ITT Reports Third Quarter 2006 Results

• Earnings per share up 15 percent excluding special items (up 18 percent excluding SFAS-123R).
• Third quarter revenue up 15 percent to $2.0 billion on strong growth in all segments; organic revenue up 13 percent; strong cash performance.
• Net impact of special items, including $0.03 per share results from Switches business (moved to discontinued operations), is zero.
• ITT today announces a $1 billion share repurchase program.
• Company raises FY 2006 earnings guidance after adjusting for the impact of moving the Switches business to discontinued operations.

ITT Corporation (NYSE: ITT) today reported third quarter 2006 net income of $143.5 million or $0.77 per share. The net impact of special items, comprising restructuring, tax settlements and discontinued operations, is zero. Excluding special items in 2005 and 2006, 2006 third quarter earnings from continuing operations grew 15 percent or $0.10 per share over the third quarter 2005. Excluding the $(0.02) per share impact of the adoption of SFAS-123R, earnings for the quarter grew 18 percent compared to the third quarter of 2005. Third quarter 2006 revenue was $2.0 billion, up 15 percent over the same period last year, with organic revenue growth of 13 percent.

"We are very pleased with our performance in the third quarter, with solid growth in organic revenue, earnings, and cash flow," said Steve Loranger, Chairman, President and Chief Executive Officer. "Our management team is continuing to deliver double-digit organic growth, reflecting the strength of our market positions, our ongoing focus on new product development, a balanced portfolio of businesses, and overall customer satisfaction."

"This revenue growth trend has continued now for several years, but we never take it for granted," Loranger said. "We are constantly listening to our customers and looking for new ways to anticipate their needs and deliver reliable solutions. This is an integral part of the ITT Management System, and our results this quarter and this year speak to its importance in the way we manage the company."

2006 Outlook and Beyond

"We are very pleased with the strong performance we have seen this year," Loranger added. "We are raising our full-year earnings guidance as a result." ITT now forecasts full year 2006 earnings from continuing operations, excluding special items, will be in a range of $2.88 to $2.91 per share, up 13-14 percent compared to full year 2005, including the estimated $(0.09) per share impact from the adoption of SFAS-123R. Excluding the impact of the adoption of SFAS-123R, the outlook for full year 2006 earnings from continuing operations excluding special items would be up 16-17 percent. The new guidance reflects the move of the Switches business, which is in the process of being sold, to discontinued operations.

"Today we announced a $1 billion share repurchase program that is consistent with ITT's commitment to a balanced and disciplined capital allocation process," said George E. Minnich, Senior Vice President and Chief Financial Officer. "Our capital priorities are centered on those investments necessary to grow our businesses organically and through acquisitions, while also providing cash returns to shareholders. With our strong balance sheet and robust cash flow generation, we continue to support our growth priorities while returning additional cash to shareholders through the repurchase program."

In other action, the Board of Directors of ITT Corporation declared an $0.11 per share dividend for the fourth quarter of 2006. The dividend is payable on January 1, 2007 to shareholders of record on November 17, 2006.

Primary Business Results

Defense Electronics & Services

• ITT's Defense Electronics & Services segment reported third quarter 2006 revenues of $957.4 million, up 19 percent, over the same period last year, led by increases in the Aerospace/Communications, Night Vision and Advanced Engineering and Sciences businesses.
• Higher volume, better yields and contract performance drove third quarter operating results. Third quarter operating income for the segment was $112.6 million, including the impact of restructuring. Excluding restructuring, operating income was up 17 percent in the quarter to $113.6 million over the comparable period in 2005.
• The company saw strong order growth in the third quarter, with orders up 28 percent over the same quarter of 2005.

Fluid Technology

• Third quarter Fluid Technology revenue was $780.3 million, up $85.8 million or 12 percent; organic revenues grew 7 percent over the same period in 2005, led by the Water and Wastewater businesses. Operating income was $97.8 million for the third quarter, including the impact of restructuring. Excluding restructuring, third quarter operating income was up 15 percent to $103.4 million.
• Operating margins, excluding restructuring, grew by 40 basis points in the quarter, to 13.3 percent as a result of ongoing operational and lean initiatives.
• Total orders for the third quarter were up 19 percent and organic orders were up 15 percent compared to the third quarter of 2005.

Motion & Flow Control

• 2006 third quarter revenues for ITT's Motion & Flow Control segment were $167.1 million, up 11 percent from the third quarter last year.
• 2006 third quarter operating income for the segment declined to $23.7 million, including the impact of restructuring. Excluding restructuring, operating income for this segment was $25.1 million, down 16 percent from the same quarter in 2005. The decline in operating income resulted from the costs of factory relocations and increases in the cost of certain specialty materials.
• During the third quarter the company completed the acquisition of aerospace pump manufacturer SOTA Corporation, which will become part of the Aerospace Controls value center. SOTA strengthens the company's ability to compete as an integrator of small fluid management systems used on aircraft.

Electronic Components

• The process to sell Electronic Components' Switches business is progressing, and presentations to prospective buyers have commenced. As a result, the Switches business has been moved to discontinued operations effective with the third quarter results.
• 2006 third quarter revenues for the Electronic Components segment were $99.9 million, up 16 percent over the same period in 2005. Organic revenue grew 15 percent, due to strong performance in the transportation, industrial and military markets.
• Operating income for the third quarter was $10.0 million. Excluding restructuring, operating income was up 107 percent over the third quarter last year to $11.2 million. Operating margins, excluding restructuring, grew 490 basis points compared to the third quarter of 2005, primarily driven by strong demand in the industrial market and continuing operational improvements.

About ITT Corporation

ITT Corporation (NYSE: ITT) supplies advanced technology products and services in several growth markets. ITT is a global leader in

the transport, treatment and control of water, wastewater and other fluids. The company plays a vital role in international security through its defense communications and electronics products; space surveillance and intelligence systems; and advanced engineering and related services. It also serves the growing leisure marine and electronic components markets with a wide range of products. Headquartered in White Plains, NY, the company generated $7.0 billion in 2005 sales. In addition to the New York Stock Exchange, ITT Corporation stock is traded on the NYSE Arca, Paris, London and Frankfurt exchanges.