UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



þ☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~July 3, 2021



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from to

Commission File Number: 001-05672

ITT INC.



State of Indiana						81-1197930
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

1133 Westchester Avenue, White Plains, NY 10604

(Principal Executive Office)

Telephone Number: (914) 641-2000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1 per share	ITT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ☑ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þ☑ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. (Check one):

☑

Large accelerated filerþ

☐

Accelerated filero

☐

Non-accelerated filero

☐

Smaller reporting companyo

☐

Emerging growth companyo

~~(Do not check if a smaller reporting company)~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ☑

As of ~~October 31, 2017,~~August 4, 2021, there were ~~88.0~~86.1 million shares of ~~common stock~~Common Stock ($1 par value per share) of the ~~registrant~~issuer outstanding.

TABLE OF CONTENTS


ITEM		PAGE
PART I – FINANCIAL INFORMATION
1.	Financial Statements (unaudited)
	Consolidated Condensed Statements of Operations	1
	Consolidated Condensed Statements of Comprehensive Income	2
	Consolidated Condensed Balance Sheets	3
	Consolidated Condensed Statements of Cash Flows	4
	Consolidated Condensed Statements of Changes in Shareholders’ Equity	5
	Notes to Consolidated Condensed Financial Statements:
	Note 1. Description of Business and Basis of Presentation	6
	Note 2. Recent Accounting Pronouncements	7
	Note 3. Segment Information	7
	Note 4. Revenue	8
	Note 5. Restructuring Actions	10
	Note 6. Income Taxes	11
	Note 7. Earnings Per Share Data	12
	Note 8. Receivables, Net	12
	Note 9. Inventories, Net	13
	Note 10. Other Current and Non-Current Assets	13
	Note 11. Plant, Property and Equipment, Net	14
	Note 12. Goodwill and Other Intangible Assets, Net	14
	Note 13. Accrued Liabilities and Other Non-Current Liabilities	15
	Note 14. Debt	16
	Note 15. Postretirement Benefit Plans	17
	Note 16. Long-Term Incentive Employee Compensation	18
	Note 17. Capital Stock	19
	Note 18. Accumulated Other Comprehensive Loss	19
	Note 19. Commitments and Contingencies	20
	Note 20. Derivatives Financial Instruments	22

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Overview	24
	Discussion of Financial Results	26
	Liquidity	30
	Key Performance Indicators and Non-GAAP Measures	32
	Recent Accounting Pronouncements	36
	Critical Accounting Estimates	36
3.	Quantitative and Qualitative Disclosures about Market Risk	36
4.	Controls and Procedures	36
PART II – OTHER INFORMATION
1.	Legal Proceedings	37
1A.	Risk Factors	37
2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
3.	Defaults Upon Senior Securities	37
4.	Mine Safety Disclosures	37
5.	Other Information	38
6.	Exhibits	38
	Signature	39

ITEM

PAGE
PART I – FINANCIAL INFORMATION
1.
Financial Statements

Consolidated Condensed Statements of Operations
1

Consolidated Condensed Statements of Comprehensive Income
2

Consolidated Condensed Balance Sheets
3

Consolidated Condensed Statements of Cash Flows
4

Consolidated Condensed Statements of Changes in Shareholders' Equity
5

Notes to Consolidated Condensed Financial Statements:

Note 1. Description of Business and Basis of Presentation
6

Note 2. Recent Accounting Pronouncements
7

Note 3. Segment Information
9

Note 4. Restructuring Actions
10

Note 5. Income Taxes
11

Note 6. Earnings Per Share Data
12

Note 7. Receivables, Net
12

Note 8. Inventories, Net
12

Note 9. Other Current and Non-Current Assets
13

Note 10. Plant, Property and Equipment, Net
13

Note 11. Goodwill and Other Intangible Assets, Net
14

Note 12. Accrued Liabilities and Other Non-Current Liabilities
15

Note 13. Debt
15

Note 14. Postretirement Benefit Plans
16

Note 15. Long-Term Incentive Employee Compensation
17

Note 16. Capital Stock
17

Note 17. Commitments and Contingencies
18

Note 18. Acquisitions
21

2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview
22

Discussion of Financial Results
22

Liquidity
28

Key Performance Indicators and Non-GAAP Measures
32

Recent Accounting Pronouncements
36

Critical Accounting Estimates
36
3.
Quantitative and Qualitative Disclosures about Market Risk
36
4.
Controls and Procedures
36
PART II – OTHER INFORMATION
1.
Legal Proceedings
37
1A.
Risk Factors
38
2.
Unregistered Sales of Equity Securities and Use of Proceeds
38
3.
Defaults Upon Senior Securities
38
4.
Mine Safety Disclosures
38
5.
Other Information
38
6.
Exhibits
39

Signature
40

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the SEC). The SEC maintains a website at www.sec.gov on which you may access our SEC filings. In addition, we make available free of charge at www.itt.com/investors copies of materials we file with, or furnish to, the SEC as soon as reasonably practical after we electronically file or furnish these reports, as well as other important information that we disclose from time to time. Information contained on our website, or that can be accessed through our website, does not constitute a part of this Quarterly Report on Form 10-Q (this Report). We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.

Our corporate headquarters are located at 1133 Westchester Avenue, White Plains, New York 10604 and the telephone number of this location is (914) 641-2000.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information included herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather ~~are~~represent only a belief regarding future events based on current expectations, estimates, assumptions and projections about our business, future financial results and the industry in which we operate, and other legal, regulatory and economic developments. These forward-looking statements include, but are not limited to, future strategic plans and other statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future events and future operating or financial performance.

We use words such as ~~"anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "future," "may," "will," "could," "should," "potential," "continue," "guidance"~~“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “future,” “may,” “will,” “could,” “should,” “potential,” “continue,” “guidance” and other similar expressions to identify such forward-looking statements. Forward-looking statements are uncertain and, ~~to some extent~~by their nature, many are inherently unpredictable and outside of ITT’s control, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.

Where in any forward-looking statement we express an expectation or belief as to future results or events, such expectation or belief is based on current plans and expectations of our management, expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that the expectation or belief will occur or that anticipated results will be achieved or accomplished.

Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:

•impacts on our business due to the COVID-19 pandemic and the rise of the COVID-19 Delta variant, as well as the timing, effectiveness and availability of vaccines or other medical remedies and people’s attitudes towards receiving them; including disruptions to our operations and demand for our products, increased costs, disruption of supply chain and other constraints in the availability of key commodities and other necessary services, government-mandated site closures, employee illness, skilled labor shortages, the impact of travel restrictions and stay-in-place restrictions on our business and workforce, customer and supplier bankruptcies, impacts to the global economy and financial markets, and liquidity challenges in accessing capital markets;

•uncertain global economic and capital markets conditions, including due to COVID-19, trade disputes between the U.S. and its trading partners, the new U.S. administration, political and social unrest, and the availability and fluctuations in prices of steel, oil, copper, and other commodities;

•volatility in raw material prices and our suppliers’ ability to meet quality and delivery requirements;

•fluctuations in demand or customers’ levels of capital investment and maintenance expenditures, especially in the oil and gas, chemical, and mining markets, or changes in our customers’ anticipated production schedules, especially in the commercial aerospace market;

•failure to manage the distribution of products and services effectively;

•the risk of material business interruptions, particularly at our manufacturing facilities;

•risks due to our operations and sales outside the U.S. and in emerging markets;

•the extent to which there are quality problems with respect to manufacturing processes or finished goods;

•loss of or decrease in sales from our most significant customers;

•fluctuations in foreign currency exchange rates;

•failure to compete successfully and innovate in our markets;

•risks related to government contracting, including changes in levels of government spending and regulatory and contractual requirements applicable to sales to the U.S. government;

•fluctuations in our effective tax rate;

•failure to protect our intellectual property rights or violations of the intellectual property rights of others;

•the risk of cybersecurity breaches;

•changes in laws relating to the use and transfer of personal and other information;

•failure of portfolio management strategies, including cost-saving initiatives, to meet expectations;

•changes in environmental laws or regulations, discovery of previously unknown or more extensive contamination, or the failure of a potentially responsible party to perform;

•failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation, export controls and trade sanctions, including tariffs;

•risk of product liability claims and litigation; and

•risk of liabilities from past divestitures and spin-offs.

More information on factors that could cause actual results or events to differ materially from those anticipated is included in our reports filed with the ~~U.S. Securities and Exchange Commission (the SEC),~~SEC, including our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 (particularly under the caption ~~"Risk Factors"~~“Risk Factors”), our Quarterly Reports on Form 10-Q ~~(including Part II, Item 1A, "Risk Factors," of this Quarterly Report on Form 10-Q)~~ and in other documents we file from time to time with the SEC.

The forward-looking statements included in this ~~Quarterly~~ Report ~~on Form 10-Q (this Report)~~ speak only as of the date of this Report. We undertake no obligation (and expressly disclaim any obligation) to update any forward-looking statements, whether written or oral or as a result of new information, future events or otherwise.

~~WHERE YOU CAN FIND MORE INFORMATION~~

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can inspect, read and copy these reports, proxy statements and other information at the SEC's Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information regarding the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov where you may access our reports, proxy statements and other information that we file with, or furnish to, the SEC.

We make available free of charge at www.itt.com (in the "Investors" section) copies of materials we file with, or furnish to, the SEC. We also use the Investor Relations page of our website at www.itt.com (in the "Investors" section) to disclose important information to the public.

Information contained on our website, or that can be accessed through our website, does not constitute a part of this Report. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website. Our corporate headquarters is located at 1133 Westchester Avenue, White Plains, NY 10604 and the telephone number of this location is (914) 641-2000.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


														Three Months Ended				Six Months Ended
	Three Months						Nine Months							July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
For the Periods Ended September 30	2017			2016			2017			2016
Revenue	$	645.0		$	581.7		$	1,901.7		$	1,817.0		Revenue	$	691.6	$	514.7	$	1,390.0	$	1,178.0
Costs of revenue	441.9			397.8			1,291.9			1,232.2			Costs of revenue	467.0		351.1		936.4		805.0
Gross profit	203.1			183.9			609.8			584.8			Gross profit	224.6		163.6		453.6		373.0
General and administrative expenses	73.7			59.2			205.2			202.2			General and administrative expenses	60.2		44.6		112.3		101.7
Sales and marketing expenses	41.3			39.4			128.3			128.7			Sales and marketing expenses	38.3		35.7		75.0		77.3
Research and development expenses	23.1			18.6			68.2			58.9			Research and development expenses	23.2		18.9		47.5		41.6
Asbestos-related benefit, net	(62.8		)	(68.1		)	(33.0		)	(40.3		)
Asbestos-related (benefit) costs, net													Asbestos-related (benefit) costs, net	(76.8)		16.0		(74.4)		(24.7)
Restructuring costs													Restructuring costs	0.1		27.9		3.7		31.0
Asset impairment charges													Asset impairment charges	0		0		0		16.3
Operating income	127.8			134.8			241.1			235.3			Operating income	179.6		20.5		289.5		129.8
Interest and non-operating expenses, net	0.2			0.3			0.1			1.5
Interest and non-operating (income) expenses, net													Interest and non-operating (income) expenses, net	(3.5)		2.2		(4.8)		2.8
Income from continuing operations before income tax expense	127.6			134.5			241.0			233.8			Income from continuing operations before income tax expense	183.1		18.3		294.3		127.0
Income tax expense	40.6			46.1			60.3			75.3
Income tax expense (benefit)													Income tax expense (benefit)	143.9		(28.1)		168.6		(3.4)
Income from continuing operations	87.0			88.4			180.7			158.5			Income from continuing operations	39.2		46.4		125.7		130.4
(Loss) Income from discontinued operations, including tax benefit (expense) of $0.0, $(1.1), $0.2 and $(0.9), respectively	(0.1		)	1.8			(0.3		)	2.0
Income from discontinued operations, net of tax expense of $0.0, $0.3, $0.0, and $0.7, respectively													Income from discontinued operations, net of tax expense of $0.0, $0.3, $0.0, and $0.7, respectively	0		1.6		0		2.7
Net income	86.9			90.2			180.4			160.5			Net income	39.2		48.0		125.7		133.1
Less: Income (loss) attributable to noncontrolling interests	—			0.1			(0.3		)	0.2
Less: Income attributable to noncontrolling interests													Less: Income attributable to noncontrolling interests	0.2		0		0.5		0.3
Net income attributable to ITT Inc.	$	86.9		$	90.1		$	180.7		$	160.3		Net income attributable to ITT Inc.	$	39.0	$	48.0	$	125.2	$	132.8

Amounts attributable to ITT Inc.:													Amounts attributable to ITT Inc.:
Income from continuing operations, net of tax	$	87.0		$	88.3		$	181.0		$	158.3		Income from continuing operations, net of tax	$	39.0	$	46.4	$	125.2	$	130.1
(Loss) income from discontinued operations, net of tax	(0.1		)	1.8			(0.3		)	2.0
Income from discontinued operations, net of tax													Income from discontinued operations, net of tax	0		1.6		0		2.7
Net income attributable to ITT Inc.	$	86.9		$	90.1		$	180.7		$	160.3		Net income attributable to ITT Inc.	$	39.0	$	48.0	$	125.2	$	132.8

Earnings per share attributable to ITT Inc.:													Earnings per share attributable to ITT Inc.:
Basic:
Basic earnings per share:													Basic earnings per share:
Continuing operations	$	0.99		$	0.99		$	2.05		$	1.77		Continuing operations	$	0.45	$	0.54	$	1.45	$	1.50
Discontinued operations	—			0.02			—			0.02			Discontinued operations	0		0.02		0		0.03
Net income	$	0.99		$	1.01		$	2.05		$	1.79		Net income	$	0.45	$	0.56	$	1.45	$	1.53
Diluted:
Diluted earnings per share:													Diluted earnings per share:
Continuing operations	$	0.98		$	0.98		$	2.03		$	1.76		Continuing operations	$	0.45	$	0.53	$	1.44	$	1.49
Discontinued operations	—			0.02			—			0.02			Discontinued operations	0		0.02		0		0.03
Net income	$	0.98		$	1.00		$	2.03		$	1.78		Net income	$	0.45	$	0.55	$	1.44	$	1.52
Weighted average common shares – basic	88.0			89.2			88.3			89.5			Weighted average common shares – basic	86.1		86.3		86.2		87.0
Weighted average common shares – diluted	88.7			89.7			89.0			90.2			Weighted average common shares – diluted	86.5		86.8		86.7		87.6
Cash dividends declared per common share	$	0.128		$	0.124		$	0.384		$	0.372

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the ~~above statements~~Statements of ~~operations.~~Operations.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(IN MILLIONS)

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Net income $ 86.9
$ 90.2
$ 180.4
$ 160.5
Other comprehensive income (loss):
Net foreign currency translation adjustment 22.7
4.3
84.4
17.1
Net change in postretirement benefit plans, net of tax impacts of $2.1, $0.6, $3.0 and $1.6, respectively 3.6
1.2
5.9
3.5
Other comprehensive income 26.3
5.5
90.3
20.6
Comprehensive income 113.2
95.7
270.7
181.1
Less: Comprehensive income (loss) attributable to noncontrolling interests —
0.1
(0.3 ) 0.2
Comprehensive income attributable to ITT Inc. $ 113.2
$ 95.6
$ 271.0
$ 180.9
Disclosure of reclassification adjustments to postretirement benefit plans
Reclassification adjustments (see Note 14):
Amortization of prior service benefit, net of tax expense of $(0.3), $(0.6), $(1.3) and $(1.6), respectively $ (0.9 ) $ (0.8 ) $ (2.3 ) $ (2.6 )
Amortization of net actuarial loss, net of tax benefits of $1.1, $1.2, $3.0 and $3.2, respectively 2.1
2.0
5.8
6.1
Other adjustments:
Loss from curtailment, net of tax benefit of $1.3, $0.0, $1.3 and $0.0, respectively 2.4
—
2.4
—
Net change in postretirement benefit plans, net of tax $ 3.6
$ 1.2
$ 5.9
$ 3.5


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net income	$	39.2	$	48.0	$	125.7	$	133.1
Other comprehensive income (loss):
Net foreign currency translation adjustment	8.4		2.1		(21.6)		(49.2)
Net change in postretirement benefit plans, net of tax (expense) benefit of $(0.1), $0.3, $(0.2), and $0.6, respectively	0		0.9		0		1.8
Other comprehensive income (loss)	8.4		3.0		(21.6)		(47.4)
Comprehensive income	47.6		51.0		104.1		85.7
Less: Comprehensive income attributable to noncontrolling interests	0.2		0		0.5		0.3
Comprehensive income attributable to ITT Inc.	$	47.4	$	51.0	$	103.6	$	85.4
Disclosure of reclassification adjustments to postretirement benefit plans
Reclassification adjustments (see Note 15):
Amortization of prior service benefit, net of tax expense of $(0.3), $(0.3), $(0.6) and $(0.6), respectively	$	(0.9)	$	(1.0)	$	(1.9)	$	(1.9)
Amortization of net actuarial loss, net of tax benefit of $0.2, $0.6, $0.4 and $1.2, respectively	0.9		1.9		1.9		3.7



Net change in postretirement benefit plans, net of tax	$	0	$	0.9	$	0	$	1.8

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the ~~above statements~~

Statements of ~~comprehensive income.~~Comprehensive Income.

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


	September 30, 2017			December 31, 2016
	(Unaudited)							July 3, 2021		December 31, 2020
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	395.6		$	460.7		Cash and cash equivalents	$	578.8	$	859.8
Receivables, net	611.6			523.9			Receivables, net	553.4		507.5
Inventories, net	327.9			295.2			Inventories, net	406.2		360.5
Other current assets	130.1			122.0			Other current assets	88.8		189.5
Total current assets	1,465.2			1,401.8			Total current assets	1,627.2		1,917.3
Plant, property and equipment, net	503.5			464.5			Plant, property and equipment, net	502.7		525.1
Goodwill	882.6			774.7			Goodwill	936.3		944.8
Other intangible assets, net	159.8			160.3			Other intangible assets, net	95.8		106.4
Asbestos-related assets	309.6			314.6			Asbestos-related assets	0		353.7
Deferred income taxes	285.7			297.4			Deferred income taxes	37.3		158.3
Other non-current assets	193.7			188.4			Other non-current assets	263.0		272.0
Total non-current assets	2,334.9			2,199.9			Total non-current assets	1,835.1		2,360.3
Total assets	$	3,800.1		$	3,601.7		Total assets	$	3,462.3	$	4,277.6
Liabilities and Shareholders’ Equity							Liabilities and Shareholders’ Equity
Current liabilities:							Current liabilities:
Short-term loans and current maturities of long-term debt	$	191.1		$	214.3
Commercial paper and current maturities of long-term debt							Commercial paper and current maturities of long-term debt	$	199.7	$	106.8
Accounts payable	334.7			301.7			Accounts payable	337.8		306.8
Accrued liabilities	399.6			350.2			Accrued liabilities	362.5		457.4
Total current liabilities	925.4			866.2			Total current liabilities	900.0		871.0
Asbestos-related liabilities	798.1			877.5			Asbestos-related liabilities	0		840.6
Postretirement benefits	251.3			248.6			Postretirement benefits	222.0		227.5
Other non-current liabilities	172.1			181.0			Other non-current liabilities	200.0		210.6
Total non-current liabilities	1,221.5			1,307.1			Total non-current liabilities	422.0		1,278.7
Total liabilities	2,146.9			2,173.3			Total liabilities	1,322.0		2,149.7
Shareholders’ equity:							Shareholders’ equity:
Common stock:							Common stock:
Authorized – 250.0 shares, $1 par value per share							Authorized – 250.0 shares, $1 par value per share
Issued and Outstanding – 88.0 shares and 88.4 shares, respectively	88.0			88.4
Issued and outstanding – 86.1 shares and 86.5 shares, respectively							Issued and outstanding – 86.1 shares and 86.5 shares, respectively	86.1		86.5
Retained earnings	1,924.5			1,789.2			Retained earnings	2,353.1		2,319.3
Total accumulated other comprehensive loss	(360.9		)	(451.2		)	Total accumulated other comprehensive loss	(301.0)		(279.4)
Total ITT Inc. shareholders' equity	1,651.6			1,426.4
Total ITT Inc. shareholders’ equity							Total ITT Inc. shareholders’ equity	2,138.2		2,126.4
Noncontrolling interests	1.6			2.0			Noncontrolling interests	2.1		1.5
Total shareholders’ equity	1,653.2			1,428.4			Total shareholders’ equity	2,140.3		2,127.9
Total liabilities and shareholders’ equity	$	3,800.1		$	3,601.7		Total liabilities and shareholders’ equity	$	3,462.3	$	4,277.6

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the ~~above balance sheets.~~Balance Sheets.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN MILLIONS)


								Six Months Ended
For the Nine Months Ended September 30	2017			2016
								July 3, 2021		June 27, 2020
Operating Activities							Operating Activities
Net income	$	180.4		$	160.5
Less: (Loss) income from discontinued operations	(0.3		)	2.0
Less: (Loss) income attributable to noncontrolling interests	(0.3		)	0.2
Income from continuing operations attributable to ITT Inc.	181.0			158.3			Income from continuing operations attributable to ITT Inc.	$	125.2	$	130.1
Adjustments to income from continuing operations:							Adjustments to income from continuing operations:
Depreciation and amortization	77.6			76.5			Depreciation and amortization	57.2		54.5
Stock-based compensation	12.5			9.1
Equity-based compensation							Equity-based compensation	7.4		5.8

Asbestos-related benefit, net	(33.0		)	(40.3		)	Asbestos-related benefit, net	(74.4)		(24.7)
Asset impairment charges							Asset impairment charges	0		16.3
Other non-cash charges, net							Other non-cash charges, net	11.2		23.5
Asbestos-related payments, net	(39.5		)	(24.5		)	Asbestos-related payments, net	(4.5)		(7.6)
Divestiture of asbestos-related assets and liabilities							Divestiture of asbestos-related assets and liabilities	(398.0)		0
Changes in assets and liabilities:							Changes in assets and liabilities:
Change in receivables	(47.2		)	(13.9		)	Change in receivables	(51.6)		97.2
Change in inventories	(4.2		)	(8.9		)	Change in inventories	(50.8)		2.0

Change in accounts payable	3.4			(16.2		)	Change in accounts payable	32.1		(62.3)
Change in accrued expenses	18.3			(18.8		)	Change in accrued expenses	12.9		5.7
Change in accrued and deferred income taxes	19.8			33.3
Change in income taxes							Change in income taxes	123.1		(17.5)
Other, net	(10.3		)	(7.9		)	Other, net	(21.4)		(19.9)
Net Cash – Operating activities	178.4			146.7
Net Cash – Operating Activities							Net Cash – Operating Activities	(231.6)		203.1
Investing Activities							Investing Activities
Capital expenditures	(79.2		)	(68.1		)	Capital expenditures	(35.1)		(34.3)
Acquisitions, net of cash acquired	(113.7		)	(8.8		)
Purchases of investments	—			(60.6		)
Maturities of investments	—			113.6
Proceeds from sale of assets	3.4			1.4

Other, net	0.2			—			Other, net	0.4		(2.8)
Net Cash – Investing activities	(189.3		)	(22.5		)
Net Cash – Investing Activities							Net Cash – Investing Activities	(34.7)		(37.1)
Financing Activities							Financing Activities
Commercial paper, net borrowings	17.5			56.5			Commercial paper, net borrowings	95.4		51.0
Short-term revolving loans, borrowings	77.3			27.7			Short-term revolving loans, borrowings	0		495.8
Short-term revolving loans, repayments	(123.9		)	(78.3		)	Short-term revolving loans, repayments	0		(406.2)
Long-term debt, issued	3.9			—

Long-term debt, repayments	(1.1		)	(0.8		)	Long-term debt, repayments	(1.3)		(1.2)
Repurchase of common stock	(32.9		)	(70.9		)	Repurchase of common stock	(61.4)		(83.7)
Proceeds from issuance of common stock	6.7			8.8

Dividends paid	(22.8		)	(22.6		)	Dividends paid	(38.1)		(14.6)
Excess tax benefit from equity compensation activity	—			3.4
Other, net	—			(2.2		)	Other, net	0.3		0.1
Net Cash – Financing activities	(75.3		)	(78.4		)
Net Cash – Financing Activities							Net Cash – Financing Activities	(5.1)		41.2
Exchange rate effects on cash and cash equivalents	22.3			9.0			Exchange rate effects on cash and cash equivalents	(9.2)		(0.2)
Net Cash – Operating activities of discontinued operations	(1.2		)	5.3
Net cash – operating activities of discontinued operations							Net cash – operating activities of discontinued operations	(0.2)		0.1
Net change in cash and cash equivalents	(65.1		)	60.1			Net change in cash and cash equivalents	(280.8)		207.1
Cash and cash equivalents – beginning of year	460.7			415.7
Cash and cash equivalents – end of period	$	395.6		$	475.8
Cash and cash equivalents – beginning of year (includes restricted cash of $0.8 and $0.8, respectively)							Cash and cash equivalents – beginning of year (includes restricted cash of $0.8 and $0.8, respectively)	860.6		612.9
Cash and Cash Equivalents – End of Period (includes restricted cash of $1.0 and $0.9, respectively)							Cash and Cash Equivalents – End of Period (includes restricted cash of $1.0 and $0.9, respectively)	$	579.8	$	820.0
Supplemental Disclosures of Cash Flow Information							Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:							Cash paid during the year for:
Interest	$	2.8		$	3.3		Interest	$	0.7	$	1.2
Income taxes, net of refunds received	$	39.6		$	37.2		Income taxes, net of refunds received	$	42.3	$	10.7

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the ~~above statements~~Statements of ~~cash flows.~~Cash Flows.

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN ~~SHAREHOLDERS'~~SHAREHOLDERS’ EQUITY (UNAUDITED)

(IN ~~MILLIONS)~~MILLIONS, EXCEPT PER SHARE AMOUNTS)


As of and for the Three Months Ended July 3, 2021	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Shareholders' Equity
	(Shares)	(Dollars)
April 3, 2021	86.1	$	86.1	$	2,329.4	$	(309.4)	$	1.8	$	2,107.9
Net income	—	0		39.0		0		0.2		39.2
Activity from stock incentive plans	0	0		4.4		0		0		4.4
Share repurchases	0	0		(0.4)		0		0		(0.4)
Dividends declared ($0.22 per share)	—	0		(19.3)		0		0		(19.3)
Total other comprehensive income, net of tax	—	0		0		8.4		0		8.4
Other	—	—		—		—		0.1		0.1
July 3, 2021	86.1	$	86.1	$	2,353.1	$	(301.0)	$	2.1	$	2,140.3

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Common Stock
Common stock, beginning balance $ 88.0
$ 89.6
$ 88.4
$ 89.5
Activity from stock incentive plans —
—
0.5
0.9
Share repurchases —
(1.3 ) (0.9 ) (2.1 )
Common stock, ending balance 88.0
88.3
88.0
88.3
Retained Earnings

Retained earnings, beginning balance 1,843.6
1,734.6
1,789.2
1,696.7
Cumulative adjustment for accounting change (See Note 2) —
—
0.5
—
Net income attributable to ITT Inc. 86.9
90.1
180.7
160.3
Dividends declared (11.3 ) (11.2 ) (34.1 ) (33.6 )
Activity from stock incentive plans 5.3
3.3
20.1
20.5
Share repurchases (0.1 ) (45.6 ) (32.0 ) (72.3 )
Purchase of noncontrolling interest —
—
—
(0.4 )
Retained earnings, ending balance 1,924.5
1,771.2
1,924.5
1,771.2
Accumulated Other Comprehensive Loss

Postretirement benefit plans, beginning balance (142.9 ) (151.4 ) (145.2 ) (153.7 )
Net change in postretirement benefit plans 3.6
1.2
5.9
3.5
Postretirement benefit plans, ending balance (139.3 ) (150.2 ) (139.3 ) (150.2 )
Cumulative translation adjustment, beginning balance (244.3 ) (257.3 ) (306.0 ) (270.1 )
Net cumulative translation adjustment 22.7
4.3
84.4
17.1
Cumulative translation adjustment, ending balance (221.6 ) (253.0 ) (221.6 ) (253.0 )
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 (360.9 ) (403.5 ) (360.9 ) (403.5 )
Noncontrolling interests

Noncontrolling interests, beginning balance 1.6
1.6
2.0
3.3
Income (loss) attributable to noncontrolling interests —
0.1
(0.3 ) 0.2
Dividend to noncontrolling interest shareholders —
—
—
(1.9 )
Other —
—
(0.1 ) 0.1
Noncontrolling interests, ending balance 1.6
1.7
1.6
1.7
Total Shareholders' Equity

Total shareholders' equity, beginning balance 1,546.0
1,416.8
1,428.4
1,365.4
Net change in common stock —
(1.3 ) (0.4 ) (1.2 )
Net change in retained earnings 80.9
36.6
135.3
74.5
Net change in accumulated other comprehensive loss 26.3
5.5
90.3
20.6
Net change in noncontrolling interests —
0.1
(0.4 ) (1.6 )
Total shareholders' equity, ending balance $ 1,653.2
$ 1,457.7
$ 1,653.2
$ 1,457.7


As of and for the Six Months Ended July 3, 2021
	(Shares)	(Dollars)
December 31, 2020	86.5	$	86.5	$	2,319.3	$	(279.4)	$	1.5	$	2,127.9
Net income	—	0		125.2		0		0.5		125.7
Activity from stock incentive plans	0.3	0.3		7.6		0		0		7.9
Share repurchases	(0.7)	(0.7)		(60.7)		0		0		(61.4)
Dividends declared ($0.44 per share)	—	0		(38.3)		0		0		(38.3)
Total other comprehensive loss, net of tax	—	0		0		(21.6)		0		(21.6)
Other	—	—		—		—		0.1		0.1
July 3, 2021	86.1	$	86.1	$	2,353.1	$	(301.0)	$	2.1	$	2,140.3


As of and for the Three Months Ended June 27, 2020
	(Shares)	(Dollars)
March 28, 2020	86.3	$	86.3	$	2,361.8	$	(435.7)	$	3.2	$	2,015.6
Net income	—	0		48.0		0		0		48.0
Activity from stock incentive plans	0	0		3.3		0		0		3.3
Share repurchases	0	0		(0.3)		0		0		(0.3)

Dividends declared ($0.169 per share)	—	0		(14.6)		0		0		(14.6)

Total other comprehensive income, net of tax	—	0		0		3.0		0		3.0

June 27, 2020	86.3	$	86.3	$	2,398.2	$	(432.7)	$	3.2	$	2,055.0


As of and for the Six Months Ended June 27, 2020
	(Shares)	(Dollars)
December 31, 2019	87.8	$	87.8	$	2,372.4	$	(385.3)	$	2.9	$	2,077.8
Net income	—	0		132.8		0		0.3		133.1
Activity from stock incentive plans	0.4	0.4		5.5		0		0		5.9
Share repurchases	(1.9)	(1.9)		(81.8)		0		0		(83.7)
Cumulative adjustment for accounting change	—	—		(1.2)		—		—		(1.2)
Dividends declared ($0.338 per share)	—	0		(29.5)		0		0		(29.5)

Total other comprehensive loss, net of tax	—	0		0		(47.4)		0		(47.4)

June 27, 2020	86.3	$	86.3	$	2,398.2	$	(432.7)	$	3.2	$	2,055.0

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the ~~above statements~~Statements of ~~changes~~Changes in ~~shareholders' equity.~~Shareholders’ Equity.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLARS AND SHARES (EXCEPT PER SHARE AMOUNTS) IN MILLIONS, UNLESS OTHERWISE STATED)

NOTE 1

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

ITT Inc. is a diversified manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and ~~oil and gas~~energy markets. Unless the context otherwise indicates, references herein to ~~"ITT," "the~~“ITT,” “the Company,"” and such words as ~~"we," "us,"~~“we,” “us,” and ~~"our"~~“our” include ITT Inc. and its subsidiaries. ITT operates through three segments: ~~Industrial Process, consisting of industrial pumping and complementary equipment;~~ Motion Technologies (MT), consisting of friction and shock and vibration equipment; Industrial Process (IP), consisting of industrial flow equipment and services; and Connect & Control Technologies (CCT), consisting of electronic connectors, fluid handling, motion control, composite materials and noise and energy absorption products. Financial information for our segments is presented in Note 3, Segment Information.

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a pandemic, resulting in certain local government-mandated site closures. While most of our businesses were deemed essential, we experienced disruption in our operations due to decreased customer demand, temporary plant closures, and elevated safety standards to keep our employees safe. The Company continues to face certain risks and uncertainties resulting from COVID-19, including the severity of a resurgence of COVID-19 or new strains of the virus, as well as the speed of distribution of the COVID-19 vaccines and people’s attitudes towards receiving the vaccines. Due to these uncertainties, the severity and extent of future impacts from COVID-19 or any new strains of the virus cannot be reasonably estimated at this time.

Basis of Presentation

The unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the SEC and, in the opinion of management, reflect all known adjustments (which ~~include~~consist primarily of normal, recurring ~~adjustments)~~accruals, estimates and assumptions) necessary ~~for a fair presentation of~~to state fairly the financial position, results of operations, and cash flows for the periods presented. ~~Certain information and note disclosures normally~~The Consolidated Condensed Balance Sheet as of December 31, 2020, presented herein, has been derived from our audited balance sheet included in ~~financial statements prepared in accordance with accounting principles generally accepted in~~our Annual Report on Form 10-K (2020 Annual Report) for the ~~United States of America (GAAP) have been condensed or omitted pursuant to such SEC rules. We believe that the~~year ended December 31, 2020 but does not include all disclosures ~~made are adequate to make the information presented not misleading.~~required by GAAP. We consistently applied the accounting policies described in ~~ITT's~~the 2020 Annual Report ~~on Form 10-K for the year ended December 31,~~ ~~2016~~ (~~2016~~ ~~Annual Report)~~ in preparing these unaudited financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in our ~~2016~~2020 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes ~~available.~~available and may be impacted by the duration and severity of the COVID-19 pandemic. Estimates and assumptions are used for, but not limited to, ~~asbestos-related liabilities and recoveries from insurers,~~ revenue recognition, unrecognized tax benefits, deferred tax valuation allowances, projected benefit obligations for postretirement plans, accounting for business combinations, goodwill and other intangible asset impairment testing, environmental liabilities and assets, allowance for ~~doubtful accounts~~credit losses and inventory valuation. Actual results could differ from these estimates.

~~ITT's~~Effective July 1 2021, the Company divested the entity holding asbestos-related assets and liabilities to a third-party. As a result of the transaction, all associated asbestos-related assets and liabilities were removed from the Company’s consolidated balance sheet, other than current liabilities for certain transaction costs. See Note 19, Commitments and Contingencies, for further information.

ITT’s quarterly financial periods end on the Saturday that is ~~generally~~ closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year, which ends on December 31st. ~~For ease of presentation, the quarterly financial statements included herein are described as ending~~ITT’s second quarter for 2021 and 2020 ended on ~~the last day of the calendar quarter.~~July 3, 2021 and June 27, 2020, respectively, and were both thirteen week periods.

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2

RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of all accounting standard updates (ASUs). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

~~Accounting Pronouncements Recently Adopted~~

In March 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-09 to simplify several aspects of the accounting standard for employee share-based payment transactions, including the classification of excess tax benefits and deficiencies and the accounting for employee forfeitures. ITT elected to adopt this guidance as of January 1, 2017 which includes the following:

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 Sheet. Instead they will be recognized on the Statements of Operations as a tax expense or benefit. On 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. These provisions were adopted using a prospective method of transition. During the nine months ended September 30, 2017, we recorded an income tax benefit of $1.2, on the Statement of Operations and classified this benefit on the Statement of Cash Flows as an operating activity. The income tax benefit for the three months ended September 30, 2017 was less than $0.1. The excess tax benefit of $3.4 for the nine months ended September 30, 2016 was recorded as a change in equity on the Balance Sheet and was classified as a financing activity on the Statement of Cash Flows.

Previously unrecognized tax benefits due to net operating loss carryforwards were recognized during the first quarter of 2017 using a modified retrospective approach, resulting in a cumulative-effect adjustment to increase retained earnings by $2.1 as of January 1, 2017. In addition, a corresponding deferred tax asset of $25.6 was partially offset by a valuation allowance of $23.5 during the first quarter of 2017 as the newly recognized net operating losses were not considered more likely than not realizable.

The impact of forfeitures will now be recognized as they occur as opposed to previously estimating future employee forfeitures. We adopted this provision utilizing a modified retrospective approach, resulting in a cumulative-effect adjustment reducing retained earnings by $1.6 as of January 1, 2017.

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. The adoption of these provisions were reflected prospectively in the financial statements and did not have a material impact.

Recent Accounting Pronouncements Not Yet ~~Adopted~~Adopted:

In March ~~2017,~~2020 and January 2021, the FASB issued ASU ~~2017-07 which amends~~2020-04, Reference Rate Reform (Topic 848): Facilitation of the ~~Statement~~Effects of ~~Operations presentation for~~Reference Rate Reformon Financial Reporting and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, respectively. Together, the ~~components of net periodic benefit cost for entities that sponsor defined benefit pension~~ASUs provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other ~~postretirement plans. Under the ASU, entities are now required~~interbank offered rates to ~~disaggregate the service cost component~~alternative reference rates. This guidance was effective beginning on March 12, 2020, and present it with other current compensation costs for the related employees. All other components of net periodic benefit cost will no longer be classified as an operating expense. In addition, only the service cost component will be eligible for capitalization on the balance sheet. The ASU requires a retrospective transition method to adopt the requirement to present service costs separately from the other components of net periodic benefit cost in the statements of operations and a prospective transition method to adopt the requirement that prohibits capitalization of all components of net periodic benefit cost on the balance sheet except service costs. The ASU is effective for the Company ~~beginning in~~may elect to apply the ~~first quarter of 2018, at which time~~amendments prospectively through December 31, 2022. We do not expect this guidance to have a significant impact on our operating results, financial position, or cash flows; however, we ~~expect~~will continue to ~~adopt the new standard. We have yet to finalize the evaluation of~~monitor the potential impact, ~~of this ASU on our financial statements; however, we do not expect these changes to have a material impact.~~if adopted.

In February 2016, the FASB issued ASU 2016-02 impacting the accounting for leases intending to increase transparency and comparability of organizations by requiring balance sheet presentation of leased assets and increased financial statement disclosure of leasing arrangements. The revised standard will require entities to recognize a liability for their lease obligations and a corresponding asset representing the right to use the underlying asset over the lease term. Lease obligations are to be measured at the present value of lease payments and accounted for using the effective interest method. The accounting for the leased asset will differ slightly depending on whether the agreement is deemed to be a financing or operating lease. For finance leases, the leased asset is depreciated on a straight-line basis and recorded separately from the interest expense in the statements of operations, resulting in higher expense in the earlier part of the lease term. For operating leases, the depreciation

and interest expense components are combined, recognized evenly over the term of the lease, and presented as a reduction to operating income. The ASU requires that assets and liabilities be presented or disclosed separately and classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The ASU is effective for the Company beginning in the first quarter 2019, at which time we expect to adopt the new standard. We are currently assessing our existing lease agreements and related financial disclosures to evaluate the impact of these amendments on our financial statements.

In May 2014, the FASB issued ASU 2014-09 amending the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. We are still finalizing our assessment of the impact of the new standard, but we do not currently expect it to have a material impact on our consolidated financial statements. Based on the evaluation of our current contracts and revenue streams, most will be recorded consistently under both the current and new standard. However, the timing of revenue recognition of certain design and build contracts, currently recognized using the percentage of completion method, will be dependent on contract terms and therefore may vary. Additionally, certain advance payments that are currently presented as a reduction of inventory will be presented as a contract liability under the new guidance. The new guidance will be effective for the Company beginning in its first quarter of 2018. At this time, we expect to adopt the new standard using a modified retrospective approach with the cumulative effect recognized as of the date of initial application.

NOTE 3

SEGMENT INFORMATION

During the first quarter of 2017, we combined our former Interconnect Solutions and Control Technologies segments to form Connect & Control Technologies. All prior year segment information has been reclassified based on our current segment structure. The ~~Company's~~Company’s segments are reported on the same basis used by our Chief Executive Officer, who is also our chief operating decision maker, for evaluating performance and for allocating resources. Our ~~three~~3 reportable segments are referred to as: Motion Technologies, Industrial Process, ~~Motion Technologies,~~ and Connect & Control Technologies.

Motion Technologies manufactures brake components and specialized sealing solutions, shock absorbers and damping technologies primarily for the global automotive, truck and trailer, public bus and rail transportation markets.

Industrial Process manufactures engineered fluid process equipment serving a diversified mix of customers in global industries such as chemical, oil and gas, mining, and other industrial process markets and is a provider of plant optimization and efficiency solutions and aftermarket services and parts.

~~Motion Technologies~~ manufactures brake components and specialized sealing solutions, shock absorbers and damping technologies primarily for the global automotive, truck and trailer, public bus and rail transportation markets.

Connect & Control Technologies manufactures harsh-environment connector solutions, ~~and~~ critical energy absorption, ~~and~~ flow control components, and composite materials for the aerospace and defense, general industrial, medical, and oil and gas markets.

Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as asbestos and environmental liabilities, that are managed at a corporate level and are not included in segment results when evaluating performance or allocating resources. Assets of the segments exclude general corporate assets, which principally consist of cash, investments, asbestos-related receivables, deferred taxes, and certain property, plant and equipment.


	Revenue				Operating Income				Operating Margin
For the Three Months Ended	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Motion Technologies	$	343.6	$	199.3	$	64.7	$	10.4	18.8	%	5.2	%
Industrial Process	213.9		193.3		31.5		18.5		14.7	%	9.6	%
Connect & Control Technologies	134.5		122.9		17.9		8.4		13.3	%	6.8	%
Eliminations	(0.4)		(0.8)		—		—		0		0
Total segment results	691.6		514.7		114.1		37.3		16.5	%	7.2	%
Asbestos-related benefit (costs), net(a)	0		0		76.8		(16.0)		0		0
Other Corporate costs	—		—		(11.3)		(0.8)		0		0
Total Corporate and other benefit (costs)	0		0		65.5		(16.8)		0		0
Total	$	691.6	$	514.7	$	179.6	$	20.5	26.0	%	4.0	%

(a)The 2021 period includes a pre-tax gain of $88.8 resulting from the divestiture of the entity holding asbestos-related assets and liabilities. See Note 19, Commitments and Contingencies, for further information.


																		Revenue				Operating Income				Operating Margin
For the Six Months Ended																	For the Six Months Ended	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Motion Technologies																	Motion Technologies	$	712.7	$	497.2	$	140.7	$	63.5	19.7	%	12.8	%
Industrial Process																	Industrial Process	416.2		420.6		62.5		27.4		15.0	%	6.5	%
Connect & Control Technologies																	Connect & Control Technologies	261.8		261.6		29.7		24.3		11.3	%	9.3	%
Eliminations																	Eliminations	(0.7)		(1.4)		—		—		0		0
Total segment results																	Total segment results	1,390.0		1,178.0		232.9		115.2		16.8	%	9.8	%
Asbestos-related benefit, net(a)																	Asbestos-related benefit, net(a)	0		0		74.4		24.7		0		0
Other Corporate costs																	Other Corporate costs					(17.8)		(10.1)		0		0
Total Corporate and other benefit																	Total Corporate and other benefit	0		0		56.6		14.6		0		0
Total																	Total	$	1,390.0	$	1,178.0	$	289.5	$	129.8	20.8	%	11.0	%

	Revenue						Operating Income						Operating Margin
For the Three Months Ended September 30	2017			2016			2017			2016			2017		2016
Industrial Process	$	196.2		$	195.0		$	9.9		$	4.3		5.0	%	2.2	%
Motion Technologies	300.1			238.7			49.1			45.2			16.4	%	18.9	%
Connect & Control Technologies	149.4			149.0			17.5			17.4			11.7	%	11.7	%
Total segment results	645.7			582.7			76.5			66.9			11.9	%	11.5	%
Asbestos-related benefit, net	—			—			62.8			68.1			—		—
Eliminations / Other corporate costs	(0.7		)	(1.0		)	(11.5		)	(0.2		)	—		—
Total Eliminations / Corporate and Other costs	(0.7		)	(1.0		)	51.3			67.9			—		—
Total	$	645.0		$	581.7		$	127.8		$	134.8		19.8	%	23.2	%

	Revenue						Operating Income						Operating Margin
For the Nine Months Ended September 30	2017			2016			2017			2016			2017		2016
Industrial Process	$	574.6		$	618.0		$	32.0		$	19.6		5.6	%	3.2	%
Motion Technologies	877.5			755.3			156.1			144.8			17.8	%	19.2	%
Connect & Control Technologies	452.3			446.8			47.5			46.6			10.5	%	10.4	%
Total segment results	1,904.4			1,820.1			235.6			211.0			12.4	%	11.6	%
Asbestos-related benefit, net	—			—			33.0			40.3			—		—
Eliminations / Other corporate costs	(2.7		)	(3.1		)	(27.5		)	(16.0		)	—		—
Total Eliminations / Corporate and Other costs	(2.7		)	(3.1		)	5.5			24.3			—		—
Total	$	1,901.7		$	1,817.0		$	241.1		$	235.3		12.7	%	12.9	%


As of and for the Six Months Ended	Total Assets				Capital Expenditures				Depreciation & Amortization
	July 3, 2021		December 31, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Motion Technologies	$	1,284.7	$	1,202.3	$	27.8	$	22.9	$	31.8	$	29.2
Industrial Process	1,013.5		1,069.6		2.7		4.4		11.1		12.3
Connect & Control Technologies	717.1		720.5		3.9		6.2		11.3		11.7
Corporate(b)	447.0		1,285.2		0.7		0.8		3.0		1.3
Total	$	3,462.3	$	4,277.6	$	35.1	$	34.3	$	57.2	$	54.5

Total Assets
Capital
Expenditures

Depreciation &
Amortization
For the Nine Months Ended September 30 2017
2016^(a)
2017 2016 2017 2016
Industrial Process $ 1,020.8
$ 998.1
$ 15.8
$ 14.9
$ 20.7
$ 21.0
Motion Technologies 1,111.8
838.4
55.1
45.5
35.1
32.7
Connect & Control Technologies 699.1
678.4
7.9
7.3
17.3
18.2
Corporate and Other 968.4
1,086.8
0.4
0.4
4.5
4.6
Total $ 3,800.1
$ 3,601.7
$ 79.2
$ 68.1
$ 77.6
$ 76.5
(b)The decrease in Corporate total assets as of July 3, 2021 is due to the divestiture of the entity holding asbestos-related assets and liabilities and the cash contribution to fund the divestiture. See Note 19, Commitments and Contingencies, for further information.


~~(a)~~	~~Amounts reflect balances as of December 31, 2016.~~

NOTE 4

REVENUE

The following table represents our revenue disaggregated by end market for the three and six months ended July 3, 2021 and June 27, 2020.


For the Three Months Ended July 3, 2021	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total
Auto and rail		$	334.2		$	0		$	0		$	0		$	334.2
Chemical and industrial pumps		0			167.7			0			0			167.7
Aerospace and defense		2.6			0			63.9			0			66.5
Oil and gas		0			46.2			8.9			0			55.1
General industrial		6.8			0			61.7			(0.4)			68.1
Total		$	343.6		$	213.9		$	134.5		$	(0.4)		$	691.6


For the Six Months Ended July 3, 2021	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total
Auto and rail		$	698.2		$	0		$	0		$	0		$	698.2
Chemical and industrial pumps		0			327.4			0			0			327.4
Aerospace and defense		4.2			0			124.1			0			128.3
Oil and gas		0			88.8			17.4			0			106.2
General industrial		10.3			0			120.3			(0.7)			129.9
Total		$	712.7		$	416.2		$	261.8		$	(0.7)		$	1,390.0


For the Three Months Ended June 27, 2020	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total
Auto and rail		$	195.6		$	0		$	0		$	0		$	195.6
Chemical and industrial pumps		0			158.6			0			0			158.6
Aerospace and defense		1.6			0			64.6			0			66.2
Oil and gas		0			34.7			7.7			0			42.4
General industrial		2.1			0			50.6			(0.8)			51.9
Total		$	199.3		$	193.3		$	122.9		$	(0.8)		$	514.7


For the Six Months Ended June 27, 2020	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total
Auto and rail		$	488.0		$	0		$	0		$	(0.1)		$	487.9
Chemical and industrial pumps		0			320.1			0			0			320.1
Aerospace and defense		4.5			0			150.7			0			155.2
Oil and gas		0			100.5			15.5			0			116.0
General industrial		4.7			0			95.4			(1.3)			98.8
Total		$	497.2		$	420.6		$	261.6		$	(1.4)		$	1,178.0

Contract Assets and Liabilities

Contract assets consist of unbilled amounts where revenue recognized exceeds customer billings, net of allowances for credit losses. Contract assets are included in other current assets and other non-current assets in our Consolidated Condensed Balance Sheet. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Contract liabilities are included in accrued liabilities and other non-current liabilities in our Consolidated Condensed Balance Sheet. The following table represents our net contract assets and liabilities as of July 3, 2021 and December 31, 2020.


	July 3, 2021			December 31, 2020
Current contract assets, net		$	14.4		$	19.1
Non-current contract assets, net		0.3			0
Current contract liabilities		(39.5)			(56.2)
Non-current contract liabilities		(4.4)			(0.1)
Net contract liabilities		$	(29.2)		$	(37.2)

During the three and six months ended July 3, 2021, we recognized revenue of $15.8 and $37.7, respectively, related to contract liabilities as of December 31, 2020. The aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of July 3, 2021 was $832.4. Of this amount, we expect to recognize approximately $560 to $580 of revenue during the remainder of 2021.

NOTE 5

RESTRUCTURING ACTIONS

We have initiated various restructuring actions throughout our businesses during the past two years, including the 2020 Global Restructuring Plan described below. There were no other restructuring actions considered individually significant. The following table ~~below~~ summarizes the total restructuring costs presented ~~within general and administrative expenses~~separately in our Consolidated Condensed Statements of Operations for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016.~~June 27, 2020.


											Three Months Ended				Six Months Ended
	Three Months					Nine Months					July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
For the Periods Ended September 30	2017			2016		2017		2016
Severance costs	$	4.6		$	3.1	$	7.3	$	22.0
Severance and other employee-related										Severance and other employee-related	$	0	$	27.8	$	2.4	$	30.9
Asset write-offs	0.1			0.2		0.1		0.4		Asset write-offs	0		0		0.6		0
Other restructuring costs	—			0.7		1.6		1.4
Other										Other	0.1		0.1		0.7		0.1
Total restructuring costs	$	4.7		$	4.0	$	9.0	$	23.8	Total restructuring costs	$	0.1	$	27.9	$	3.7	$	31.0
By segment:										By segment:
Motion Technologies										Motion Technologies	$	0	$	14.0	$	0	$	14.0
Industrial Process	$	3.2		$	2.9	$	4.9	$	19.9	Industrial Process	0		7.8		0.9		7.9
Motion Technologies	0.5			1.1		1.3		2.5
Connect & Control Technologies	1.6			—		2.8		0.9		Connect & Control Technologies	0.1		5.2		2.5		6.7
Corporate and Other	(0.6		)	—		—		0.5		Corporate and Other	0		0.9		0.3		2.4

The following table displays a rollforward of the restructuring accruals, presented on our Consolidated Condensed Balance Sheet within accrued liabilities, for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016.~~June 27, 2020.


	July 3, 2021		June 27, 2020
Beginning balance - January 1	$	19.1	$	7.5
Restructuring costs	4.4		31.7
Reversal of prior accruals	(0.7)		(0.7)
Cash payments	(7.2)		(9.6)
Asset write-offs	(0.6)		0
Foreign exchange translation and other	(0.5)		(0.2)
Ending balance	$	14.5	$	28.7
By accrual type:
Severance and other employee-related	$	14.3	$	28.3
Other	0.2		0.4

For the Periods Ended September 30 2017 2016
Restructuring accruals - beginning balance $ 14.6
$ 20.0
Restructuring costs 9.0
23.8
Cash payments (13.8 ) (22.7 )
Asset write-offs (0.1 ) (0.4 )
Foreign exchange translation and other 1.4
—
Restructuring accrual - ending balance $ 11.1
$ 20.7
By accrual type:
Severance accrual $ 9.9
$ 19.4
Facility carrying and other costs accrual 1.2
1.3

2020 Global Restructuring Plan

~~We have~~During 2020, we initiated ~~various~~an organizational-wide restructuring ~~activities throughout our businesses during the past two years, of which only those noted below are considered~~plan to ~~be individually significant. Other less significant restructuring actions taken during 2017 and 2016 included various reduction in workforce initiatives.~~

~~Industrial Process Restructuring Actions~~

~~Beginning in early 2015, we have been executing a series of restructuring actions focused on achieving efficiencies and reducing~~reduce the overall cost structure of the ~~Industrial Process segment~~Company primarily in ~~an effort~~response to ~~align with~~a reduction in demand from the ~~declining oil and gas market conditions experienced over the past two years. During the first nine months~~COVID-19 pandemic. Through July 3, 2021, we have recognized restructuring charges of ~~2017, we continued to pursue these objectives and we recognized $4.9 of restructuring costs~~$45.1, including $43.8 in 2020, which are primarily related to involuntary severance costs. We expect to incur additional restructuring charges of approximately $3 during the ~~exit~~remainder of ~~certain office space and severance for 61 employees.~~2021 to complete this action. Cash payments ~~related to~~during the ~~remaining accrual are expected~~six months ended July 3, 2021 were $6.5. The restructuring liability as of July 3, 2021 was $10.6, which we expect to be substantially ~~complete in 2018. However, we will continue to monitor~~paid during 2021, and ~~evaluate the need for any additional restructuring actions.~~

~~The following table provides a rollforward of the restructuring accruals associated with the Industrial Process restructuring actions.~~is presented on our Consolidated Condensed Balance Sheet within accrued liabilities.

For the Nine Months Ended September 30 2017 2016
Restructuring accruals - beginning balance $ 6.5
$ 4.9
Restructuring costs 4.9
19.9
Cash payments (5.5 ) (12.8 )
Asset write-offs (0.1 ) (0.4 )
Foreign exchange translation and other (0.9 ) 0.3
Restructuring accruals - ending balance $ 4.9
$ 11.9

NOTE 56

INCOME TAXES

For the three months ended September 30, 2017 and 2016, the Company recognized income tax expense of $40.6 and $46.1 and had an effective tax rate of 31.8% and 34.3%, respectively. For the nine months ended September 30, 2017 and 2016, the Company recognized income tax expense of $60.3 and $75.3 and had an effective tax rate of 25.0% and 32.2%, respectively. The lower year-to-date effective tax rate in 2017 is primarily due to a tax rate change on Korea deferred tax assets and an excess share-based compensation deduction due to the adoption of ASU 2016-09.


	Three Months Ended						Six Months Ended
	July 3, 2021			June 27, 2020				July 3, 2021			June 27, 2020
Income tax expense (benefit)	$	143.9		$	(28.1)			$	168.6		$	(3.4)
Effective tax rate	78.6		%	(153.6)		%		57.3		%	(2.7)		%

The higher effective tax rate ~~in 2016 was primarily driven by an increase in~~for the three and six months ended July 3, 2021 resulted from the Company recording tax expense on the reversal of previously recorded deferred tax ~~liability on foreign earnings which are not considered indefinitely reinvested. Refer to~~assets of $116.9 resulting from the Company’s divestiture of the entity holding asbestos-related assets and liabilities (see Note ~~2, Recent Accounting Pronouncements,~~19, Commitments and Contingencies, for further ~~information on ASU 2016-09.~~information). In addition, the effective tax rate for the three and six months ended June 27, 2020 was lower due to tax benefits of $26.7 resulting from an internal restructuring in Europe. This reorganization resulted in a refined projection of future earnings, which will result in the realization of a portion of our deferred tax assets.

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA), a $1.9 trillion COVID-19 stimulus legislation to accelerate the United States' recovery from the economic and health effects of the COVID-19 pandemic. ARPA builds upon many of the measures in the Coronavirus Aid, Relief, and Economic Security Act from March 2020 (the 2020 CARES Act) and the Consolidated Appropriations Act from December 2020. The Act extends the employee retention credit through the end of 2021 and maintains the credit per employee per quarter initially included in the Consolidated Appropriations Act. During the three and six months ended July 3, 2021, the Company ~~continues~~recognized a benefit of $1.7 and $4.1 from the employee retention credit, and recognized a benefit of $7.2 during the second quarter of 2020. The benefit was recorded in operating income and related to ~~benefit from a larger mix~~the employer portion of ~~earnings in~~payroll taxes. Certain non-U.S. jurisdictions ~~with favorable tax rates.~~have enacted similar stimulus measures. We continue to monitor any effects that may result from the ARPA and 2020 CARES Act or other similar legislation globally.

The Company operates in various tax jurisdictions and is subject to examination by tax authorities in these jurisdictions. The Company is currently under examination in several jurisdictions including ~~Canada,~~the Czech Republic, Germany, Hong Kong, India, Italy, ~~Mexico,~~ the U.S. and Venezuela. The estimated tax liability calculation for unrecognized tax benefits considers uncertainties in the application of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability for unrecognized tax benefits in foreign and domestic jurisdictions could ~~change~~decrease by approximately ~~$17~~$16 due to changes in audit status, expiration of statutes of limitations and other events. In addition, the settlement of any future examinations relating to the 2011 and prior tax years could result in changes in amounts attributable to the Company under its Tax Matters Agreement with Exelis Inc. and Xylem Inc. relating to the ~~Company's~~Company’s 2011 spin-off of those businesses.

NOTE 67

EARNINGS PER SHARE DATA

The following table provides a reconciliation of the data used in the calculation of basic and diluted earnings per share from continuing operations attributable to ITT for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016~~.June 27, 2020.


	Three Months Ended		Six Months Ended
	July 3, 2021	June 27, 2020	July 3, 2021	June 27, 2020
Basic weighted average common shares outstanding	86.1	86.3	86.2	87.0
Add: Dilutive impact of outstanding equity awards	0.4	0.5	0.5	0.6
Diluted weighted average common shares outstanding	86.5	86.8	86.7	87.6

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Basic weighted average common shares outstanding 88.0
89.2
88.3
89.5
Add: Dilutive impact of outstanding equity awards 0.7
0.5
0.7
0.7
Diluted weighted average common shares outstanding 88.7
89.7
89.0
90.2

~~The following table provides~~For the ~~number~~three and six months ended July 3, 2021, there were 0.0 and 0.1, respectively, of anti-dilutive shares ~~underlying~~related to equity stock ~~options~~unit awards excluded from the computation of diluted earnings per ~~share for the~~ ~~three and nine~~ ~~months ended September 30, 2017 and~~ ~~2016~~ ~~because they were anti-dilutive.~~

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Anti-dilutive stock options 0.3
0.7
0.4
0.7
Weighted average exercise price per share $ 42.40
$ 37.99
$ 42.41
$ 38.47
Year(s) of expiration 2024 - 2025
2024 - 2026
2024 - 2025
2024 - 2026

~~In addition, 0.2 of outstanding Performance stock units (PSU) awards were excluded from the computation of diluted earnings per share for both~~share. For the three and ~~nine~~six months ended ~~September 30, 2017~~June 27, 2020, there were 0.2 and ~~2016, as the necessary performance conditions had not yet been satisfied.~~0.2, respectively, of anti-dilutive shares.

~~NOTE 7~~

~~RECEIVABLES, NET~~

September 30,
2017
December 31,
2016
Trade accounts receivable
$ 601.3

$ 513.5

Notes receivable
4.1

4.2

Other
21.6

21.6

Receivables, gross
627.0

539.3

Less: Allowance for doubtful accounts
(15.4 )

(15.4 )
Receivables, net
$ 611.6

$ 523.9

NOTE 8

~~INVENTORIES,~~RECEIVABLES, NET


	July 3, 2021			December 31, 2020
Trade accounts receivable		$	533.8		$	492.5
Notes receivable		15.5			11.0
Other		16.9			19.1
Receivables, gross		566.2			522.6
Less: Allowance for credit losses - receivables		(12.8)			(15.1)
Receivables, net		$	553.4		$	507.5

The following table displays our allowance for credit losses for receivables and contract assets as of July 3, 2021 and December 31, 2020.


	July 3, 2021			December 31, 2020
Allowance for credit losses - receivables		$	12.8		$	15.1
Allowance for credit losses - contract assets		0.5			0.5
Total allowance for credit losses		$	13.3		$	15.6

The following table displays a rollforward of the total allowance for credit losses for the six months ended July 3, 2021 and June 27, 2020.



	July 3, 2021			June 27, 2020
Total allowance for credit losses - January 1		$	15.6		$	12.8
Impact of adoption of ASU 2016-13		0			1.7
(Recoveries) charges to income		(1.7)			8.6
Write-offs		(0.7)			(3.0)
Foreign currency and other		0.1			(0.1)
Total allowance for credit losses - ending balance		$	13.3		$	20.0

September 30,
2017 December 31,
2016
Finished goods $ 59.0
$ 53.0

Work in process 60.5
60.5

Raw materials 192.9
166.0

Inventoried costs related to long-term contracts 39.1
33.5

Total inventory before progress payments 351.5
313.0

Less: Progress payments (23.6 ) (17.8 )
Inventories, net $ 327.9
$ 295.2

NOTE 9

INVENTORIES, NET


	July 3, 2021			December 31, 2020
Finished goods		$	75.2		$	63.1
Work in process		82.5			77.5
Raw materials		248.5			219.9
Inventories, net		$	406.2		$	360.5

NOTE 10

OTHER CURRENT AND NON-CURRENT ASSETS


	July 3, 2021			December 31, 2020

Advance payments and other prepaid expenses		$	43.3		$	39.6
Prepaid income taxes		23.3			29.0
Current contract assets, net		14.4			19.1
Asbestos-related assets (see Note 19)		0			91.0
Other		7.8			10.8
Other current assets		$	88.8		$	189.5
Other employee benefit-related assets		$	116.5		$	113.9
Operating lease right-of-use assets		80.0			87.3
Capitalized software costs		20.4			23.9
Equity method investments		12.4			11.7
Environmental-related assets		8.1			10.6
Other		25.6			24.6
Other non-current assets		$	263.0		$	272.0

September 30,
2017 December 31,
2016
Asbestos-related assets $ 64.7
$ 66.0

Advance payments and other prepaid expenses 45.9
47.9

Prepaid income taxes 17.7
7.6

Other 1.8
0.5

Other current assets $ 130.1
$ 122.0

Other employee benefit-related assets $ 100.4
$ 96.5

Capitalized software costs 43.3
38.1

Environmental-related assets 24.3
33.4

Equity method investments 6.6
5.6

Other 19.1
14.8

Other non-current assets $ 193.7
$ 188.4

NOTE 1011

PLANT, PROPERTY AND EQUIPMENT, NET


	Useful life (in years)	July 3, 2021			December 31, 2020
Machinery and equipment	2 - 10		$	1,207.3		$	1,205.7
Buildings and improvements	5 - 40		270.5			273.9
Furniture, fixtures and office equipment	3 - 7		81.1			82.0
Construction work in progress			40.2			44.7
Land and improvements			33.7			34.6
Other			4.9			5.0
Plant, property and equipment, gross			1,637.7			1,645.9
Less: Accumulated depreciation			(1,135.0)			(1,120.8)
Plant, property and equipment, net			$	502.7		$	525.1

September 30,
2017 December 31,
2016
Land and improvements $ 29.2
$ 28.2

Machinery and equipment 999.4
898.6

Buildings and improvements 258.0
244.6

Furniture, fixtures and office equipment 72.4
68.0

Construction work in progress 62.0
68.5

Other 11.0
5.3

Plant, property and equipment, gross 1,432.0
1,313.2

Less: Accumulated depreciation (928.5 ) (848.7 )
Plant, property and equipment, net $ 503.5
$ 464.5

Depreciation expense of ~~$19.7~~$21.5 and ~~$18.1~~$20.7, and ~~$57.2~~$42.9 and ~~$55.5~~$41.2 was recognized in the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016,~~June 27, 2020, respectively.

~~The Company entered into~~During the first quarter of 2020, we recorded an ~~agreement to sell excess property~~impairment of $4.0 for a ~~cash purchase price of approximately $41. On April 16, 2017, the purchaser’s~~business within IP due ~~diligence period ended. There are remaining~~to challenging economic conditions ~~to closing which are anticipated to be finalized~~ in the ~~first half~~upstream oil and gas market combined with impacts associated with the COVID-19 pandemic. Long-lived assets of ~~2018. At closing,~~ the ~~Company will receive~~business, with a carrying value of $14.0, primarily building and improvements, machinery and equipment, were reduced to their current estimated fair value of $10.0. The estimate of fair value, categorized within Level 3 of the fair value hierarchy, was determined based on a market approach estimating the net proceeds that would be received for the sale of the assets. Significant additional adverse changes to the economic environment or future cash ~~proceeds and is expected~~flows of our businesses could cause us to record ~~a gain of approximately $38 to $40.~~additional impairment charges in future periods, which may be material.

NOTE 1112

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following table provides a rollforward of the carrying amount of goodwill for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 by segment.


	Motion Technologies			Industrial Process			Connect & Control Technologies			Total
Goodwill - December 31, 2020		$	298.1		$	365.4		$	281.3	$	944.8



Foreign exchange translation		(2.4)			(5.4)			(0.7)		(8.5)
Goodwill - July 3, 2021		$	295.7		$	360.0		$	280.6	$	936.3

Industrial
Process

Motion
Technologies

Connect & Control
Technologies
Total
Goodwill - December 31, 2016 $ 308.4
$ 202.3
$ 264.0
$ 774.7
Acquired —
91.2
—
91.2
Adjustments to purchase price allocations —
(11.7 ) —
(11.7 )
Foreign exchange translation 14.5
11.7
2.2
28.4
Goodwill - September 30, 2017 $ 322.9
$ 293.5
$ 266.2
$ 882.6

Goodwill acquired during 2017 relates to our acquisition of Axtone Railway Components (Axtone) and represents the excess of the purchase price over the net assets acquired, the valuation of which is pending completion. Upon completion of the valuation, goodwill acquired will be adjusted to reflect the final fair value of the net assets acquired. Refer to Note 18, ~~Acquisitions, for additional information.~~

Other Intangible Assets, Net

Information regarding our other intangible assets is as follows:


	July 3, 2021									December 31, 2020
	Gross Carrying Amount			Accumulated Amortization			Net Intangibles			Gross Carrying Amount			Accumulated Amortization			Net Intangibles
Customer relationships		$	162.9		$	(107.9)		$	55.0		$	163.3		$	(101.7)		$	61.6
Proprietary technology		46.4			(25.2)			21.2			46.7			(23.4)			23.3
Patents and other		16.2			(13.2)			3.0			16.2			(11.5)			4.7
Finite-lived intangible total		225.5			(146.3)			79.2			226.2			(136.6)			89.6
Indefinite-lived intangibles		16.6			—			16.6			16.8			—			16.8
Other intangible assets		$	242.1		$	(146.3)		$	95.8		$	243.0		$	(136.6)		$	106.4

September 30, 2017 December 31, 2016

Gross
Carrying
Amount
Accumulated Amortization Net Intangibles
Gross
Carrying
Amount
Accumulated Amortization Net Intangibles
Customer relationships $ 165.5
$ (71.1 ) $ 94.4
$ 155.8
$ (59.3 ) $ 96.5

Proprietary technology 54.2
(20.7 ) 33.5
52.5
(16.8 ) 35.7

Patents and other 13.5
(9.0 ) 4.5
9.0
(7.6 ) 1.4

Finite-lived intangible total 233.2
(100.8 ) 132.4
217.3
(83.7 ) 133.6

Indefinite-lived intangibles 27.4
—
27.4
26.7
—
26.7

Other intangible assets $ 260.6
$ (100.8 ) $ 159.8
$ 244.0
$ (83.7 ) $ 160.3

~~The fair value~~As a result of the global COVID-19 pandemic combined with a decline in the upstream oil and gas market, during the first quarter of 2020, we determined that certain intangible assets ~~acquired in connection with~~within the ~~purchase of Axtone, based on a preliminary valuation, include $7.4 of~~IP segment including an indefinite-lived trademark, customer relationships and ~~$2.3~~proprietary technology, would not be recoverable resulting in an impairment of ~~trademarks. These intangible assets will~~$12.3. Significant additional adverse changes to the economic environment or future cash flows of our businesses could cause us to record additional impairment charges in future periods, which may be ~~amortized straight-line over their estimated useful lives of 12 years and 10 years, respectively. Refer to Note 18,~~ ~~Acquisitions, for additional information.~~material.

Amortization expense related to finite-lived intangible assets was ~~$5.2~~$4.9 and ~~$5.5~~$4.2, and ~~$14.4~~$10.0 and ~~$15.6~~$9.0 for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016,~~June 27, 2020, respectively.

NOTE 1213

ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES


	July 3, 2021			December 31, 2020
Compensation and other employee-related benefits		$	142.4		$	137.3
Contract liabilities and other customer-related liabilities		60.2			73.7
Accrued income taxes and other tax-related liabilities		36.8			36.9
Accrued warranty costs		23.6			23.1
Operating lease liabilities		19.3			19.8
Environmental liabilities and other legal matters		14.8			19.1
Accrued restructuring costs		14.5			19.1
Asbestos-related liabilities(a)		10.4			91.4
Other		40.5			37.0
Accrued liabilities		$	362.5		$	457.4
Operating lease liabilities		$	65.8		$	72.4
Environmental liabilities		48.3			50.1
Compensation and other employee-related benefits		27.4			29.4
Deferred income taxes and other tax-related liabilities		12.0			11.9
Non-current maturities of long-term debt		11.4			13.0
Other		35.1			33.8
Other non-current liabilities		$	200.0		$	210.6

(a)As of July 3, 2021, the current liability represents transaction costs related to the divestiture of the entity holding asbestos-related assets and liabilities. See Note 19, Commitments and Contingencies, for further information.

September 30,
2017 December 31,
2016
Compensation and other employee-related benefits $ 142.8
$ 120.5

Asbestos-related liabilities 77.4
76.8

Customer-related liabilities 49.2
39.9

Accrued income taxes and other tax-related liabilities 44.5
31.0

Environmental liabilities and other legal matters 30.3
25.1

Accrued warranty costs 16.1
17.4

Other accrued liabilities 39.3
39.5

Accrued liabilities $ 399.6
$ 350.2

Environmental liabilities $ 58.4
$ 63.2

Compensation and other employee-related benefits 35.1
33.0

Deferred income taxes and other tax-related accruals 21.8
24.9

Other 56.8
59.9

Other non-current liabilities $ 172.1
$ 181.0

NOTE 1314

DEBT

September 30,
2017 December 31,
2016
Commercial paper $ 130.9
$ 113.5

Short-term loans 59.1
100.0

Current maturities of long-term debt and capital leases 1.1
0.8

Short-term loans and current maturities of long-term debt 191.1
214.3

Long-term debt and capital leases 5.6
2.0

Total debt and capital leases $ 196.7
$ 216.3


	July 3, 2021			December 31, 2020
Commercial paper		$	197.4		$	104.3

Current maturities of long-term debt and finance leases		2.3			2.5
Commercial paper and current maturities of long-term debt		199.7			106.8
Non-current maturities of long-term debt		11.4			13.0
Total debt and finance leases		$	211.1		$	119.8

Commercial Paper

Commercial paper outstanding ~~had an associated~~of $197.4 as of July 3, 2021 was issued through both the Company’s U.S. and Euro programs. Commercial paper outstanding under the U.S. program was $150.0, with a weighted average interest rate of ~~1.61%~~0.21%. Commercial paper outstanding under the Euro program was $47.4, with a weighted average negative interest rate of (0.44)%. Commercial paper outstanding of $104.3 as of December 31, 2020 was issued entirely under the Company’s Euro program and ~~1.14% and~~had a weighted average negative interest rate of (0.06)%. Outstanding commercial paper for both periods had maturity terms less than ~~one month~~three months from the date of ~~issuance~~issuance.

Short-term Loans

On November 25, 2014, we entered into a competitive advance and revolving credit facility agreement (the 2014 Revolving Credit Agreement) with a consortium of third party lenders including JPMorgan Chase Bank, N.A., as administrative agent, and Citibank, N.A., as syndication agent. During 2019, we extended the 2014 Revolving Credit Agreement maturity date to November 25, 2022. The 2014 Revolving Credit Agreement provides for an aggregate principal amount of ~~September 30, 2017~~up to $500 of (i) revolving extensions of credit (the revolving loans) outstanding at any time, (ii) competitive advance borrowing option which will be provided on an uncommitted competitive advance basis through an auction mechanism (the competitive advances), and (iii) letters of credit for a face amount up to $100 at any time outstanding. Subject to certain conditions, we are permitted to terminate permanently the total commitments and reduce commitments in minimum amounts of $10. Borrowings under the credit facility are available in U.S. dollars, Euros or British pound sterling. We are permitted to request that lenders increase the commitments under the facility by up to $200 for a maximum aggregate principal amount of $700, however this is subject to certain conditions and therefore may not be available to us.

The interest rate per annum on the Revolving Credit Agreement is based on the LIBOR rate of the currency we borrow in, adjusted for statutory reserve requirements, plus a margin of 1.1%. As of July 3, 2021 and December 31, ~~2016, respectively.~~

~~Short-term Loans~~

~~Short-term loans consist of~~2020, we had 0 outstanding ~~borrowings~~obligations under ~~our $500~~the credit facility. There is a 0.15% fee per annum applicable to the commitments under the 2014 Revolving Credit Agreement. ~~Outstanding borrowings~~The fees and margin are subject to adjustment should the Company’s credit ratings change.

The 2014 Revolving Credit Agreement contains customary affirmative and negative covenants that, among other things, will limit or restrict our ability to: incur additional debt or issue guarantees; create liens; enter into certain sale and lease-back transactions; merge or consolidate with another person; sell, transfer, lease or otherwise dispose of assets; liquidate or dissolve; and enter into restrictive covenants. Additionally, the 2014 Revolving Credit Agreement requires us not to permit the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (leverage ratio) to exceed 3.00 to 1.00 at any time, or the ratio of consolidated EBITDA to consolidated interest expense (interest coverage ratio) to be less than 3.00 to 1.00. In the event of certain ratings downgrades of the Company to a level below investment grade, the direct and indirect significant U.S. subsidiaries of the Company would be required to guarantee the obligations under the credit facility.

As of July 3, 2021, our interest coverage ratio and leverage ratios associated with short-term loans were ~~denominated~~within the prescribed thresholds.

On April 29, 2020, we entered into two 364-day term revolving credit agreements totaling $200 (the Incremental Revolving Credit Agreements) which provided the Company with additional liquidity in ~~Euros with an associated weighted average interest rate~~excess of ~~1.1% as of September 30, 2017~~the Revolving Credit Agreement. The credit agreements expired in April 2021 and we did not renew the

agreements. Borrowings were ~~denominated~~available in U.S. dollars ~~with an associated weighted average~~and the interest rate ~~of 1.87% as of December 31, 2016. Refer to the~~ ~~Liquidity~~ ~~section within "Item 2. Management's Discussion and Analysis," for additional information~~per annum was based on the LIBOR rate, adjusted for statutory reserve requirements, plus a margin of up to 1.55%. The Incremental Revolving Credit Agreements were subject to fees of up to 0.35% per annum. The fees and margin were subject to adjustment should the Company’s credit ratings change. All other key provisions of the Incremental Revolving Credit Agreements mirrored those of the Revolving Credit Agreement described above, including all covenants. In addition, the Incremental Revolving Credit Agreements did not violate any negative covenants associated with the existing Revolving Credit Agreement.

Subsequent Event

On August 5, 2021, we refinanced our revolving credit facility agreement to replace the 2014 Revolving Credit Agreement with a syndicate of third party lenders including Bank of America, N.A., as ~~well~~administrative agent (the 2021 Revolving Credit Agreement). The 2014 Revolving Credit Agreement was terminated on August 5, 2021. The 2021 Revolving Credit Agreement matures in August 2026 and provides for an aggregate principal amount of up to $700. The 2021 Revolving Credit Agreement provides for a potential increase of commitment of up to $350 for a possible maximum of $1,050 in aggregate commitments at the request of the Company and with the consent of the institutions providing such increase of commitments.

The 2021 Revolving Credit Agreement contains customary affirmative and negative covenants that, among other things, will limit or restrict our ability to: incur additional debt or issue guarantees; create certain liens; merge or consolidate with another person; sell, transfer, lease or otherwise dispose of assets; liquidate or dissolve; and enter into restrictive covenants. Additionally, the 2021 Revolving Credit Agreement requires us not to permit the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (leverage ratio) to exceed 3.50 to 1.00, with a qualified acquisition step up immediately following such qualified acquisition of 4.00 to 1.00 for four quarters, 3.75 to 1.00 for two quarters thereafter, and returning to 3.50 to 1.00 thereafter.

The interest rate per annum on the 2021 Revolving Credit Agreement is based on the LIBOR rate of the currency we borrow in, plus a margin of 1.1%, with applicable benchmark replacement rates for the currencies available when LIBOR is phased out as ~~our overall funding~~a result of the impending reference rate reform. There is a 0.15% fee per annum applicable to the commitments under the 2021 Revolving Credit Agreement. The margin and ~~liquidity strategy.~~fees are subject to adjustment should the Company’s credit ratings change.

NOTE 1415

POSTRETIREMENT BENEFIT PLANS

In the fourth quarter of 2020, the Company terminated its U.S. qualified pension plan by purchasing a group annuity contract from MassMutual Life Insurance Company (MassMutual), which fully assumed the responsibility for paying and administering pension benefits to approximately five thousand plan participants and their beneficiaries. In connection with the plan termination, the Company settled all future obligations under the plan by providing lump sum payments to eligible participants who elected to receive them, and by transferring the remaining projected benefit obligation to the insurance company. The termination was initially funded with plan assets of approximately $320 and cash of $8.4. During the second quarter of 2021, the funding was finalized, resulting in income of $3.4 presented within the interest and non-operating (income) expenses line in the Consolidated Statements of Operations.

The following ~~tables provide~~table provides the components of net periodic benefit cost for pension plans and other employee-related benefit plans for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016.~~June 27, 2020.













	July 3, 2021									June 27, 2020
For the Three Months Ended	Pension			Other Benefits			Total			Pension			Other Benefits			Total
Service cost		$	0.3		$	0.2		$	0.5		$	0.3		$	0.2		$	0.5
Interest cost		0.3			0.4			0.7			2.3			0.7			3.0
Expected return on plan assets		0			0			0			(2.1)			0			(2.1)
Amortization of prior service benefit		0			(1.2)			(1.2)			0			(1.3)			(1.3)
Amortization of net actuarial loss		0.5			0.6			1.1			1.7			0.8			2.5


Total net periodic benefit cost		$	1.1		$	0		$	1.1		$	2.2		$	0.4		$	2.6


	2017												2016
For the Three Months Ended September 30	Pension				Other Benefits				Total				Pension				Other Benefits				Total

																										July 3, 2021									June 27, 2020
For the Six Months Ended																									For the Six Months Ended	Pension			Other Benefits			Total			Pension			Other Benefits			Total
Service cost		$	1.5			$	0.2			$	1.7			$	1.5			$	0.2			$	1.7		Service cost		$	0.7		$	0.4		$	1.1		$	0.6		$	0.4		$	1.0
Interest cost		3.0				1.1				4.1				3.3				1.2				4.5			Interest cost		0.5			0.9			1.4			4.6			1.4			6.0
Expected return on plan assets		(4.6		)		(0.1		)		(4.7		)		(5.0		)		(0.1		)		(5.1		)	Expected return on plan assets		0			0			0			(4.3)			0			(4.3)
Amortization of prior service cost (benefit)		0.2				(1.4		)		(1.2		)		0.2				(1.6		)		(1.4		)
Amortization of prior service benefit																									Amortization of prior service benefit		0			(2.5)			(2.5)			0			(2.5)			(2.5)
Amortization of net actuarial loss		2.1				1.1				3.2				2.0				1.2				3.2			Amortization of net actuarial loss		1.0			1.3			2.3			3.5			1.4			4.9
Net periodic benefit cost		2.2				0.9				3.1				2.0				0.9				2.9
Loss from curtailment		3.7				—				3.7				—				—				—
Total net periodic benefit cost		$	5.9			$	0.9			$	6.8			$	2.0			$	0.9			$	2.9

	2017												2016
For the Nine Months Ended September 30	Pension				Other Benefits				Total				Pension				Other Benefits				Total
Service cost		$	4.3			$	0.6			$	4.9			$	4.0			$	0.6			$	4.6
Interest cost		9.0				3.4				12.4				10.2				3.6				13.8
Expected return on plan assets		(13.7		)		(0.3		)		(14.0		)		(15.1		)		(0.4		)		(15.5		)
Amortization of prior service cost (benefit)		0.7				(4.3		)		(3.6		)		0.7				(4.9		)		(4.2		)
Amortization of net actuarial loss		5.6				3.2				8.8				5.7				3.6				9.3
Net periodic benefit cost		5.9				2.6				8.5				5.5				2.5				8.0
Loss from curtailment		3.7				—				3.7				—				—				—
Total net periodic benefit cost		$	9.6			$	2.6			$	12.2			$	5.5			$	2.5			$	8.0		Total net periodic benefit cost		$	2.2		$	0.1		$	2.3		$	4.4		$	0.7		$	5.1

~~In the third quarter of 2017 we recorded curtailment loss of $3.7 related to a freeze of benefit accruals for certain current employees at our Industrial Process segment.~~

We made contributions to our global postretirement plans of ~~$14.3~~$5.5 and ~~$11.9~~$4.2 during the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016, respectively, which included a discretionary contribution of $5 to our U.S. pension plan during 2017.~~June 27, 2020, respectively. We expect to make contributions of approximately $2$7 to $4$11 during the remainder of ~~2017,~~2021, principally related to our other ~~postretirement employee~~employee-related benefit plans.

Amortization from accumulated other comprehensive income into earnings related to prior service ~~cost~~benefit and net actuarial loss was ~~$3.6~~$0.0 and ~~$5.9,~~$0.9, and ~~$1.2~~$0.0 and ~~$3.5,~~$1.8, net of tax, ~~for~~during the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016,~~June 27, 2020, respectively. No other reclassifications from accumulated other comprehensive income into earnings were recognized during any of the presented periods.

NOTE 1516

LONG-TERM INCENTIVE EMPLOYEE COMPENSATION

Our long-term incentive plan (LTIP) costs are primarily recorded within general and administrative expenses. The following table provides the components of LTIP costs for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016~~.June 27, 2020.


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Equity-based awards	$	4.2	$	3.3	$	7.4	$	5.8
Liability-based awards	0.2		0.5		1.1		(0.1)
Total share-based compensation expense	$	4.4	$	3.8	$	8.5	$	5.7

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Equity based awards $ 5.2
$ 3.2
$ 12.5
$ 9.1
Liability-based awards 0.8
0.4
1.7
1.2
Total share-based compensation expense $ 6.0
$ 3.6
$ 14.2
$ 10.3

The change in share-based compensation expense for equity-based awards was primarily driven by the likelihood of achieving certain performance targets. The change in share-based compensation expense for liability-based awards is driven by the change in ITT’s stock price. At ~~September 30, 2017~~,July 3, 2021, there was ~~$21.3~~$28.3 of total unrecognized compensation cost related to non-vested equity awards. This cost is expected to be recognized ratably over a weighted-average period of 1.9 years. Additionally, unrecognized compensation cost related to liability-based awards was ~~$3.0,~~$2.0, which is expected to be recognized ratably over a weighted-average period of ~~1.9~~2.2 years.

Year-to-Date ~~2017~~2021 LTIP Activity

The majority of our LTIP awards are granted during the first quarter of each year and vest on the completion of a three-year service period. During the ~~nine~~six months ended ~~September 30, 2017,~~July 3, 2021, we granted the following LTIP awards as provided in the table below:


	# of Awards Granted	Weighted Average Grant Date Fair Value Per Share

Restricted stock units (RSUs)	0.1		$	85.07
Performance stock units (PSUs)	0.1		$	84.27

# of Awards Granted Weighted Average Grant Date Fair Value Per Share
Restricted stock units (RSUs) 0.4 $ 41.86

Performance stock units (PSUs) 0.1 $ 44.87

During the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016, 0.3 and 0.4~~June 27, 2020, a nominal amount of non-qualified stock options were exercised resulting in proceeds of ~~$6.7~~$0.5 and ~~$8.8,~~$0.1, respectively. During the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016,~~June 27, 2020, RSUs of 0.1 and 0.2, ~~and 0.3~~respectively, vested and were ~~issued, respectively. There were no~~issued. During the six months ended July 3, 2021 and June 27, 2020, PSUs of 0.2 that vested on December 31, ~~2016 because the minimum performance requirements~~2020 and 2019, respectively, were ~~not met. PSUs of 0.2 were issued during the nine months ended September 30, 2016 that vested on December 31, 2015.~~issued.

NOTE 1617

CAPITAL STOCK

On October 27, 2006, our Board of Directors approved a three-year, ~~$1 billion~~$1,000 share repurchase program ~~was approved by~~(the 2006 Plan), which it modified in 2008 to make the term indefinite. On October 30, 2019, the Board of Directors ~~(Share Repurchase Program). On December 16, 2008, the provisions of the Share Repurchase Program were modified by the Board of Directors to replace the original three-year~~approved a new indefinite term ~~with an indefinite term.~~$500 share repurchase program (the 2019 Plan). During the ~~nine~~first quarter of 2020, we completed the 2006 Plan and commenced repurchases under the 2019 Plan. During the six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016,~~June 27, 2020, we repurchased and retired ~~0.8~~0.6 and ~~1.9~~1.7 shares of common stock for ~~$30.0~~$50.0 and ~~$66.6,~~$73.2, respectively, under ~~this program~~. ~~To date,~~these programs, including 1.4 shares and $61.9 in 2020, which fully exhausted the ~~Company has repurchased 21.2 shares for $859.4 under the Share Repurchase Program.~~2006 Plan.

Separate from the ~~Share Repurchase Program,~~share repurchase program, the Company repurchased 0.1 and 0.2 shares during the six months ended July 3, 2021 and ~~0.2~~ ~~shares~~June 27, 2020, respectively, for an aggregate ~~price~~amount of ~~$2.9~~$11.4 and ~~$7.8, during the nine months ended September 30, 2017 and~~ ~~2016~~,$10.5, respectively, in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs.

NOTE 1718

ACCUMULATED OTHER COMPREHENSIVE LOSS


As of and for the Three Months Ended July 3, 2021	Postretirement Benefit Plans		Cumulative Translation Adjustment		Accumulated Other Comprehensive Loss
April 3, 2021	(55.9)		(253.5)		(309.4)
Net foreign currency translation adjustment	—		8.4		8.4
July 3, 2021	$	(55.9)	$	(245.1)	$	(301.0)


As of and for the Six Months Ended July 3, 2021
December 31, 2020	$	(55.9)	$	(223.5)	$	(279.4)
Net foreign currency translation adjustment	—		(21.6)		(21.6)
July 3, 2021	$	(55.9)	$	(245.1)	$	(301.0)


As of and for the Three Months Ended June 27, 2020
March 28, 2020	(132.4)		(303.3)		(435.7)
Net change in postretirement benefit plans, net of tax	0.9		—		0.9
Net foreign currency translation adjustment	—		2.1		2.1
June 27, 2020	$	(131.5)	$	(301.2)	$	(432.7)


As of and for the Six Months Ended June 27, 2020
December 31, 2019	$	(133.3)	$	(252.0)	$	(385.3)
Net change in postretirement benefit plans, net of tax	1.8		—		1.8
Net foreign currency translation adjustment	—		(49.2)		(49.2)
June 27, 2020	$	(131.5)	$	(301.2)	$	(432.7)

NOTE 19

COMMITMENTS AND CONTINGENCIES

From time to time, we are involved in legal proceedings that are incidental to the operation of our ~~businesses. Some of~~business. Historically, these proceedings ~~allege~~have alleged damages relating to asbestos and environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues and commercial or contractual disputes and acquisitions or divestitures. We will continue to defend vigorously against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, as well as our current reserves and insurance coverage, we do not expect that such legal proceedings will have a material adverse impact on our financial statements, unless otherwise noted below.

Asbestos Matters

~~Subsidiaries~~Prior to the divestiture described below, former subsidiaries of ITT, including ITT LLC and Goulds Pumps LLC, have been sued, along with many other companies in product liability lawsuits alleging personal injury due to purported asbestos exposure. These claims generally allege that certain products sold by ~~our~~these entities or their subsidiaries prior to 1985 contained a part manufactured by a third party (e.g., a gasket) which contained asbestos. To the extent these third-party parts may have contained asbestos, it was encapsulated in the gasket (or other) material and was non-friable. ~~As of~~ ~~September 30, 2017, there were approximately~~ ~~27 thousand~~ ~~pending claims against~~ ITT ~~subsidiaries, including~~LLC and Goulds Pumps LLC ~~filed~~are wholly owned subsidiaries of InTelCo Management LLC (InTelCo), a former subsidiary of ITT.

On June 30, 2021, the Company entered into a Membership Interest Purchase Agreement (the Purchase Agreement) with Sapphire TopCo, Inc. (Buyer), a wholly owned subsidiary of Delticus HoldCo, L.P., which is a portfolio company of the private equity firm Warburg Pincus LLC. Under the Purchase Agreement, the Company transferred 100% of the equity interests of InTelCo to the Buyer, effective as of July 1, 2021, along with a cash contribution from the Company of $398. As InTelCo was the obligor for the Company's asbestos-related liabilities and policyholder of the related insurance assets through its subsidiaries ITT LLC and Goulds Pumps LLC, the rights and obligations related to these items transferred upon the sale. In addition, pursuant to the Purchase Agreement, the Buyer and InTelCo have indemnified the Company and its affiliates for asbestos-related liabilities and other product liabilities and the Company has indemnified InTelCo and its affiliates for all other historical liabilities of InTelCo. This indemnification is not subject to any cap or time limitation. In connection with the sale, the Company and its Board of Directors received a solvency opinion from an independent advisory firm that InTelCo was solvent and adequately capitalized after giving effect to the transaction.

Following the completion of the transfer, the Company no longer has any obligation with respect to pending and future asbestos claims. As such, InTelco has been deconsolidated from the financial results of the Company as we no longer maintain control of the entity. Therefore, all associated assets and liabilities are no longer reported on the consolidated balance sheet. The transaction resulted in ~~various state and federal courts alleging injury~~a pre-tax gain of $88.8. Additionally, the Company recorded tax expense as a result of ~~exposure to asbestos. Activity related to these asserted asbestos claims during~~ the ~~period was as follows:~~reversal of previously recorded deferred tax assets of $116.9, resulting in an after-tax loss of $28.1 recorded in the second quarter of 2021.

The following is a summary of the impacts of the divestiture:



~~For the Nine Months Ended September 30 (in thousands)~~Cash and cash equivalents	~~2017~~$	(398.0)
~~Pending claims – Beginning~~Current asbestos-related assets	30(91.0)
~~New claims~~Long-term asbestos-related assets	3(310.4)
~~Settlements~~Accrued liabilities	(191.2		)
~~Dismissals~~Long-term asbestos-related liabilities	(5797.0		)
~~Pending claims – Ending~~Gain on divestiture of asbestos-related assets and liabilities before income tax	27$	88.8
Less: income tax expense	116.9
Loss on divestiture of asbestos-related assets and liabilities, net of tax	$	(28.1)

~~Frequently, plaintiffs are unable~~

Asbestos-Related Costs (Benefit), Net

Prior to identify any ITT LLC or Goulds Pumps LLC products as a source of asbestos exposure. Our experience to date is that a majority of resolved claims are dismissed without any payment from ITT subsidiaries. Management believes that a large majoritythe divestiture of the entity holding asbestos-related assets and liabilities, the Company recognized an estimated asbestos liability for pending claims ~~have little or no value. In addition, because~~and claims ~~are sometimes dismissed in large groups, the average cost per resolved claim can fluctuate significantly from period~~expected to ~~period. ITT expects more asbestos-related suits will~~ be filed in the future, ~~and ITT will continue to aggressively defend or seek a reasonable resolution, as appropriate.~~

~~Asbestos litigation is a unique form~~including legal fees. In the third quarter of ~~litigation. Frequently,~~2020, we extended the plaintiff sues a large number of defendants and does not state a specific claim amount. After filing a complaint, the plaintiff engages defendants in settlement negotiations to establish a settlement value based on certain criteria, including the number of defendants in the case. Rarely do the plaintiffs seek to collect all damages from one defendant. Rather, they seek to spread the liability, and thus the payments, among many defendants. As a result of this and other factors, the Company is unable tomeasurement period over which we estimate the ~~maximum potential exposure~~asbestos liability to include pending claims and claims estimated to be filed ~~over the next 10 years.~~

Estimating our exposure to pending asbestos claims and those that may be filed in the future is subject to significant uncertainty and risk as there are multiple variables that can affect the timing, severity, quality, quantity and resolution of claims. Any predictions with respect to the variables impacting the estimate of the asbestos liability and related asset are subject to even greater uncertainty as the projection period lengthens. In light of the variables and uncertainties inherent in the long-term projection of the Company's asbestos exposures, although it is probable that the Company will incur additional costs for asbestos claims filed beyond the next 10 years, which additional costs may be material, we do not believe there is a reasonable basis for estimating those costs at this time.

The asbestos liability and related receivables reflect management's best estimate of future events. However, future events affecting the key factors and other variables for either the asbestos liability or the related receivables could cause actual costs or recoveries to be materially higher or lower than currently estimated. Due to these uncertainties, as well as our inability to reasonably estimate any additional asbestos liability for claims which may be filed beyond the next 10 years, it is difficult to predict the ultimate cost of resolving all pending and unasserted asbestos claims. We believe it is possible that future events affecting the key factors and other variables within

~~the next 10 years, as well as the cost of asbestos claims filed beyond the next 10 years, net of expected recoveries, could have a material adverse effect on our financial statements.~~

~~Income Statement Costs/Benefit~~

In the third quarter of each year, we conduct our annual remeasurement with the assistance of outside consultants in order to review and update the underlying assumptions used in our asbestos liability and related asset estimates. In each remeasurement, the underlying assumptions are updated based on our actual experience since our previous annual remeasurement, and we reassess the appropriate reference period used in determining each assumption and our expectations regarding future conditions, including inflation.

~~Based on the results of this study, in the third quarter of 2017, we decreased our estimated undiscounted asbestos liability,~~through 2052, including legal fees, ~~by $66.4,~~ reflecting ~~a decrease in costs~~ the ~~company~~full time period over which we expected claims to be filed against us. Previous estimates ~~will be incurred to resolve all~~included pending claims ~~as well as unasserted~~and claims ~~estimated~~expected to be filed over the next 10 years. ~~The decrease in our estimated liability is a result~~Additionally, prior to the divestiture of ~~several developments, primarily favorable experience in settlement values~~the entity holding asbestos-related assets and ~~a decrease in the number of cases expected to be adjudicated. Further, in the third quarter of 2017,~~liabilities, the Company ~~increased its estimated~~recorded an asbestos-related ~~assets by $10.0, primarily due to favorable developments in~~asset composed of probable insurance ~~litigation.~~

~~In addition to the charges associated with our annual remeasurement, we record a net asbestos charge each quarter to maintain a rolling 10-year forecast period.~~recoveries. The table below summarizes the total net asbestos charges (benefits) for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016.~~June 27, 2020.


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Asbestos provision(a)	$	12.0	$	11.8	$	14.4	$	23.6
Gain on divestiture before income tax	(88.8)		0		(88.8)		0
Insurance settlement agreements(b)	0		4.2		0		(48.3)
Asbestos-related (benefit) costs, net	$	(76.8)	$	16.0	$	(74.4)	$	(24.7)

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Asbestos provision $ 13.6
$ 13.7
$ 43.4
$ 44.3
Net asbestos remeasurement benefit (76.4 ) (81.8 ) (76.4 ) (81.8 )
Defense cost adjustment —
—
—
(4.9 )
Settlement agreements —
—
—
2.1
Asbestos-related benefit, net $ (62.8 ) $ (68.1 ) $ (33.0 ) $ (40.3 )

~~Changes in Financial Position~~

(a)Includes certain administrative costs such as legal-related costs for insurance asset recoveries and transaction costs related to the divestiture of the entity holding asbestos-related assets and liabilities. The ~~Company's estimated~~ asbestos ~~exposure, net of expected recoveries~~provision for the ~~resolution~~three and six months ended June 27, 2020 includes amounts to maintain a rolling 10-year provision prior to the transition to a full horizon estimate.

(b)In March 2020, we finalized a settlement agreement with a group of ~~all pending~~insurers to settle responsibility for claims ~~and claims estimated to be filed~~under certain insurance policies for a lump sum payment of $66.4, resulting in ~~the next 10 years was $501.2 and $573.7 as~~a benefit of ~~September 30, 2017 and December 31, 2016.~~ $52.5. During June 2020, we entered into a settlement agreement with an insurer accelerating payments previously included in a buyout agreement, resulting in a loss of $4.2.

The following table provides a rollforward of the estimated asbestos liability and related assets for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016.~~June 27, 2020.


	July 3, 2021						June 27, 2020
For the Six Months Ended	Liability		Asset		Net		Liability		Asset		Net
Beginning balance	$	932.0	$	444.7	$	487.3	$	817.6	$	386.8	$	430.8
Asbestos provision(a)	13.4		(1.0)		14.4		28.9		5.3		23.6


Insurance settlement agreements(b)	0		0		0		0		48.3		(48.3)
Net cash activity(a)	(46.8)		(42.3)		(4.5)		(42.7)		(35.1)		(7.6)
Divestiture of asbestos-related assets and liabilities	(888.2)		(401.4)		(486.8)		—		—		—
Ending balance	$	10.4	$	0	$	10.4	$	803.8	$	405.3	$	398.5
Current portion(c)	$	10.4	$	0			$	85.9	$	85.9
Noncurrent portion	$	0	$	0			$	717.9	$	319.4

2017 2016
For the Nine Months Ended September 30 Liability Asset Net Liability Asset Net
Beginning balance $ 954.3

$ 380.6

$ 573.7
$ 1,042.8
$ 412.0
$ 630.8
Asbestos provision 51.1

7.7

43.4
51.6
7.3
44.3
Asbestos remeasurement (66.4 ) 10.0
(76.4 ) (75.9 ) 5.9
(81.8 )
Defense costs adjustment —
—
—
(4.9 ) —
(4.9 )
Insurance settlement agreements —
—
—
—
(2.1 ) 2.1
Net cash activity (63.5 )
(24.0 )
(39.5 ) (61.8 ) (37.3 ) (24.5 )
Ending balance $ 875.5

$ 374.3

$ 501.2
$ 951.8
$ 385.8
$ 566.0
Current portion $ 77.4

$ 64.7

$ 76.1
$ 66.0

Noncurrent portion $ 798.1

$ 309.6

$ 875.7
$ 319.8

(c)As of July 3, 2021, the current liability represents transaction costs related to the divestiture of the entity holding asbestos-related assets and liabilities.

Environmental Matters

In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and site remediation. These sites are in various stages of investigation or remediation and in many of these proceedings our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency, and from similar state and foreign environmental agencies, that a number of sites formerly or currently owned or operated by ITT, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation or remediation. These sites include instances where we have been identified as a potentially responsible party under federal and state environmental laws and regulations.

The following table provides a rollforward of the estimated environmental liability for the ~~nine~~six months ended~~September 30, 2017~~ July 3, 2021 and ~~2016.~~June 27, 2020.


For the Six Months Ended	July 3, 2021		June 27, 2020
Environmental liability - beginning balance	$	58.3	$	61.9
Change in estimates for pre-existing accruals:
Continuing operations	0.1		1.4
Discontinued operations	(0.1)		(1.6)
Accruals added during the period for new matters	1.0		0
Payments	(6.7)		(2.3)
Foreign currency	(0.1)		(0.1)
Environmental liability - ending balance	$	52.5	$	59.3

For the Nine Months Ended September 30 2017 2016
Environmental liability - beginning balance $ 76.6
$ 82.6
Change in estimates for pre-existing accruals
Continuing operations 2.4
2.4
Discontinued operations —
0.7
Net cash activity (7.4 ) (10.2 )
Foreign currency 0.1
—
Environmental liability - ending balance $ 71.7
$ 75.5

~~During the first quarter of 2017, ITT entered into~~Environmental-related assets, including a ~~settlement agreement with a former subsidiary to settle all claims covered by the environmental~~ Qualified Settlement Fund ~~(QSF) established in the first quarter of 2016. The former subsidiary no longer has rights to the funds in the QSF. The settlement resulted in a reduction to both our environmental-related asset~~ and ~~the corresponding deferred income liability balance of $5.2. During the second quarter of 2017, the QSF was amended resulting in income of $3.8. The total environmental-related asset~~estimated recoveries from insurance providers and other third parties, were $12.1 and $20.4 as of ~~September 30, 2017~~July 3, 2021 and ~~December 31, 2016 was $24.3 and $33.4,~~June 27, 2020, respectively.

We are currently involved with 3527 active environmental investigation and remediation sites. ~~At September 30, 2017,~~As of July 3, 2021, we have estimated the potential high-end liability range of environmental-related matters to be ~~$119.6.~~$91.8.

As actual costs incurred at identified sites in future periods may vary from our current estimates given the inherent uncertainties in evaluating environmental exposures, management believes it is possible that the outcome of these uncertainties may have a material adverse effect on our financial statements.

~~Other Matters~~

NOTE 20

DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, the Company ~~learned that the Criminal Division of DOJ is also investigating this matter. The Company is cooperating with the government~~may use derivative financial instruments, primarily foreign currency forward and ~~has produced documents responsive~~option contracts, to ~~the subpoena~~mitigate exposure from foreign currency exchange rate fluctuations as it pertains to ~~the Civil Division. Based on its current analysis following discussions with DOJ~~receipts from customers, payments to ~~resolve the civil matter, the Company has accrued $5~~suppliers and intercompany transactions; as ~~its current best estimate of the minimum amount of probable loss. It is reasonably possible that any actual loss related~~well as from commodity price fluctuations. We record derivatives at their fair value as either an asset or liability. For derivatives not designated as hedges, adjustments to ~~this matter may be higher than this amount, but at this time management is unable to estimate a range of potential loss~~reflect changes in ~~excess of the amount accrued.~~

~~NOTE 18~~

~~ACQUISITIONS~~

~~Axtone Railway Components~~

On January 26, 2017, we acquired 100% of the privately held stock of Axtone Railway Components (Axtone) for a purchase price of $123.1, net of cash acquired. The purchase price allocation is subject to change during the measurement period (up to one year from the acquisition date). Axtone, which had 2016 revenue of approximately $72, is a manufacturer of highly engineered and customized energy absorption solutions, including springs, buffers, and coupler components for the railway and industrial markets.

The purchase price for Axtone was allocated to net tangible assets acquired and liabilities assumed based on their preliminary fair values as of January 26, 2017, with the excess of the purchase price of $79.5 recorded as goodwill. The primary areas of purchase price allocation that are not yet finalized relate to the valuation of certain tangible and intangible assets, liabilities, income tax, and residual goodwill. We expect to obtain the information necessary to finalize the fair value of our derivatives are included in earnings. For cash flow hedges that qualify and are designated for hedge accounting, the effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently recognized in earnings when the hedged transaction affects earnings. Any ineffective portion is recognized immediately in earnings. As of July 3, 2021 and December 31, 2020, no derivatives were designated as hedges. Derivative contracts involve the risk of non-performance by the counterparty. The fair value of our foreign currency contracts are determined using the net ~~assets~~position of the contracts and ~~liabilities during~~ the ~~measurement period. Changes to~~applicable spot rates and forward rates as of the ~~preliminary estimates~~reporting date.

As of July 3, 2021, the U.S. dollar equivalent notional value of outstanding foreign currency forward and option contracts, which are denominated in euros, was $100.5 and the fair value ~~during~~was $2.2, recorded within other current assets. There were no derivative contracts outstanding as of December 31, 2020. During the ~~measurement period will be recorded~~three and six months ended July 3, 2021, we recognized losses related to foreign currency derivatives not designated as ~~adjustments~~hedges of $0.8 and $2.2, respectively, within general and administrative expenses. During the three and six months ended June 27, 2020, we recognized a gain of $0.3 and a loss of $3.8, respectively.

From time to ~~those assets~~time, we enter into call option contracts to mitigate exposure to commodity price fluctuations. As of July 3, 2021, call option contracts were nominal. There were no call option contracts outstanding as of December 31, 2020.

We utilize market approaches to estimate the fair value of our derivative instruments by discounting anticipated future cash flows derived from the derivative’s contractual terms and ~~liabilities with a corresponding adjustment to goodwill~~observable foreign exchange rates. The fair values of the derivatives summarized above are determined based on Level 2 inputs in the ~~period they occur. The goodwill arising from this acquisition, which is not expected to be deductible for income tax purposes, has been assigned to the Motion Technologies segment.~~

~~Preliminary Allocation of Purchase Price for Axtone~~fair value hierarchy.

Cash $ 9.4
Receivables 11.5
Inventory 13.6
Plant, property and equipment 14.1
Goodwill 79.5
Other intangible assets 9.7
Other assets 6.0
Accounts payable and accrued liabilities (14.8 )
Postretirement liabilities (3.8 )
Other liabilities (2.1 )
Net assets acquired $ 123.1

~~Pro forma results of operations have not been presented because the acquisition was not deemed material at the acquisition date.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except per share amounts, unless otherwise stated)

OVERVIEW

ITT Inc. is a diversified manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and ~~oil and gas~~energy markets. ~~Building on our heritage of engineering, we partner with our customers to deliver enduring solutions to the key industries that underpin our modern way of life.~~ We manufacture components that are integral to the operation of systems and manufacturing processes in ~~our~~these key markets. Our products provide enabling functionality for applications where reliability and performance are critically important to our customers and the users of their products.

Our businesses share a common, repeatable operating ~~model.~~model centered on our engineering capabilities. Each business applies its technology and engineering expertise to solve our ~~customers'~~customers’ most pressing challenges. Our applied engineering ~~aptitude enables~~provides a ~~tight~~valuable business ~~fit~~relationship with our customers given the critical nature of their applications. This in turn provides us with unique insight to our ~~customer’s~~customers’ requirements and enables us to develop solutions to assist our customers in achieving their business goals. Our technology and customer intimacy ~~work in tandem to~~together produce opportunities to capture recurring revenue streams, aftermarket opportunities and long-lived platforms from original equipment ~~manufacturer (OEM) platforms.~~manufacturers (OEMs).

Our product and service offerings are organized into three segments: Motion Technologies (MT), Industrial Process ~~Motion Technologies,~~(IP), and Connect & Control ~~Technologies.~~Technologies (CCT). See Note 3, Segment Information, in this Report for a summary description of each segment. Additional information is also available in our ~~2016~~2020 Annual Report within Part I, Item 1, ~~"Description~~“Description of ~~Business"~~Business”.

~~DISCUSSION OF FINANCIAL RESULTS~~

~~Three and Nine Months Ended September 30~~

Three Months Nine Months
For the Periods Ended September 30 2017 2016 Change 2017 2016 Change
Revenue $ 645.0
$ 581.7
10.9 % $ 1,901.7
$ 1,817.0
4.7 %
Gross profit 203.1
183.9
10.4 % 609.8
584.8
4.3 %
Gross margin 31.5 % 31.6 % (10 )bp 32.1 % 32.2 % (10 )bp
Operating expenses 75.3
49.1
53.4 % 368.7
349.5
5.5 %
Expense to revenue ratio 11.7 % 8.4 % 330 bp 19.4 % 19.2 % 20 bp
Operating income 127.8
134.8
(5.2 %) 241.1
235.3
2.5 %
Operating margin 19.8 % 23.2 % (340 )bp 12.7 % 12.9 % (20 )bp
Interest and non-operating expenses, net 0.2
0.3
(33.3 %) 0.1
1.5
(93.3 %)
Income tax expense 40.6
46.1
(11.9 %) 60.3
75.3
(19.9 %)
Effective tax rate 31.8 % 34.3 % (250 )bp 25.0 % 32.2 % (720 )bp
Income from continuing operations attributable to ITT Inc. 87.0
88.3
(1.5 %) 181.0
158.3
14.3 %
(Loss) income from discontinued operations, net of tax (0.1 ) 1.8
(105.6 %) (0.3 ) 2.0
(115.0 %)
Net income attributable to ITT Inc. 86.9
90.1
(3.6 %) 180.7
160.3
12.7 %

All comparisons included within ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to the comparable three and ~~nine~~six months ended ~~September 30, 2016,~~June 27, 2020, unless stated otherwise.

COVID-19 Update:

The Company continues to respond to and recover from the challenges stemming from the COVID-19 pandemic, including managing significant market headwinds, supply chain disruptions and reduced availability of skilled labor. We are continuing to actively monitor the situation, including the current rise of the COVID-19 Delta variant, to assess the impact on our businesses and operations. In addition, we continue to work closely with our suppliers to minimize disruptions within our supply chain and to continue to deliver high quality products to our customers.

Future impacts of COVID-19 on our business and financials remain uncertain and will be dependent on the severity of a resurgence of COVID-19 or variant strains of the virus, including the Delta variant, the effectiveness of vaccines and people’s attitudes towards receiving them, and the overall duration of the pandemic. See Part I, Item 1A, “Risk Factors”, of our 2020 Annual Report, for an additional discussion of risk related to COVID-19.

Executive Summary

InDuring the ~~third~~second quarter of ~~2017,~~2021, we ~~continued to optimize execution~~grew our revenue and expanded our margins across all three segments. The following table provides a summary of key performance indicators for the enterprise while driving growth and share gains in stabilizing key end-markets. We strengthened project performance within the Industrial Process segment, drove productivity improvements at our Connect and Control Technologies facilities, and continued to leverage the benefitssecond quarter of ~~proactive restructuring in both businesses. In addition, productivity gains at our Motion Technologies segment helped offset much of the commodity cost headwinds we've experienced throughout the year.~~

We continued to grow in our key end-markets, including automotive, rail, and general industrial. In automotive we won positions on a significant number of new platforms in China and with electric and hybrid vehicles for both braking and charging components. In addition, we had key multi-year wins during the third quarter which included a large award for KONI shock absorbers which will be used in the defense market,2021 as ~~well as an award on a new multi-year rotorcraft platform.~~

During the third quarter we expanded innovation and testing capabilities for braking components in China to support market trends for electric vehicles and our new North American brake pad facility delivered their first pads. In addition, we continued to successfully integrate the operations of our first quarter 2017 acquisition of Axtone Railway Group (Axtone).

~~Our third quarter 2017 results include:~~

Revenue of $645.0, reflecting a year-over-year increase of $63.3, or 10.9%, driven by growth in the transportation end-markets due to the automotive and rail market, partially offset by lower revenues from the aerospace market. Industrial end-market revenues provided a modest gain during the quarter and revenues from the oil and gas end-market were flat to the prior year. Our acquisition of Axtone provided incremental revenue of $19.6. Organic revenue, which excludes the impacts from foreign exchange, acquisitions, and divestitures, increased 4.8% compared to the ~~prior year.~~second quarter of 2020.

Orders of $658.6, reflecting year-over-year growth of $85.2 or 14.9% driven by continued share gains in the global automotive brake pad markets and growth in industrial connectors and components partially offset by lower pump project activity. We also received incremental orders from our newly acquired Axtone business of $21.5. Organic orders, which excludes the impacts from foreign exchange, acquisitions, and divestitures, increased 8.4% compared to the prior year.


Summary of Key Performance Indicators for the Second Quarter of 2021
Revenue	Segment Operating Income	Segment Operating Margin	EPS
$692	$114	16.5%	$0.45
34% Increase	206% Increase	930bp Increase	15% Decrease
Organic Revenue	Adjusted Segment Operating Income	Adjusted Segment Operating Margin	Adjusted EPS
$666	$114	16.5%	$0.94
29% Increase	77% Increase	390bp Increase	65% Increase

Operating income of $127.8, decreased $7.0, or 5.2%, reflecting a 340 basis point decline to operating margin, due to higher corporate costs, primarily related to incentive compensation and prior year insurance favorability, as well as a lower asbestos remeasurement benefit. These items more than offset the growth in segment operating income of $9.6 or 14.3% due to higher sales volumes, improvements in productivity and project performance, restructuring benefits, and favorable foreign currency impacts, partially offset by rising commodity costs and expenses related to the build-out of our new North American friction facility. Adjusted segment operating income which excludes the impacts of restructuring and realignment costs, certain asset impairment charges, acquisition-related expenses, and unusual or infrequent operating items increased $17.2, or 23.6%.

Income from continuing operations of $0.98 per diluted share was flat compared to the prior year. Adjusted income from continuing operations was $0.66 per diluted share, reflecting a $0.08, or 13.8%, increase compared to the prior year.

Further details related to these results are contained elsewhere in the Discussion of Financial Results section. Refer to the section titled ~~"Key~~“Key Performance Indicators and Non-GAAP ~~Measures"~~Measures” for definitions and reconciliations between GAAP and non-GAAP metrics.

Our second quarter 2021 results include:

•Revenue of $691.6 increased $176.9, including favorable foreign exchange of $25.2. Organic revenue improved 29.5% primarily as a result of strong top-line growth from our Motion Technologies segment, which significantly outperformed the global automotive market. We also saw top line growth from our Industrial Process business driven by pump projects and our CCT business due to strength in connector sales.

•Segment operating income was $114.1, an increase of $76.8 over the prior year primarily driven by benefits from higher sales volume and prior year restructuring costs related to the 2020 Global Restructuring Plan. In addition, we realized benefits from net productivity and prior year cost actions. These items were partially offset by prior year actions to reduce discretionary spending, higher raw materials costs, and strategic growth investments.

•Income from continuing operations of $0.45 per diluted share decreased $0.08 versus last year, as higher segment operating income was more than offset by a $28.1 loss on divestiture of asbestos-related assets and liabilities during the quarter, a prior year income tax benefit of $28.1, and an increase in corporate and environmental costs of $10.5. Adjusted income from continuing operations, which excludes the impact from the sale of asbestos, was $0.94 per diluted share, an improvement of $0.37.

In terms of capital deployment, during the second quarter of 2021 we paid $398.0 to fund the divestiture of the entity holding asbestos-related assets and liabilities. This transaction, along with our successful U.S. pension plan termination executed in October 2020, positions us favorably for future growth and capital flexibility. In addition, we paid dividends of $19.0, which represents a 30% increase as compared to the second quarter of 2020.

DISCUSSION OF FINANCIAL RESULTS


	Three Months Ended								Six Months Ended
	July 3, 2021			June 27, 2020			Change		July 3, 2021			June 27, 2020			Change
Revenue	$	691.6		$	514.7		34.4	%	$	1,390.0		$	1,178.0		18.0	%
Gross profit	224.6			163.6			37.3	%	453.6			373.0			21.6	%
Gross margin	32.5		%	31.8		%	70	bp	32.6		%	31.7		%	90	bp
Operating expenses(a)	45.0			143.1			(68.6)	%	164.1			243.2			(32.5)	%
Operating expense to revenue ratio	6.5		%	27.8		%	(2,130)	bp	11.8		%	20.6		%	(880)	bp
Operating income(a)	179.6			20.5			776.1	%	289.5			129.8			123.0	%
Operating margin	26.0		%	4.0		%	2,200	bp	20.8		%	11.0		%	980	bp
Interest and non-operating (income) expenses, net	(3.5)			2.2			(259.1)	%	(4.8)			2.8			(271.4)	%
Income tax expense (benefit)	143.9			(28.1)			(612.1)	%	168.6			(3.4)			**
Effective tax rate	78.6		%	(153.6)		%	**		57.3		%	(2.7)		%	6,000	bp
Income from continuing operations attributable to ITT Inc.	39.0			46.4			(15.9)	%	125.2			130.1			(3.8)	%
Net income attributable to ITT Inc.	39.0			48.0			(18.8)	%	125.2			132.8			(5.7)	%

** Resulting percentage or basis point change not considered meaningful.

(a) Operating expenses and operating income for the three and six months ended July 3, 2021 include the impact of the divestiture of the entity holding asbestos-related assets and liabilities. See Operating Expenses section below for further information.

REVENUE

The following table illustrates the revenue derived from each of our segments for the three and six months ended July 3, 2021 and June 27, 2020.


For the Three Months Ended	July 3, 2021		June 27, 2020		Change		Organic Growth (Decline)(a)
Motion Technologies	$	343.6	$	199.3	72.4	%	63.6	%
Industrial Process	213.9		193.3		10.7	%	7.7	%
Connect & Control Technologies	134.5		122.9		9.4	%	8.0	%
Eliminations	(0.4)		(0.8)
Total Revenue	$	691.6	$	514.7	34.4	%	29.5	%

For the Six Months Ended	July 3, 2021		June 27, 2020		Change		Organic Growth (Decline)(a)
Motion Technologies	$	712.7	$	497.2	43.3	%	35.7	%
Industrial Process	416.2		420.6		(1.0)	%	(3.1)	%
Connect & Control Technologies	261.8		261.6		0.1	%	(1.4)	%
Eliminations	(0.7)		(1.4)
Total Revenue	$	1,390.0	$	1,178.0	18.0	%	13.7	%

(a)See the section titled “Key Performance Indicators and Non-GAAP Measures” for a definition and reconciliation of organic revenue.

Motion Technologies (MT)

MT revenue for the three and six months ended July 3, 2021 increased $144.3 and $215.5, respectively. Excluding the impact of favorable foreign currency translation of $17.5 and $37.8 for the three and six months ended July 3, 2021, organic revenue increased $126.8 and $177.7, respectively. Sales from our Friction

For the Three Months Ended September 30 2017 2016 Change
Organic Revenue Growth^(a)
Industrial Process $ 196.2
$ 195.0
0.6 % (0.1 )%
Motion Technologies 300.1
238.7
25.7 % 11.9 %
Connect & Control Technologies 149.4
149.0
0.3 % (0.2 )%
Eliminations (0.7 ) (1.0 ) (30.0 )% —
Revenue $ 645.0
$ 581.7
10.9 % 4.8 %

For the Nine Months Ended September 30 2017 2016 Change
Organic Revenue Growth^(a)
Industrial Process $ 574.6
$ 618.0
(7.0 )% (7.2 )%
Motion Technologies 877.5
755.3
16.2 % 8.8 %
Connect & Control Technologies 452.3
446.8
1.2 % 1.4 %
Eliminations (2.7 ) (3.1 ) (12.9 )% —
Revenue $ 1,901.7
$ 1,817.0
4.7 % 1.6 %
business grew 83% and 43%, respectively, during the three and six month periods driven by a strong automotive recovery and significant outperformance versus global automotive production rates. Wolverine sales improved 58% and 29%, respectively, during the three and six month periods due to growth in sealings and OE shims. KONI & Axtone sales increased 4% and 5%, respectively, during the three and six month periods, primarily due to strength in automotive, partially offset by a decline in rail.


~~(a)~~	~~See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation of organic revenue.~~

The automotive industry is currently experiencing a global semiconductor supply shortage. This shortage has created supply chain disruptions for our automotive OEM customers, resulting in temporary declines in production. As a result, demand for our OEM brake pads and parts may be adversely affected until the shortage is resolved. While this shortage has had and may continue to have a negative impact on revenue, we continue to significantly outperform global automotive production rates which has resulted in our ability to grow revenue versus prior year and 2019.

Industrial Process (IP)

~~Revenue~~IP revenue increased $20.6 for the three months ended ~~September 30, 2017 increased $1.2 or 0.6%, which includes~~July 3, 2021, and decreased $4.4 for the six months ended July 3, 2021. Both periods included favorable foreign currency translation impacts of ~~$1.4.~~$5.8 and $8.6, respectively. Organic revenue increased by $14.8 during the three months ended September 30, 2017 was flat compared to the prior year as increases in aftermarket parts and service revenues of approximately 10% and an increase in baseline pumps of approximately 6% was offset by lower project pump revenue of approximately 14%, stemming from the mid-stream oil and gas and mining markets, and reduced valves sales primarily within the BioPharm market.

Revenue for the nine months ended September 30, 2017 decreased $43.4 or 7.0%, which includes favorable foreign currency impacts of $1.2. Organic revenue during the nine months ended September 30, 2017 decreased $44.6, or 7.2%. The decrease was driven by a decline in project pump revenue of approximately 26%, mostly due to lower North American oil and gas projects in backlog entering the year. Revenue from valves decreased approximately 12%. Revenues from aftermarket parts and service activity increased approximately 1%.

~~Orders decreased $5.6, or 2.8%, during the three months ended September 30, 2017, which includes favorable foreign currency impacts of $1.5. The decrease was~~month period, primarily driven by ~~lower project~~growth in pump ~~orders which declined approximately 10%~~projects of 52% due to ~~stronger prior year North American petrochemical market orders, partially offset by higher order activity~~strength in the oil and gas, chemical, and general industrial markets. ~~Short-cycle orders declined approximately 2% as unfavorable timing related~~This was partially offset by a decline in service revenue.

Organic revenue for the six month period decreased by $13.0, primarily driven by declines in our short-cycle business of 8% due to ~~parts activity~~decreases in service revenue and baseline pumps. This decline was partially offset by growth in ~~baseline pumps.~~

~~During the nine months ended September 30, 2017 orders increased $18.1, or 3.1%, which includes favorable foreign currency impacts~~pump projects of $1.2. The increase in orders reflects stronger aftermarket activity as orders for service and parts increased approximately 13% and 2%, respectively, and growth in short-cycle baseline pumps of approximately 4% due to stronger general industrial orders. Order activity for 2017 also included a $26 downstream oil and gas order in Africa received during the first quarter of 2017. Growth was partially offset by lower project pump orders in North America and Asia.18%.

The level of order and shipment activity ~~related to project pumps~~at IP can vary significantly from period to period due to pump projects which ~~may impact year-over-year comparisons.~~are highly engineered, customized to customer needs, and have longer lead times. Total orders during the six months ended July 3, 2021 were $446.7, an increase of 6.1% as compared to the prior year period. Backlog as of ~~September 30, 2017~~July 3, 2021 was ~~$375.5, reflecting~~$383.9, an increase of ~~$28.3,~~$16.5, or ~~8.2%~~4.5%, ~~from the~~as compared to December 31, ~~2016 level.~~2020. Our backlog represents firm orders that have been received, acknowledged, and entered into our production systems.

Connect & Control Technologies (CCT)

~~Motion Technologies~~

~~Revenue of $300.1~~CCT revenue for the three and six months ended ~~September 30, 2017~~July 3, 2021 increased ~~$61.4, or 25.7%,~~$11.6 and $0.2, respectively, which ~~includes incremental revenue of $19.6 from our 2017 acquisition of Axtone and~~included favorable foreign currency translation ~~impacts~~ of ~~$13.5. Revenue for the nine months ended September 30, 2017~~$1.8 and $3.8, respectively. Organic revenue increased ~~$122.2, or 16.2%, which includes incremental revenue of $55.6 from our 2017 acquisition of Axtone and favorable foreign currency translation impacts of $0.4. During~~$9.8 during the three ~~and nine months ended September 30, 2017, organic revenue increased $28.3, or 11.9%, and $66.2, or 8.8%, respectively. The growth in organic revenue for both periods was~~month period primarily driven by ~~our friction materials business from our continued~~increases in connector sales of 17%, with particular strength in the ~~automotive OEM sales channel primarily due to market growth and share gains in China and Europe in both periods and North America in third quarter, as well as strength~~industrial market. This was partially offset by declines in the aftermarket brake pad sales channel. In addition, Wolverine contributed organic revenue growth of approximately 3% and 5% during the three and nine month periods, respectively, driven by global share gains in sealing solutions. Revenue from our KONI business increased by 16% during the third quarter reflecting growth in the European rail markets and higher demand in the high speed rail market in China. During the nine months ended September 30, 2017, KONI revenues grew 3% primarily stemming from activity on a U.S. defense program.

Orders for the three months ended September 30, 2017 increased $86.9, or 36.7%, including incremental orders of $21.5 from our 2017 acquisition of Axtone and favorable foreign currency translation impacts of $13.7. Orders for the nine months ended September 30, 2017 increased $136.5, or 17.9%, including incremental orders of $54.0 from our 2017 acquisition of Axtone and unfavorable foreign currency translation impacts of $0.2. During the three and nine months ended September 30, 2017 organic orders grew $51.7, or 21.8%, and $82.3, or 10.8%, respectively. The organic order increase in both periods reflects continued strength in OEM auto brake pads in our friction materials business as well as KONI, which grew approximately 95% and 21% in the three and nine months ended September 30, 2017, respectively, due to a large multi-year defense order in North America and share capture from new products in the China high speed rail market. In addition, Wolverine orders grew 2% and 5% due to strength in sealing solutions.

~~Connect & Control Technologies~~

GAAP revenue and organic revenue for the three months ended September 30, 2017 was flat compared to the prior year. Revenue for the nine months ended September 30, 2017 increased $5.5, or 1.2%, including unfavorable foreign currency translation impacts of $0.8. Revenue from the general industrial market was flat during the third quarter as higher revenue from connectors and actuation components was offset by lower energy absorption projects. Revenue from the general industrial market grew 4% during the nine months ended September 30, 2017 due to higher revenues from heavy vehicle and electric vehicle connectors. Revenue from the oil and gas connectors increased 28% and 34%, respectively, during the three and nine months ended September 30, 2017 due to stronger demand in the Middle East and continuing positive market trends. Aerospaceaerospace and defense market ~~revenues declined~~of 2% ~~and 3%~~for the quarter.

Organic revenue decreased $3.6 during the ~~three~~six month period primarily driven by declines in the aerospace and ~~nine months ended September 30, 2017, respectively, as weak~~defense market of 16% due to continued challenges in the commercial aerospace ~~demand and impacts~~market resulting from ~~restrictions on~~ the ~~sales of certain military-specification connectors were~~COVID-19 pandemic. This was partially offset by ~~rotorcraft share gains~~a 19% increase in connector sales within the industrial market. Recently, there has been an increase in commercial air travel and ~~defense component strength.~~

Orders for the three months ended September 30, 2017 increased $3.4, or 2.4%, including favorable foreign currency translation impacts of $0.6. Orders for the nine months ended September 30, 2017 decreased $2.8, or 0.6% versus the prior year, including unfavorable foreign currency translation impacts of $1.0. During the three and nine months ended September 30, 2017, orders from the general industrial markets increased 8% and 6%, respectively,production levels by OEMs; however, due to ~~increased activity for energy absorption and actuation components and electric vehicle connectors~~high levels of OEM inventory, we do not expect to see a significant improvement in North America. In addition, increased order activity from heavy vehicle connectors in China favorably impacted both periods. Aerospace and defense market order activity decreased 3% and 6%, respectively, due to weak commercial aerospace components and connectors, and impacts from restrictions on the sales ~~of certain military-specification connectors. Orders for connectors associated with the oil and gas market grew approximately 21% and 36% during the three and nine month periods, respectively.~~until early 2022.

On July 11, 2017, the U.S. Defense Logistics Agency, Land and Maritime (DLA) issued a notice that it has removed our connectors business from the Qualified Products List (QPL) with respect to six military-specification connector products. At the time of this notice, these products had been subject to a previously-disclosed stop shipment/stop production order issued by DLA earlier this year. Annual sales of these military-specification connectors are estimated to range from $8 to $10. The Company will seek to restore its status on the QPL as expeditiously as possible but is unable to estimate how long this process will take. At this time, there is uncertainty whether there will be any further negative impacts to our revenue and results of operations related to the QPL removal.

GROSS PROFIT

Gross profit for the three months ended ~~September 30, 2017~~July 3, 2021 and ~~2016~~June 27, 2020 was ~~$203.1~~$224.6 and ~~$183.9,~~$163.6, respectively, reflecting a gross margin of ~~31.5%~~32.5% and ~~31.6%~~31.8%, respectively. Gross profit for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016~~June 27, 2020 was ~~$609.8~~$453.6 and ~~$584.8,~~$373.0, respectively, reflecting a gross margin of ~~32.1%~~32.6% and ~~32.2%~~31.7%, respectively. ~~Unfavorable automotive~~The increase in gross profit was primarily driven by higher sales volume and ~~aerospace pricing~~net productivity savings, including the benefit of cost actions executed in 2020. These items were partially offset by an increase in raw material prices, primarily driven by the supply of steel, copper, and ~~sales mix impacts,~~tin.

Since 2020, the cost of raw materials, including commodities such as steel, used in our production processes has increased. The rising prices are mainly a result of increased ~~direct material costs due to~~demand fueled by economic recovery from the COVID-19 pandemic as well as lower supply since global production capacity was cut in 2020. The impact of higher commodity prices ~~impacting~~on our ~~Motion Technologies segment,~~financial results during the second quarter of 2021 was partially mitigated by fixed-price supply contracts with suppliers. The expiration of these fixed-price contracts, potential continued raw materials inflation, and supply constraints are expected to have an increasingly unfavorable ~~impacts from certain military-specification connectors were almost fully~~impact on our second half financial results. We expect to be able to offset ~~by improved project performance at our Industrial Process segment, lower~~some of this impact through price increases and net productivity savings.

The manufacturing industry is also currently experiencing a skilled labor shortage. This shortage has created difficulties for the Company in meeting customer demand and in managing the labor costs asof our factory workers. Accordingly, our revenue, gross profit, and operating expenses at each of our businesses may be negatively impacted if we are unable to timely fulfill our customer orders; or if our labor costs, including costs related to attracting and retaining skilled workers, increase substantially in order to meet our customer demand. At this time, we do not expect this shortage to have a ~~result of restructuring benefits from~~material impact on our ~~structural cost reset at our Industrial Process segment and operational improvements at our Connect & Control Technologies segment.~~financial results.

OPERATING EXPENSES


	Three Months Ended						Six Months Ended
	July 3, 2021		June 27, 2020		Change		July 3, 2021		June 27, 2020		Change
General and administrative expenses	$	60.2	$	44.6	35.0	%	$	112.3	$	101.7	10.4	%
Sales and marketing expenses	38.3		35.7		7.3	%	75.0		77.3		(3.0)	%
Research and development expenses	23.2		18.9		22.8	%	47.5		41.6		14.2	%
Asbestos-related (benefit) costs, net	(76.8)		16.0		(580.0)	%	(74.4)		(24.7)		(201.2)	%
Restructuring costs	0.1		27.9		(99.6)	%	3.7		31.0		(88.1)	%
Asset impairment charges	—		—		—	%	—		16.3		**
Total operating expenses	$	45.0	$	143.1	(68.6)	%	$	164.1	$	243.2	(32.5)	%
Total Operating Expenses By Segment:
Motion Technologies	$	41.4	$	43.6	(5.0)	%	$	83.0	$	79.8	4.0	%
Industrial Process	39.7		50.8		(21.9)	%	76.0		113.6		(33.1)	%
Connect & Control Technologies	29.4		31.7		(7.3)	%	61.7		64.3		(4.0)	%
Corporate & Other	(65.5)		17.0		(485.3)	%	(56.6)		(14.5)		(290.3)	%

Three Months Nine Months
For the Periods Ended September 30 2017 2016 Change 2017 2016 Change
General and administrative expenses $ 73.7
$ 59.2
24.5 % $ 205.2
$ 202.2
1.5 %
Sales and marketing expenses 41.3
39.4
4.8 % 128.3
128.7
(0.3 )%
Research and development expenses 23.1
18.6
24.2 % 68.2
58.9
15.8 %
Asbestos-related benefit, net (62.8 ) (68.1 ) (7.8 )% (33.0 ) (40.3 ) (18.1 )%
Total operating expenses $ 75.3
$ 49.1
53.4 % $ 368.7
$ 349.5
5.5 %
Total Operating Expenses By Segment:
Industrial Process $ 47.5
$ 51.2
(7.2 )% $ 134.8
$ 167.9
(19.7 )%
Motion Technologies 43.9
33.3
31.8 % 125.7
102.1
23.1 %
Connect & Control Technologies 35.1
32.5
8.0 % 113.6
103.7
9.5 %
Corporate & Other (51.2 ) (67.9 ) (24.6 )% (5.4 ) (24.2 ) (77.7 )%
** Resulting percentage change not considered meaningful.

General and administrative (G&A) expenses for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 increased ~~$14.5, or 24.5%~~$15.6 and ~~$3.0, or 1.5%,~~$10.6, respectively. The increase ~~in G&A expenses~~ was primarily due to higher ~~incentive~~incentive-based compensation as well as prior year actions taken in response to the COVID-19 pandemic. Prior year actions included a temporary reduction in executive compensation and suspension of ~~$5.7~~select 401(k) benefits for certain U.S. employees that have since been reinstated. Last year, we also benefited from higher employee retention credits for the three and ~~$13.7, respectively, a pension curtailment of $3.7~~six month periods, in connection with the third quarter of 2017, and higher legal expenses. Incremental costs related to our recently acquired Axtone business were $2.6 and $6.4, respectively. Savings from our past restructuring actions during both periods and lower restructuring costs of $14.8 during the nine-month period partially offset these2020 CARES Act. In addition, environmental costs in the ~~third quarter~~current year were higher by $5.3 and ~~almost fully~~$5.0, respectively, primarily due to prior year insurance-related recoveries. The increase was partially offset ~~these costs during~~by a decline in bad debt expense.

Sales and marketing expenses increased $2.6 for the ~~nine~~three months ended ~~September 30, 2017. In addition,~~July 3, 2021 primarily driven by prior year benefits from discretionary spending reductions and temporary personnel cost actions taken in response to the ~~nine-month period included unfavorable foreign currency impacts of $5.1~~COVID-19 pandemic. Sales and ~~a $5.0 legal accrual recorded~~marketing expenses decreased $2.3 for the six months ended July 3, 2021 reflecting net year-to-date savings from our cost actions initiated during the second quarter of ~~2017, which were partially offset by a prior year trade name impairment of $4.1 and income of $3.8 related to an amendment to our environmental QSF in the second quarter of 2017.~~2020.

Sales and marketing expenses for the three and nine months ended September 30, 2017 increased $1.9, or 4.8%, and decreased $0.4, or 0.3%, respectively, as incremental costs related to Axtone of $1.4 and $2.9, respectively, and higher overall selling costs at Motion Technologies were only partially offset by lower personnel costs at Industrial Process. During the nine months ended September 30, 2017, commissions to sales personnel at Industrial Process were favorable compared to the prior year, which contributed to the decline during the period.

Research and development expenses for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 increased ~~$4.5, or 24.2%,~~$4.3 and ~~$9.3, or 15.8%,~~$5.9, respectively, ~~primarily~~ due to ~~increased product development activities at~~ our ~~Motion Technologies~~continued focus on strategic investments to drive future growth.

Asbestos-related matters resulted in a net benefit of $76.8 and ~~Connect and Control Technologies segments. Incremental costs related to our acquisition of Axtone were $0.3 and $0.9 during~~$74.4 for the three and ~~nine~~six months ended ~~September 30, 2017.~~

July 3, 2021, respectively, due to the recognition of a pre-tax gain of $88.8 from the divestiture of the entity holding asbestos-related assets and liabilities. Asbestos-related ~~benefit, net, decreased $5.3, or 7.8% and $7.3, or 18.1%, respectively, during~~matters for the ~~three and nine~~six months ended ~~September 30, 2017 due to~~June 27, 2020 benefited from a ~~lower current year benefit from our annual remeasurement.~~$52.5 insurance settlement gain. See Note ~~17,~~ 19, Commitments and Contingencies, to the Consolidated Condensed Financial Statements for further information.

Restructuring costs decreased $27.8 and $27.3, respectively, during the three and six months ended July 3, 2021. Restructuring costs recorded during the prior year were primarily related to cost actions taken as part of our 2020 Global Restructuring Plan, which is an organizational-wide restructuring plan to reduce the overall cost structure of the Company in response to a reduction in demand from the COVID-19 pandemic. See Note 5, Restructuring Actions, to the Consolidated Condensed Financial Statements for further information.

Asset impairment charges for the six months ended June 27, 2020 were related to a business within IP that primarily serves the global upstream oil and gas market. See Note 11, Plant, Property and Equipment, net, and Note 12, Goodwill and Other intangible assets, net, to the Consolidated Condensed Financial Statements for further information.

OPERATING INCOME


																		Three Months Ended								Six Months Ended
	Three Months								Nine Months									July 3, 2021			June 27, 2020			Change		July 3, 2021			June 27, 2020			Change
For the Periods Ended September 30	2017			2016			Change		2017			2016			Change
Motion Technologies																	Motion Technologies	$	64.7		$	10.4		522.1	%	$	140.7		$	63.5		121.6	%
Industrial Process	$	9.9		$	4.3		130.2	%	$	32.0		$	19.6		63.3	%	Industrial Process	31.5			18.5			70.3	%	62.5			27.4			128.1	%
Motion Technologies	49.1			45.2			8.6	%	156.1			144.8			7.8	%
Connect & Control Technologies	17.5			17.4			0.6	%	47.5			46.6			1.9	%	Connect & Control Technologies	17.9			8.4			113.1	%	29.7			24.3			22.2	%
Segment operating income	76.5			66.9			14.3	%	235.6			211.0			11.7	%	Segment operating income	114.1			37.3			205.9	%	232.9			115.2			102.2	%
Asbestos-related benefit, net	62.8			68.1			(7.8	)%	33.0			40.3			(18.1	)%
Asbestos-related benefit (costs), net																	Asbestos-related benefit (costs), net	76.8			(16.0)			**		74.4			24.7			201.2	%
Other corporate costs	(11.5		)	(0.2		)	**		(27.5		)	(16.0		)	(71.9	)%	Other corporate costs	(11.3)			(0.8)			**		(17.8)			(10.1)			76.2	%
Total corporate and other benefit	51.3			67.9			(24.4	)%	5.5			24.3			77.4	%
Total corporate and other benefit (costs), net																	Total corporate and other benefit (costs), net	65.5			(16.8)			**		56.6			14.6			287.7	%
Total operating income	$	127.8		$	134.8		(5.2	)%	$	241.1		$	235.3		2.5	%	Total operating income	$	179.6		$	20.5		776.1	%	$	289.5		$	129.8		123.0	%
Operating margin:																	Operating margin:
Motion Technologies																	Motion Technologies	18.8		%	5.2		%	1,360	bp	19.7		%	12.8		%	690	bp
Industrial Process	5.0		%	2.2		%	280	bp	5.6		%	3.2		%	240	bp	Industrial Process	14.7		%	9.6		%	510	bp	15.0		%	6.5		%	850	bp
Motion Technologies	16.4		%	18.9		%	(250	)bp	17.8		%	19.2		%	(140	)bp
Connect & Control Technologies	11.7		%	11.7		%	—		10.5		%	10.4		%	10	bp	Connect & Control Technologies	13.3		%	6.8		%	650	bp	11.3		%	9.3		%	200	bp
Segment operating margin	11.9		%	11.5		%	40	bp	12.4		%	11.6		%	80	bp	Segment operating margin	16.5		%	7.2		%	930	bp	16.8		%	9.8		%	700	bp
Consolidated operating margin	19.8		%	23.2		%	(340	)bp	12.7		%	12.9		%	(20	)bp	Consolidated operating margin	26.0		%	4.0		%	2,200	bp	20.8		%	11.0		%	980 bp

** Resulting percentage change not considered meaningful.

Industrial Process operating income increased $5.6, or 130.2%, and operating margin increased 280 basis points to 5.0% for the three months ended September 30, 2017. The increase in operating income in the third quarter was primarily driven by improved project performance, favorable sales mix and pricing of approximately $3, and favorable foreign currency of $1.7. These items were partially offset by a pension curtailment of $3.7 recorded in the third quarter of 2017. Operating income increased $12.4, or 63.3%, and operating margin increased 240 basis points to 5.6% for the nine months ended September 30, 2017. The increase was primarily driven by improved project performance as well as net savings of approximately $20 due to restructuring benefits, productivity, and sourcing initiatives, a decrease in restructuring costs of $15 and a trade name impairment of $4.1 recorded in the second quarter of 2016. These items were partially offset by an unfavorable impact of approximately $20 from lower sales volume and a pension curtailment of $3.7 recorded in the third quarter of 2017.

~~Motion Technologies~~MT operating income for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 increased ~~$3.9, or 8.6%,~~$54.3 and $11.3, or 7.8%. Operating margin for the three and nine months ended September 30, 2017 decreased 250 basis points to 16.4% and 140 basis points to 17.8%, respectively. The increase in operating income was$77.2, respectively, primarily driven by higher sales volume ~~which provided a benefit~~ of ~~approximately $14~~$52.9 and ~~$31, respectively~~$76.4 and prior year restructuring costs of $14.0 related to the 2020 Global Restructuring Plan. In addition, we benefited from net productivity ~~improvements at our brake component facilities. These items were~~and prior year cost actions, along with favorable foreign exchange of $2.7 and $6.1. Operating income growth was partially offset by unfavorable ~~pricing and sales mix, higher~~raw material costs and incremental investments to support recent long-term global automotive platform wins. Foreign currency fluctuations provided a favorable impact of $1.4 during the third quarter and an unfavorable impact of $5 during the nine months ended September 30, 2017. In addition, our acquisition of Axtone produced anstrategic growth investments.

IP operating ~~loss of $1.4 due to acquisition related costs of $2.6 during the third quarter of 2017 and provided an incremental increase to operating~~ income ~~of $2.2 during the nine months ended September 30, 2017.~~

~~Connect & Control Technologies operating income and margin~~ for the three and ~~nine~~six months ended ~~September 30, 2017 were flat~~July 3, 2021 increased $13.0 and $35.1, respectively, driven by higher prior year restructuring costs related to the 2020 Global Restructuring Plan. In addition, we benefited from net productivity, savings from prior year cost actions, and a decline in ~~both periods. Operating income was favorably impacted by net savings of approximately $6 and $14, respectively, due to restructuring~~bad debt expense. Second quarter volume benefits ~~productivity, and sourcing initiatives, primarily at our North American Connector facility. These items~~ were offset by unfavorable ~~sales~~product mix due to higher pump project sales. The prior year six month period also includes an asset impairment expense of $16.3 related to a business that mainly serves the global upstream oil and ~~pricing of approximately $3 and $7~~gas market.

CCT operating income for the three and ~~nine~~six months ended ~~September 30, 2017,~~July 3, 2021 increased $9.5 and $5.4, respectively, driven by prior year restructuring costs related to the 2020 Global Restructuring Plan, as well as ~~unfavorable foreign currency impacts of $0.7~~net productivity and $2.1, respectively. In addition, both periods include unfavorable impacts related to certain military-specification connectors and the nine-month period ended September 30, 2017 is impacted by a $5 legal accrual that was recorded in the second quarter of 2017.savings from prior year cost actions.

Other corporate costs for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 increased ~~$11.3~~$10.5 and ~~$11.5,~~$7.7, respectively. The increase for both periods was primarily driven by unfavorable environmental-related costs of $5.3 and $5.0, respectively, ~~primarily reflecting~~associated with prior year insurance-related recoveries, higher personnel costs driven by performance-based incentive compensation, ~~costs~~as well as prior year actions taken in response to the COVID-19 pandemic. Prior year actions included a temporary reduction in executive compensation and suspension of ~~$8 and $10, respectively, and insurance-related~~select 401(k) benefits ~~recorded in 2016. During the nine-month period ended September 30, 2017, disposal costs associated with a pending sale of property was~~that have since been reinstated. These items were partially offset by ~~income of $3.8 related to an amendment to the environmental Qualified Settlement Fund (QSF)~~a decrease in ~~the second quarter of 2017.~~restructuring expense.

INTEREST AND NON-OPERATING ~~INCOME~~EXPENSES AND ~~EXPENSES,~~INCOME, NET

~~During~~


	Three Months Ended						Six Months Ended
	July 3, 2021		June 27, 2020		Change		July 3, 2021		June 27, 2020		Change
Interest and non-operating (income) expenses, net	$	(3.5)	$	2.2	(259.1)	%	$	(4.8)	$	2.8	(271.4)	%

The change for the three and six months ended ~~September 30, 2017 and 2016, we recognized interest and non-operating expenses, net~~July 3, 2021 was primarily due to a $3.4 gain from the final pricing adjustment related to the termination of ~~$0.2 and $0.3, respectively. During~~our U.S. qualified pension plan. We also benefited from a decline in postretirement-related costs mainly resulting from the nine months ended September 30, 2017 and 2016, we recognized interest and non-operating expenses, net of $0.1 and $1.5, respectively. The change during the nine-month period was driven by an increase in interest income from time deposits in the current year.plan termination.

INCOME TAX EXPENSE


	Three Months Ended						Six Months Ended
	July 3, 2021			June 27, 2020				July 3, 2021			June 27, 2020
Income tax expense (benefit)	$	143.9		$	(28.1)			$	168.6		$	(3.4)
Effective tax rate	78.6		%	(153.6)		%		57.3		%	(2.7)		%

The higher effective tax rate ~~in 2016 was primarily driven by an increase in~~for the three and six months ended July 3, 2021 resulted from the Company recording tax expense on the reversal of previously recorded deferred tax ~~liability on foreign earnings which are not considered indefinitely reinvested. Refer to~~assets of $116.9 resulting from the Company’s divestiture of the entity holding asbestos-related assets and liabilities (see Note ~~2, Recent Accounting Pronouncements,~~19, Commitments and Contingencies, for further ~~information on ASU 2016-09.~~information). In addition, the ~~Company continues~~effective tax rate for the three and six months ended June 27, 2020 was lower due to ~~benefit from a larger mix of earnings in non-U.S. jurisdictions with favorable tax rates.~~

See Note 6, Income Taxes, to the complexity of some uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liabilityConsolidated Condensed Financial Statements for unrecognized tax benefits in foreign and domestic jurisdictions could change by approximately $17 due to changes in audit status, expiration of statutes of limitations and other events. In addition, the settlement of any future examinations relating to the 2011 and prior tax years could result in changes in amounts attributable to the Company under its Tax Matters Agreement with Exelis Inc. and Xylem Inc. relating to the Company's 2011 spin-off of those businesses.further information.

LIQUIDITY

Funding and Liquidity Strategy

We monitor our funding needs ~~and design~~ and execute strategies to meet overall liquidity requirements, including the management of our capital structure, on both a short- and long-term basis. Significant factors that affect our overall management of liquidity include our cash flow from operations, credit ratings, the availability of commercial paper, access to bank lines of credit, term loans, and the ability to attract long-term capital on satisfactory terms. We assess these factors along with current market conditions on a continuous basis, and as a result, may alter the mix of our short- and long-term financing when it is advantageous to do so. We expect to have enough liquidity to fund ~~our ongoing working capital, capital expenditures, dividends~~operations for at least the next 12 months and financing requirements through cash flows from operations and cash on hand or by accessing the commercial paper market. If our access to the commercial paper market were adversely affected, we believe that alternative sources of liquidity, including our Revolving Credit Agreement, described below, would be sufficient to meet our short-term funding requirements.beyond.

We manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We have identified and continue to look for opportunities to access cash balances in excess of local operating requirements to meet our global liquidity needs in a cost-efficient manner. ~~A majority of our cash and cash equivalents is held by our international subsidiaries.~~ We ~~have transferred, and~~ plan to continue to transfer cash between certain international subsidiaries and the U.S. ~~and between our other international subsidiaries~~ when it is cost effective to do so. ~~Our intent is generally to indefinitely reinvest these funds outside of the U.S. consistent with our overall intention~~We will also continue to support growth and ~~expand~~expansion in markets outside of the U.S. through the development of products, increased ~~non-U.S.~~ capital spending, and ~~potentially~~potential foreign acquisitions. During the ~~acquisition of foreign businesses. However,~~six months ended July 3, 2021, we have determined that certain undistributed foreign earnings generated in Luxembourg, Netherlands, Japan, Hong Kong, and South Korea should not be considered permanently reinvested outside of the U.S. Cashhad net cash distributions from foreign countries ~~amounted~~ to ~~$111.8 for~~ the ~~nine months ended September 30, 2017. Cash distributions from foreign countries amounted to $100.0 for~~U.S. of $44.3. During the year ended December 31, ~~2016.~~2020, we had net

cash distributions from foreign countries to the U.S. of $498.2. The timing and amount of any additional future distributions ~~if any,~~ remains under ~~evaluation.~~evaluation based on our jurisdictional cash needs.

The Company also continues to evaluate the various global governmental programs instituted in response to COVID-19, including the American Rescue Plan Act of 2021 (ARPA). ARPA builds upon many of the measures in the CARES Act from March 2020 and the Consolidated Appropriations Act from December 2020. ARPA and various global programs in the jurisdictions in which we operate generally provide for employee retention credits, workforce incentives, and incentive financing programs backed by governmental agencies. During the three and six months ended July 3, 2021, the Company recognized a benefit of $1.7 and $4.1 from the employee retention credit, and recognized a benefit of $7.2 during the second quarter of 2020. The benefit was recorded in operating income and related to the employer portion of payroll taxes. Certain non-U.S. jurisdictions have enacted similar stimulus measures. As of July 3, 2021, we have not incurred any borrowings under governmental loan programs. We continue to monitor any effects that may result from the ARPA and 2020 CARES Act or other similar legislation globally.

The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of Directors and will be based on, and affected by, a number of factors, including our financial position and results of operations, available cash, expected capital spending plans, prevailing business conditions and other factors the Board of Directors deems relevant. Therefore, there can be no assurance as to what level of dividends, if any, will be paid in the future. In the ~~third~~second quarter of ~~2017,~~2021, we declared a dividend of ~~$0.128~~$0.22 per share for shareholders

of record on ~~September 11, 2017,~~June 21, 2021, which was ~~paid on October 2, 2017. The dividend declared in the third quarter of 2017 is~~ a ~~3.2%~~30% increase from the ~~third quarter of 2016.~~quarterly dividends declared in 2020. Dividend payments for the six months ended July 3, 2021 amounted to $38.1.

During the ~~nine~~first quarter of 2020, we completed our $1,000 share repurchase plan approved in 2006 and commenced repurchases under the $500 share repurchase plan approved in 2019. During the six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016,~~June 27, 2020, we repurchased ~~0.8~~ and ~~1.9~~retired 0.6 and 1.7 shares of common stock for ~~$30.0~~$50.0 and ~~$66.6,~~$73.2, respectively, under our ~~$1 billion~~ share repurchase ~~program. To date, under the program,~~plans. Separate from our share repurchase plans, the Company ~~has~~ repurchased ~~21.2~~0.1 and 0.2 shares during the six months ended July 3, 2021 and June 27, 2020, respectively, for ~~$859.4.~~an aggregate price of $11.4 and $10.5, respectively, in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs. All repurchased shares are canceled immediately following the repurchases.

Significant factors that affect our overall management of liquidity include our credit ratings, the adequacy of commercial paper and supporting bank lines of credit, and the ability to attract long-term capital on satisfactory terms. We assess these factors along with current market conditions on a continuous basis, and as a result, may alter the mix of our short- and long-term financing when it is advantageous to do so.

Commercial Paper

~~We access~~When available and economically feasible, we have accessed the commercial paper market through programs in place in the U.S. and Europe to supplement ~~the~~ cash flows generated internally and to provide additional short-term ~~funding for strategic investments~~funding. Commercial paper outstanding of $197.4 as of July 3, 2021 was issued through both the Company’s U.S. and ~~other funding requirements. We manage our short-term liquidity through~~Euro programs. Commercial paper outstanding under the ~~use~~U.S. program was $150.0, with a weighted average interest rate of ~~our commercial~~0.21%, and was used to partially fund the divestiture of the entity holding asbestos-related assets and liabilities (see Note 19, Commitments and Contingencies). Commercial paper outstanding under the Euro program ~~by adjusting~~was $47.4, with a weighted average negative interest rate of (0.44)%. Commercial paper outstanding of $104.3 as of December 31, 2020 was issued entirely under the ~~level~~Company’s Euro program and had a weighted average negative interest rate of ~~commercial paper borrowings as opportunities to deploy additional capital arise and it is cost effective to do so. As of September 30, 2017, we had an~~(0.06)%. All outstanding commercial paper ~~balance~~for both periods had maturity terms less than three months from the date of ~~$130.9. The average outstanding commercial paper balance during the nine months ended September 30, 2017 was $131.6. There have been no material changes that have impacted our funding~~issuance.

Revolving Credit Agreements

We had maintained access to a $500 competitive advance and ~~liquidity capabilities since~~revolving credit facility under agreement with a consortium of third party lenders (the 2014 Revolving Credit Agreement). As of July 3, 2021 and December 31, ~~2016.~~

2020, we had no outstanding borrowings under the 2014 Revolving Credit ~~Facilities~~

~~Our revolving $500 credit agreement~~Agreement. In August 2021, we entered into a new Revolving Credit Agreement with a syndicate of third party lenders including Bank of America, N.A., as administrative agent (the 2021 Revolving Credit Agreement) ~~provides for increases of up~~ to ~~$200 for a possible maximum total of $700 in aggregate principal amount, at~~replace the ~~request of the Company and with the consent of the institutions providing such increased commitments. The~~2014 Revolving Credit Agreement, ~~is intended~~which was to ~~provide access to additional liquidity~~mature in November 2022 and be a source of alternate funding to the commercial paper program, if needed. Our policy is to maintain unused committed bank lines of credit in an amount greater than outstanding commercial paper balances.was terminated on August 5, 2021. The provisions of the Revolving Credit Agreement require that we maintain an interest coverage ratio, as defined therein, of at least 3.0 and a leverage ratio, as defined therein, of not more than 3.0. At September 30, 2017, we had $59.1 outstanding under the Revolving Credit Agreement and our interest coverage ratio and leverage ratio were within the prescribed thresholds. In the event of certain ratings downgrades of the Company, to a level below investment grade, the direct and indirect significant U.S. subsidiaries of the Company would be required to guarantee the obligations under the Revolving Credit Agreement. The2021 Revolving Credit Agreement matures in ~~November 2021.~~August 2026 and provides for an aggregate principal amount of up to $700 of (i) revolving extensions of credit (the revolving loans) outstanding at any time, and (ii) letters of credit for a face amount up to $100 at any time outstanding. Subject to certain conditions, we are permitted to terminate permanently the total commitments and reduce commitments by a minimum aggregate amount of $10 or any whole multiple of $1 in excess thereof. Borrowings under the credit facility are available in U.S. dollars, Euros, British pound sterling or any other currency that may be requested by us, subject to the approval of the administrative agent and each lender. We are permitted to request that lenders increase the commitments under the facility by up to $350 for a maximum aggregate principal amount of $1,050; however, this is subject to certain conditions and therefore may not be available to us.

On April 29, 2020, we entered into two 364-day revolving credit agreements totaling $200 (the Incremental Revolving Credit Agreements) which provided the Company with additional liquidity in excess of the 2014 Revolving Credit Agreement. The Incremental Revolving Credit Agreements expired in April 2021 and we did not renew the agreements.

See Note 14, Debt, to the Consolidated Condensed Financial Statements for further information.

Sources and Uses of Liquidity

Our principal source of liquidity is our cash flow generated from operating activities, which provides us with the ability to meet the majority of our short-term funding requirements. The following table summarizes net cash derived from or used in operating, investing, and financing activities from continuing operations, as well as net cash from discontinued operations, for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016.~~June 27, 2020.


For the Six Months Ended	July 3, 2021		June 27, 2020
Operating activities	$	(231.6)	$	203.1
Investing activities	(34.7)		(37.1)
Financing activities	(5.1)		41.2
Foreign exchange	(9.2)		(0.2)
Total net cash (used in) provided by continuing operations	(280.6)		207.0
Net cash (used in) provided by discontinued operations	(0.2)		0.1
Net change in cash and cash equivalents	$	(280.8)	$	207.1

For the Nine Months Ended September 30 2017 2016
Operating activities $ 178.4
$ 146.7
Investing activities (189.3 ) (22.5 )
Financing activities (75.3 ) (78.4 )
Foreign exchange 22.3
9.0
Total net cash flow (used in) provided by continuing operations (63.9 ) 54.8
Net cash (used in) provided by discontinued operations (1.2 ) 5.3
Net change in cash and cash equivalents $ (65.1 ) $ 60.1
Operating Activities

~~Net cash provided by operating activities was $178.4 for the nine months ended September 30, 2017 compared to $146.7 for the nine months ended September 30, 2016.~~ The ~~change~~decrease in net cash ~~provided by~~from operating activities of $434.7 was primarily ~~reflects an increase~~due to cash paid of $398.0 during the second quarter of 2021 to fund the divestiture of the entity holding asbestos-related assets and liabilities and higher income tax payments of $31.6. In addition, we made investments in ~~segment operating income of approximately $14, after adjustments for non-cash charges, such as depreciation and amortization as well as higher incentive compensation payments in the prior year.~~working capital to support sales growth. These items were partially offset by an increase in asbestos-related payments of $15.0 due to the timing of insurance recoveries and higher postretirement contributions due to a voluntary contribution in the third quarter of $5. Unfavorable changes in working capital were almost fully offset by asegment operating income.

Investing Activities

The decrease in ~~restructuring payments in the current year.~~

~~Net~~net cash used byin investing activities was ~~$189.3~~driven by a prior year payment of $4.7 related to our 2019 acquisition of Rheinhütte. Capital expenditures were $35.1 and $34.3 for the ~~nine~~six months ended ~~September 30, 2017, compared to $22.5~~2021 and 2020, respectively.

Financing Activities

The decrease in net cash from financing activities of ~~cash used~~$46.3 was primarily driven by ~~investing activities during the same~~ prior year ~~period. The year-over-year~~revolver borrowings, net of repayments, of $89.6 and an increase ~~reflects the purchase~~in dividends paid of ~~Axtone for $113.7 (net~~$23.5. These items were partially offset by an increase in net commercial paper borrowings of cash acquired), as well as higher capital expenditures which increased $11.1 primarily due to capacity expansion projects in support of global automotive friction growth. In addition, the 2016 result included $53.0 of cash provided by the maturity of investments (net of purchases).

~~Net cash used by financing activities was $75.3 reflecting~~$44.4 and a ~~decrease of $3.1 for the nine months ended September 30, 2017 primarily due to a decrease of $38.0~~decline in repurchases of ITT common stock ~~as part~~ of ~~our Share Repurchase Plan partially offset by a $31.4 decrease in net borrowings and lower proceeds of $2.1 from employee stock option exercises.~~$22.3.

Net cash used by discontinued operations was $1.2 for the nine months ended September 30, 2017 compared to net cash provided by discontinued operation for the nine months ended September 30, 2016 of $5.3. The change of $6.5 is primarily driven by a cash payment in the prior year from Xylem Inc. related to the Tax Matters Agreement.

~~Asbestos~~

Based on the estimated undiscounted asbestos liability as of September 30, 2017 for claims filed or estimated to be filed over the next 10 years, we have estimated that we will be able to recover approximately 43% of the asbestos indemnity and defense costs from our insurers. Actual insurance reimbursements may vary significantly from period to period and the anticipated recovery rate is expected to decline over time due to gaps in our insurance coverage, reflecting uninsured periods, the insolvency of certain insurers, prior settlements with our insurers and our expectation that certain insurance policies will exhaust within the next 10 years. In the 10th year of our estimate, our insurance recoveries are currently projected to be approximately 18%. Additionally, future recovery rates may be impacted by other factors, such as future insurance settlements, insolvencies and judicial determinations relevant to our coverage program, which are difficult to predict and subject to a high degree of uncertainty.

While there are overall limits on the aggregate amount of insurance available to the Company with respect to asbestos claims, with respect to certain coverage, those overall limits were not reached by the estimated liability recorded by the Company at September 30, 2017.

Further, there is uncertainty in estimating when cash payments related to the recorded asbestos liability will be fully expended and such cash payments will continue for a number of years beyond the next 10 years due to the significant proportion of future claims included in the estimated asbestos liability and the delay between the date a claim is filed and when it is resolved. Subject to these inherent uncertainties, it is expected that cash payments related to pending claims and claims to be filed in the next 10 years will extend through approximately 2031.

Although asbestos cash outflows can vary significantly from year to year, our current net cash outflows for defense and indemnity, net of tax benefits, are projected to average $15 to $25 over the next five years and increase to an average of approximately $30 to $40 per year over the remainder of the projection period. Total net cash outflows, net of tax, averaged $13, including certain administrative costs such as legal related costs for insurance asset recoveries, over the past three annual periods.

In light of the variables and uncertainties inherent in the long-term projection of the Company's asbestos exposures and potential recoveries, although it is probable that the Company will incur additional costs for asbestos claims filed beyond the next 10 years, we do not believe that there is a reasonable basis for estimating the number of future claims, the nature of future claims, or the cost to resolve future claims for years beyond the next 10 years at this time. Accordingly, no liability or related asset has been recorded for any costs that may be incurred for claims asserted subsequent to 2027.

Due to these uncertainties, as well as our inability to reasonably estimate any additional asbestos liability for claims that may be filed beyond the next 10 years, it is difficult to predict the ultimate outcome of the cost of resolving the pending and estimated unasserted asbestos claims. We believe it is possible that the future events affecting the key factors and other variables within the next 10 years, as well as the cost of asbestos claims filed beyond the next 10 years, net of expected recoveries, could have a material adverse effect on our financial statements.

KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES

Management reviews a variety of key performance indicators including revenue, segment operating income and margins, and earnings per share, ~~order growth, and backlog,~~ some of which are ~~non-GAAP financial measures.~~calculated other than in accordance with accounting principles generally accepted in the United States of America (GAAP). In addition, we consider certain ~~other~~ measures to be useful to management and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, acquisitions, dividends, and share repurchases. ~~These other~~Some of these metrics, however, are not measures of financial performance under ~~accounting principles generally accepted in the United States of America (GAAP)~~GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures ~~which~~to be key performance indicators. These measures may not be comparable to similarly titled measures reported by other ~~companies,~~companies.

•“Organic revenue” is defined as revenue, excluding the impacts of foreign currency fluctuations and acquisitions. The period-over-period change resulting from foreign currency fluctuations is estimated using a fixed exchange rate for both the current and prior periods. Management believes that reporting organic revenue provides useful information to ~~be key~~investors by facilitating comparisons of our revenue performance ~~indicators:~~with prior and future periods and to our peers.

"organic revenue" and "organic orders" are defined as revenue and orders, excluding the impacts of foreign currency fluctuations, 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. Management believes that reporting

A reconciliation of revenue to organic revenue and organic orders provides useful information to investors by helping identify underlying trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. Reconciliations of organic revenue for the three and nine months ended September 30, 2017 are provided below.

Three Months Ended September 30
Industrial
Process
Motion
Technologies
Connect & Control
Technologies
Eliminations
Total
ITT
2017 Revenue $ 196.2
$ 300.1
$ 149.4
$ (0.7 ) $ 645.0
(Acquisitions)/divestitures, net —
(19.6 ) —
—
(19.6 )
Foreign currency translation (1.4 ) (13.5 ) (0.7 ) —
(15.6 )
2017 Organic revenue $ 194.8
$ 267.0
$ 148.7
$ (0.7 ) $ 609.8

2016 Revenue $ 195.0
$ 238.7
$ 149.0
$ (1.0 ) $ 581.7
Organic (decline) growth (0.1 )% 11.9 % (0.2 )% 4.8 %

Nine Months Ended September 30
2017 Revenue $ 574.6
$ 877.5
$ 452.3
$ (2.7 ) $ 1,901.7
(Acquisitions)/divestitures, net —
(55.6 ) —
—
(55.6 )
Foreign currency translation (1.2 ) (0.4 ) 0.8
—
(0.8 )
2017 Organic revenue $ 573.4
$ 821.5
$ 453.1
$ (2.7 ) $ 1,845.3

2016 Revenue $ 618.0
$ 755.3
$ 446.8
$ (3.1 ) $ 1,817.0
Organic (decline) growth (7.2 )% 8.8 % 1.4 % 1.6 %

~~Reconciliations of organic orders~~ for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 is provided below.


Three Months Ended July 3	Motion Technologies				Industrial Process				Connect & Control Technologies				Eliminations			Total ITT
2021 Revenue		$	343.6			$	213.9			$	134.5			$	(0.4)		$	691.6

Foreign currency translation		(17.5)				(5.8)				(1.8)				(0.1)			(25.2)
2021 Organic revenue		$	326.1			$	208.1			$	132.7			$	(0.5)		$	666.4
2020 Revenue		$	199.3			$	193.3			$	122.9			$	(0.8)		$	514.7
Organic growth		126.8				14.8				9.8				0.3			151.7
Percentage change		63.6		%		7.7		%		8.0		%					29.5		%

Six Months Ended July 3
2021 Revenue		$	712.7			$	416.2			$	261.8			$	(0.7)		$	1,390.0

Foreign currency translation		(37.8)				(8.6)				(3.8)				—			(50.2)
2021 Organic revenue		$	674.9			$	407.6			$	258.0			$	(0.7)		$	1,339.8
2020 Revenue		$	497.2			$	420.6			$	261.6			$	(1.4)		$	1,178.0
Organic growth (decline)		177.7				(13.0)				(3.6)				0.7			161.8
Percentage change		35.7		%		(3.1)		%		(1.4)		%					13.7		%

•“Adjusted operating income” and “Adjusted segment operating income” are ~~provided below:~~

Three Months Ended September 30
Industrial
Process
Motion
Technologies
Connect & Control
Technologies Eliminations
Total
ITT
2017 Orders $ 193.3
$ 323.7
$ 142.5
$ (0.9 ) $ 658.6
(Acquisitions)/divestitures, net —
(21.5 ) —
—
(21.5 )
Foreign currency translation (1.5 ) (13.7 ) (0.6 ) —
(15.8 )
2017 Organic orders $ 191.8
$ 288.5
$ 141.9
$ (0.9 ) $ 621.3

2016 Orders $ 198.9
$ 236.8
$ 139.1
$ (1.4 ) $ 573.4
Organic (decline) growth (3.6 )% 21.8 % 2.0 % 8.4 %

Nine Months Ended September 30
2017 Orders $ 605.5
$ 899.9
$ 452.7
$ (2.6 ) $ 1,955.5
(Acquisitions)/divestitures, net —
(54.0 ) —
—
(54.0 )
Foreign currency translation (1.2 ) (0.2 ) 1.0
0.1
(0.3 )
2017 Organic orders $ 604.3
$ 845.7
$ 453.7
$ (2.5 ) $ 1,901.2

2016 Orders $ 587.4
$ 763.4
$ 455.5
$ (3.5 ) $ 1,802.8
Organic growth (decline) 2.9 % 10.8 % (0.4 )% 5.5 %

"defined as operating income, adjusted to exclude special items that include, but are not limited to, asbestos-related impacts, restructuring, certain asset impairment charges, certain acquisition-related impacts, and unusual or infrequent operating items. Special items represent charges or credits that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. “Adjusted operating margin” and “Adjusted segment operating margin” are defined as adjusted operating income or adjusted segment operating income" is defined as operating income, adjusted to exclude special items that include, but are not limited to, restructuring costs, realignment costs, certain asset impairment charges, certain acquisition-related expenses, and 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. We believe that adjusted segment operating income is useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.

~~Reconciliations of~~ segment operating income divided by revenue. We believe that these financial measures are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.

A reconciliation of operating income to adjusted ~~segment~~ operating income for the three and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~2016~~June 27, 2020 is provided below.


Three Months Ended July 3, 2021	Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate			Total ITT
Operating income		$	64.7			$	31.5			$	17.9			$	114.1			$	65.5		$	179.6

Asbestos-related benefit, net(a)		—				—				—				—				(76.8)			(76.8)
Restructuring costs		—				—				0.1				0.1				—			0.1

Other(b)		—				—				—				—				0.6			0.6
Adjusted operating income (loss)		$	64.7			$	31.5			$	18.0			$	114.2			$	(10.7)		$	103.5

Adjusted operating margin		18.8		%		14.7		%		13.4		%		16.5		%					15.0		%

Six Months Ended July 3, 2021
Operating income		$	140.7			$	62.5			$	29.7			$	232.9			$	56.6		$	289.5

Asbestos-related benefit, net(a)		—				—				—				—				(74.4)			(74.4)
Restructuring costs		—				0.9				2.5				3.4				0.3			3.7
Other(b)		—				—				—				—				1.7			1.7
Adjusted operating income (loss)		$	140.7			$	63.4			$	32.2			$	236.3			$	(15.8)		$	220.5

Adjusted operating margin		19.7		%		15.2		%		12.3		%		17.0		%					15.9		%


Three Months Ended June 27, 2020	Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate			Total ITT
Operating income (loss)		$	10.4			$	18.5			$	8.4			$	37.3			$	(16.8)		$	20.5
Restructuring costs		14.0				7.8				5.2				27.0				0.9			27.9
Asbestos-related costs, net(a)		—				—				—				—				16.0			16.0


Other(c)		—				0.2				0.1				0.3				(0.6)			(0.3)
Adjusted operating income (loss)		$	24.4			$	26.5			$	13.7			$	64.6			$	(0.5)		$	64.1

Adjusted operating margin		12.2		%		13.7		%		11.1		%		12.6		%					12.5		%

Six Months Ended June 27, 2020
Operating income		$	63.5			$	27.4			$	24.3			$	115.2			$	14.6		$	129.8
Restructuring costs		14.0				7.9				6.7				28.6				2.4			31.0
Asbestos-related benefit, net(a)		—				—				—				—				(24.7)			(24.7)
Asset impairment charges(d)		—				16.3				—				16.3				—			16.3

Other(c)		—				0.5				0.2				0.7				(0.3)			0.4
Adjusted operating income (loss)		$	77.5			$	52.1			$	31.2			$	160.8			$	(8.0)		$	152.8

Adjusted operating margin		15.6		%		12.4		%		11.9		%		13.7		%					13.0		%

(a)See Note 19, Commitments and Contingencies, for further information.

(b)Includes accelerated amortization of an intangible asset.

(c)Primarily includes acquisition-related costs and a gain on sale of excess property.

(d)Asset impairment charges are ~~provided below.~~related to a business within IP that primarily serves the global upstream oil and gas market.

Three Months Ended September 30, 2017
Industrial
Process
Motion
Technologies
Connect & Control
Technologies
Total
Segment
Segment operating income
$ 9.9

$ 49.1

$ 17.5

$ 76.5
Restructuring costs
3.2
0.5
1.6

5.3
Acquisition-related expenses —
2.9
0.4
3.3
Realignment costs and other^(a)
3.7
—
1.2
4.9
Adjusted segment operating income
$ 16.8

$ 52.5

$ 20.7

$ 90.0
Nine Months Ended September 30, 2017
Segment operating income $ 32.0
$ 156.1
$ 47.5
$ 235.6
Restructuring costs 4.9
1.3
2.8
9.0
Acquisition-related expenses —
3.7
0.4
4.1
Realignment costs and other^(a)
4.8
—
8.5
13.3
Adjusted segment operating income $ 41.7
$ 161.1
$ 59.2
$ 262.0

Three Months Ended September 30, 2016 Industrial
Process Motion
Technologies Connect & Control
Technologies Total
Segment
Segment operating income $ 4.3
$ 45.2
$ 17.4
$ 66.9
Restructuring costs 2.9
1.1
—
4.0
Acquisition-related expenses —
0.6
—
0.6
Realignment costs and other^(a)
—
—
1.3
1.3
Adjusted segment operating income $ 7.2
$ 46.9
$ 18.7
$ 72.8
Nine Months Ended September 30, 2016
Segment operating income $ 19.6
$ 144.8
$ 46.6
$ 211.0
Restructuring costs 19.9
2.5
0.9
23.3
Acquisition-related expenses —
2.8
1.5
4.3
Realignment costs and other^(a)
4.1
(0.1 ) 3.4
7.4
Adjusted segment operating income $ 43.6
$ 150.0
$ 52.4
$ 246.0

~~(a)~~

Primarily reflects realignment costs associated with an action to move certain production lines in our Connect & Control Technologies segment in 2017 and 2016, a legal accrual of $5.0 in 2017 in our Connect & Control Technologies segment in the second quarter of 2017, a $3.7 pension curtailment in the third quarter of 2017 at our Industrial Process segment, and costs associated with a management reorganization at our Industrial Process segment during the first quarter of 2017. In the second quarter of 2016, an impairment of $4.1 was recorded at our Industrial Process segment for trade names as a result of the downturn in the upstream oil and gas market.

~~"adjusted income from continuing operations" and "adjusted income from continuing operations per diluted share" are~~•“Adjusted income from continuing operations” is defined as income from continuing operations attributable to ITT Inc. and income from continuing operations attributable to ITT Inc. per diluted share, adjusted to exclude special items that include, but are not limited to, asbestos-related costs, restructuring costs, realignment costs, certain asset impairment charges, certain acquisition-related expenses, income tax settlements or adjustments, and 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. We believe that adjusted income from continuing operations is useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.

~~A reconciliation of adjusted~~ income from continuing operations ~~including~~attributable to ITT Inc. adjusted to exclude special items that include, but are not limited to, asbestos-related impacts, restructuring, certain asset impairment charges, pension termination and settlement impacts, certain acquisition-related impacts, income tax settlements or adjustments, and unusual or infrequent items. Special items represent 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. The after-tax basis of each special item is determined using the jurisdictional tax rate of where the expense or benefit occurred. “Adjusted income from continuing operations per diluted ~~share,~~share” (Adjusted EPS) is defined as adjusted income from continuing operations divided by diluted weighted average common shares outstanding. We believe that adjusted income from continuing operations and adjusted EPS are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.

A reconciliation of income from continuing operations to adjusted income from continuing operations, for the three and six months ended July 3, 2021 and June 27, 2020 is provided below.


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Income from continuing operations attributable to ITT Inc.	$	39.0	$	46.4	$	125.2	$	130.1
Net asbestos-related costs (benefit), net of tax expense (benefit) of $114.0, ($3.5), $113.5 and $5.4, respectively(a)	37.2		12.5		39.1		(19.3)
Tax-related special items(b)	7.6		(31.2)		7.6		(33.2)
Restructuring costs, net of tax benefit of $0.1, $6.8, $0.6 and $7.6, respectively	—		21.1		3.1		23.4

Asset impairment charges, net of tax benefit of $0.0, $0.0, $0.0 and $0.1, respectively(c)	—		—		—		16.2
Other, net of tax expense (benefit) of $0.7, ($0.2), $0.4 and ($0.6), respectively(d)	(2.1)		0.9		(1.3)		2.6
Adjusted income from continuing operations	$	81.7	$	49.7	$	173.7	$	119.8
Income from continuing operations attributable to ITT Inc. per diluted share (EPS)	$	0.45	$	0.53	$	1.44	$	1.49
Adjusted EPS	$	0.94	$	0.57	$	2.00	$	1.37

(a)See Note 19, Commitments and Contingencies, for further information.

(b)Tax-related special items primarily reflect the impacts of valuation allowances.

(c)Asset impairment charges are related to a business within IP that primarily serves the global upstream oil and gas market.

(d)Other special items for the quarterly and year-to-date periods of 2021 include a benefit from finalization of the U.S. Qualified pension plan termination funding and accelerated amortization of an intangible asset. Other special items for the quarterly and year-to-date periods of 2020 primarily include costs associated with the termination of U.S. Qualified pension plan.

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Income from continuing operations attributable to ITT Inc. $ 87.0
$ 88.3
$ 181.0
$ 158.3
Net asbestos-related benefit, net of tax expense of $23.2, $25.2, $12.2 and $14.9, respectively (39.6 ) (42.9 ) (20.8 ) (25.4 )
Restructuring costs, net of tax benefit of $1.3, $3.3, $2.6 and $6.3, respectively 3.4
0.7
6.4
17.5
Realignment costs, net of tax benefit of $0.7, $0.7, $3.4 and $1.4, respectively^(a)
0.8
1.3
5.6
2.8
Tax-related special items^(b)
1.3
5.1
(5.0 ) 8.6
Acquisition-related costs, net of tax benefit of $0.6, $0.4, $0.9, and $1.7, respectively 2.9
0.2
3.4
2.6
Other unusual or infrequent items, net of tax benefit of $1.4, $0.2, $0.0 and $0.1, respectively^(c)
2.3
(0.7 ) 2.8
1.1
Adjusted income from continuing operations attributable to ITT Inc. $ 58.1
$ 52.0
$ 173.4
$ 165.5
Income from continuing operations attributable to ITT Inc. per diluted share $ 0.98
$ 0.98
$ 2.03
$ 1.76
Adjusted income from continuing operations attributable to ITT Inc. per diluted share $ 0.66
$ 0.58
$ 1.95
$ 1.84


~~(a)~~	Realignment costs include 2017 costs associated with the pending sale of excess property, costs associated with a management reorganization at our Industrial Process segment in the first quarter of 2017 and costs associated with an action to move certain production lines in our Connect & Control Technologies segment in both 2017 and 2016.

~~(b)~~

Tax-related special items for the three and nine months ended September 30, 2017 primarily relate to tax expense due to the distribution of foreign earnings offset by a tax benefit on undistributed foreign earnings and tax benefits on uncertain tax positions. Tax-related special items for the three and nine months ended September 30, 2016 primarily relate to tax expense due to distributions of foreign earnings offset by a benefit for previously unrecognized tax positions.

~~(c)~~

Other unusual or infrequent items in 2017 primarily consist of a pension curtailment, as well as second quarter items which include a legal accrual of $5, income of $3.8 related to an amendment to the environmental QSF and interest income from the reversal of uncertain tax positions taken in prior years. Other unusual or infrequent items in 2016 primarily consist of an impairment of $4.1 recorded in the second quarter of 2016 at our Industrial Process segment for trade names as a result of the downturn in the upstream oil and gas market offset by interest income from the reversal of uncertain tax positions taken in prior years.

"adjusted free cash flow" is defined as net cash provided by operating activities less capital expenditures, adjusted for cash payments for restructuring costs, realignment actions, 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 expenses, the entire free cash flow may not be available for discretionary purposes. We believe that adjusted free cash flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated by our operations. A reconciliation of adjusted free cash flow is provided below.

For the Nine Months Ended September 30 2017 2016
Net cash provided by operating activities $ 178.4
$ 146.7
Capital expenditures (79.2 ) (68.1 )
Restructuring cash payments 13.8
22.7
Net asbestos cash flows 39.5
24.5
Realignment and discretionary pension payments 12.2
4.2
Adjusted free cash flow $ 164.7
$ 130.0

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2,Recent Accounting Pronouncements, to the Consolidated Condensed Financial Statements for information on recent accounting pronouncements.

CRITICAL ACCOUNTING ESTIMATES

The preparation of ~~ITT's~~the Company’s financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. ~~ITT~~The Company believes the most complex and sensitive judgments, because of their significance to the Consolidated Condensed Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations in the ~~2016~~2020 Annual Report describes the critical accounting estimates that are used in the preparation of the Consolidated Condensed Financial Statements. Actual results in these areas could differ from ~~management's~~management’s estimates. There have been no ~~significant~~material changes concerning ~~ITT's~~the Company’s critical accounting estimates as described in our ~~2016~~2020 Annual ~~Report.~~Report.



~~ITEM 3.~~	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the information concerning market risk as stated in our ~~2016~~2020 Annual ~~Report.~~Report. See Note 20, Derivative Financial Instruments, to the Consolidated Condensed Financial Statements for information on the Company’s use of derivative financial instruments to mitigate exposure from foreign currency exchange rate fluctuations and commodity price fluctuations.



~~ITEM 4.~~	ITEM 4. CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) as of the end of the period covered by this ~~report.~~Report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this ~~report,~~Report, the Company’s disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting during the ~~last fiscal quarter~~period covered by this Report that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

PART II. OTHER INFORMATION



~~ITEM 1.~~	ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings that are incidental to the operation of our ~~businesses. Some~~business. For a discussion of these proceedings allege damages relating to environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues and commercial or contractual disputes and acquisitions or divestitures. Descriptions of certain legal proceedings, ~~to which the Company is a party are contained in~~see Note ~~17,~~ 19, Commitments and Contingencies to the Consolidated Condensed Financial ~~Statements included~~Statements.

As described in ~~Part I, Item~~Note 19, Commitments and Contingencies, on July 1, 2021, we completed the divestiture of ~~this Report~~InTelCo Management LLC (InTelCo), a former subsidiary which held our asbestos-related assets and liabilities. In connection with the divestiture, we contributed approximately $398 to InTelCo. Pursuant to the purchase agreement, the buyer and InTelCo agreed to indemnify the Company and its affiliates for all asbestos-related and other product liabilities, while the Company agreed to indemnify InTelCo and its affiliates for all other historical liabilities of InTelCo, which includes any losses with respect to release of, or exposure to, hazardous materials. These indemnification obligations are ~~incorporated by reference herein. Such descriptions include~~not subject to any cap or time limitation. As a result of the ~~following recent developments:~~

~~Asbestos Proceedings~~

~~Subsidiaries of ITT, ITT LLC and Goulds Pumps LLC, are joined as a defendant with numerous other companies~~divestiture, we believe we have resolved our involvement in ~~product liability lawsuits alleging personal injury due~~material legal proceedings related to asbestos exposure. These claims allege that certain of their products sold prior to 1985 contained a part manufactured by a third party (e.g., a gasket) which contained asbestos. To the extent these third-party parts may have contained asbestos, it was encapsulated in the gasket (or other) material and was non-friable. Frequently, the plaintiffs are unable to identify any ITT LLC or Goulds Pumps LLC products as a source of asbestos exposure. In addition, a large majority of claims pending against the Company subsidiaries have been placed on inactive dockets because the plaintiff cannot demonstrate a significant compensable loss. Our experience to date is that a substantial portion of resolved claims have been dismissed without payment by the Company's subsidiaries.

We record a liability for pending asbestos claims and asbestos claims estimated to be filed over the next 10 years. While it is probable that we will incur additional costs for future claims to be filed against the Company, a liability for potential future claims beyond the next 10 years is not reasonably estimable due to the variables and uncertainties inherent in the long-term projection of the Company's asbestos exposures and potential recoveries. As of September 30, 2017, we have recorded an undiscounted asbestos-related liability for pending claims and unasserted claims estimated to be filed over the next 10 years of $875.5, including expected legal fees, and an associated asset of $374.3 which represents estimated recoveries from insurers, resulting in a net asbestos exposure of $501.2.

~~Environmental~~

~~Other Matters~~

The Company received a civil subpoena from the Department of Defense, Office of the Inspector General, in the second quarter of 2015 as part of an investigation being led by the Civil Division of the U.S. Department of Justice (DOJ). The subpoena and related investigation involve certain connector products manufactured by the Company’s Connect & Control Technologies segment that are purchased or used by the U.S. government. In addition, in the third quarter of 2017, the Company learned that the Criminal Division of DOJ is also investigating this matter. The Company is cooperating with the government and has produced documents responsive to the subpoena to the Civil Division. Based on its current analysis following discussions with DOJ to resolve the civil matter, the Company has accrued$5 as its current best estimate of the minimum amount of probable loss. It is reasonably possible that any actual loss related to this matter may be higher than this amount, but at this time management is unable to estimate a range of potential loss in excess of the amount accrued.



~~ITEM 1A.~~	ITEM 1A. RISK FACTORS

Reference is made to the risk factors set forth in Part I, Item 1A, ~~"Risk Factors,"~~“Risk Factors”, of our ~~2016~~2020 Annual Report, which are incorporated by reference herein. There have been no material changes with regard to the risk factors disclosed in such ~~report.~~report, other than our risk factor regarding exposure to legacy asbestos claims and related assets, liabilities and cash flows that no longer applies to the Company after the divestiture of the entity holding asbestos-related assets and liabilities as discussed in Note 19, Commitments and Contingencies to the Consolidated Condensed Financial Statements.



~~ITEM 2.~~	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of equity securities by the issuer and affiliated purchasers

On October 30, 2019, the Board of Directors approved an indefinite term $500 share repurchase program (the 2019 Plan).We intend to utilize the 2019 Plan in a manner that is consistent with our capital allocation process, which has centered on those investments necessary to grow our businesses organically and through acquisition, while also providing cash returns to shareholders.

We did not make any share repurchases of our common stock during the quarter ended July 3, 2021. We routinely receive shares of our common stock as payment for the withholding of taxes due on vested restricted stock awards from stock-based compensation program participants. As of July 3, 2021, approximately $438.7 remains available under the 2019 Plan.

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

PERIOD
TOTAL
NUMBER
OF SHARES
PURCHASED
AVERAGE
PRICE
PAID
PER SHARE⁽¹⁾
TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS⁽²⁾
MAXIMUM DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS⁽²⁾
7/1/2017 - 7/31/2017 —
$ —
—
$ 140.6

8/1/2017 - 8/31/2017 —
$ —
—
$ 140.6

9/1/2017 - 9/30/2017 —
$ —
—
$ 140.6


~~(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. On December 16, 2008, our Board of Directors modified the provisions of the Share Repurchase Program to replace the original three-year term with an indefinite term. As of September 30, 2017, we had repurchased 21.2 shares for $859.4, including commissions, under the 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.~~	ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.



~~ITEM 4.~~	ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.



~~ITEM 5.~~	ITEM 5. OTHER INFORMATION

Disclosure pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act (ITRA)

This disclosure is made pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 which added subsection (r) to Section 13 of the Exchange Act (Section 13(r)). Section 13(r) requires an issuer to disclose in its annual or quarterly reports whether it or any of its affiliates have knowingly engaged in certain activities, transactions or dealings relating to Iran. Disclosure of such activities, transactions or dealings is required even when conducted outside the United States by non-U.S. persons in compliance with applicable law, and whether or not such activities are sanctionable under U.S. law.

In its 2012 Annual Report, ITT described its acquisition of all the shares of Joh. Heinr. Bornemann GmbH (Bornemann) in November 2012, as well as certain activities of Bornemann in Iran and the wind down of those activities in accordance with a General License issued on December 26, 2012 ~~(the General License)~~ by the Office of Foreign Assets ~~Control.~~Control (the General License). As permitted by the General License, on or before March 8, 2013, Bornemann completed the wind-down activities and ceased all activities in Iran. As required to be disclosed by Section 13(r), the gross revenues and operating income to Bornemann from its Iranian activities subsequent to its acquisition by ITT were ~~Euros 2.2~~€2.2 million euros and ~~Euros 1.5~~€1.5 million euros, respectively. Prior to its acquisition by ITT, Bornemann issued a performance bond to its Iranian customer in the amount of ~~Euros 1.3~~€1.3 million euros (the Bond). Bornemann requested that the Bond be canceled prior to March 8, 2013; however, the former customer refused this request and as a result the Bond remains outstanding. Bornemann did not receive gross revenues or operating income, or pay interest, with respect to the Bond in any subsequent periods through ~~September 30, 2017,~~July 3, 2021, however, Bornemann did pay fees ~~in 2016~~ of approximately ~~Euros 11~~€5 thousand euros during the six months ended July 3, 2021 and approximately €11 thousand euros during 2020 to the German financial institution which is maintaining the Bond.

ITEM 6. EXHIBITS



~~ITEM 6.~~EXHIBIT NUMBER			~~EXHIBITS~~

DESCRIPTION

~~EXHIBIT NUMBER~~(2.1)						~~DESCRIPTION~~ Membership Interest Purchase Agreement, dated as of June 30, 2021, among ITT Inc., InTelCo Management LLC, and Sapphire TopCo, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed July 1, 2021)*

~~(31.1)~~(10.1)						Credit Agreement, dated August 5, 2021 among ITT Inc. and Other Parties Signatory Thereto

(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

(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

(32.1)						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(32.2)						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(101)						The following materials from ITT Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2017,~~July 3, 2021, formatted in Inline XBRL ~~(Extensible~~(Inline Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Operations, (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'~~Shareholders’ Equity, ~~and~~ (vi) Notes to Consolidated Condensed Financial Statements, and (vii) Cover Page

(104)						The cover page from the Quarterly Report on Form 10-Q for the quarter ended July 3, 2021, formatted in Inline XBRL (included in Exhibit 101).

*Schedules to this Exhibit were omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish to the Securities and Exchange Commission a copy of such schedules and exhibits, or any section thereof, upon request.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



		ITT Inc.
		~~ITT Inc.~~
		(Registrant)
		~~(Registrant)~~
By:		/s/ John Capela
~~By:~~		/S~~/ STEVEN~~ ~~C. GIULIANO~~ John Capela
		~~Steven C. Giuliano~~
	~~Vice President and~~ Chief Accounting Officer
		(Principal ~~accounting officer)~~Accounting Officer)

~~November 2, 2017~~

August 6, 2021



	September 30, 2017										December 31, 2016
	Gross Carrying Amount			Accumulated Amortization				Net Intangibles			Gross Carrying Amount			Accumulated Amortization				Net Intangibles
Customer relationships		$	165.5		$	(71.1	)		$	94.4		$	155.8		$	(59.3	)		$	96.5
Proprietary technology		54.2			(20.7		)		33.5			52.5			(16.8		)		35.7
Patents and other		13.5			(9.0		)		4.5			9.0			(7.6		)		1.4
Finite-lived intangible total		233.2			(100.8		)		132.4			217.3			(83.7		)		133.6
Indefinite-lived intangibles		27.4			—				27.4			26.7			—				26.7
Other intangible assets		$	260.6		$	(100.8	)		$	159.8		$	244.0		$	(83.7	)		$	160.3



Cash	$	9.4
Receivables	11.5
Inventory	13.6
Plant, property and equipment	14.1
Goodwill	79.5
Other intangible assets	9.7
Other assets	6.0
Accounts payable and accrued liabilities	(14.8		)
Postretirement liabilities	(3.8		)
Other liabilities	(2.1		)
Net assets acquired	$	123.1



Three Months Ended September 30	Industrial Process				Motion Technologies				Connect & Control Technologies				Eliminations				Total ITT
2017 Revenue		$	196.2			$	300.1			$	149.4			$	(0.7	)		$	645.0
(Acquisitions)/divestitures, net		—				(19.6		)		—				—				(19.6		)
Foreign currency translation		(1.4		)		(13.5		)		(0.7		)		—				(15.6		)
2017 Organic revenue		$	194.8			$	267.0			$	148.7			$	(0.7	)		$	609.8

2016 Revenue		$	195.0			$	238.7			$	149.0			$	(1.0	)		$	581.7
Organic (decline) growth		(0.1		)%		11.9		%		(0.2		)%						4.8		%

Nine Months Ended September 30
2017 Revenue		$	574.6			$	877.5			$	452.3			$	(2.7	)		$	1,901.7
(Acquisitions)/divestitures, net		—				(55.6		)		—				—				(55.6		)
Foreign currency translation		(1.2		)		(0.4		)		0.8				—				(0.8		)
2017 Organic revenue		$	573.4			$	821.5			$	453.1			$	(2.7	)		$	1,845.3

2016 Revenue		$	618.0			$	755.3			$	446.8			$	(3.1	)		$	1,817.0
Organic (decline) growth		(7.2		)%		8.8		%		1.4		%						1.6		%



Three Months Ended September 30, 2017	Industrial Process			Motion Technologies			Connect & Control Technologies			Total Segment
Segment operating income		$	9.9		$	49.1		$	17.5		$	76.5
Restructuring costs		3.2			0.5			1.6			5.3
Acquisition-related expenses		—			2.9			0.4			3.3
Realignment costs and other^(a)		3.7			—			1.2			4.9
Adjusted segment operating income		$	16.8		$	52.5		$	20.7		$	90.0
Nine Months Ended September 30, 2017
Segment operating income		$	32.0		$	156.1		$	47.5		$	235.6
Restructuring costs		4.9			1.3			2.8			9.0
Acquisition-related expenses		—			3.7			0.4			4.1
Realignment costs and other^(a)		4.8			—			8.5			13.3
Adjusted segment operating income		$	41.7		$	161.1		$	59.2		$	262.0



Three Months Ended September 30, 2016	Industrial Process			Motion Technologies				Connect & Control Technologies			Total Segment
Segment operating income		$	4.3		$	45.2			$	17.4		$	66.9
Restructuring costs		2.9			1.1				—			4.0
Acquisition-related expenses		—			0.6				—			0.6
Realignment costs and other^(a)		—			—				1.3			1.3
Adjusted segment operating income		$	7.2		$	46.9			$	18.7		$	72.8
Nine Months Ended September 30, 2016
Segment operating income		$	19.6		$	144.8			$	46.6		$	211.0
Restructuring costs		19.9			2.5				0.9			23.3
Acquisition-related expenses		—			2.8				1.5			4.3
Realignment costs and other^(a)		4.1			(0.1		)		3.4			7.4
Adjusted segment operating income		$	43.6		$	150.0			$	52.4		$	246.0



(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) PERIOD	TOTAL NUMBER OF SHARES PURCHASED	AVERAGE PRICE PAID PER SHARE⁽¹⁾			TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS⁽²⁾		MAXIMUM DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS⁽²⁾
7/1/2017 - 7/31/2017	—		$	—		—		$	140.6
8/1/2017 - 8/31/2017	—		$	—		—		$	140.6
9/1/2017 - 9/30/2017	—		$	—		—		$	140.6