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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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State of Indiana
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13-5158950
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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ITEM
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PAGE
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PART I – FINANCIAL INFORMATION
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1.
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2.
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3.
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4.
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PART II – OTHER INFORMATION
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1.
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1A.
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2.
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3.
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4.
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5.
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6.
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For the Three Months Ended March 31
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2016
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2015
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||||
Revenue
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$
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609.1
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$
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588.7
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Costs of revenue
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413.8
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389.7
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Gross profit
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195.3
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199.0
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General and administrative expenses
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69.0
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60.1
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Sales and marketing expenses
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43.3
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47.3
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Research and development expenses
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19.2
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18.3
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Asbestos-related costs, net
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12.8
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15.4
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Operating income
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51.0
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57.9
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Interest and non-operating expenses, net
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1.7
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1.2
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Income from continuing operations before income tax expense
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49.3
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56.7
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Income tax expense
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11.7
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18.1
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Income from continuing operations
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37.6
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38.6
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(Loss) income from discontinued operations, including tax benefit of $0.3 and $3.5, respectively
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(0.3
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3.4
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Net income
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37.3
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42.0
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Less: Loss attributable to noncontrolling interests
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(0.1
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(0.1
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Net income attributable to ITT Corporation
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$
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37.4
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$
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42.1
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Amounts attributable to ITT Corporation:
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Income from continuing operations, net of tax
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$
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37.7
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$
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38.7
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(Loss) income from discontinued operations, net of tax
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(0.3
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)
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3.4
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Net income
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$
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37.4
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$
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42.1
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Earnings (loss) per share attributable to ITT Corporation:
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Basic:
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Continuing operations
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$
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0.42
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$
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0.42
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Discontinued operations
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—
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0.04
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Net income
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$
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0.42
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$
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0.46
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Diluted:
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Continuing operations
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$
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0.42
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$
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0.42
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Discontinued operations
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(0.01
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)
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0.04
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Net income
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$
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0.41
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$
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0.46
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Weighted average common shares – basic
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89.6
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90.6
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Weighted average common shares – diluted
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90.5
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91.6
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Cash dividends declared per common share
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$
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0.124
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$
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0.1183
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For the Three Months Ended March 31
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2016
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2015
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Net income
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$
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37.3
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$
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42.0
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Other comprehensive income (loss):
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Net foreign currency translation adjustment
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27.2
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(60.9
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)
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Net change in postretirement benefit plans, net of tax impacts of $0.6 and $0.3, respectively
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1.1
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0.5
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Other comprehensive income (loss)
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28.3
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(60.4
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)
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Comprehensive income (loss)
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65.6
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(18.4
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Less: Comprehensive loss attributable to noncontrolling interests
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(0.1
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(0.1
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Comprehensive income (loss) attributable to ITT Corporation
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$
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65.7
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$
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(18.3
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)
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Disclosure of reclassification and other adjustments to postretirement benefit plans
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Reclassification adjustments (see Note 14):
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Amortization of prior service benefit, net of tax expense of $(0.5) and $(0.9), respectively
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$
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(0.9
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$
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(1.6
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)
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Amortization of net actuarial loss, net of tax benefits of $1.1 and $1.2, respectively
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2.0
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2.1
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Net change in postretirement benefit plans, net of tax
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$
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1.1
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$
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0.5
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March 31,
2016 |
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December 31,
2015 |
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(Unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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430.9
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$
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415.7
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Receivables, net
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607.0
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584.9
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Inventories, net
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301.3
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292.7
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Other current assets
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227.0
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204.4
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Total current assets
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1,566.2
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1,497.7
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Plant, property and equipment, net
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443.0
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443.5
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Goodwill
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787.6
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778.3
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Other intangible assets, net
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181.2
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187.2
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Asbestos-related assets
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331.3
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337.5
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Deferred income taxes
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322.6
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326.1
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Other non-current assets
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177.3
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153.3
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Total non-current assets
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2,243.0
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2,225.9
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Total assets
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$
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3,809.2
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$
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3,723.6
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Liabilities and Shareholders’ Equity
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Current liabilities:
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Short-term loans and current maturities of long-term debt
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$
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275.2
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$
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245.7
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Accounts payable
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293.5
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314.7
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Accrued liabilities
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385.3
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392.7
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Total current liabilities
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954.0
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953.1
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Asbestos-related liabilities
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957.0
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954.8
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Postretirement benefits
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260.6
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260.4
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Other non-current liabilities
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214.7
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189.9
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Total non-current liabilities
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1,432.3
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1,405.1
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Total liabilities
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2,386.3
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2,358.2
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Shareholders’ equity:
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Common stock:
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Authorized – 250.0 shares, $1 par value per share (104.7 and 104.5 shares issued, respectively)
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Outstanding – 90.0 shares and 89.5 shares, respectively
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90.0
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89.5
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Retained earnings
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1,727.2
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1,696.7
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Total accumulated other comprehensive loss
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(395.8
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)
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(424.1
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)
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Total ITT Corporation shareholders' equity
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1,421.4
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1,362.1
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Noncontrolling interests
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1.5
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3.3
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Total shareholders’ equity
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1,422.9
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1,365.4
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Total liabilities and shareholders’ equity
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$
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3,809.2
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$
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3,723.6
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For the Three Months Ended March 31
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2016
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|
2015
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Operating Activities
|
|
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|
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Net income
|
$
|
37.3
|
|
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$
|
42.0
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Less: (Loss) income from discontinued operations
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(0.3
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)
|
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3.4
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Less: (Loss) attributable to noncontrolling interests
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(0.1
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)
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(0.1
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)
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Income from continuing operations attributable to ITT Corporation
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37.7
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38.7
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Adjustments to income from continuing operations:
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Depreciation and amortization
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25.3
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20.7
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Stock-based compensation
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2.9
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|
|
3.1
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|
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Asbestos-related costs, net
|
12.8
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|
|
15.4
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Asbestos-related payments, net
|
(4.3
|
)
|
|
(3.9
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)
|
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Changes in assets and liabilities:
|
|
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|
||||
Change in receivables
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(21.0
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)
|
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(56.7
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)
|
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Change in inventories
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(4.0
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)
|
|
3.6
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|
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Change in accounts payable
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(14.8
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)
|
|
(0.5
|
)
|
||
Change in accrued expenses
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(28.8
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)
|
|
(21.3
|
)
|
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Change in accrued and deferred income taxes
|
3.4
|
|
|
17.2
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Other, net
|
(3.5
|
)
|
|
(8.1
|
)
|
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Net Cash – Operating activities
|
5.7
|
|
|
8.2
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Investing Activities
|
|
|
|
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Capital expenditures
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(21.0
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)
|
|
(30.2
|
)
|
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Acquisitions, net of cash acquired
|
(0.2
|
)
|
|
—
|
|
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Purchases of investments
|
(40.0
|
)
|
|
(15.3
|
)
|
||
Maturities of investments
|
36.3
|
|
|
5.3
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|
||
Other, net
|
0.1
|
|
|
0.2
|
|
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Net Cash – Investing activities
|
(24.8
|
)
|
|
(40.0
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)
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Financing Activities
|
|
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|
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Commercial paper, net borrowings
|
28.5
|
|
|
113.5
|
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Short-term revolving loans, borrowings
|
27.7
|
|
|
—
|
|
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Short-term revolving loans, repayments
|
(27.7
|
)
|
|
—
|
|
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Repurchase of common stock
|
(6.9
|
)
|
|
(82.8
|
)
|
||
Proceeds from issuance of common stock
|
6.1
|
|
|
2.0
|
|
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Dividends paid
|
(11.4
|
)
|
|
(0.3
|
)
|
||
Excess tax benefit from equity compensation activity
|
3.0
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|
|
1.8
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|
||
Other, net
|
(2.4
|
)
|
|
(0.2
|
)
|
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Net Cash – Financing activities
|
16.9
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|
|
34.0
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Exchange rate effects on cash and cash equivalents
|
9.9
|
|
|
(15.8
|
)
|
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Net Cash – Operating activities of discontinued operations
|
7.5
|
|
|
(0.3
|
)
|
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Net change in cash and cash equivalents
|
15.2
|
|
|
(13.9
|
)
|
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Cash and cash equivalents – beginning of year
|
415.7
|
|
|
584.0
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Cash and cash equivalents – end of period
|
$
|
430.9
|
|
|
$
|
570.1
|
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Supplemental Disclosures of Cash Flow Information
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Cash paid during the year for:
|
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|
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Interest
|
$
|
1.4
|
|
|
$
|
—
|
|
Income taxes, net of refunds received
|
$
|
5.0
|
|
|
$
|
(1.0
|
)
|
For the Three Months Ended March 31
|
|
2016
|
|
2015
|
||||
Common Stock
|
|
|
|
|
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Common stock, beginning balance
|
|
$
|
89.5
|
|
|
$
|
91.0
|
|
Activity from stock incentive plans
|
|
0.7
|
|
|
0.3
|
|
||
Share repurchases
|
|
(0.2
|
)
|
|
(2.1
|
)
|
||
Common stock, ending balance
|
|
90.0
|
|
|
89.2
|
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Retained Earnings
|
|
|
|
|
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Retained earnings, beginning balance
|
|
1,696.7
|
|
|
1,445.1
|
|
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Net income attributable to ITT Corporation
|
|
37.4
|
|
|
42.1
|
|
||
Dividends declared
|
|
(11.3
|
)
|
|
(10.5
|
)
|
||
Activity from stock incentive plans
|
|
11.1
|
|
|
6.5
|
|
||
Share repurchases
|
|
(6.7
|
)
|
|
(81.5
|
)
|
||
Retained earnings, ending balance
|
|
1,727.2
|
|
|
1,401.7
|
|
||
Accumulated Other Comprehensive Loss
|
|
|
|
|
|
|
||
Postretirement benefit plans, beginning balance
|
|
(153.7
|
)
|
|
(144.2
|
)
|
||
Net change in postretirement benefit plans
|
|
1.1
|
|
|
0.5
|
|
||
Postretirement benefit plans, ending balance
|
|
(152.6
|
)
|
|
(143.7
|
)
|
||
Cumulative translation adjustment, beginning balance
|
|
(270.1
|
)
|
|
(176.7
|
)
|
||
Net cumulative translation adjustment
|
|
27.2
|
|
|
(60.9
|
)
|
||
Cumulative translation adjustment, ending balance
|
|
(242.9
|
)
|
|
(237.6
|
)
|
||
Unrealized loss on investment securities, beginning balance
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Unrealized loss on investment securities, ending balance
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Total accumulated other comprehensive loss
|
|
(395.8
|
)
|
|
(381.6
|
)
|
||
Noncontrolling interests
|
|
|
|
|
|
|
||
Noncontrolling interests, beginning balance
|
|
3.3
|
|
|
5.4
|
|
||
Loss attributable to noncontrolling interests
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Dividend to noncontrolling interest shareholders
|
|
(1.9
|
)
|
|
—
|
|
||
Other
|
|
0.2
|
|
|
—
|
|
||
Noncontrolling interests, ending balance
|
|
1.5
|
|
|
5.3
|
|
||
Total Shareholders' Equity
|
|
|
|
|
|
|
||
Total shareholders' equity, beginning balance
|
|
1,365.4
|
|
|
1,220.3
|
|
||
Net change in common stock
|
|
0.5
|
|
|
(1.8
|
)
|
||
Net change in retained earnings
|
|
30.5
|
|
|
(43.4
|
)
|
||
Net change in accumulated other comprehensive loss
|
|
28.3
|
|
|
(60.4
|
)
|
||
Net change in noncontrolling interests
|
|
(1.8
|
)
|
|
(0.1
|
)
|
||
Total shareholders' equity, ending balance
|
|
$
|
1,422.9
|
|
|
$
|
1,114.6
|
|
•
|
Excess tax benefits and deficiencies will no longer be recognized as a change in additional paid-in-capital in the equity section of the balance, instead they are to be recognized in the income statement as a tax expense or benefit. In the statement of cash flows, excess tax benefits and deficiencies will no longer be classified as a financing activity, instead they will be classified as an operating activity.
|
•
|
Entities will have the option to continue to reduce share-based compensation expense during the vesting period of outstanding awards for estimated future employee forfeitures or they may elect to recognize the impact of forfeitures as they actually occur.
|
•
|
The ASU also provides new guidance to other areas of the standard including minimum statutory tax withholding rules and the calculation of diluted common shares outstanding.
|
|
Revenue
|
|
Operating Income (Loss)
|
|
Operating Margin
|
||||||||||||||||
Three Months Ended March 31
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||
Industrial Process
|
$
|
208.8
|
|
|
$
|
255.6
|
|
|
$
|
9.0
|
|
|
$
|
20.4
|
|
|
4.3
|
%
|
|
8.0
|
%
|
Motion Technologies
|
257.0
|
|
|
191.2
|
|
|
50.7
|
|
|
41.0
|
|
|
19.7
|
%
|
|
21.4
|
%
|
||||
Interconnect Solutions
|
72.4
|
|
|
77.5
|
|
|
2.0
|
|
|
4.8
|
|
|
2.8
|
%
|
|
6.2
|
%
|
||||
Control Technologies
|
71.9
|
|
|
65.8
|
|
|
10.4
|
|
|
14.3
|
|
|
14.5
|
%
|
|
21.7
|
%
|
||||
Total segment results
|
610.1
|
|
|
590.1
|
|
|
72.1
|
|
|
80.5
|
|
|
11.8
|
%
|
|
13.7
|
%
|
||||
Asbestos-related costs, net
|
—
|
|
|
—
|
|
|
(12.8
|
)
|
|
(15.4
|
)
|
|
—
|
|
|
—
|
|
||||
Eliminations / Other corporate costs
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(8.3
|
)
|
|
(7.2
|
)
|
|
—
|
|
|
—
|
|
||||
Total Eliminations / Corporate and Other costs
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(21.1
|
)
|
|
(22.6
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
609.1
|
|
|
$
|
588.7
|
|
|
$
|
51.0
|
|
|
$
|
57.9
|
|
|
8.4
|
%
|
|
9.8
|
%
|
|
Total Assets
|
|
Capital
Expenditures
|
|
Depreciation &
Amortization
|
||||||||||||||||||
Three Months Ended March 31
|
2016
|
|
2015
(a)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Industrial Process
|
$
|
1,079.4
|
|
|
$
|
1,097.5
|
|
|
$
|
3.5
|
|
|
$
|
6.2
|
|
|
$
|
7.2
|
|
|
$
|
7.6
|
|
Motion Technologies
|
830.7
|
|
|
779.8
|
|
|
14.2
|
|
|
13.3
|
|
|
10.1
|
|
|
6.9
|
|
||||||
Interconnect Solutions
|
312.3
|
|
|
303.2
|
|
|
1.8
|
|
|
7.1
|
|
|
3.0
|
|
|
2.3
|
|
||||||
Control Technologies
|
378.7
|
|
|
370.6
|
|
|
1.4
|
|
|
2.4
|
|
|
3.4
|
|
|
2.5
|
|
||||||
Corporate and Other
|
1,208.1
|
|
|
1,172.5
|
|
|
0.1
|
|
|
1.2
|
|
|
1.6
|
|
|
1.4
|
|
||||||
Total
|
$
|
3,809.2
|
|
|
$
|
3,723.6
|
|
|
$
|
21.0
|
|
|
$
|
30.2
|
|
|
$
|
25.3
|
|
|
$
|
20.7
|
|
(a)
|
Amounts reflect balances as of
December 31, 2015
.
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Severance costs
|
$
|
5.1
|
|
|
$
|
8.9
|
|
Asset write-offs
|
0.2
|
|
|
—
|
|
||
Other restructuring costs
|
0.2
|
|
|
0.4
|
|
||
Total restructuring costs
|
$
|
5.5
|
|
|
$
|
9.3
|
|
By segment:
|
|
|
|
||||
Industrial Process
|
$
|
3.2
|
|
|
$
|
8.9
|
|
Motion Technologies
|
1.4
|
|
|
—
|
|
||
Interconnect Solutions
|
—
|
|
|
(0.2
|
)
|
||
Control Technologies
|
0.9
|
|
|
0.5
|
|
||
Corporate and Other
|
—
|
|
|
0.1
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Restructuring accruals - beginning balance
|
$
|
20.0
|
|
|
$
|
21.9
|
|
Restructuring costs
|
5.5
|
|
|
9.3
|
|
||
Cash payments
|
(6.5
|
)
|
|
(6.6
|
)
|
||
Asset write-offs
|
(0.2
|
)
|
|
—
|
|
||
Foreign exchange translation and other
|
(0.1
|
)
|
|
(0.4
|
)
|
||
Restructuring accrual - ending balance
|
$
|
18.7
|
|
|
$
|
24.2
|
|
By accrual type:
|
|
|
|
||||
Severance accrual
|
$
|
18.4
|
|
|
$
|
22.4
|
|
Facility carrying and other costs accrual
|
0.3
|
|
|
1.8
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Restructuring accruals - beginning balance
|
$
|
4.9
|
|
|
$
|
—
|
|
Restructuring costs
|
3.2
|
|
|
8.9
|
|
||
Cash payments
|
(3.3
|
)
|
|
(1.0
|
)
|
||
Asset write-offs
|
(0.2
|
)
|
|
—
|
|
||
Restructuring accruals - ending balance
|
$
|
4.6
|
|
|
$
|
7.9
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Restructuring accruals - beginning balance
|
$
|
9.4
|
|
|
$
|
17.1
|
|
Restructuring costs
|
—
|
|
|
(0.2
|
)
|
||
Cash payments
|
(2.6
|
)
|
|
(3.4
|
)
|
||
Foreign exchange translation
|
—
|
|
|
(0.2
|
)
|
||
Restructuring accruals - ending balance
|
$
|
6.8
|
|
|
$
|
13.3
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||
Basic weighted average common shares outstanding
|
89.6
|
|
|
90.6
|
|
Add: Dilutive impact of outstanding equity awards
|
0.9
|
|
|
1.0
|
|
Diluted weighted average common shares outstanding
|
90.5
|
|
|
91.6
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Anti-dilutive stock options
|
0.6
|
|
|
0.3
|
|
||
Average exercise price
|
$
|
39.74
|
|
|
$
|
42.90
|
|
Year(s) of expiration
|
2024 - 2026
|
|
|
2024 - 2025
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||||||
Trade accounts receivable
|
|
$
|
587.0
|
|
|
|
|
$
|
554.0
|
|
|
Notes receivable
|
|
3.0
|
|
|
|
|
3.9
|
|
|
||
Other
|
|
33.5
|
|
|
|
|
43.1
|
|
|
||
Receivables, gross
|
|
623.5
|
|
|
|
|
601.0
|
|
|
||
Less: Allowance for doubtful accounts
|
|
(16.5
|
)
|
|
|
|
(16.1
|
)
|
|
||
Receivables, net
|
|
$
|
607.0
|
|
|
|
|
$
|
584.9
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||||||
Finished goods
|
|
$
|
46.8
|
|
|
|
|
$
|
60.9
|
|
|
Work in process
|
|
63.5
|
|
|
|
|
56.0
|
|
|
||
Raw materials
|
|
170.9
|
|
|
|
|
162.9
|
|
|
||
Inventoried costs related to long-term contracts
|
|
47.2
|
|
|
|
|
43.0
|
|
|
||
Total inventory before progress payments
|
|
328.4
|
|
|
|
|
322.8
|
|
|
||
Less: Progress payments
|
|
(27.1
|
)
|
|
|
|
(30.1
|
)
|
|
||
Inventories, net
|
|
$
|
301.3
|
|
|
|
|
$
|
292.7
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||||||
Asbestos-related assets
|
|
$
|
74.5
|
|
|
|
|
$
|
74.5
|
|
|
Short-term investments
|
|
68.5
|
|
|
|
|
64.9
|
|
|
||
Prepaid income taxes
|
|
30.9
|
|
|
|
|
14.3
|
|
|
||
Other
|
|
53.1
|
|
|
|
|
50.7
|
|
|
||
Other current assets
|
|
$
|
227.0
|
|
|
|
|
$
|
204.4
|
|
|
Other employee benefit-related assets
|
|
$
|
93.9
|
|
|
|
|
$
|
92.9
|
|
|
Environmental-related assets
(a)
|
|
34.2
|
|
|
|
|
10.8
|
|
|
||
Capitalized software costs
|
|
28.5
|
|
|
|
|
28.2
|
|
|
||
Other
|
|
20.7
|
|
|
|
|
21.4
|
|
|
||
Other non-current assets
|
|
$
|
177.3
|
|
|
|
|
$
|
153.3
|
|
|
(a)
|
Environmental-related assets increased $23.4 primarily related to a settlement agreement and establishment of a Qualified Settlement Fund (QSF), which can be drawn upon to pay certain future environmental expenses associated with environmental remediation sites covered under the agreement. See Note
17
, Commitments and Contingencies, to the Consolidated Condensed Financial Statements for further information on environmental-related matters.
|
|
March 31,
2016 |
|
December 31,
2015 |
||||||||
Land and improvements
|
|
$
|
26.0
|
|
|
|
|
$
|
25.4
|
|
|
Machinery and equipment
|
|
941.2
|
|
|
|
|
909.3
|
|
|
||
Buildings and improvements
|
|
244.5
|
|
|
|
|
242.0
|
|
|
||
Furniture, fixtures and office equipment
|
|
69.4
|
|
|
|
|
66.3
|
|
|
||
Construction work in progress
|
|
31.0
|
|
|
|
|
42.3
|
|
|
||
Other
|
|
6.0
|
|
|
|
|
6.7
|
|
|
||
Plant, property and equipment, gross
|
|
1,318.1
|
|
|
|
|
1,292.0
|
|
|
||
Less: Accumulated depreciation
|
|
(875.1
|
)
|
|
|
|
(848.5
|
)
|
|
||
Plant, property and equipment, net
|
|
$
|
443.0
|
|
|
|
|
$
|
443.5
|
|
|
|
Industrial
Process
|
|
Motion
Technologies
|
|
Interconnect
Solutions
|
|
Control
Technologies
|
|
Total
|
||||||||||||||||||
Goodwill - December 31, 2015
|
|
$
|
312.6
|
|
|
|
|
$
|
201.0
|
|
|
|
|
$
|
69.0
|
|
|
|
|
$
|
195.7
|
|
|
|
$
|
778.3
|
|
Adjustments to purchase price allocations
|
|
—
|
|
|
|
|
0.8
|
|
|
|
|
—
|
|
|
|
|
0.4
|
|
|
|
1.2
|
|
|||||
Foreign currency
|
|
5.6
|
|
|
|
|
1.8
|
|
|
|
|
0.7
|
|
|
|
|
—
|
|
|
|
8.1
|
|
|||||
Goodwill - March 31, 2016
|
|
$
|
318.2
|
|
|
|
|
$
|
203.6
|
|
|
|
|
$
|
69.7
|
|
|
|
|
$
|
196.1
|
|
|
|
$
|
787.6
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Net Intangibles
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Net Intangibles
|
||||||||||||||||||||||||
Customer relationships
|
|
$
|
158.1
|
|
|
|
|
$
|
(49.2
|
)
|
|
|
|
$
|
108.9
|
|
|
|
|
$
|
157.4
|
|
|
|
|
$
|
(45.3
|
)
|
|
|
|
$
|
112.1
|
|
|
Proprietary technology
|
|
53.6
|
|
|
|
|
(14.0
|
)
|
|
|
|
39.6
|
|
|
|
|
54.9
|
|
|
|
|
(12.7
|
)
|
|
|
|
42.2
|
|
|
||||||
Patents and other
|
|
8.8
|
|
|
|
|
(7.4
|
)
|
|
|
|
1.4
|
|
|
|
|
8.6
|
|
|
|
|
(6.6
|
)
|
|
|
|
2.0
|
|
|
||||||
Finite-lived intangible total
|
|
220.5
|
|
|
|
|
(70.6
|
)
|
|
|
|
149.9
|
|
|
|
|
220.9
|
|
|
|
|
(64.6
|
)
|
|
|
|
156.3
|
|
|
||||||
Indefinite-lived intangibles
|
|
31.3
|
|
|
|
|
—
|
|
|
|
|
31.3
|
|
|
|
|
30.9
|
|
|
|
|
—
|
|
|
|
|
30.9
|
|
|
||||||
Other intangible assets
|
|
$
|
251.8
|
|
|
|
|
$
|
(70.6
|
)
|
|
|
|
$
|
181.2
|
|
|
|
|
$
|
251.8
|
|
|
|
|
$
|
(64.6
|
)
|
|
|
|
$
|
187.2
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||||||
Compensation and other employee-related benefits
|
|
$
|
122.6
|
|
|
|
|
$
|
138.6
|
|
|
Asbestos-related liabilities
|
|
88.1
|
|
|
|
|
88.0
|
|
|
||
Customer-related liabilities
|
|
38.9
|
|
|
|
|
38.0
|
|
|
||
Accrued income taxes and other tax-related liabilities
|
|
42.2
|
|
|
|
|
30.9
|
|
|
||
Environmental liabilities and other legal matters
|
|
25.0
|
|
|
|
|
24.0
|
|
|
||
Accrued warranty costs
|
|
21.2
|
|
|
|
|
21.7
|
|
|
||
Other accrued liabilities
|
|
47.3
|
|
|
|
|
51.5
|
|
|
||
Accrued liabilities
|
|
$
|
385.3
|
|
|
|
|
$
|
392.7
|
|
|
Deferred income taxes and other tax-related accruals
|
|
$
|
44.2
|
|
|
|
|
$
|
44.5
|
|
|
Environmental liabilities
|
|
68.2
|
|
|
|
|
72.0
|
|
|
||
Compensation and other employee-related benefits
|
|
37.9
|
|
|
|
|
35.6
|
|
|
||
Other
(a)
|
|
64.4
|
|
|
|
|
37.8
|
|
|
||
Other non-current liabilities
|
|
$
|
214.7
|
|
|
|
|
$
|
189.9
|
|
|
(a)
|
Increase primarily driven by deferred income associated with an insurance settlement agreement and establishment of a QSF related to our environmental liability. The deferred income will be reduced as actual costs for remediation sites covered under the agreement are incurred. See Note
17
, Commitments and Contingencies, to the Consolidated Condensed Financial Statements for further information.
|
|
March 31,
2016 |
|
December 31,
2015 |
||||||||
Commercial paper
|
|
$
|
123.0
|
|
|
|
|
$
|
94.5
|
|
|
Short-term loans
|
|
151.1
|
|
|
|
|
150.0
|
|
|
||
Current maturities of long-term debt and capital leases
|
|
1.1
|
|
|
|
|
1.2
|
|
|
||
Short-term loans and current maturities of long-term debt
|
|
275.2
|
|
|
|
|
245.7
|
|
|
||
Long-term debt and capital leases
|
|
2.7
|
|
|
|
|
2.8
|
|
|
||
Total debt and capital leases
|
|
$
|
277.9
|
|
|
|
|
$
|
248.5
|
|
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||||
Three Months Ended March 31
|
Pension
|
|
Other
Benefits |
|
Total
|
|
Pension
|
|
Other
Benefits |
|
Total
|
||||||||||||||||||||||||
Service cost
|
|
$
|
1.2
|
|
|
|
|
$
|
0.2
|
|
|
|
|
$
|
1.4
|
|
|
|
|
$
|
1.3
|
|
|
|
|
$
|
0.2
|
|
|
|
|
$
|
1.5
|
|
|
Interest cost
|
|
3.4
|
|
|
|
|
1.2
|
|
|
|
|
4.6
|
|
|
|
|
3.6
|
|
|
|
|
1.2
|
|
|
|
|
4.8
|
|
|
||||||
Expected return on plan assets
|
|
(5.0
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(5.2
|
)
|
|
|
|
(5.1
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(5.3
|
)
|
|
||||||
Amortization of prior service cost (benefit)
|
|
0.2
|
|
|
|
|
(1.6
|
)
|
|
|
|
(1.4
|
)
|
|
|
|
0.2
|
|
|
|
|
(2.7
|
)
|
|
|
|
(2.5
|
)
|
|
||||||
Amortization of net actuarial loss
|
|
1.9
|
|
|
|
|
1.2
|
|
|
|
|
3.1
|
|
|
|
|
2.1
|
|
|
|
|
1.1
|
|
|
|
|
3.2
|
|
|
||||||
Total net periodic benefit cost
|
|
$
|
1.7
|
|
|
|
|
$
|
0.8
|
|
|
|
|
$
|
2.5
|
|
|
|
|
$
|
2.1
|
|
|
|
|
$
|
(0.4
|
)
|
|
|
|
$
|
1.7
|
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Equity based awards
|
$
|
2.9
|
|
|
$
|
3.1
|
|
Liability-based awards
|
0.5
|
|
|
0.2
|
|
||
Total share-based compensation expense
|
$
|
3.4
|
|
|
$
|
3.3
|
|
|
# of Awards Granted
|
Grant Date Fair Value
|
|||
Non-qualified stock options (NQOs)
|
0.4
|
|
$
|
9.16
|
|
Restricted stock units (RSUs)
|
0.3
|
|
$
|
33.01
|
|
Performance stock units (PSUs)
|
0.2
|
|
$
|
33.27
|
|
Dividend yield
|
1.5%
|
Expected volatility
|
32.2%
|
Expected life
|
6.0 years
|
Risk-free rates
|
1.5%
|
Grant date fair value
|
$9.16
|
|
Liability
|
|
Asset
|
|
Net
|
||||||
Balance as of December 31, 2015
|
$
|
1,042.8
|
|
|
$
|
412.0
|
|
|
$
|
630.8
|
|
Asbestos provision
|
17.8
|
|
|
2.4
|
|
|
15.4
|
|
|||
Settlement agreement
|
—
|
|
|
2.6
|
|
|
(2.6
|
)
|
|||
Net cash activity
|
(15.5
|
)
|
|
(11.2
|
)
|
|
(4.3
|
)
|
|||
Balance as of March 31, 2016
|
$
|
1,045.1
|
|
|
$
|
405.8
|
|
|
$
|
639.3
|
|
Current portion
|
$
|
88.1
|
|
|
$
|
74.5
|
|
|
|
||
Noncurrent portion
|
$
|
957.0
|
|
|
$
|
331.3
|
|
|
|
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Environmental liability - beginning balance
|
$
|
82.6
|
|
|
$
|
89.9
|
|
Change in estimates for pre-existing accruals
|
|
|
|
||||
Continuing operations
|
0.7
|
|
|
0.2
|
|
||
Discontinued operations
|
0.5
|
|
|
—
|
|
||
Net cash activity
|
(5.1
|
)
|
|
(4.4
|
)
|
||
Foreign currency
|
0.1
|
|
|
(0.3
|
)
|
||
Environmental liability - ending balance
|
$
|
78.8
|
|
|
$
|
85.4
|
|
|
|
||
Cash
|
$
|
8.5
|
|
Receivables
|
31.6
|
|
|
Inventory
|
35.0
|
|
|
Plant, property and equipment
|
22.8
|
|
|
Goodwill
|
162.5
|
|
|
Other intangible assets
|
87.0
|
|
|
Other assets
|
3.3
|
|
|
Accounts payable and accrued liabilities
|
(21.2
|
)
|
|
Postretirement liabilities
|
(14.6
|
)
|
|
Other liabilities
|
(8.1
|
)
|
|
Net assets acquired
|
$
|
306.8
|
|
For the Three Months Ended March 31
|
2016
|
2015
|
Change
|
|||||
Revenue
|
$
|
609.1
|
|
$
|
588.7
|
|
3.5
|
%
|
Gross profit
|
195.3
|
|
199.0
|
|
(1.9
|
%)
|
||
Gross margin
|
32.1
|
%
|
33.8
|
%
|
(170
|
)bp
|
||
Operating expenses
|
144.3
|
|
141.1
|
|
2.3
|
%
|
||
Expense to revenue ratio
|
23.7
|
%
|
24.0
|
%
|
(30
|
)bp
|
||
Operating income
|
51.0
|
|
57.9
|
|
(11.9
|
%)
|
||
Operating margin
|
8.4
|
%
|
9.8
|
%
|
(140
|
)bp
|
||
Interest and non-operating expense (income), net
|
1.7
|
|
1.2
|
|
41.7
|
%
|
||
Income tax expense
|
11.7
|
|
18.1
|
|
(35.4
|
%)
|
||
Effective tax rate
|
23.7
|
%
|
31.9
|
%
|
(820
|
)bp
|
||
Income from continuing operations attributable to ITT Corporation
|
37.7
|
|
38.7
|
|
(2.6
|
%)
|
||
Income (loss) from discontinued operations, net of tax
|
(0.3
|
)
|
3.4
|
|
(a)
|
|||
Net income attributable to ITT Corporation
|
37.4
|
|
42.1
|
|
(11.2
|
%)
|
(a)
|
The percentage change was intentionally excluded as the resulting figure is not considered meaningful.
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
|
Change
|
|
Organic Revenue Growth
(a)
|
||||||
Industrial Process
|
$
|
208.8
|
|
|
$
|
255.6
|
|
|
(18.3
|
)%
|
|
(14.5
|
)%
|
Motion Technologies
|
257.0
|
|
|
191.2
|
|
|
34.4
|
%
|
|
14.2
|
%
|
||
Interconnect Solutions
|
72.4
|
|
|
77.5
|
|
|
(6.6
|
)%
|
|
(6.1
|
)%
|
||
Control Technologies
|
71.9
|
|
|
65.8
|
|
|
9.3
|
%
|
|
(1.1
|
)%
|
||
Eliminations
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(28.6
|
)%
|
|
—
|
|
||
Revenue
|
$
|
609.1
|
|
|
$
|
588.7
|
|
|
3.5
|
%
|
|
(2.5
|
)%
|
(a)
|
See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation of organic revenue.
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
|
Change
|
|||||
Sales and marketing expenses
|
$
|
43.3
|
|
|
$
|
47.3
|
|
|
(8.5
|
)%
|
General and administrative expenses
|
69.0
|
|
|
60.1
|
|
|
14.8
|
%
|
||
Research and development expenses
|
19.2
|
|
|
18.3
|
|
|
4.9
|
%
|
||
Asbestos-related costs, net
|
12.8
|
|
|
15.4
|
|
|
(16.9
|
)%
|
||
Total operating expenses
|
$
|
144.3
|
|
|
$
|
141.1
|
|
|
2.3
|
%
|
Total Operating Expenses By Segment:
|
|
|
|
|
|
|||||
Industrial Process
|
$
|
54.1
|
|
|
$
|
64.1
|
|
|
(15.6
|
)%
|
Motion Technologies
|
31.9
|
|
|
19.6
|
|
|
62.8
|
%
|
||
Interconnect Solutions
|
20.0
|
|
|
20.5
|
|
|
(2.4
|
)%
|
||
Control Technologies
|
17.1
|
|
|
14.1
|
|
|
21.3
|
%
|
||
Corporate & Other
|
21.2
|
|
|
22.8
|
|
|
(7.0
|
)%
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
|
Change
|
|||||
Industrial Process
|
$
|
9.0
|
|
|
$
|
20.4
|
|
|
(55.9
|
)%
|
Motion Technologies
|
50.7
|
|
|
41.0
|
|
|
23.7
|
%
|
||
Interconnect Solutions
|
2.0
|
|
|
4.8
|
|
|
(58.3
|
)%
|
||
Control Technologies
|
10.4
|
|
|
14.3
|
|
|
(27.3
|
)%
|
||
Segment operating income
|
72.1
|
|
|
80.5
|
|
|
(10.4
|
)%
|
||
Asbestos-related costs, net
|
(12.8
|
)
|
|
(15.4
|
)
|
|
(16.9
|
)%
|
||
Other corporate costs
|
(8.3
|
)
|
|
(7.2
|
)
|
|
(15.3
|
)%
|
||
Total corporate and other costs
|
(21.1
|
)
|
|
(22.6
|
)
|
|
6.6
|
%
|
||
Total operating income
|
$
|
51.0
|
|
|
$
|
57.9
|
|
|
(11.9
|
)%
|
Operating margin:
|
|
|
|
|
|
|||||
Industrial Process
|
4.3
|
%
|
|
8.0
|
%
|
|
(370
|
)bp
|
||
Motion Technologies
|
19.7
|
%
|
|
21.4
|
%
|
|
(170
|
)bp
|
||
Interconnect Solutions
|
2.8
|
%
|
|
6.2
|
%
|
|
(340
|
)bp
|
||
Control Technologies
|
14.5
|
%
|
|
21.7
|
%
|
|
(720
|
)bp
|
||
Segment operating margin
|
11.8
|
%
|
|
13.7
|
%
|
|
(190
|
)bp
|
||
Consolidated operating margin
|
8.4
|
%
|
|
9.8
|
%
|
|
(140
|
)bp
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Operating activities
|
$
|
5.7
|
|
|
$
|
8.2
|
|
Investing activities
|
(24.8
|
)
|
|
(40.0
|
)
|
||
Financing activities
|
16.9
|
|
|
34.0
|
|
||
Foreign exchange
|
9.9
|
|
|
(15.8
|
)
|
||
Total net cash flow from continuing operations
|
7.7
|
|
|
(13.6
|
)
|
||
Net cash from discontinued operations
|
7.5
|
|
|
(0.3
|
)
|
||
Net change in cash and cash equivalents
|
$
|
15.2
|
|
|
$
|
(13.9
|
)
|
n
|
"organic revenue" and "organic orders" are defined as revenue and orders, excluding the impacts of foreign currency fluctuations and acquisitions and divestitures. Divestitures include sales of portions of our business that did not meet the criteria for presentation as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations is estimated using a fixed exchange rate for both the current and prior periods. Reconciliations of organic revenue for the
three months ended
March 31, 2016
are provided below.
|
Three Months Ended March 31, 2016
|
Industrial
Process
|
Motion
Technologies
|
Interconnect
Solutions
|
Control
Technologies
|
Eliminations
|
Total
ITT
|
||||||||||||||||||||||||
2016 Revenue
|
|
$
|
208.8
|
|
|
|
$
|
257.0
|
|
|
|
$
|
72.4
|
|
|
|
$
|
71.9
|
|
|
|
$
|
(1.0
|
)
|
|
|
$
|
609.1
|
|
|
(Acquisitions)/divestitures, net
|
|
—
|
|
|
|
(42.0
|
)
|
|
|
—
|
|
|
|
(6.8
|
)
|
|
|
—
|
|
|
|
(48.8
|
)
|
|
||||||
Foreign currency translation
|
|
9.8
|
|
|
|
3.4
|
|
|
|
0.4
|
|
|
|
—
|
|
|
|
0.1
|
|
|
|
13.7
|
|
|
||||||
2016 Organic revenue
|
|
$
|
218.6
|
|
|
|
$
|
218.4
|
|
|
|
$
|
72.8
|
|
|
|
$
|
65.1
|
|
|
|
$
|
(0.9
|
)
|
|
|
$
|
574.0
|
|
|
Organic growth (decline)
|
|
(14.5
|
)%
|
|
|
14.2
|
%
|
|
|
(6.1
|
)%
|
|
|
(1.1
|
)%
|
|
|
|
|
|
(2.5
|
)%
|
|
Three Months Ended March 31, 2016
|
Industrial
Process
|
Motion
Technologies
|
Interconnect
Solutions
|
Control
Technologies
|
Eliminations
|
Total
ITT
|
||||||||||||||||||||||||
2016 Orders
|
|
$
|
188.8
|
|
|
|
$
|
265.4
|
|
|
|
$
|
78.1
|
|
|
|
$
|
92.4
|
|
|
|
$
|
(1.2
|
)
|
|
|
$
|
623.5
|
|
|
(Acquisitions)/divestitures, net
|
|
—
|
|
|
|
(41.6
|
)
|
|
|
—
|
|
|
|
(11.3
|
)
|
|
|
—
|
|
|
|
(52.9
|
)
|
|
||||||
Foreign currency translation
|
|
11.4
|
|
|
|
3.7
|
|
|
|
0.5
|
|
|
|
—
|
|
|
|
0.1
|
|
|
|
15.7
|
|
|
||||||
2016 Organic orders
|
|
$
|
200.2
|
|
|
|
$
|
227.5
|
|
|
|
$
|
78.6
|
|
|
|
$
|
81.1
|
|
|
|
$
|
(1.1
|
)
|
|
|
$
|
586.3
|
|
|
Organic growth (decline)
|
|
(23.6
|
)%
|
|
|
14.8
|
%
|
|
|
(5.3
|
)%
|
|
|
23.4
|
%
|
|
|
|
|
|
(3.5
|
)%
|
|
n
|
"adjusted segment operating income" is defined as operating income, adjusted to exclude special items that include, but are not limited to, restructuring and realignment costs, certain asset impairment charges, repositioning costs, certain acquisition-related expenses, and other unusual or infrequent operating items. Special items represent significant charges or credits that impact current results, which management views as unrelated to the Company's ongoing operations and performance.
|
Three Months Ended March 31, 2016
|
Industrial
Process
|
Motion
Technologies
|
Interconnect
Solutions
|
Control
Technologies
|
Total
Segment
|
|||||||||||||||
Segment operating income
|
|
$
|
9.0
|
|
|
$
|
50.7
|
|
|
$
|
2.0
|
|
|
$
|
10.4
|
|
|
$
|
72.1
|
|
Restructuring costs
|
|
3.2
|
|
|
1.4
|
|
|
—
|
|
|
0.9
|
|
|
5.5
|
|
|||||
Other unusual or infrequent items
(a)
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
2.4
|
|
|
3.4
|
|
|||||
Adjusted segment operating income
|
|
$
|
12.2
|
|
|
$
|
53.1
|
|
|
$
|
2.0
|
|
|
$
|
13.7
|
|
|
$
|
81.0
|
|
Three Months Ended March 31, 2015
|
Industrial
Process |
Motion
Technologies |
Interconnect
Solutions |
Control
Technologies |
Total
Segment |
|||||||||||||||
Segment operating income
|
|
$
|
20.4
|
|
|
$
|
41.0
|
|
|
$
|
4.8
|
|
|
$
|
14.3
|
|
|
$
|
80.5
|
|
Restructuring costs
|
|
8.9
|
|
|
—
|
|
|
(0.2
|
)
|
|
0.5
|
|
|
9.2
|
|
|||||
Adjusted segment operating income
|
|
$
|
29.3
|
|
|
$
|
41.0
|
|
|
$
|
4.6
|
|
|
$
|
14.8
|
|
|
$
|
89.7
|
|
(a)
|
The adjustments for unusual or infrequent items during 2016 primarily reflect acquisition-related costs.
|
n
|
"adjusted income from continuing operations" and "adjusted income from continuing operations per diluted share" are defined as income from continuing operations attributable to ITT Corporation and income from continuing operations attributable to ITT Corporation per diluted share, adjusted to exclude special items that include, but are not limited to, asbestos-related costs, repositioning costs, restructuring and realignment costs, certain asset impairment charges, certain acquisition-related expenses, income tax settlements or adjustments, and other unusual or infrequent non-operating items. Special items represent significant charges or credits, on an after-tax basis, that impact current results, which management views as unrelated to the Company's ongoing operations and performance.
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Income from continuing operations attributable to ITT Corporation
|
$
|
37.7
|
|
|
$
|
38.7
|
|
Net asbestos-related costs, net of tax
|
8.1
|
|
|
9.7
|
|
||
Restructuring costs, net of tax
|
4.1
|
|
|
8.7
|
|
||
Tax-related special items
(a)
|
1.3
|
|
|
2.7
|
|
||
Other special items, net of tax
(b)
|
2.1
|
|
|
0.1
|
|
||
Adjusted income from continuing operations
|
$
|
53.3
|
|
|
$
|
59.9
|
|
Income from continuing operations attributable to ITT Corporation per diluted share
|
$
|
0.42
|
|
|
$
|
0.42
|
|
Adjusted income from continuing operations per diluted share
|
$
|
0.59
|
|
|
$
|
0.65
|
|
(a)
|
Tax-related special items for both the
three months ended
March 31, 2016
and 2015 primarily relate to deemed distributions of foreign earnings.
|
(b)
|
Other special items primarily relates to one-time realignment and integration costs associated with our 2015 acquisitions of Hartzell and Wolverine.
|
n
|
"adjusted free cash flow" is defined as net cash provided by operating activities less capital expenditures, adjusted for cash payments for restructuring and realignment actions, repositioning costs, net asbestos cash flows and other significant items that impact current results which management views as unrelated to the Company's ongoing operations and performance. Due to other financial obligations and commitments, including asbestos, the entire free cash flow may not be available for discretionary purposes. A reconciliation of adjusted free cash flow is provided below.
|
For the Three Months Ended March 31
|
2016
|
|
2015
|
||||
Net cash provided by operating activities
|
$
|
5.7
|
|
|
$
|
8.2
|
|
Capital expenditures
(c)
|
(21.0
|
)
|
|
(30.0
|
)
|
||
Restructuring cash payments
|
6.5
|
|
|
6.6
|
|
||
Net asbestos cash flows
|
4.3
|
|
|
3.9
|
|
||
Repositioning and other cash payments
|
—
|
|
|
2.2
|
|
||
Adjusted free cash flow
|
$
|
(4.5
|
)
|
|
$
|
(9.1
|
)
|
(c)
|
Capital expenditures for the
three months ended March 31,
2015 reflect a reduction of $0.2 associated with repositioning activities related to the 2011 spin-off.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(1)
|
Average price paid per share is calculated on a settlement basis and includes commissions.
|
(2)
|
On October 27, 2006, our Board of Directors approved a three-year $1 billion share repurchase program (2006 Share Repurchase Program). On December 16, 2008, our Board of Directors modified the provisions of the 2006 Share Repurchase Program to replace the original three-year term with an indefinite term. As of
March 31, 2016
, we had repurchased
18.4
shares for
$759.3
, including commissions, under the 2006 Share Repurchase Program. The program is consistent with our capital allocation process, which has centered on those investments necessary to grow our businesses organically and through acquisitions, while also providing cash returns to shareholders. Our strategy for cash flow utilization is to invest in our business, execute strategic acquisitions, pay dividends and repurchase common stock.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
ITT Corporation
|
|
|
|
|
|
(Registrant)
|
|
|
|
By:
|
|
/S/ STEVEN C. GIULIANO
|
|
|
Steven C. Giuliano
|
|
|
Vice President and Chief Accounting Officer
|
|
|
(Principal accounting officer)
|
EXHIBIT
NUMBER
|
|
DESCRIPTION
|
|
LOCATION
|
|
|
|
|
|
(10.1)*
|
|
ITT Corporation Form of 2016 Performance Unit Award Agreement (Executive Officer)
|
|
Filed herewith.
|
|
|
|
|
|
(10.2)*
|
|
ITT Corporation Form of 2016 Non-Qualified Stock Option Award Agreement (Executive Officer)
|
|
Filed herewith.
|
|
|
|
|
|
(10.3)*
|
|
ITT Corporation Form of 2016 Restricted Stock Unit Agreement (Stock Settled)
|
|
Filed herewith.
|
|
|
|
|
|
(31.1)
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith.
|
|
|
|
||
(31.2)
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith.
|
|
|
|
||
(32.1)
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
This Exhibit is intended to be furnished in accordance with Regulation S-K Item 601(b) (32) (ii) and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference.
|
|
|
|
||
(32.2)
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
This Exhibit is intended to be furnished in accordance with Regulation S-K Item 601(b) (32) (ii) and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference.
|
|
|
|
||
(101)
|
|
The following materials from ITT Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Income Statements, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Cash Flows, (v) Consolidated Condensed Statements of Changes in Shareholders' Equity, and (vi) Notes to Consolidated Condensed Financial Statements
|
|
Submitted electronically with this report.
|
|
|
|
|
|
1.
|
Grant of Award and Performance Period
. In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Participant this performance unit award (the “Award”). A performance unit corresponds to the right to receive one Share, subject to the terms of the Award. The target number of performance units subject to this Award is
_______________
(the “Target Units”). The actual number of performance units that will be settled under this Award will depend upon the achievement of the threshold performance goal described in Section 2 of this Agreement during the Performance Period, which for this Award commences
January 1, 2016
and ends
December 31, 2018
.
|
2.
|
Terms and Conditions
. It is understood and agreed that this Award is subject to the following terms and conditions:
|
(a)
|
Threshold Condition to Payout of Awards
. Payment under this Award shall not be due and payable to the Grantee unless the Company earns a level of “Adjusted EBITDA” (as defined below) in any rolling consecutive four calendar quarter period during the Performance Period that exceeds $199 million (the “Threshold”). For purposes of this Agreement, “Adjusted EBITDA” means net income before interest, taxes, depreciation and amortization, adjusted to exclude the impact of (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses. If the Threshold is achieved, then the number of performance units due and payable to the Participant hereunder shall be a number equal to the number of Target Units set forth above multiplied by two. In the event of an Acceleration Event that constitutes a change of ownership or control (as determined under Section 162
|
(b)
|
Additional Factors
. For guidance to the Committee in determining the level of the Award that may be paid hereunder, the Committee will take into account the “Performance Unit Award Payout” and other terms and conditions set forth below, but the Committee is not obligated to apply these factors in determining the actual amount of Awards payable. The “Performance Unit Award Payout” shall be the sum of the TSR Unit Payout and the ROIC Unit Payout, each as described below.
|
(i)
|
TSR Unit Payout
. 50% of the Target Units shall be “TSR Target Units.” The performance units calculated with respect to the TSR Target Units shall be determined in accordance with the following formula:
|
If Company’s TSR rank against the
S&P 400 Capital Goods Index is |
TSR Payout Factor
(% of TSR Target Units) |
less than the 35
th
percentile
|
0%
|
at the 35
th
percentile
|
50%
|
at the 50
th
percentile
|
100%
|
at the 80
th
percentile or more
|
200%
|
The TSR Payout Factor is interpolated for actual results between the 35
th
percentile and the 80
th
percentile shown above.
|
(ii)
|
ROIC Unit Payout
. 50% of the Target Units shall be “ROIC Target Units.” The performance units calculated with respect to the ROIC Target Units shall be determined in accordance with the following formula:
|
If Company’s ROIC rank against the
ROIC Peer Group is |
ROIC Payout Factor
(% of ROIC Target Units) |
less than the 35
th
percentile
|
0%
|
at the 35
th
percentile
|
50%
|
at the 50
th
percentile
|
100%
|
at the 80
th
percentile or more
|
200%
|
The ROIC Payout Factor is interpolated for actual results between the 35
th
percentile and the 80
th
percentile shown above.
|
(c)
|
Form and Timing of Payment of Award
. Payment with respect to an earned Performance Unit Award shall be made (i) as soon as practicable (but not later than March 15
th
) in the calendar year following the close of the Performance Period, and (ii) in Shares in an amount equal to the Performance Unit Award Payout, as determined under this Section 2, in each case subject to subsections 2(e) and 2(f).
|
(d)
|
Effect of Termination of Employment
. Except as otherwise provided below (each provision of which is subject to the attainment of the Threshold and the Committee’s discretion), if the Participant’s employment with the Company or an Affiliate of the Company is terminated for any reason prior to the end of the Performance Period, any Award subject to this Agreement shall be immediately forfeited.
|
(i)
|
Termination due to Death or Disability
. If the Participant’s termination of employment is due to death or Disability (as defined below), the Award shall vest and will be payable at the time and in the form as provided in subsection
|
(ii)
|
Termination due to Early Retirement
. If the Participant’s termination of employment is due to Early Retirement (as defined below), then a prorated portion of the Award shall vest in accordance with the provisions of this subsection and will be payable at the time and in the form as provided in subsection 2(c) above. The prorated portion of the Award that vests due to termination of the Participant's employment due to Early Retirement shall be determined by multiplying (i) the Performance Unit Award Payout determined pursuant to subsection 2(b) above for the entire Performance Period, by (ii) a fraction, the numerator of which is the number of full months the Participant has been continually employed since the beginning of the Performance Period and the denominator of which is 36. For this purpose, full months of employment shall be based on monthly anniversaries of the commencement of the Performance Period.
|
(iii)
|
Termination by the Company for Other than Cause
. If the Participant’s employment is terminated by the Company (or an Affiliate of the Company, as the case may be) for other than Cause, a prorated portion of the Award shall vest in accordance with the provisions of this subsection and will be payable at the time and in the form as provided in subsection 2(c) above. The prorated portion of the Award that vests due to termination of the Participant's employment by the Company for other than cause shall be determined by multiplying (i) the Performance Unit Award Payout determined pursuant to subsection 2(b) above for the entire Performance Period, by (ii) a fraction, the numerator of which is the number of full months the Participant has been continually employed since the beginning of the Performance Period and the denominator of which is 36. For this purpose, full months of employment shall be based on monthly anniversaries of the commencement of the Performance Period. The term “Cause” shall mean “cause” as defined in any employment agreement then in effect between the Participant and the Company, or if not defined therein, or if there is no such agreement, the Participant’s (a) embezzlement, misappropriation of corporate funds, or other material acts of dishonesty; (b) commission or conviction of any felony, or of any misdemeanor involving moral turpitude, or entry of a plea of guilty or nolo contendere to any felony or misdemeanor; (c) engagement in any activity that the Participant knows or should know could harm the business or reputation of the Company or an affiliate; (d) material failure to adhere to the Company’s or its subsidiaries’ or affiliates’ corporate codes, policies or procedures as in effect from time to time; (e) willful failure to perform the Participant’s assigned duties, repeated absenteeism or tardiness, insubordination, or the refusal or failure to comply with the directions or instructions of the Participant’s supervisor, as determined by the Company or an affiliate; (f) violation of any statutory, contractual, or common law duty or obligation to the Company or an affiliate, including, without limitation, the duty of loyalty; (g) the Participant’s violation of any of the applicable provisions of subsection 2(j) of this Agreement; or (h) material breach of any confidentiality or non-competition covenant entered into between the
|
(iv)
|
Termination Due to Normal Retirement
.
|
(A)
|
After First 12 Months. If the Participant’s separation from service is due to Normal Retirement (as defined below), and the separation from service occurs at least twelve (12) months after the first day of the Performance Period, the Award shall vest and will be payable in the amount determined pursuant to subsection 2(b) at the time and in the form as provided in subsection 2(c) above.
|
(B)
|
Within First 12 Months. If the Participant’s separation from service is due to Normal Retirement, and the separation from service occurs within the first twelve (12) months of the Performance Period, then a prorated portion of the Award shall vest in accordance with the provisions of this subsection and will be payable at the time and in the form as provided in subsection 2(c) above. The prorated portion of the Award that vests in accordance with the previous sentence shall be determined by multiplying (i) the Performance Unit Award Payout determined pursuant to subsection 2(b) above for the entire Performance Period, by (ii) a fraction, the numerator of which is the number of full months the Participant has been continually employed since the beginning of the Performance Period and the denominator of which is 12. For this purpose, full months of employment shall be based on monthly anniversaries of the commencement of the Performance Period.
|
(v)
|
Early and Normal Retirement
.
For purposes of this Agreement, the term “Early Retirement” shall mean any termination of the Participant’s employment (other than a Normal Retirement) after the date the Participant attains age 55 and completes 10 or more years of Effective Service (as such term is defined in the ITT Retirement Savings Plan for Salaried Employees). The term “Normal Retirement” shall mean any termination of the Participant’s employment after (A) the date the Participant attains age 62 and completes 10 or more years of Effective Service (as such term is defined in the ITT Retirement Savings Plan for Salaried Employees) or, if earlier, (B) the date the Participant attains age 65.
|
(vi)
|
Disability
. For purposes of this Agreement, the term “Disability” shall mean the complete and permanent inability of the Participant to perform all of his or her duties under the terms of his or her employment, as determined by the Committee upon the basis of such evidence, including independent medical reports and data, as the Committee deems appropriate or necessary.
|
(e)
|
Acceleration Event - Involuntary Termination of Employment Without Cause or Termination With Good Reason
.
|
(i)
|
Vesting
. Notwithstanding anything in the Plan to the contrary other than subsection 2(f)(i) (but subject to attainment of the Threshold to the extent required as described above and the Committee’s discretion), if, during the Performance Period, the Participant’s employment is terminated on or within two (2) years after an Acceleration Event (A) by the Company (or an Affiliate, as the case may be) for other than Cause, as defined herein, and not because of the Participant’s Early or Normal Retirement, Disability, or death, or (B) by the Participant because of Good Reason, then the Award shall become fully vested and valued as provided below in this subsection 2(e) and shall be paid at the time specified in subsection 2(c).
|
(ii)
|
Payment Amount
. Notwithstanding any provisions of this Agreement to the contrary, the value of the Performance Unit Award Payout payable under this subsection 2(e) shall be equal to the greater of (A) the “most recent share price” multiplied by the sum of (I) 50% of the Target Units multiplied by the TSR Payout Factor for the “most recent performance period” and (II) 50% of the Target Units multiplied by the ROIC Payout Factor for the “most recent performance period” or (B) the “most recent share price” multiplied by the Target Units. For this purpose, “most recent share price” means the market price of a Share on the date of the Acceleration Event, and “most recent performance period” means the performance period with respect to a similar performance-based award of the Company that most recently ended before the termination of employment.
|
(iii)
|
Good Reason
. For this purpose, the term “Good Reason” shall mean (A) without the Participant’s express written consent and excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company or its affiliates within 30 days after receipt of notice thereof given by the Participant, (I) a reduction in the Participant’s annual base compensation (whether or not deferred), (II) the assignment to the Participant of any duties inconsistent in any material respect with the Participant’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or (III) any other action by the Company or its affiliates that results in a material diminution in such position, authority, duties or responsibilities; or (B) without the Participant’s express written consent, the Company’s requiring the Participant’s primary work location to be other than within twenty-five (25) miles of the location where the Participant was principally working immediately prior to the Acceleration Event; provided, that “Good Reason” shall cease to exist for an event on the 90th day following the later of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company notice thereof prior to such date.
|
(f)
|
Other Payments After an Acceleration Event.
|
(i)
|
Going Private Transaction
. If an Acceleration Event occurs that constitutes a change in control under Section 409A of the Code and any related regulations or other effective guidance promulgated thereunder (“Section 409A”) and, immediately following the Acceleration Event the common stock of the Company (or, if applicable, its successor) is not publicly traded,
|
(ii)
|
Other Acceleration Event
. If clause (i) above does not apply and a Performance Period ends after the occurrence of an Acceleration Event, then, notwithstanding any provisions of this Agreement to the contrary (except as provided in subsection 2(e), and subject to attainment of the Threshold to the extent required as described above and the Committee’s discretion), the
Award shall be settled at the time provided in subsection 2(c) in the amount determined under clause (iii) below.
|
(iii)
|
Amount
. In the event of a payment under clause (i) or clause (ii), above, the value of the Performance Unit Award Payout payable at a time otherwise provided herein shall be equal to the greater of (A) the “most recent share price” multiplied by the sum of (I) 50% of the Target Units multiplied by the TSR Payout Factor for the “most recent performance period” and (II) 50% of the Target Units multiplied by the ROIC Payout Factor for the “most recent performance period” or (B) the “most recent share price” multiplied by the Target Units. For this purpose, “most recent share price” means the market price of a Share on the date of the Acceleration Event, and “most recent performance period” means the performance period with respect to a similar performance-based award of the Company that most recently ended before the Acceleration Event.
|
(g)
|
Tax Withholding
. Payments with respect to Awards under the Plan shall be subject to applicable tax withholding obligations as described in Article 15 of the Plan, or, if the Plan is amended, successor provisions.
|
(h)
|
No Shareholder Rights
. The Participant shall not be entitled to any rights or privileges of ownership of Shares with respect to this Award unless and until a Share is actually delivered to the Participant in settlement of this Award pursuant to this Agreement.
|
(i)
|
Participant Bound by Plan and Rules
. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof. The Participant agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee prior to the settlement of the Award subject to this Agreement. The Committee shall be authorized to make all necessary interpretations concerning the provisions of this Agreement and the proper application of those provisions to particular fact patterns, including but not limited to the basis for the Participant’s termination of employment, and any such interpretation shall be final.
|
(j)
|
Non-Competition, Non-Solicitation and Non-Disparagement.
In consideration of the Company entering into this Agreement with the Participant, the Participant agrees as follows:
|
(i)
|
During Participant’s employment with the Company (which, for purposes of this subsection 2(j) includes its subsidiaries), Participant will not, directly or
|
(ii)
|
During Participant’s employment and for a period of twelve (12) months following the termination of Participant’s employment with the Company for any reason, Participant agrees that Participant will not within the Restricted Area, directly or indirectly, except with the Company’s prior written approval from an authorized officer, either as an employee, employer, consultant, agent, principal, partner, stockholder, member, corporate officer, director or in any other individual or representative capacity, engage or attempt to engage in any Competitive Activity relating to the Company’s business or products, or to its actual or demonstrably anticipated research or development. For the purposes of this subparagraph, “Competitive Activity” shall mean perform services for, have an interest in, be employed by, or do business with (including as a consultant), any person, firm, or corporation engaged in the same or a similar business as the Company’s within the Restricted Area. For purposes of this Agreement, “Restricted Area” shall mean, any area in which the Company has transacted business for the twelve (12) months prior to Participant’s termination of employment, which includes, but is not limited to, the state(s) in which Participant worked on behalf of the Company, the United States, Australia, Argentina, Brazil, Canada, Chile, China, Columbia, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hong Kong, India, Indonesia, Italy, Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, Peru, Russia, Saudi Arabia, Singapore, Spain, Taiwan, Thailand, United Arab Emirates, United Kingdom, Venezuela and such other countries as the Company is now conducting and may expand its business from time to time.
|
(iii)
|
Throughout the Participant’s term of employment with the Company and for a period of twelve (12) months following the Participant’s termination of employment with the Company for any reason, the Participant shall not, directly or indirectly, divert or attempt to divert or assist others in diverting any business of the Company including by soliciting, contacting or communicating with any customer or supplier of the Company with whom the Participant has direct or indirect contact or upon termination of employment has had direct or indirect contact during the twelve (12) month period immediately preceding the Participant’s date of termination with the Company.
|
(iv)
|
During Participant’s employment and for a period of twelve (12) months following Participant’s termination of employment with the Company for any reason, the Participant shall not, directly or indirectly, hire, solicit, induce, attempt to induce or assist others in attempting to induce any employee of the Company with whom the Participant has worked or had material contact with, during the twelve (12) month period immediately preceding the termination of the Participant’s employment, to leave the employment of the Company or to accept employment or affiliation with (including as a consultant) any other company or firm of which the Participant becomes an employee, owner, partner or consultant.
|
(v)
|
Participant agrees not to make or publish any maliciously defamatory statements about the Company, including any current, former or future managers or representatives.
|
(vi)
|
Participant agrees that damages in the event of a breach by Participant of Participant’s obligations in this Agreement, including in this subsection 2(j), would be difficult if not impossible to ascertain, and that any such breach will result in irreparable and continuing damage to the Company. Therefore, Participant agrees that the Company, in addition to and without limiting any other remedy or right it may have, shall have the right to an immediate injunction or other equitable relief (without posting bond or other form of security) in the Chosen Courts (as defined below) enjoining any such threatened or actual breach. The existence of this right shall not preclude the Company from also pursuing any other rights and remedies at law or in equity that it may have.
|
(vii)
|
If the Participant violates the terms of this subsection 2(j), then, in addition to any other remedy the Company might have, no amount shall be due to the Participant under this Agreement and the Participant shall be required to repay to the Company all amounts and Shares paid under this Agreement (or proceeds from Shares, if applicable).
|
(viii)
|
Notice to Attorneys
.
For a Participant who is an attorney, the provisions in subsection 2(j)(ii) will apply only to prohibit Participant’s employment for twelve (12) months in any position in the Restricted Area that involves non-legal responsibilities similar to those performed for the Company, or that would involve or risk the use or disclosure of the Company’s attorney-client privileged or other Confidential Information, as defined in the Participant’s respective confidentiality agreement with the Company. This restriction and the other restrictions in subsection 2(j) are not intended to bar Participant from performing solely legal functions for any entity or client, provided that work does not involve or risk the disclosure of the Company’s attorney-client privileged information or other Confidential Information
.
|
(k)
|
Governing Law
. This Agreement is issued in White Plains, New York, and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
|
(l)
|
Jurisdiction
. Participant hereby consents to the personal jurisdiction of and venue in the state and federal courts in the state of New York (collectively, the “
Chosen Courts
”), and agrees that such Chosen Courts shall have exclusive jurisdiction to hear and determine or settle any dispute that may arise out of or in connection with this Agreement, and that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chosen Courts.
|
(m)
|
Attorneys’ Fees
. If any action or proceeding is commenced to construe or enforce this Agreement or the rights and duties of the parties hereunder, then the party prevailing in that action will be entitled to recover its reasonable attorneys’ fees and costs related to such action or proceeding.
|
(n)
|
Severability
. Any term or provision of this Agreement that is determined to be invalid or unenforceable by any court of competent jurisdiction in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction and such invalid or unenforceable provision shall be modified by such court so that it is enforceable to the extent permitted by applicable law.
|
(o)
|
Section 409A Compliance
. To the extent applicable, it is intended that the Plan and this Agreement comply with the requirements of Section 409A, and the Plan and this Agreement shall be interpreted accordingly.
|
(i)
|
If it is determined that all or a portion of the Award constitutes deferred compensation for purposes of Section 409A, and if the Participant is a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, at the time of the Participant’s separation from service, then, to the extent required under Section 409A, any portion of this Award that would otherwise be distributed upon the Participant’s termination of employment, shall instead be distributed on the earlier of (x) the first business day of the seventh month following the date of the Participant’s termination of employment or (y) the Participant’s death.
|
(ii)
|
It is intended that this Agreement shall comply with the provisions of Section 409A, or an exception to Section 409A, to the extent applicable, so as not to subject the Participant to the payment of interest and taxes under Section 409A. Further, any reference to termination of employment, Early Retirement, Normal Retirement, separation from service, or similar terms under this Agreement shall be interpreted in a manner consistent with the definition of “separation from service” under Section 409A.
|
(p)
|
Successors
. All obligations of the Company under this Agreement shall be binding on any successor to the Company, and the term “Company” shall include any successor.
|
•
|
Actuant Corporation (ATU)
|
•
|
Flowserve Corporation (FLS)
|
•
|
AMETEK, Inc. (AME)
|
•
|
Harsco Corporation (HSC)
|
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Barnes Group, Inc. (B)
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Hubbell Incorporated (HUB.B)
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Carlisle Companies Incorporated (CSL)
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IDEX Corporation (IEX)
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Colfax Corporation (CFX)
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Nordson Corporation (NDSN)
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Crane Co. (CR)
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Roper Industries, Inc. (ROP)
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EnPro Industries, Inc. (NPO)
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SPX Flow, Inc. (FLOW)
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Esterline Technologies Corporation (ESL)
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Woodward, Inc. (WWD)
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1.
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Grant of Options
. In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby confirms the grant on February 19, 2016
(the “Grant Date”) to the Optionee of the option to purchase from the Company all or any part of an aggregate of
_______________
Shares (the “Option”), at the purchase price of
$[ ]
per Share (the “Option Price” or “Exercise Price”). The Option shall be a Nonqualified Stock Option.
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2.
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Terms and Conditions
. It is understood and agreed that the Option is subject to the following terms and conditions:
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(a)
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Expiration Date
. The Option shall expire on
February 19, 2026,
or, if the Optionee’s employment terminates before that date, on the date specified in subsection (f) below.
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(b)
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Exercise of Option
. The Option may be exercised at any time to the extent it has vested until the date it expires under the terms of this Agreement.
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(c)
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Vesting
. Subject to subsections 2(a) and 2(f), the Option shall vest in full upon
February 19, 2019
.
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(d)
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Payment of Exercise Price
. Permissible methods for payment of the Exercise Price upon exercise of the Option are described in Section 6.6 of the Plan, or, if the Plan is amended, successor provisions. In addition to the methods of exercise permitted by Section 6.6 of the Plan, the Optionee may exercise all or part of the Option by way of (i) broker-assisted cashless exercise in a manner consistent with the Federal Reserve Board's Regulation T, unless the Committee determines that such exercise method is prohibited by law, or (ii) net-settlement, whereby the Optionee directs the Company to withhold Shares that otherwise would be issued upon exercise of the Option having an aggregate Fair Market
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(e)
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Tax Withholding
. The Company shall have the power and the right to deduct or withhold, or require the Optionee to remit to the Company, all applicable federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to the exercise of the Option. The Optionee may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares that otherwise would be issued upon exercise of the Option, with the number of Shares withheld having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction (rounding up to the nearest whole Share). Any such election shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
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(f)
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Effect of Termination of Employment
.
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(i)
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Termination due to Death
. If the Optionee’s employment is terminated as a result of the Optionee’s death, the Option shall expire on the earlier of
February 19, 2026
, or the date three years after the termination of the Optionee’s employment due to death. If the Option is not vested at the time of the Optionee's termination of employment due to death, the Option shall immediately become 100% vested.
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(ii)
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Termination due to Disability
. If the Optionee’s employment is terminated as a result of the Optionee’s Disability (as defined below), the Option shall expire on the earlier of
February 19, 2026,
or the date five years after the termination of the Optionee’s employment due to Disability. If the Option is not vested at the time of the termination of the Optionee's employment due to Disability, the Option shall immediately become 100% vested.
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(iii)
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Termination due to Early Retirement
. If the Optionee's employment is terminated as a result of the Optionee's Early Retirement (as defined below), then the Option shall expire on the earlier of
February 19, 2026,
or the date five years after the termination of the Optionee's employment due to Early Retirement. If the Optionee’s employment is terminated as a result of the Optionee’s Early Retirement and the Option is not vested at the time of the such termination, then a prorated portion of the Option shall immediately vest as of the date of the termination of employment in accordance with the terms of this subsection. The portion of an Option that shall be vested upon termination of employment due to the Optionee's Early Retirement (if the Option is not yet fully vested) shall be determined by multiplying the total number of Shares subject to such Option by a fraction, the numerator of which is the number of full months the Optionee has been continually employed since the Grant Date and the denominator of which is
36
. For this purpose, full months of employment shall be based on monthly anniversaries of the Grant Date, not calendar months. Any remaining unvested portion of the Option shall expire as of the date of the termination of the Optionee's employment.
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(iv)
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Termination due to Normal Retirement
. If the Optionee's employment is terminated as a result of the Optionee's Normal Retirement (as defined below), the Option shall expire on the earlier of
February 19, 2026,
or the date five years after the termination of the Optionee's employment due to Normal Retirement. If
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(v)
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Cause
. If the Optionee’s employment is terminated by the Company (or an Affiliate, as the case may be) for Cause (as determined by the Committee), the Option (whether vested or unvested) shall expire on the date of the termination of the Optionee’s employment. For this purpose, “Cause” shall mean “cause” as defined in any employment agreement then in effect between the Optionee and the Company, or if not defined therein, or if there is no such agreement, the Optionee’s (a) embezzlement, misappropriation of corporate funds, or other material acts of dishonesty; (b) commission or conviction of any felony, or of any misdemeanor involving moral turpitude, or entry of a plea of guilty or nolo contendere to any felony or misdemeanor; (c) engagement in any activity that the Optionee knows or should know could harm the business or reputation of the Company or an affiliate; (d) material failure to adhere to the Company’s or its subsidiaries’ or affiliates’ corporate codes, policies or procedures as in effect from time to time; (e) willful failure to perform the Optionee’s assigned duties, repeated absenteeism or tardiness, insubordination, or the refusal or failure to comply with the directions or instructions of the Optionee’s supervisor, as determined by the Company or an affiliate; (f) violation of any statutory, contractual, or common law duty or obligation to the Company or an affiliate, including, without limitation, the duty of loyalty; (g) the Optionee’s violation of any of the applicable provisions of subsection 2(h) of this Agreement; or (h) material breach of any confidentiality or non-competition covenant entered into between the Optionee and the Company or an affiliate. The determination of the existence of Cause shall be made by the Company in good faith, and such determination shall be conclusive for purposes of this Agreement.
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(vi)
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Voluntary Termination
. If the Optionee’s employment is terminated by the Optionee and not because of the Optionee’s Early or Normal Retirement, Disability or death, the vested portion of the Option shall expire on the earlier of
February 19, 2026,
or the date three months after the termination of the Optionee’s employment. Any portion of the Option that is not vested (or the entire Option, if no part was vested) as of the date the Optionee’s employment so terminates shall expire immediately on the date of termination of employment, and such unvested portion of the Option (the entire Option, if no portion was vested on the date of termination) shall not thereafter be exercisable.
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(vii)
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Other Termination by the Company
. If the Optionee’s employment is terminated by the Company (or an Affiliate, as the case may be) for other than Cause (as determined by the Committee), and not because of the Optionee’s Early or Normal Retirement, Disability or death, the vested portion of the Option, if any, shall expire
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(g)
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Compliance with Laws and Regulations
.
The Option shall not be exercised at any time when its exercise or the delivery of Shares hereunder would be in violation of any law, rule, or regulation that the Company may find to be valid and applicable.
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(h)
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Non-Competition, Non-Solicitation and Non-Disparagement.
In consideration of the Company entering into this Agreement with the Optionee, the Optionee agrees as follows:
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(i)
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During the Optionee’s employment with the Company (which, for purposes of this subsection 2(h) includes its subsidiaries), Optionee will not, directly or indirectly, except for on behalf of the Company or except with the prior written approval of the Company, either as an employee, employer, consultant, agent, principal, partner, stockholder, member, corporate officer, director or in any other individual or representative capacity, engage or attempt to engage in any competitive activity relating to the Company’s business or products, or to its actual or demonstrably anticipated research or development, nor will Optionee engage in any other activities that conflict with Optionee’s employment obligations to the Company, where such activities (other employment, occupations, consulting, business activities, commitments, anticipated research or development, or conflicts) violate ITT’s Code of Conduct. Activities and commitments as used herein do not include passive investments in stocks or other financial instruments.
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(ii)
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During the Optionee’s employment and for a period of twelve (12) months following the termination of the Optionee’s employment with the Company for any reason, the Optionee agrees that the Optionee will not within the Restricted Area, directly or indirectly, except with the Company’s prior written approval from an authorized officer, either as an employee, employer, consultant, agent, principal, partner, stockholder, member, corporate officer, director or in any other individual or representative capacity, engage or attempt to engage in any Competitive Activity relating to the Company’s business or products, or to its actual or demonstrably anticipated research or development. For the purposes of this subparagraph, “Competitive Activity” shall mean perform services for, have an interest in, be employed by, or do business with (including as a consultant), any person, firm, or corporation engaged in the same or a similar business as the Company’s within the Restricted Area. For purposes of this Agreement, “Restricted Area” shall mean, any area in which the Company has transacted business for the twelve (12) months prior to the Optionee’s termination of employment, which includes, but is not limited to, the state(s) in which Optionee worked on behalf of the Company, the United States, Australia, Argentina, Brazil, Canada, Chile, China, Columbia, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hong Kong, India, Indonesia, Italy, Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, Peru, Russia, Saudi Arabia, Singapore, Spain, Taiwan, Thailand, United Arab Emirates, United Kingdom, Venezuela and such other countries as the Company is now conducting and may expand its business from time to time.
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(iii)
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Throughout the Optionee’s term of employment with the Company and for a period of twelve (12) months following the Optionee’s termination of employment with
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(iv)
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During the Optionee’s employment and for a period of twelve (12) months following the Optionee’s termination of employment with the Company for any reason, the Optionee shall not, directly or indirectly, hire, solicit, induce, attempt to induce or assist others in attempting to induce any employee of the Company with whom the Optionee has worked or had material contact with, during the twelve (12) month period immediately preceding the termination of the Optionee’s employment, to leave the employment of the Company or to accept employment or affiliation with (including as a consultant) any other company or firm of which the Optionee becomes an employee, owner, partner or consultant.
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(v)
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The Optionee agrees not to make or publish any maliciously defamatory statements about the Company, including any current, former or future managers or representatives.
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(vi)
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The Optionee agrees that damages in the event of a breach by the Optionee of the Optionee’s obligations in this Agreement, including in this subsection 2(h), would be difficult if not impossible to ascertain, and that any such breach will result in irreparable and continuing damage to the Company. Therefore, the Optionee agrees that the Company, in addition to and without limiting any other remedy or right it may have, shall have the right to an immediate injunction or other equitable relief (without posting bond or other form of security) in the Chosen Courts (as defined below) enjoining any such threatened or actual breach. The existence of this right shall not preclude the Company from also pursuing any other rights and remedies at law or in equity that it may have.
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(vii)
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If the Optionee violates the terms of this subsection 2(h), then, in addition to any other remedy the Company might have, the Option shall immediately expire, no amount shall be due to the Optionee under this Agreement and the Optionee shall be required to repay to the Company all amounts and Shares paid under this Agreement (or proceeds therefrom).
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(viii)
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Notice to Attorneys
.
For an Optionee who is an attorney, the provisions in subsection 2(h)(ii) will apply only to prohibit the Optionee’s employment for twelve (12) months in any position in the Restricted Area that involves non-legal responsibilities similar to those performed for the Company, or that would involve or risk the use or disclosure of the Company’s attorney-client privileged or other Confidential Information, as defined in the Optionee’s respective confidentiality agreement with the Company. This restriction and the other restrictions in subsection 2(h) are not intended to bar Optionee from performing solely legal functions for any entity or client, provided that work does not involve or risk the
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(i)
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Optionee Bound by Plan and Rules
. The Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof as amended from time to time. The Optionee agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee during the life of the Option. The Committee shall be authorized to make all necessary interpretations concerning the provisions of this Agreement and the proper application of those provisions to particular fact patterns, including but not limited to the basis for the Optionee’s termination of employment, and any such interpretation shall be final.
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(j)
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Governing Law
. This Agreement is issued, and the Option evidenced hereby is granted, in White Plains, New York, and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction
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(k)
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Jurisdiction
. The Optionee hereby consents to the personal jurisdiction of and venue in the state and federal courts in the state of New York (collectively, the “
Chosen Courts
”), and agrees that such Chosen Courts shall have exclusive jurisdiction to hear and determine or settle any dispute that may arise out of or in connection with this Agreement, and that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chosen Courts.
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(l)
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Attorneys’ Fees
. If any action or proceeding is commenced to construe or enforce this Agreement or the rights and duties of the parties hereunder, then the party prevailing in that action will be entitled to recover its reasonable attorneys’ fees and costs related to such action or proceeding.
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(m)
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Severability
. Any term or provision of this Agreement that is determined to be invalid or unenforceable by any court of competent jurisdiction in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction and such invalid or unenforceable provision shall be modified by such court so that it is enforceable to the extent permitted by applicable law.
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(n)
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Successors
. All obligations of the Company under this Agreement shall be binding on any successor to the Company, and the term “Company” shall include any successor.
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1.
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Grant of Restricted Stock Units
. In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby confirms the grant on
February 19, 2016
(the “Grant Date”) to the Grantee of
_______________
Restricted Stock Units. The Restricted Stock Units are notional units of measurement corresponding to Shares of common stock (
i.e
., one Restricted Stock Unit is equivalent in value to one Share).
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2.
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Terms and Conditions
. It is understood and agreed that the Restricted Stock Units are subject to the following terms and conditions:
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(a)
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Restrictions
. Except as otherwise provided in the Plan and this Agreement, neither this Award nor any Restricted Stock Units subject to this Award may be sold, assigned, pledged, exchanged, transferred, hypothecated or encumbered, other than to the Company as a result of forfeiture of the Restricted Stock Units.
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(b)
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Voting and Dividend Equivalent Rights.
The Grantee shall not have any privileges of a stockholder of the Company with respect to the Restricted Stock Units, including without limitation any right to vote Shares or to receive dividends. Dividend equivalents shall be earned with respect to each Restricted Stock Unit that vests. The amount of dividend equivalents earned with respect to each such Restricted Stock Unit that vests shall be equal to the total dividends declared on a Share where the record date of the dividend is between the Grant Date of this Award and the date this Award is settled. Any dividend equivalents earned shall be paid in cash to the Grantee when the Shares subject to the vested Restricted
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(c)
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Vesting of Restricted Stock Units and Payment
.
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(i)
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Threshold Condition to Payout of Awards
. The RSUs shall not be due and payable to the Grantee unless the Company earns a level of “Adjusted EBITDA” (as defined below) in any rolling consecutive four calendar quarter period during the “Performance Period” that exceeds $199 million (the “Threshold”). For purposes of this Agreement, “Adjusted EBITDA” means net income before interest, taxes, depreciation and amortization, adjusted to exclude the impact of (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses. The “Performance Period” begins on January 1, 2016, and ends on the earlier of (A) December 31, 2018, or (B) December 31 of the year in which the Grantee separates from service. In the event of an Acceleration Event that constitutes a change of ownership or control (as determined under Section 162(m) of the Code) and that occurs during the Performance Period, the Threshold shall be deemed to have been satisfied.
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(ii)
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Additional Vesting Requirements
. Subject to earlier vesting pursuant to subsection 2(d) below (and achievement of the Threshold), the Restricted Stock Units shall vest (meaning the Period of Restriction shall lapse and the Restricted Stock Units shall become free of the forfeiture provisions in this Agreement) on
February 19, 2019,
provided the Grantee has been continuously employed by the Company or an Affiliate on a full-time basis from the Grant Date through the date the Restricted Stock Units vest. For the avoidance of doubt, continuous employment of a Grantee by the Company or an Affiliate for purposes of vesting in the Restricted Stock Units granted hereunder shall include continuous employment with the Company for so long as the Grantee continues working at such entity.
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(iii)
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Payment of the Award
. Except as provided in subsection 2(l) below, as soon as practicable after the date the Restricted Stock Units vest (including vesting upon a separation from service pursuant to subsection 2(d) below), the Company will deliver to the Grantee (A) one Share for each vested Restricted Stock Unit, with any fractional Shares resulting from proration pursuant to subsection 2(d) to be rounded to the nearest whole Share (with 0.5 to be rounded up) and (B) an amount in cash attributable to any dividend equivalents earned in accordance with subsection 2(b) above, in the case of (A) and (B) less any Shares or cash withheld in accordance with subsection 2(e) below. In the case of a payment on account of a separation from service, if the Threshold has not been achieved prior to the Grantee’s separation from service but is achieved within the Performance Period, payment of vested RSUs shall be made as soon as practicable after the achievement of the Threshold, subject to subsection 2(l) below.
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(iv)
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Payment after Acceleration Event
. If, prior to the payment date, Shares cease to exist as a result of an Acceleration Event and this Award is not assumed, converted, or otherwise replaced with a comparable award, the RSUs shall be settled in cash instead of Shares, and the amount of cash paid on the settlement date specified in this Agreement shall equal the sum of (A) the Fair Market Value of one Share multiplied by the number of vested RSUs, plus (B) the dividend equivalents described herein. For this purpose, “Fair Market Value” shall be the fair market value on the date of the Acceleration Event. However, if the Acceleration Event constitutes a change in control under Section 409A of the Code and any related regulations or other effective guidance promulgated thereunder (“Section 409A”) and, immediately following the Acceleration Event the common stock of the Company (or, if applicable, its successor) is not publicly traded, the Restricted Stock Units shall immediately become 100% vested as of the date of the Acceleration Event and be settled on such date.
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(d)
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Effect of Termination of Employment
. If the Grantee's employment with the Company and its Affiliates is terminated for any reason and such termination constitutes a “separation from service” within the meaning of Section 409A, any Restricted Stock Units that are not vested at the time of such separation from service shall be immediately forfeited except as follows:
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(i)
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Separation from Service due to Death or Disability
. If the Grantee's separation from service is due to death or Disability (as defined below), the Restricted Stock Units shall immediately become 100% vested as of such separation from service. For purposes of this Agreement, the term “Disability” shall mean the complete and permanent inability of the Grantee to perform all of his or her duties under the terms of his or her employment, as determined by the Committee upon the basis of such evidence, including independent medical reports and data, as the Committee deems appropriate or necessary.
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(ii)
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Separation from Service due to Early Retirement or Separation from Service by the Company for Other than Cause
. If the Grantee's separation from service is due to Early Retirement (as defined below) or an involuntary separation from service by the Company (or an Affiliate, as the case may be) for other than Cause (other than as specified in (iv), below), a prorated portion of the Restricted Stock Units shall immediately vest as of such separation from service. For these purposes,
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(A)
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the prorated portion of the Restricted Stock Units shall be determined by multiplying the total number of Restricted Stock Units subject to this Award by a fraction, the numerator of which is the number of full months during which the Grantee has been continually employed since the Grant Date (not to exceed
36
in the aggregate) and the denominator of which is
36
(for avoidance of doubt, the period during which the Grantee may receive severance in the form of salary continuation or otherwise shall not affect the determination of the date of the Grantee’s separation from service or the date this award is settled); and
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(B)
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full months of employment shall be based on monthly anniversaries of the Grant Date, not calendar months.
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(iii)
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Separation from Service Due to Normal Retirement
. If the Grantee’s separation from service is due to Normal Retirement (as defined below), and the separation from service occurs at least twelve (12) months after the Grant Date, the Grantee’s Restricted Stock Units shall immediately become 100% vested as of such separation from service. If the Grantee’s separation from service is due to Normal Retirement and the separation from service occurs within the twelve (12) month period beginning on the Grant Date, a prorated portion of the Restricted Stock Units shall immediately vest as of such separation from service in an amount equal to the number of Restricted Stock Units granted herein multiplied by a fraction, the numerator of which is the number of full months in such twelve (12) month period that were completed before the Grantee’s separation and the denominator of which is twelve (12). For this purpose, full months of employment shall be based on monthly anniversaries of the Grant Date, not calendar months.
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(iv)
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Separation from Service After an Acceleration Event
. If the Grantee’s employment is terminated on or within two (2) years after an Acceleration Event (A) by the Company (or an Affiliate, as the case may be) for other than Cause, as defined herein, and not because of the Grantee’s Early or Normal Retirement, Disability, or death, or (B) by the Grantee because of Good Reason, then any unvested Restricted Stock Units shall immediately become 100% vested. For this purpose, the term “Good Reason” shall mean (i) without the Grantee’s express written
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(e)
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Tax Withholding
. In accordance with Article 15 of the Plan, the Company may make such provisions and take such actions as it may deem necessary for the withholding of all applicable taxes attributable to the Restricted Stock Units and any related dividend equivalents.
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(f)
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Grantee Bound by Plan and Rules
. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof. The Grantee agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee prior to the date the Restricted Stock Units vest. The Committee shall be authorized to make all necessary interpretations concerning the provisions of this Agreement and the proper application of those provisions to particular fact patterns, including but not limited to the basis for the Grantee’s termination of employment, and any such interpretation shall be final. Terms used herein and not otherwise defined shall be as defined in the Plan.
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(g)
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Non-Competition, Non-Solicitation and Non-Disparagement.
In consideration of the Company entering into this Agreement with the Grantee, the Grantee agrees as follows:
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(i)
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During Grantee’s employment with the Company (which, for purposes of this subsection 2(g) includes its subsidiaries), Grantee will not, directly or indirectly, except for on behalf of the Company or except with the prior written approval of the Company, either as an employee, employer, consultant, agent, principal, partner, stockholder, member, corporate officer, director or in any other individual or representative capacity, engage or attempt to engage in any competitive activity relating to the Company’s business or products, or to its actual or demonstrably anticipated research or development, nor will Grantee engage in any other activities that conflict with Grantee’s employment obligations to the Company, where such activities (other employment, occupations, consulting, business activities, commitments, anticipated research or development, or conflicts) violate ITT’s Code of Conduct. Activities and commitments as used herein do not include passive investments in stocks or other financial instruments.
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(ii)
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During Grantee’s employment and for a period of twelve (12) months following the termination of Grantee’s employment with the Company for any reason, Grantee agrees that Grantee will not within the Restricted Area, directly or indirectly, except with the Company’s prior written approval from an authorized officer, either as an employee, employer, consultant, agent, principal, partner, stockholder, member, corporate officer, director or in any other individual or representative capacity, engage or attempt to engage in any Competitive Activity relating to the Company’s business or products, or to its actual or demonstrably anticipated research or development. For the purposes of this subparagraph, “Competitive Activity” shall mean perform services for, have an interest in, be employed by, or do business with (including as a consultant), any person, firm, or corporation engaged in the same or a similar business as the Company’s within the Restricted Area. For purposes of this Agreement, “Restricted Area” shall mean, any area in which the Company has transacted business for the twelve (12) months prior to Grantee’s termination of employment, which includes, but is not limited to, the state(s) in which Grantee worked on behalf of the Company, the United States, Australia, Argentina, Brazil, Canada, Chile, China, Columbia, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hong Kong, India, Indonesia, Italy, Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, Peru, Russia, Saudi Arabia, Singapore, Spain, Taiwan, Thailand, United Arab Emirates, United Kingdom, Venezuela and such other countries as the Company is now conducting and may expand its business from time to time.
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(iii)
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Throughout the Grantee’s term of employment with the Company and for a period of twelve (12) months following the Grantee’s termination of employment with the Company for any reason, the Grantee shall not, directly or indirectly, divert or attempt to divert or assist others in diverting any business of the Company including by soliciting, contacting or communicating with any customer or supplier of the Company with whom the Grantee has direct or indirect contact or upon termination of employment has had direct or indirect contact during the twelve (12) month period immediately preceding the Grantee’s date of termination with the Company.
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(iv)
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During Grantee’s employment and for a period of twelve (12) months following Grantee’s termination of employment with the Company for any reason, the Grantee shall not, directly or indirectly, hire, solicit, induce, attempt to induce or assist others in attempting to induce any employee of the Company with whom the Grantee has worked or had material contact with, during the twelve (12) month period immediately preceding the termination of the Grantee’s employment, to leave the employment of the Company or to accept employment or affiliation with (including as a consultant) any other company or firm of which the Grantee becomes an employee, owner, partner or consultant.
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(v)
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Grantee agrees not to make or publish any maliciously defamatory statements about the Company, including any current, former or future managers or representatives.
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(vi)
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Grantee agrees that damages in the event of a breach by Grantee of Grantee’s obligations in this Agreement, including in this subsection 2(g), would be difficult if not impossible to ascertain, and that any such breach will result in irreparable
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(vii)
|
If the Grantee violates the terms of this subsection 2(g), then, in addition to any other remedy the Company might have, no amount shall be due to the Grantee under this Agreement and the Grantee shall be required to repay to the Company all amounts and Shares paid under this Agreement (or proceeds therefrom).
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(viii)
|
Notice to Attorneys
.
For a Grantee who is an attorney, the provisions in subsection 2(g)(ii) will apply only to prohibit Grantee’s employment for twelve (12) months in any position in the Restricted Area that involves non-legal responsibilities similar to those performed for the Company, or that would involve or risk the use or disclosure of the Company’s attorney-client privileged or other Confidential Information, as defined in Grantee’s respective confidentiality agreement with the Company. This restriction and the other restrictions in subsection 2(g) are not intended to bar Grantee from performing solely legal functions for any entity or client, provided that work does not involve or risk the disclosure of the Company’s attorney-client privileged information or other Confidential Information.
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(h)
|
Governing Law
. This Agreement is issued, and the Restricted Stock Units evidenced hereby are granted, in White Plains, New York, and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
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(i)
|
Jurisdiction
. Grantee hereby consents to the personal jurisdiction of and venue in the state and federal courts in the state of New York (collectively, the “
Chosen Courts
”), and agrees that such Chosen Courts shall have exclusive jurisdiction to hear and determine or settle any dispute that may arise out of or in connection with this Agreement, and that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chosen Courts.
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(j)
|
Attorneys’ Fees
. If any action or proceeding is commenced to construe or enforce this Agreement or the rights and duties of the parties hereunder, then the party prevailing in that action will be entitled to recover its reasonable attorneys’ fees and costs related to such action or proceeding.
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(k)
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Severability
. Any term or provision of this Agreement that is determined to be invalid or unenforceable by any court of competent jurisdiction in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction and such invalid or unenforceable provision shall be modified by such court so that it is enforceable to the extent permitted by applicable law.
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(l)
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Section 409A Compliance
. To the extent applicable, it is intended that the Plan and this Agreement comply with the requirements of Section 409A, and the Plan and this Agreement shall be interpreted accordingly.
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(i)
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If it is determined that all or a portion of the Award constitutes deferred compensation for purposes of Section 409A, and if the Grantee is a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, at the time of the Grantee’s separation from service, then, to the extent required under Section 409A, any Shares that would otherwise be distributed (along with the cash value of all dividend equivalents that would be payable) upon the Grantee’s separation from service shall instead be delivered (and, in the case of the dividend equivalents, paid) on the earlier of (x) the first business day of the seventh month following the date of the Grantee’s separation from service or (y) the Grantee’s death.
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(ii)
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It is intended that this Agreement shall comply with the provisions of Section 409A, or an exception to Section 409A, to the extent applicable, so as not to subject the Grantee to the payment of interest and taxes under Section 409A. Further, any reference to termination of employment, Early Retirement, Normal Retirement, separation from service, or similar terms under this Agreement shall be interpreted in a manner consistent with the definition of “separation from service” under Section 409A
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(iii)
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In no event will payment be made later than the date on which payment is treated as being timely under Treas. Reg. § 1.409A-3(d), generally referring to the last day of the calendar year in which the RSUs vest or, if later, the 15th day of the third calendar month following the vesting date, and subject to any delay required under paragraph (i), above. (For this purpose, vesting and vesting date refer to the vesting date designated in this Agreement.) The Grantee does not have a right to designate the taxable year of the payment.
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(m)
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Successors
. All obligations of the Company under this Agreement shall be binding on any successor to the Company, and the term “Company” shall include any successor.
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/S/ D
ENISE
L. R
AMOS
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Denise L. Ramos
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Chief Executive Officer and President
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/S/ T
HOMAS
M. S
CALERA
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Thomas M. Scalera
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Senior Vice President and
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Chief Financial Officer
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/S/ D
ENISE
L
.
R
AMOS
|
Denise L. Ramos
|
Chief Executive Officer and President
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/
S
/ T
HOMAS
M. S
CALERA
|
Thomas M. Scalera
|
Senior Vice President and
|
Chief Financial Officer
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