================================================================================
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): October 27, 2005
ITT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 1-5672 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 Rule14d-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)
================================================================================
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 quarter ended September
30, 2005 as presented in a press release dated October 27, 2005. The press
release also announces that the Company has narrowed its full-year 2005
(adjusted) earnings guidance. 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.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press release dated October 27, 2005.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this 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: October 27, 2005
3
Exhibit 99.1
ITT INDUSTRIES REPORTS THIRD QUARTER EPS OF $2.00; EARNINGS EXCLUDING
SPECIAL ITEMS ARE $1.37 PER SHARE, UP 17 PERCENT
- Revenue up 16 percent to $1.93 billion; organic revenue up 12 percent,
marking the eighth consecutive quarter of double-digit organic revenue
growth
- Solid order growth of 18 percent; organic orders increase 14 percent
- Strong cash growth driven by operational performance
- Company narrows full-year 2005 (adjusted) earnings guidance to
$5.35-5.40 per share
WHITE PLAINS, N.Y., Oct. 27 /PRNewswire-FirstCall/ -- ITT Industries, Inc.
(NYSE: ITT) today announced third quarter 2005 net income of $189.3 million, up
$79.5 million over the third quarter 2004, including the net benefit of special
items. Diluted earnings per share (EPS) for the third quarter, including the net
benefit of special items, were $2.00. The company realized an $0.85 per share
benefit from special items, primarily a favorable tax settlement arising from
the conclusion of IRS audits for the years 1998-2000, which was partially offset
by restructuring costs of $0.22 per share. The net effect of these special items
was a $0.63 increase in reported EPS for the third quarter 2005. Adjusting
results to exclude these special items, earnings for the third quarter 2005 were
$1.37 per share, up 17 percent over the comparable 2004 figure of $1.17.
"We're continuing to see the benefits of a balanced portfolio that includes
strong core businesses with good long-term growth prospects, especially in our
water and defense businesses," said Steve Loranger, ITT Industries' Chairman,
President and Chief Executive Officer. "Overall, our revenues rose 16 percent to
$1.93 billion, and organic revenue grew 12 percent, marking the eighth
consecutive quarter of double-digit organic revenue growth, once again led by
our Defense businesses. We continue to strengthen our participation in
fast-growing markets of the Asia-Pacific region, with our Fluid Technology
businesses realizing significant order and revenue gains in Russia, India and
China."
Given the company's strong performance through the first nine months,
Loranger said the company is in a position to tighten the company's full-year
financial forecast range.
"We expect that we will have full year earnings of $5.35 - $5.40 per share,
excluding special items. This represents a 17 - 18 percent increase over the
comparable figure in 2004," Loranger said. "We estimate full-year 2005 revenues
of $7.7 - $7.8 billion, up 14 - 15 percent from results last year, and full-year
free cash flow of $625 - $650 million."
Third quarter Financial Highlights
-- Third quarter revenues rose 16 percent over the same period 2004 to
$1.93 billion on sales growth across the portfolio, led by strong
double-digit revenue growth in both Fluid Technology and Defense.
Organic revenue, excluding foreign exchange and acquisitions, grew 12
percent.
-- Orders increased 18 percent during the quarter, with the largest gains
in Fluid Technology and Defense; organic orders increased 14 percent.
-- Segment operating income grew 3 percent over the third quarter 2004 to
$194.1 million. Excluding the impact of restructuring, operating income
grew 15 percent to $223.7 million.
-- Year-to-date 2005 cash from operations grew 102 percent to $511.3
million over the same period last year, before the impact of a $100
million tax payment for discontinued operations. Free cash flow (cash
from operations excluding voluntary pension pre-funding less capital
expenditures) for the first nine months of 2005 was $491.9 million.
"We're pleased with ITT's overall performance and expect continued growth in
2006. However, while certain units of the Electronic Components (EC) group have
improved over the last two years, the overall group has not performed up to our
expectations," Loranger said. "We will continue our aggressive efforts to
improve the operating performance of this business, with expanded cost
reductions, lean manufacturing and prudent product line pruning. These ongoing
actions include structural streamlining with the combination of EC with Motion &
Flow Control into one group. We have chosen Nick Hill, the President of Motion &
Flow Control, to lead this combined group, and he has been elected a Senior Vice
President of the corporation by the Board of Directors. Nick is an ITT veteran
who has spent much of his career in EC, and he will help us determine the best
course of action to ensure that the EC businesses meet our long-term financial
objectives."
"Consistent with our desire to build on the "Engineered for Life"
philosophy, we are pleased to announce that Brenda Reichelderfer, who has led
the EC group for the last two years, has been appointed to the position of
Senior Vice President and Chief Technology Officer for the corporation,
reporting to me," Loranger said. "In this role she will be responsible for the
company's Value-Based Product Development, engineering career and technology
development, and intellectual property. Her engineering background and her
experience in each of our management companies uniquely qualify her for this new
role."
Third Quarter 2005 Segment Highlights
Fluid Technology
-- Third quarter Fluid Technology revenues were $704.1 million, up $84.9
million or 14 percent from the same period last year, with organic
revenue growth of 13 percent. Revenue growth was driven by a 24 percent
revenue increase in Advanced Water Treatment and 23 percent growth in
the Industrial & BioPharm group. Segment operating income was $76.2
million and operating margin was down 160 basis points. Adjusting to
exclude restructuring costs, operating income was $91.4 million, up 14
percent from the comparable figure in 2004, while margins remained
relatively flat.
-- The Advanced Water Treatment business won several significant orders
during the quarter, including a first-of-its-kind project in New Mexico
that will supplement surface drinking water sources with treated
wastewater. The project involves technologies from throughout the
company's Fluid Technology portfolio, including ITT's reverse osmosis
designs, chlorination dosing equipment, instrumentation and pumping
equipment. Advanced Water Treatment also received a $5 million order to
supply water treatment equipment for textile wastewater reuse in
southern India, and an order to provide an oil refinery with the world's
largest ozone system for removing nitrogen oxides, a common pollutant
produced in refineries and other industrial operations.
-- The Wastewater business also grew revenues by 8 percent and grew orders
by 17 percent. Additional order opportunities are expected for
dewatering pumps as global mining activity increases, and there has been
increasing demand for submersible wastewater pumps in new geographic
markets like Russia.
-- The Industrial & BioPharm group continues to show strong revenue gains
in every region of the world. Activity has remained strong with the high
price of oil and the growing global demand for energy. The group
received a $4 million order for rubber lined slurry pumps as part of
system to remove harmful sulfur dioxides from a power plant.
Defense Electronics & Services
-- Defense Electronics & Services revenues for the third quarter were
$806.7 million, up $176.5 million or 28 percent over last year, due to
the acquisition of the Remote Sensing business and increased sales,
particularly at Night Vision, Systems and Aerospace/Communications.
Organic revenue growth was 19 percent. Operating income rose 35 percent
to $96.8 million, and operating margin rose 60 basis points.
-- Order input grew 40 percent, with organic orders up 31 percent, led by
ongoing demand for night vision goggles and SINCGARS radios. The Defense
backlog now stands at $3.9 billion, up 17 percent over the period last
year.
-- ITT's Night Vision group received an Omni VII contract worth a potential
$1.4 billion to help meet the US Army demand for the next several years.
Deliveries on the initial $160 million order will begin in early 2006.
This and other contracts have increased the backlog at Night Vision to
more than $500 million.
-- Demand for ITT's SINCGARS tactical radios continues to grow, with
additional orders of $82 million in the third quarter. The company has
been successful in developing a module to make ITT's SINCGARS radios
compatible with the Joint Tactical Radio System (JTRS) program. The
module uses ITT technology to provide high speed voice, video and data
transmission, and provides advanced mobile ad hoc networking
capabilities.
Motion & Flow Control
-- Motion & Flow Control revenues for the third quarter were $249.2
million, up 3 percent on higher volume in Leisure Marine, Friction
Materials and Aerospace Controls. Operating income declined 8 percent to
$29.4 million and margin declined 140 basis points. Excluding
restructuring costs, operating income was down 2 percent to $32.4
million, while operating margin declined 70 basis points, primarily due
to performance in the auto tubing business. The auto tubing business
recorded a charge for credit issues related to current developments in
the auto industry - without the charge, Motion & Flow Control margins
would have been 90 basis points higher in the quarter.
-- ITT's Friction Materials business is enjoying a 70 percent win rate so
far this year on new OEM platforms in Europe, including wins on new
Toyota, Fiat, Audi and Volkswagen models. The business successfully
inaugurated production at its U.S. production plant in Arkansas.
-- Aerospace Controls, which produces switches and actuators, grew revenues
6 percent, and grew orders 45 percent over the prior year, benefiting
from strong growth in the commercial and military aerospace industries.
Electronic Components
-- Electronic Components revenues for the third quarter were $170.3
million, down 2 percent or $4 million from same period last year, with
growth in the transportation and cellular handset markets more than
offset by weakness in automotive, military, and industrial demand.
Operating income declined $16.8 million to ($8.3) million as reported.
Adjusting for the effects of restructuring, operating income declined
$6.3 million to $3.1 million, primarily due to continued challenges in
keypads operations.
-- Order activity grew 15 percent compared to the third quarter 2004, due
primarily to activity in the mobile phone and military/aerospace
markets, increasing the business's book-to-bill ratio to 1.11.
-- The Electronic Components group has secured 15 platform wins for its
mechatronic technology, primarily joystick controls. It plans to launch
12 new products in this area in the fourth quarter, with customers such
as Bobcat and Caterpillar, among others.
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 are free to the media.
"Safe Harbor Statement" under the Private Securities Litigation Reform Act
of 1995 ("the Act"):
Certain material presented herein includes forward-looking statements
intended to qualify for the safe harbor from liability established by the Act.
These forward-looking statements include statements that describe the Company's
business strategy, outlook, objectives, plans, intentions or goals, and any
discussion of future operating or financial performance. Whenever used words
such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," "target" and other terms of similar meaning are intended to identify
such forward-looking statements. Forward-looking statements are uncertain and to
some extent unpredictable, and involve known and unknown risks, uncertainties
and other important factors that could cause actual results to differ materially
from those expressed in, or implied from, such forward-looking statements.
Factors that could cause results to differ materially from those anticipated by
the Company include general global economic conditions, decline in consumer
spending, interest and foreign currency exchange rate fluctuations, availability
of commodities, supplies and raw materials, competition, acquisitions or
divestitures, changes in government defense budgets, employment and pension
matters, contingencies related to actual or alleged environmental contamination,
claims and concerns, intellectual property matters, personal injury claims,
governmental investigations, tax obligations, and changes in generally accepted
accounting principles. Other factors are 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. Annual
Report on Form 10-K for the fiscal year ended December 31, 2004, and other of
its filings with the Securities and Exchange Commission. The Company undertakes
no obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise.
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 and order growth by utilizing organic revenue and organic
order growth measures that exclude 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, organic revenue and
organic orders 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.
CONSOLIDATED CONDENSED INCOME STATEMENTS
(In millions, except per share)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Sales and revenues $ 1,927.6 $ 1,663.2 $ 5,793.9 $ 4,821.1
Costs of sales
and revenues 1,306.0 1,097.3 3,911.8 3,175.3
Selling, general
and administrative
expenses 247.9 242.7 790.4 706.4
Research, development
and engineering expenses 168.8 150.2 501.7 461.2
Restructuring and asset
impairment charges 29.9 5.6 55.9 24.3
Total costs and expenses 1,752.6 1,495.8 5,259.8 4,367.2
Operating income 175.0 167.4 534.1 453.9
Interest expense 17.9 12.8 51.9 33.9
Interest income 16.6 4.2 36.3 18.8
Gain on sale of assets 7.1 - 7.1 -
Miscellaneous expense, net 2.8 4.1 13.5 10.8
Income from continuing
operations before
income taxes 178.0 154.7 512.1 428.0
Income tax expense 23.9 44.4 93.9 115.1
Income from continuing
operations 154.1 110.3 418.2 312.9
Discontinued operations,
including tax benefit of
$39.8, $0.3,$45.0 and
$1.1 in each period,
respectively 35.2 (0.5) 25.3 (2.2)
Net income $ 189.3 $ 109.8 $ 443.5 $ 310.7
Earnings Per Share:
Income from continuing operations:
Basic $ 1.67 $ 1.20 $ 4.53 $ 3.38
Diluted $ 1.63 $ 1.17 $ 4.43 $ 3.31
Discontinued operations:
Basic $ 0.38 $ (0.01) $ 0.27 $ (0.02)
Diluted $ 0.37 $ (0.01) $ 0.27 $ (0.02)
Net income:
Basic $ 2.05 $ 1.19 $ 4.80 $ 3.36
Diluted $ 2.00 $ 1.16 $ 4.70 $ 3.29
Average Common Shares -
Basic 92.4 92.3 92.3 92.3
Average Common Shares -
Diluted 94.5 94.3 94.3 94.4
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
September 30, December 31,
2005 2004
-------------- --------------
Assets
Current Assets:
Cash and cash equivalents $ 470.3 $ 262.9
Receivables, net 1,312.7 1,174.3
Inventories, net 693.3 708.4
Current assets of discontinued operations - 7.3
Deferred income taxes 78.7 107.2
Other current assets 91.8 69.1
Total current assets 2,646.8 2,329.2
Plant, property and equipment, net 941.5 980.9
Deferred income taxes 238.1 212.1
Goodwill, net 2,467.8 2,514.1
Other intangible assets, net 225.4 240.3
Other assets 1,016.8 1,000.1
Total assets $ 7,536.4 $ 7,276.7
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 782.0 $ 719.8
Accrued expenses 797.0 717.2
Accrued taxes 144.2 277.4
Current liabilities of
discontinued operations - -
Notes payable and current maturities
of long-term debt 898.0 729.2
Other current liabilities 10.6 2.2
Total current liabilities 2,631.8 2,445.8
Pension and postretirement benefits 1,369.4 1,378.5
Long-term debt 543.1 542.8
Other liabilities 515.2 566.6
Total liabilities 5,059.5 4,933.7
Shareholders' equity 2,476.9 2,343.0
Total liabilities and
shareholders' equity $ 7,536.4 $ 7,276.7
ITT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
-------------------------------
2005 2004
-------------- --------------
Operating Activities
Net income $ 443.5 $ 310.7
Net (income) loss from discontinued
operations (25.3) 2.2
Income from continuing operations 418.2 312.9
Adjustments to income from continuing
operations:
Depreciation and amortization 162.0 145.2
Restructuring and asset impairment charges 55.9 24.3
Payments for restructuring (39.9) (23.9)
Change in receivables (191.0) (140.6)
Change in inventories (16.4) (51.0)
Change in accounts payable and accrued
expenses 148.9 55.0
Change in accrued and deferred taxes 83.1 60.6
Change in other current and non-current assets (101.4) (94.4)
Change in other non-current liabilities (10.8) (44.3)
Other, net 2.7 9.4
Net cash - operating activities 511.3 253.2
Investing Activities
Additions to plant, property and equipment (119.4) (100.0)
Acquisitions, net of cash acquired (38.4) (994.6)
Proceeds from sale of joint venture 15.3 -
Proceeds from sale of assets and businesses 9.9 5.1
Other, net (1.0) 0.2
Net cash - investing activities (133.6) (1,089.3)
Financing Activities
Short-term debt, net 173.0 855.5
Long-term debt repaid (5.2) (52.1)
Long-term debt issued 0.4 1.1
Repurchase of common stock (288.5) (131.5)
Proceeds from issuance of common stock 133.4 61.5
Dividends paid (48.9) (46.1)
Other, net (0.3) ---
Net cash - financing activities (36.1) 688.4
Exchange Rate Effects on Cash and
Cash Equivalents (19.9) (3.6)
Net Cash from Operations -
Discontinued Operations (114.3) (9.0)
Net change in cash and cash equivalents 207.4 (160.3)
Cash and cash equivalents - beginning of year 262.9 414.2
Cash and Cash Equivalents - end of period $ 470.3 $ 253.9
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Organic Revenue / Orders Growth
Third Quarter 2005 & 2004
($ Millions)
(As Reported - GAAP)
----------------------------------------------------------
Sales & Sales & Change % Change
Revenues Revenues 2005 vs. 2005 vs.
3M 2005 3M 2004 2004 2004
------------ ------------ ------------ ------------
ITT Industries - Consolidated 1,927.6 1,663.2 264.4 15.9%
Fluid Technology 704.1 619.2 84.9 13.7%
Defense Electronics & Services 806.7 630.2 176.5 28.0%
Change % Change
Orders Orders 2005 vs. 2005 vs.
3M 2005 3M 2004 2004 2004
------------ ------------ ------------ ------------
ITT Industries - Consolidated 1,972.1 1,674.9 297.2 18%
Defense Electronics 825.2 588.0 237.2 40%
Orders Sales Orders / Sales
3M 2005 3M 2005 Book-to-Bill
------------ ------------ --------------
Electronic Components 189.1 170.3 1.11
(As Adjusted - Organic)
-------------------------------------------
Sales & Acquisition FX Adj. Sales
Revenues Contribution Contribution & Revenues
3M 2005 3M 2005 3M 2005 3M 2005
------------ ------------ ------------ ------------
ITT Industries -
Consolidated 1,927.6 (59.3) (5.3) 1,863.0
Fluid Technology 704.1 0.0 (4.0) 700.1
Defense Electronics
& Services 806.7 (58.3) (0.2) 748.2
Acquisition FX Adj.
Orders Contribution Contribution Orders
3M 2005 3M 2005 3M 2005 3M 2005
------------ ------------ ------------ ------------
ITT Industries -
Consolidated 1,972.1 (58.1) (6.1) 1,907.9
Defense Electronics 825.2 (57.1) (0.2) 767.9
(As Adjusted - Organic)
Sales & -------------------------------
Revenues Change % Change
3M 2004 Adj. 05 vs. 04 Adj. 05 vs. 04
------------- -------------- --------------
ITT Industries -
Consolidated 1,663.2 199.8 12%
Fluid Technology 619.2 80.9 13%
Defense Electronics
& Services 630.2 118.0 19%
Orders Change % Change
3M 2004 Adj. 05 vs. 04 Adj. 05 vs. 04
------------- -------------- --------------
ITT Industries -
Consolidated 1,674.9 233.0 14%
Defense Electronics 588.0 179.9 31%
ITT Industries Non-GAAP Press Release Reconciliation
Segment Operating Income & OI Margin Adjusted for Restructuring
Third Quarter of 2005 & 2004
($ Millions)
Q3 2005 Q3 2004 % Q3 2005 Adjust for
As As Change As 2005
Reported Reported 05 vs. 04 Reported Restructuring
---------- ---------- ---------- ---------- --------------
Sales and
Revenues:
Electronic
Components 170.3 174.3 170.3
Defense
Electronics
& Services 806.7 630.2 806.7
Fluid
Technology 704.1 619.2 704.1
Motion &
Flow Control 249.2 242.8 249.2
Intersegment
eliminations (2.7) (3.3) (2.7)
Total Ongoing
segments 1,927.6 1,663.2 1,927.6
Dispositions
and other - - -
Total Sales
and Revenues 1,927.6 1,663.2 1,927.6
Operating Margin:
Electronic
Components -4.9% 4.9% -4.9%
Defense
Electronics
& Services 12.0% 11.4% 12.0%
Fluid
Technology 10.8% 12.4% 10.8%
Motion &
Flow Control 11.8% 13.2% 11.8%
Total Ongoing
Segments 10.1% 11.4% 10.1%
Income:
Electronic
Components (8.3) 8.5 -197.6% (8.3) 11.4
Defense
Electronics
& Services 96.8 71.8 34.8% 96.8 0.0
Fluid Technology 76.2 77.0 -1.0% 76.2 15.2
Motion & Flow
Control 29.4 32.0 -8.1% 29.4 3.0
Total Segment
Operating Income 194.1 189.3 2.5% 194.1 29.6
Sales and Revenues:
Electronic
Components 170.3 174.3 170.3
Key Pads 14.9 22.4 14.9
Electronic
Components Ex
Keypads 155.4 151.9 155.4
Operating Margin:
Electronic
Components -4.9% 4.9% -4.9%
Key Pads -48.3% -8.9% -48.3%
Electronic
Components Ex
Keypads -0.7% 6.9% -0.7%
Income:
Electronic
Components (8.3) 8.5 -197.6% (8.3) 11.4
Key Pads (7.2) (2.0) 260.0% (7.2) 0.0
Electronic
Components Ex
Keypads (1.1) 10.5 -110.5% (1.1) 11.4
Q3 2005 Q3 2004 Adjust Q3 2004 %
As As for 2004 As Change Adj.
Adjusted Reported Restructuring Adjusted 05 vs. 04
---------- ---------- -------------- ---------- --------------
Sales and
Revenues:
Electronic
Components 170.3 174.3 174.3
Defense
Electronics
& Services 806.7 630.2 630.2
Fluid
Technology 704.1 619.2 619.2
Motion &
Flow Control 249.2 242.8 242.8
Intersegment
eliminations (2.7) (3.3) (3.3)
Total Ongoing
segments 1,927.6 1,663.2 1,663.2
Dispositions
and other - - -
Total Sales
and Revenues 1,927.6 1,663.2 1,663.2
Operating Margin:
Electronic
Components 1.8% 4.9% 5.4% (360)BP
Defense
Electronics &
Services 12.0% 11.4% 11.4% 60BP
Fluid Technology 13.0% 12.4% 13.0% -BP
Motion & Flow
Control 13.0% 13.2% 13.7% (70)BP
Total Ongoing
Segments 11.6% 11.4% 11.7% (10)BP
Income:
Electronic
Components 3.1 8.5 0.9 9.4 -67%
Defense Electronics
& Services 96.8 71.8 0.0 71.8 35%
Fluid Technology 91.4 77.0 3.4 80.4 14%
Motion & Flow
Control 32.4 32.0 1.2 33.2 -2%
Total Segment
Operating Income 223.7 189.3 5.5 194.8 15%
Sales and Revenues:
Electronic
Components 170.3 174.3 174.3
Key Pads 14.9 22.4 22.4
Electronic
Components Ex
Keypads 155.4 151.9 151.9
Operating Margin:
Electronic
Components 1.8% 4.9% 5.4% (360)BP
Key Pads -48.3% -8.9% -8.9%
Electronic
Components Ex
Keypads 6.6% 6.9% 7.5% (90)BP
Income:
Electronic
Components 3.1 8.5 0.9 9.4 -67.0%
Key Pads (7.2) (2.0) 0.0 (2.0) 260.0%
Electronic
Components Ex
Keypads 10.3 10.5 0.9 11.4 -9.6%
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Adjusted Net Income & EPS
Third Quarter of 2005 & 2004
($ Millions, except EPS and shares)
Q3 2005 Q3 2005 Q3 2005
As Reported Adjustments As Adjusted
------------ ------------ ------------
Segment Operating Income 194.1 29.6#A 223.7
Interest Income (Expense) (1.3) (13.2)#B (14.5)
Other Income (Expense) (2.8) - (2.8)
Gain on sale of Assets 7.1 (7.1) -
Corporate (Expense) (19.1) 0.3#A (18.8)
Income from Continuing Operations
before Tax 178.0 9.6 187.6
Income Tax Items (31.3)#C (31.3)
Income Tax Expense (23.9) (3.0)#D (26.9)
Total Tax Expense (23.9) (34.3) (58.2)
Income from Continuing Operations 154.1 (24.7) 129.4
Income from Discontinued Operations 35.2 (35.2)#E 0.0
Net Income 189.3 (59.9) 129.4
Diluted EPS 2.00 (0.63) 1.37
Percent
Change Change
Q3 2004 Q3 2004 Q3 2004 2005 vs. 2004 2005 vs. 2004
As Reported Adjustments As Adjusted As Adjusted As Adjusted
------------ -------------- -------------- -------------- --------------
Segment
Operating
Income 189.3 5.5#F 194.8
Interest
Income
(Expense) (8.6) - (8.6)
Other
Income
(Expense) (4.1) - (4.1)
Gain on sale
of Assets - - -
Corporate
(Expense) (21.9) - (21.9)
Income from
Continuing
Operations
before Tax 154.7 5.5 160.2
Income Tax
Items (3.7)#G (3.7)
Income Tax
Expense (44.4) (1.6)#H (46.0)
Total Tax
Expense (44.4) (5.3) (49.7)
Income from
Continuing
Operations 110.3 0.2 110.5
Income from
Discontinued
Operations (0.5) 0.5#I 0.0
Net Income 109.8 0.7 110.5 18.9 17.1%
Diluted EPS 1.16 0.01 1.17 $ 0.20 17.1%
#A - Remove Restructuring Expense of $29.6M & 0.3M
#B - Remove Interest Income Due to Tax Refund ($13.2M)
#C - Remove Tax Matters of ($31.3M)
#D - Remove Tax Benefit on Special Items of ($3.0M)
#E - Remove D.O. Income of ($35.2M)
#F - Remove Restructuring Expense of $5.5M
#G - Remove Tax Refund of ($3.7M)
#H - Remove Tax Benefit on Special Items of ($1.6M)
#I - Remove D.O. Expense of $0.5M
ITT Industries Non-GAAP Press Release Reconciliation
Cash From Operating Activities vs. Free Cash Flow
Full Year 2005
Free Cash Flow FY 2005
-------------------------------
Lower Upper
-------------- --------------
Cash from Operations 725.0 750.0
Capital Expenditures (200.0) (200.0)
Pension Pre-funding 100.0 100.0
Free Cash Flow 625.0 650.0
ITT Industries Non-GAAP Press Release Reconciliation
Cash From Operating Activities vs. Free Cash Flow
Third Quarter of 2005 & 2004
($ Millions)
3rd Qtr 05 3rd Qtr 04
-------------- --------------
Income from Continuing Ops 418.2 312.9
Depreciation 136.6 129.7
Amortization 25.4 15.5
Working Capital (129.1) (144.8)
Pension Pre-funding (100.0) (100.0)
Other 160.2 39.9
Cash from Operations 511.3 253.2
Capital Expenditures (119.4) (100.0)
Pension Pre-funding 100.0 100.0
Free Cash Flow 491.9 253.2
ITT Industries Non-GAAP Press Release Reconciliation
Reported vs. Adjusted Net Income & EPS
Full Year of 2005 & 2004
Full Year 2005 EPS**
--------------------------------------------------
Full Year
Lower Limit Upper Limit 2004 EPS**
-------------- -------------- --------------
As Reported* 6.12 6.17 4.58
Adjustments
Restructuring 0.41 0.41 0.28
Interest (0.17) (0.17) (0.03)
Tax Settlement (0.69) (0.69) (0.17)
Gain on Sale of Investments (0.05) (0.05) (0.15)
Discontinued Operations (0.27) (0.27) 0.05
Adjusted Net Income 5.35 5.40 4.56
* Amount represents projected figures for full year 2005
** Represents diluted EPS
SOURCE ITT Industries, Inc.
-0- 10/27/2005
/CONTACT: Tom Glover of ITT Industries, Inc., +1-914-641-2160,
tom.glover@itt.com /
/First Call Analyst: /
/FCMN Contact: marianna.ricci@itt.com /
/Web site: http://www.itt.com /