity 2,343.0 1,847.7
Total liabilities and
shareholders' equity $ 7,276.7 $ 5,937.6
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Year Ended
December 31,
-------------------------
2004 2003
----------- -----------
Operating Activities
Net income $ 432.3 $ 403.9
Income (loss) from discontinued operations 5.2 (9.9)
Income from continuing operations 437.5 394.0
Adjustments to income from continuing operations:
Depreciation and amortization 198.6 186.9
Restructuring and asset impairment
charges 37.7 30.1
Payments for restructuring (33.6) (24.6)
Change in receivables (21.8) (61.6)
Change in inventories (80.3) 31.0
Change in accounts payable and accrued expenses 16.9 30.1
Change in accrued and deferred taxes 102.4 168.0
Change in other current and non-current assets (59.9) (202.7)
Change in other non-current liabilities (55.2) 25.1
Other, net (13.7) 3.4
Net cash - operating activities 528.6 579.7
Investing Activities
Additions to plant, property and equipment (165.1) (153.3)
Acquisitions, net of cash acquired (1,010.0) (46.2)
Proceeds from sale of assets and businesses 32.3 17.0
Sale of investments - 43.5
Other, net 0.2 (2.0)
Net cash - investing activities (1,142.6) (141.0)
Financing Activities
Short-term debt, net 554.2 (144.1)
Long-term debt repaid (68.7) (42.7)
Long-term debt issued 120.3 0.3
Repurchase of common stock (159.6) (69.7)
Proceeds from issuance of common stock 76.8 45.3
Dividends paid (61.8) (58.0)
Other, net (0.2) -
Net cash - financing activities 461.0 (268.9)
Exchange Rate Effects on Cash and Cash
Equivalents 17.6 35.4
Net Cash - Discontinued Operations (15.9) 6.8
Net change in cash and cash equivalents (151.3) 212.0
Cash and cash equivalents - beginning of year 414.2 202.2
Cash and Cash Equivalents - end of period $ 262.9 $ 414.2
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Organic Revenue / Orders Growth
Fourth Quarter and Full Year 2004 & 2003
($ Millions)
(As Reported - GAAP)
--------------------------------------------
Sales & Sales & Change % Change
Revenues Revenues 2004 vs. 2004 vs.
3M 2004 3M 2003 2003 2003
--------- --------- -------- ---------
ITT Industries - Consolidated 1,943.0 1,513.5 429.5 28%
Fluid Technology 749.1 611.6 137.5 23%
Water Wastewater Division 515.2 387.9 127.3 33%
Advanced Water Treatment 103.2 37.4 65.8 176%
Motion & Flow Control 272.4 248.5 23.9 10%
Electronic Components 178.6 155.0 23.6 15%
Sales & Sales & %
Revenues Revenues Change Change
Full Year Full Year 2004 vs. 2004 vs.
2004 2003 2003 2003
--------- --------- -------- ---------
ITT Industries - Consolidated 6,764.1 5,610.8 1,153.3 21%
%
Change Change
Orders Orders 2004 vs. 2004 vs.
3M 2004 3M 2003 2003 2003
--------- --------- -------- ---------
Water Wastewater Division 478.6 346.6 132.0 38%
(As Adjusted - Organic)
---------------------------------------------------------
Acqui-
sition FX Adj.
Sales & Contri- Contri- Sales & Sales &
Revenues bution bution Revenues Revenues
3M 2004 3M 2004 3M 2004 3M 2004 3M 2003
--------- --------- --------- --------- ---------
ITT Industries -
Consolidated 1,943.0 (185.7) (49.3) 1,708.0 1,513.5
Fluid Technology 749.1 (48.4) (31.4) 669.3 611.6
Water Wastewater Division 515.2 (48.4) (29.7) 437.1 387.9
Advanced Water Treatment 103.2 (48.4) (7.3) 47.5 37.4
Motion & Flow Control 272.4 (0.7) (12.5) 259.2 248.5
Electronic Components 178.6 0.0 (5.6) 173.0 155.0
Acqui-
sition FX Adj.
Sales & Contri- Contri- Sales & Sales &
Revenues bution bution Revenues Revenues
Full Year Full Year Full Year Full Year Full Year
2004 2004 2004 2004 2003
--------- --------- --------- --------- ---------
ITT Industries -
Consolidated 6,764.1 (326.2) (184.0) 6,253.9 5,610.8
Acqui-
sition FX
Contri- Contri- Adj.
Orders bution bution Orders Orders
3M 2004 3M 2004 3M 2004 3M 2004 3M 2003
--------- --------- --------- --------- ---------
Water Wastewater Division 478.6 (55.3) (26.4) 396.9 346.6
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Organic Revenue / Orders Growth
Fourth Quarter and Full Year 2004 & 2003
($ Millions)
(As Adjusted - Organic)
Change % Change
Adj. 04 vs. 03 Adj. 04 vs. 03
-------------- --------------
ITT Industries - Consolidated 194.5 13%
Fluid Technology 57.7 9%
Water Wastewater Division 49.2 13%
Advanced Water Treatment 10.1 27%
Motion & Flow Control 10.7 4%
Electronic Components 18.0 12%
Change % Change
Adj. 04 vs. 03 Adj. 04 vs. 03
-------------- --------------
ITT Industries - Consolidated 643.1 12%
Change % Change
Adj. 04 vs. 03 Adj. 04 vs. 03
-------------- --------------
Water Wastewater Division 50.3 15%
ITT Industries Non-GAAP Press Release Reconciliation
Segment Operating Income & OI Margin Adjusted for Restructuring
Fourth Quarter and Full Year of 2004 & 2003
($ Millions)
Adjust
% for
Q4 2004 Q4 2003 Change Q4 2004 2004
As As 04 As Restruct-
Reported Reported vs. 03 Reported uring
-------- -------- -------- -------- ---------
Sales and Revenues:
Electronic Components 178.6 155.0 178.6
Fluid Technology 749.1 611.6 749.1
Defense Electronics &
Services 746.6 501.2 746.6
Motion & Flow Control 272.4 248.5 272.4
ITT Industries -
Consolidated 1,943.0 1,513.5 1,943.0
Operating Margin:
Electronic Components 5.2% 5.2% 5.2%
Fluid Technology 10.7% 10.9% 10.7%
Defense Electronics &
Services 10.4% 11.6% 10.4%
Motion & Flow Control 13.0% 12.4% 13.0%
Total Ongoing Segments 10.4% 10.8% 10.4%
Income:
Electronic Components 9.2 8.0 15.0% 9.2 1.4
Fluid Technology 80.3 66.7 20.4% 80.3 9.6
Defense Electronics &
Services 77.8 57.9 34.4% 77.8 0.0
Motion & Flow Control 35.4 30.9 14.6% 35.4 2.4
Total Segment Operating
Income 202.7 163.5 24.0% 202.7 13.4
ITT Industries Non-GAAP Press Release Reconciliation
Segment Operating Income & OI Margin Adjusted for Restructuring
Fourth Quarter and Full Year of 2004 & 2003
($ Millions)
%
Adjust Change Change
Q4 2004 Q4 2003 for 2003 Q4 2003 Adj. Adj.
As As Restruct- As 04 vs. 04
Adjusted Reported uring Adjusted 03 vs. 03
--------- --------- --------- --------- --------- ---------
Sales and Revenues:
Electronic Components 178.6 155.0 155.0
Fluid Technology 749.1 611.6 611.6
Defense Electronics &
Services 746.6 501.2 501.2
Motion & Flow Control 272.4 248.5 248.5
ITT Industries -
Consolidated 1,943.0 1,513.5 1,513.5
Operating Margin:
Electronic Components 5.9% 5.2% 4.1% 180 BP
Fluid Technology 12.0% 10.9% 13.0% (100)BP
Defense Electronics &
Services 10.4% 11.6% 11.8% (140)BP
Motion & Flow Control 13.9% 12.4% 12.6% 130 BP
Total Ongoing Segments 11.1% 10.8% 11.6% (50)BP
Income:
Electronic Components 10.6 8.0 (1.7) 6.3 4.3 68%
Fluid Technology 89.9 66.7 12.9 79.6 10.3 13%
Defense Electronics &
Services 77.8 57.9 1.0 58.9 18.9 32%
Motion & Flow Control 37.8 30.9 0.5 31.4 6.4 20%
Total Segment Operating
Income 216.1 163.5 12.7 176.2 39.9 23%
Adjust
FY 2004 FY 2003 % FY 2004 for 2004
As As Change As Restruct-
Reported Reported 04 vs. 03 Reported uring
--------- --------- --------- --------- ---------
Sales and Revenues:
ITT Industries -
Consolidated 6,764.1 5,610.8 6,764.1
Operating Margin:
Total Ongoing
Segments 10.6% 10.8% 10.6%
Income:
Total Segment
Operating Income 717.3 607.9 18.0% 717.3 36.0
%
Adjust Change Change
FY 2004 FY 2003 for 2003 FY 2003 Adj. Adj.
As As Restruct- As 04 vs. 04 vs.
Adjusted Reported uring Adjusted 03 03
--------- --------- --------- --------- --------- ---------
Sales and Revenues:
ITT Industries -
Consolidated 6,764.1 5,610.8 5,610.8
Operating Margin:
Total Ongoing
Segments 11.1% 10.8% 11.3% (20.0)BP
Income:
Total Segment
Operating
Income 753.3 607.9 28.8 636.7 116.6 18.3%
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Adjusted Net Income & EPS
Fourth Quarter of 2004 & 2003
($ Millions, except EPS and shares)
Q4 2004 Q4 2004 Q4 2004 Q4 2003 Q4 2003 Q4 2003
As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted
--------- --------- --------- --------- --------- ---------
Segment Operating
Income 202.7 13.4 216.1 163.5 12.7 176.2
Interest Income
(Expense) (12.8) - (12.8) (4.5) (4.5)
Other Income
(Expense) (7.0) - (7.0) (3.1) - (3.1)
Gain on sale of
Assets 20.8 (20.8) - - - -
Corporate
(Expense) (21.7) - (21.7) (21.4) (0.1) (21.5)
Income from
Continuing Operations
before Tax 182.0 (7.4)#A 174.6 134.5 12.6#E 147.1
Income Tax Items 1.1#B 1.1 (19.1)#F (19.1)
Income Tax Expense (57.5) 2.3#C (55.2) (23.8) (4.0)#G (27.8)
Total Tax Expense (57.5) 3.4 (54.1) (23.8) (23.1) (46.9)
Income from Continuing
Operations 124.5 (4.0) 120.5 110.7 (10.5) 100.2
Income from Discontinued
Operations (2.9) 2.9#D 0.0 (2.6) 2.6#H 0.0
Net Income 121.6 (1.1) 120.5 108.1 (7.9) 100.2
Diluted EPS 1.29 (0.01) 1.28 1.15 (0.08) 1.06
#A - Remove Restructuring Expense of $13.4M
#B - Remove Effect of Favorable Tax Items ($1.1M)
#C - Tax Effect of Adjustments #A
#D - Remove D.O. Income of $2.9M
#E - Remove Segment Restructuring Expense of $12.6M
#F - Remove Effect of Favorable Tax Items ($19.1M)
#G - Tax Effect of Adjustment #E
#H - Remove D.O. Income of ($2.6M)
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Adjusted Net Income & EPS
Fourth Quarter of 2004 & 2003
($ Millions, except EPS and shares)
Change Percent Change
2004 vs. 2003 2004 vs. 2003
As Adjusted As Adjusted
------------- -------------
Segment Operating Income
Interest Income (Expense)
Other Income (Expense)
Gain on sale of Assets
Corporate (Expense)
Income from Continuing Operations
before Tax
Income Tax Items
Income Tax Expense
Total Tax Expense
Income from Continuing Operations
Income from Discontinued Operations
Net Income 20.3 20%
Diluted EPS $0.22 21%
#A - Remove Restructuring Expense of $13.4M
#B - Remove Effect of Favorable Tax Items ($1.1M)
#C - Tax Effect of Adjustments #A
#D - Remove D.O. Income of $2.9M
#E - Remove Segment Restructuring Expense of $12.6M
#F - Remove Effect of Favorable Tax Items ($19.1M)
#G - Tax Effect of Adjustment #E
#H - Remove D.O. Income of ($2.6M)
ITT Industries Non-GAAP Press Release Reconciliation
Cash From Operating Activities vs. Free Cash Flow
Full Year 2004 & 2003
($ Millions)
FY 04 FY 03
-------- --------
Income from Continuing Ops 437.5 394.0
Depreciation 175.8 166.3
Amortization 22.8 20.6
Working Capital (68.1) 87.8
Pension Pre-funding (100.0) (200.0)
Other 60.6 111.0
Cash from Operations 528.6 579.7
Capital Expenditures (165.1) (153.3)
Pension Pre-funding 100.0 200.0
Free Cash Flow 463.5 626.4
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Adjusted Net Income & EPS
Full Year 2004 & 2003
($ Millions, except EPS and shares)
FY 2004 FY 2004 FY 2004 FY 2003 FY 2003 FY 2003
As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted
-------- -------- --------- -------- -------- --------
Segment Operating
Income 717.3 36.0 #A 753.3 607.9 28.8#I 636.7
Interest Income
(Expense) (27.9) (4.2)#B (32.1) 10.1 (32.3)#J (22.2)
Other Income
(Expense) (17.8) 1.3#C (16.5) (7.9) - (7.9)
Gain on sale of
Investments 20.8 (20.8)#D - - - -
Corporate
(Expense) (82.4) 1.7#E (80.7) (74.7) 1.3#K (73.4)
Income from
Continuing
Operations
before Tax 610.0 14.0 624.0 535.4 (2.2) 533.2
-
Income Tax Items (16.6)#F (16.6) (26.0)#L (26.0)
Income Tax
Expense (172.5) (4.3)#G (176.8) (141.4) 0.8#M (140.6)
Total Tax Expense (172.5) (20.9) (193.4) (141.4) (25.2) (166.6)
Income from
Continuing
Operations 437.5 (6.9) 430.6 394.0 (27.4) 366.6
Income from
Discontinued
Operations (5.2) 5.2#H 0.0 9.9 (9.9)#N 0.0
Net Income 432.3 (1.7) 430.6 403.9 (37.3) 366.6
Diluted EPS 4.58 (0.02) 4.56 4.29 (0.40) 3.89
#A - Remove Restructuring Expense of $36.0M
#B - Remove Interest Income - Tax Settlement ($4.2M)
#C - Remove Bond Discount Loss on Redemption of Bonds $1.3M
#D - Gain on Sale of Investments ($20.8)
#E - Remove HQ Restructuring Expense of $1.7M
#F - Remove Effect of Favorable Tax Items
#G - Tax Effect of Adjustments #A - #E
#H - Remove D.O. Income of ($2.6M)
#I - Remove Restructuring Expense of $28.8M
#J - Remove Interest Income From Tax Audit Settlements
#K - Remove HQ Restructuring Expense of $1.3
#L - Remove Effect of Favorable Tax Items
#M - Tax Effect of Adjustments #I, #J and #K
#N - Remove D.O. Income of ($9.9M)
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Adjusted Net Income & EPS
Full Year 2004 & 2003
($ Millions, except EPS and shares)
Change Percent Change
2004 vs. 2003 2004 vs. 2003
As Adjusted As Adjusted
------------- --------------
Segment Operating Income
Interest Income (Expense)
Other Income (Expense)
Gain on sale of Investments
Corporate (Expense)
Income from Continuing Operations
before Tax
Income Tax Items
Income Tax Expense
Total Tax Expense
Income from Continuing Operations
Income from Discontinued Operations
Net Income 64.0 17%
Diluted EPS $ 0.68 17%
#A - Remove Restructuring Expense of $36.0M
#B - Remove Interest Income - Tax Settlement ($4.2M)
#C - Remove Bond Discount Loss on Redemption of Bonds $1.3M
#D - Gain on Sale of Investments ($20.8)
#E - Remove HQ Restructuring Expense of $1.7M
#F - Remove Effect of Favorable Tax Items
#G - Tax Effect of Adjustments #A - #E
#H - Remove D.O. Income of ($2.6M)
#I - Remove Restructuring Expense of $28.8M
#J - Remove Interest Income From Tax Audit Settlements
#K - Remove HQ Restructuring Expense of $1.3
#L - Remove Effect of Favorable Tax Items
#M - Tax Effect of Adjustments #I, #J and #K
#N - Remove D.O. Income of ($9.9M)
SOURCE ITT Industries, Inc.
- -0- 01/28/2005
/CONTACT: Tom Glover of ITT Industries, Inc., +1-914-641-2160,
tom.glover@itt.com/
/Web site: http://www.itt.com
http://www.thenewsmarket.com/ITT /