MT produces friction, and 2016 revenue of $2.4 billion, which we derived from sales in more than 100 countries. In 2016, 63% of our sales were outside the U.S., including 30% from emerging markets. Accordingly, approximately half of our manufacturing facilities are outside of the U.S. in order to achieve strategic proximity to customers, further increase international salesshock and market share,vibration isolation equipment; IP delivers industrial flow equipment and lower costs.services; and CCT produces electronic connectors, fluid handling, motion control, composite materials, and noise and energy absorption products.

* Acquired in many of our niche markets. 2019

These brands are associated with quality, reliability, durability, and engineering excellence. Our brands extend internationallyhave a strong international presence and perform stronglyparticipate in many emerging markets, including China, Mexico, Brazil, Saudi Arabia, and Russia.

We are committed to continue creating long-term sustainable value for all of our stakeholders supported bywith our balanced operatingstrategic framework of customer centricity, operational excellence, and effective capital deployment. Our strategy is designed to achieve long-termpremier financial performance by combining profitable growth. growth with operational improvements, and share gains in all our businesses while keeping our customers at the center of everything we do.

The elementsmain focus of thisour strategy are disciplined organic growth throughis expanding in global market expansionmarkets and investing in new product development,products that leverage our deep engineering capabilities, combined with operational improvements that focusoptimize safety, quality, on the principles of Lean Six Sigma (herein referred to as Lean) to reduce coststime delivery, and cycle times while improving overall productivity, quality, and safetyproductivity. We are on a continuing basis. We have also movedjourney to establish a high performance culture that goes beyond the factory floor to improve the efficiency and effectiveness of otherall critical processes ofin the value chain to become a truly lean enterprise. This initiative encompassesand in all functions. These initiatives encompass not only core lean, problem solving and continuous improvement principles, but also leadership, talent, and cultural aspects.

Friction Technologies also manufactures aftermarket brake pads designed for the automotive service and repairs market. This market consists of both OE dealers, also referred to as original equipment sparesservice (OES) networks, and independent aftermarket (AM) networks. Brake pads sold within the OES network generally match the specifications of an original auto platform OE brake pad, while our catalog of AM pads feature technology designed to provide up to a range of braking performance levels. Within the service and repairs market, pads are sold either directly to OE manufacturers or to Tier-1 or Tier-2 brake manufacturers (such as Continental or TRW)Continental) or indirectly through independent distributor channels.

Combined salesSales to Continental, and TRW, MT's two largest customers, were approximately 37%customer, represent 22% of 20162019 MT revenue, however, approximately 45%revenue. A significant portion of the Continental and TRWOEM revenue, typically about half, is derived revenue is directly attributableat the automakers' direction to OESuse an ITT brake pad in Continental's braking systems (calipers), generally through supply agreements signed directly with automakers. In addition, OEThe remaining Continental revenue is generated from a long term aftermarket agreement.

The KONI business organizes its various performance shock absorber products intoand Axtone businesses service three main product groups: railway rolling stock; car & racing; and bus, truck & trailer.

In October 2015, ITT acquired Wolverine Automotive Holdings Inc., the parent company of Wolverine Advanced Materials LLC (Wolverine). Wolverine is a manufacturer of customized technologies for automotive braking systems and specialized sealing solutions for harsh operating environments across a range of industries. Brake shims are thin metal and rubber adhesive dampeners that fit onto the brake pad and against the brake caliperDue to prevent excessive noise and vibration. Gaskets are an anti-vibration solution and a sealing solution that prevent fluid spillage with applications to engines, transmissions, exhaust systems, fuel systems, and a variety of pneumatic systems.

MT competes in markets primarily served by large and well-established national and global companies. Key competitive drivers within the brake pad and brake shim business include technical expertise, formulation development capabilities, scale production, product performance, high-quality standards, customer intimacy, reputation, and the ability to meet demanding delivery and volume schedules in a reduced amount of time. OE and OES brake pad customers usually require long-lasting and well-established relationships based on mutual trust, local proximity, and a wide range of cooperative activities, starting from the design, to the sampling, prototyping and testing phases of brake pads. Within the independent AM pads market, MT is a leading European provider in a highly fragmented global market.

Competitive drivers in the rail damping systems business include price, technical expertise and product performance. Rail damping systems are considered critical components because of safety requirements and thus they have to be specifically designed according to many different train applications, and must satisfy strict compliance requirements. MT is a global leader in the rail dampers component of the complete rail damper system.system in Europe and continues to gain market share in China.

The Interconnect SolutionsIndustrial Process segment, commonly referredIP, is an original equipment manufacturer, and an aftermarket parts and service provider offering an extensive portfolio of industrial pumps, valves, and plant optimization systems and services. IP's products serve an extensive base of customers from large multi-national companies and engineering, procurement and construction (EPC) firms to regional distributors and to various other end-user customers. IP has a global manufacturing footprint with significant operations in the United States, South Korea, and Germany. IP's customers operate in global infrastructure and natural resource markets such as ICS,oil and gas, chemical and petrochemical, pharmaceutical, general industrial, mining, pulp and paper, food and beverage, and power generation. Brands include Goulds Pumps, Bornemann, Rheinhütte Pumpen, Engineered Valves, PRO Services, C'treat, and i-ALERT.

The Connect & Control Technologies segment, CCT, designs and manufactures a range of highly engineered connectors and cable assembliesspecialized products for critical applications supporting various markets including aerospace and defense, industrial, transportation, medical, and oil and gas. CCT’s products are often components on long-lived platforms that generate recurring aftermarket and replacement opportunities. CCT has organized its business around product offerings and end-user markets, with dedicated teams that specialize in harsh environments. ICS'ssolutions for their specific markets, providing focused customer support and expertise.

The connector product portfolio includes high performance military-specification, and commercial electrical connectors of the following types: Circular, Rectangular, Radio Frequency, Fiber Optic, D-sub Miniature, Micro-Miniature, and cable assemblies. ICS operates through its brands,Brands include Cannon, VEAM, and BIW Connector Systems, which deliver solutions to enable the transfer of data, signal, and power into threevarious end-user markets:markets including aerospace, and defense, industrial, transportation, and industrial,medical, and oil and gas. These brands are known for high-performance, high-reliability solutions which withstand high vibrations and are resistant to dirt and fluids. ICS has organized its business around these three end-user markets, with each business unit having a dedicated team that specializes in solutions for their specific market, providing focused customer support and expertise. ICS is considered a leader in theIn certain harsh environment niche markets, it participates in,our connector products are considered market leaders because of itsour technological capabilities, customer relationships, cost performance, and global footprint.

AerospaceProducts for the aerospace and Defense

OilProducts for the oil and Gas

Control products for the products are sold direct to the customer by an in-house sales force. CT Aerospace utilizes a small third-party business for government spare parts distribution.

CCT has a strong directglobal production footprint, including facilities in the United States, Mexico, Germany, China, Italy, and indirect sales channel providing reliable and value added serviceJapan, which provide close geographic proximity to our diverse customer base.

any such business as a whole, and we have been able to develop a robust supply chain such that we do not anticipate shortages of suchraw materials in the future. However, there can be no assurance that the Company will not be adversely affected by price volatility or the availability of supplies to meet our demands in the future.

WeOur businesses utilize two primary methods of fulfillingto fulfill demand for products:products, build-to-order and engineer-to-order.

We are subject to stringent federal, state, local, and foreign environmental laws and regulations concerning air emissions, water discharges and waste disposal. In the U.S., these include, but are not limited to, the Federal Clean Air Act, the Clean Water Act, the Resource, Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act. Environmental requirements are significant factors affecting our operations. We have established an internal program to assess compliance with applicable environmental requirements forat our

Subsidiaries of ITT, including ITT LLC (f/k/a ITT Corporation) and Goulds Pumps LLC (f/k/a Goulds Pumps, Inc.), have been sued, along with many other companies, in numerous lawsuits in which the plaintiffs claim damages for personal injury arising from exposure to asbestos from component parts of certain products sold or distributed by various defendants, including certain ITT subsidiaries. We expect they will be sued in similar actions in the future. As such, we record an estimated liability related to pending claims and similar claims estimated tothat we estimate will be filed over the next 10 years based on a number of key assumptions, including the plaintiffs’ propensity to sue,likelihood of suits being filed, claim acceptance rates, disease type, settlement values and defense costs. These assumptions are derived from ITT’s recent experience and reflect the Company’sour expectations about future claim activities. 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 those costs at this time.

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 cost, including potential recoveries, of resolving pending and unasserted asbestos claims. Changes in estimates related to these uncertainties may result in increases or decreases to the net asbestos liability, particularly if the quality, number of claims, or settlement or defense costs change significantly, if there are significant developments in the trend of case law or court procedures, or if

legislation or another alternative solution is implemented. The resolution of asbestos claims may take many years. 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 condition, results of operations, or cash flows in any given period.

We have experienced and expect to continue to experience fluctuationsvolatility in revenues, and operating results and profitability due to uncertain global economic and businesscapital market conditions. We have undertaken measures to reduce the impact of this volatility through diversification of markets and expansion of the geographic regions in which we operate. The end markets we serve include automotive, aerospace, oil and gas, industrial, mining, chemical, and defense, each of which is impacted by specific industry and general economic cycles. Important factors impacting our businesses include, but are not limited to, the overall strength of the global economy and our customers’ confidence in local and global macroeconomic conditions, industrial spending, tax rates, interest rates, andthe availability of commercial financing, for our customers.

AdverseWe closely monitor the credit-worthiness of our insurers and customers and evaluate their ability to meet their obligations. However, adverse changes to financial conditions could jeopardize certainthese counterparty obligations, including thoseobligations. A tightening of credit markets may reduce funds available to our insurerscustomers to pay for our products and customers.services for a prolonged and perhaps unknown period of time. Restrictive credit markets may also result in customers extending terms for payment and may result in our having higher customer receivables with increased risk of default. We closely monitor the credit worthiness of our insurers and customers and evaluate their ability to service their obligations to us. A tightening of credit markets may reduce funds available to our customers to pay for our products and services for an unknown, but perhaps lengthy, period.

Should market conditions deteriorate, this may also adversely affect our ability to manage inventory levels and maintain current levels of profitability. If, for any reason, we lose access to commercial paper markets or our currently available lines of credit, or if we are required to raise additional capital, we may be unable to do so, or we may be able to do so only on unfavorable terms. Deteriorating market conditions could also indicate an impairment in the value of our goodwill and intangible assets in one or more of our reporting units which would require us to recognize a non-cash charge to our Statement of Operations. We test both goodwill and intangible assets for impairment on an annual basis and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

Our international operations, including U.S. exports, comprise a growing portion of our operations and are a strategic focus for continued future growth. Our strategy calls for increasing sales in overseas markets, including emerging markets such as Mexico, South America, China, Russia, and the Middle East. In 2019, 68% of our total sales were to customers operating outside of the United States. Our sales from international operations and export sales are subject to varying degrees of risks inherent in doing business outside of the United States. These risks include the following, some of which could be impacted by changes in international trade agreements or the imposition or increase of tariffs or trade sanctions between the United States and other countries:

Our operations in emerging markets than we have in the past, which could involve additional uncertainties, including risks that governments may impose limitations on our ability to repatriate funds, impose or increase withholding or other taxes on remittances and other payments to us, seek to nationalize our assets, or impose or increase investment barriers or other restrictions that may adversely affect our business. In addition, emerging markets pose other uncertainties, including challenges to our ability to protect our intellectual property, pressure on the pricing of our products, and risks of political instability.

As we continue to grow our business internationally, our operating results could be affected by the relative strength or weakness of global economies and the impact of foreign currency exchange rate fluctuations. Any significant change in the value of currencies of the countries in which we do business relative to the value of the U.S. dollar could affect our ability to sell products competitively and control our cost structure, which could have a material adverse effect on our financial statements. Accordingly, fluctuations in foreign currency exchange rates may also impact our results when the currency of a transaction differs from the functional currency of our operating unit, or when financial statements in the functional currency of non-U.S. operating units are translated into U.S. dollars. Given that

Beginning in 2018, the majorityU.S. government undertook a series of actions to increase tariffs on certain goods imported into the U.S., including steel and aluminum, and in response governments in Europe and China have imposed retaliatory tariffs on various goods, including on certain goods we sell into those countries. These tariffs have negatively impacted the price of certain parts and materials we purchase to be included in the finished products we sell in the U.S., as well as the cost of the final product when re-exported. Since announced, we have been managing these impacts and will continue attempting to mitigate the impact of these tariffs by lowering input costs through pricing and supply chain actions, efficient utilization of our sales are non-U.S. based, a strengtheningglobal manufacturing footprint, and supplier and customer negotiations and diversification strategies. However, we expect that continued trade disputes between the U.S. and Europe, China, and other countries, and other governmental actions related to tariffs or weakeninginternational trade agreements or policies may continue to adversely impact demand for our products, our costs, customers and suppliers.

Demand for certain industrial products and services depends on the level of capital investment and planned maintenance expenditures of our customers. Our customers' levels of capital expenditures depend, in turn, on general economic conditions, availability of credit, economic conditions within their respective industries and expectations of future market behavior. Additionally, volatility in commodity prices can negatively affect the level of these activities and can result in postponement of capital spending decisions or the delay or cancellation of existing orders. The ability of our customers to finance capital investment and maintenance may also be affected by factors independent of the U.S. dollar againstconditions in their industries, such as the condition of global credit and capital markets.

The businesses of many of our customers, particularly those in the oil and gas, chemical, and mining industries, which represent approximately 10%, 9%, and 3%, respectively, of our 2019 revenue, are to varying degrees cyclical and have experienced, and may in the future experience, periodic downturns of varying severity. Our customers in these industries, particularly those whose demand for our products and services is primarily profit-driven, historically have tended to delay large capital projects, including expensive maintenance and upgrades, during economic downturns. Additionally, fluctuating energy demand forecasts and commodity pricing and other major foreign currenciesmacroeconomic factors may cause our customers to be more conservative in their capital planning, which could reduce demand for our products and services. Reduced demand for our products and services could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. This reduced demand may also erode average selling prices in our industry. Any of these results could adversely affect our resultsbusiness and financial results.

Additionally, some of operations.

We provide products and services to competitive markets. We believe the principal points of competition in our markets are product performance, reliability and innovation, application expertise, brand reputation, energy efficiency, product life cycle cost, timeliness of delivery, proximity of service centers, effectiveness of our distribution channels and price.

Maintaining and improving our competitive position will require continued investment by us in manufacturing, research and development, engineering, marketing, customer service and support, and our distribution networks. We may not be successful in maintaining our competitive position. Our competitors may develop products that are superior to our products, or may develop more efficient or effective methods of providing products and services or may adapt more quickly than we do to new technologies or evolving customer requirements. Pricing pressures also could cause us to adjust the prices of certain products to stay competitive. We may not be able to compete successfully with existing or new competitors. Risks such as these are particularly apparent in our ICS business, which relies on innovation to stay competitive.

Our operating costs are subject to fluctuations, particularly due to changes in commodity prices, raw materials, energy and related utilities, freight, tariffs, and cost of labor. In order to remain competitive, we may not be able to recoup all or a portion of these higher costs from our customers through product price increases. Further, our ability to realize financial benefits from Lean activitiesefficiency initiatives may not be able to mitigate fully or in part these manufacturing and operating cost increases and, as a result, could negatively impact our profitability.

We manufacture key components that are integral to the operation of systems and manufacturing processes in the energy, transportation,automotive, aerospace, rail, oil and gas, industrial, mining, chemical, and defense aerospace, and industrial markets. Our products provide enabling functionality for applications for whichThe reliability and performance of our products are critically important to our customers and the users of their products. As such,Accordingly, quality is extremely important to us and our customers due to the serious andpotentially costly consequences of product failure. Our quality certifications, including products manufactured to military specifications, are critical to the marketing success of our goods and services. If we fail to meet these standards, our reputation could be damaged, we could lose customers or the ability to sell certain products, and our revenue and results of operations could be materially adversely affected. Aside from specific customer standards, ourOur success in part depends on our ability to manufacture to exact tolerances precision-engineered components, subassemblies, and finished devices from multiple materials. If our components fail to meet these standards or fail to adapt to evolving standards, our reputation as a manufacturer of high-quality components will be harmed, our competitive advantage could be damaged, and we could lose customers, market share or our ability to sell certain products.

Our Interconnect Solutions,Connect & Control Technologies and Motion Technologies segments derive a portion of their revenue from sales to U.S. government customers and to higher tier contractors who sell to the U.S. government. GovernmentThe government's expenditures are subject to political and budgetary fluctuations and constraints, which may result in significant unexpected changes in levels of demand for our products. In addition, the award, administration and performance of government contracts areis subject to regulatory and contractual requirements that differ significantly from the terms and conditions that apply to contracts with our non-governmental customers. We have in the past and may in the future be subject to audits and investigations to evaluate our compliance with these requirements. If we are found to have failed to comply with requirements applicable to government contractors, we may be subject to various actions, including but not limited to fines or penalties, reductions in the value of our government contracts, restrictions on the sale of certain products to the government, or suspension or debarment from government contracting.  Failure to comply with applicable requirements also could harm our reputation and our ability to compete for future government contracts.contracts or sell equivalent commercial products. Any of these outcomes could have a material adverse effect on our business, results of operations and financial condition.

Our business relies on third-party suppliers for raw materials, components and contract manufacturing services to produce our products. The supply of raw materials to the Company and to its component parts suppliers and the supply of castings, motors, and other critical components could be interrupted for a variety of reasons, including availability and pricing. PricesCommodity prices and the prices for other raw materials necessary for production have fluctuated significantly in the past, impacting our operating results and significant future increases in commodity prices could adversely affect the Company’sour results of operations and profit margins. Due to pricing pressure or other factors, the Companywe may not be able to pass along increased raw material and components partscomponent prices to itsour customers in the form of price increases or itsour ability to do so could be delayed. Consequently, our results of operations and financial condition may be adversely affected.

We use a variety of sales channels to sell our products and services. Successfully managing these sales channels is a complex process as we sell a broad mix of products through a network of over 750approximately 700 distributors, agents, and value-added resellers. Moreover, since each distribution method has distinct risks and profit margins, our failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue and profit margins. In addition, changes to the sales channels could introduce additional complexity to theour sales and inventory management processes and could cause disruptions to customer service or create channel conflicts.

Further, we must manage inventory effectively, particularly with respect to sales to distributors, which involves forecasting demand and potential pricing issues. Distributors may increase orders during periods of product shortages, cancel orders if their inventory is too high or delay orders in anticipation of new products. Our reliance on indirect distribution methods may reduce visibility to end-customer demand, generating a time lag to the market trend with potential negative impacts on inventory levels and strategic decisions, including pricing, capital deployment, and operational decisions.

Our financial results could be adversely affected by the loss of or delays caused by a distributor, the loss or deterioration of some distribution or reseller arrangements, channel conflicts, including the consolidation of third-party distributors, or if the financial conditions of our channel partners were to weaken. It is not unreasonable to suspect that someSome of our distributors may have insufficient financial resources and may not be able to withstand changes in business conditions, including economic weakness, leading to a slowness or difficulty in the cash collection process.

ApproximatelySales to Continental, ITT's largest customer, were approximately 10% of our total revenue in 2019. A significant portion of the OEM revenue, typically about half, is derived at the automakers' direction to use an ITT brake pad in Continental's braking systems (calipers), generally through supply agreements signed directly with automakers. The remaining Continental revenue is generated from a single customer, Continental ATE, whom we sell to through OE brake pad contracts and OES supply agreements with automakers, and which is also a third-party distributor for us in the independentlong term aftermarket channel.agreement. The loss of this customer could have a material adverse effect on our business, results of operations, or financial condition.

The Company is subject to income taxes in the U.S. and in various foreign jurisdictions. We exercise significant judgment in calculating our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Furthermore, changes in domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain income or the deductibility of certain expenses, thereby affecting our income tax expense and profitability.

Any significant increase in our future effective tax rates could reduce net income forin future periods. Given the global nature of our business, a number of factors may increase our future effective tax rates, including:

The amount of income taxes and other taxes we have paid are subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from amounts paid or reserved, future financial results may include unfavorable tax adjustments. We are currently under routine examination by the U.S. Internal Revenue Service and other tax authorities, and we may be subject to additional examinations in the future. The tax authorities may disagree with our tax treatment of certain material items and thereby increase our tax liability. Failure to sustain our position in these matters could result in a material adverse effect on our financial statements.

Our success will continue to depend to a significant extent on our ability to retain or attract a significant number of employees in senior management and engineering and other key personnel. The ability to attract or retain employees will depend on our ability to offer competitive compensation, training and cultural benefits. We will need to continue to develop a roster of qualified talent to support business growth and replace departing employees. A failure to retain or attract highly skilled personnel could adversely affect our operating results or our ability to operate or grow our business.

If operations at one of our manufacturing facilities were to be disrupted as a result of a significantan equipment failure, natural disaster, power outage, fire, explosion, act of terrorism, war, IT system failure, cyber-based attack,cyber-attack, adverse weather conditions, labor disputes, epidemic illness (including without limitation, 2019 novel coronavirus), relocation of production location, or any other reason, our financial performance could be adversely affected as a result of our inability to meet customer demand for our products. We have business continuity plans in place to mitigate the effects of such interruptions, but these plans may not be sufficient to resolve the issues in a timely manner. A significant interruption in production capability could also require us to make substantial payments due to non-performance, which could negatively affect

our results of operations. We also have insurance for certain covered losses which we believe to be adequate to provideoffset a significant portion of the costs for reconstruction of facilities and equipment, as well as certain financial losses resulting from any production interruption or shutdown. However, any recovery under our insurance policies would be subject to deductibles and, depending on the coverage, may not offset the lost revenues or increased expenses that may be experienced during the disruption of operations.

Additionally,Recently, the outbreak of the 2019 novel coronavirus in China has caused temporary restrictions on travel and closures of plants and offices owned by ITT, our suppliers and customers, and other businesses in China while the country attempts to control the virus. At this time, it is unknown when the virus will be fully contained and therefore we have intentionsmay be negatively impacted by future closures, whether mandated by the government or at the discretion of senior management, or the virus may spread to upgrade or replace existing Enterprise Resource Planning (ERP) systems over the next several years. Implementing new ERP systems may result in unintended changes to the way in which production is performed and transactions are processed. Our ability to execute these ERP systems implementations will directly impact our potential risk exposure during this implementation period.workforce causing a material business interruption.

The efficient operation of our business is dependent on computer hardwareinformation technology systems, some of which are managed by third parties. In the ordinary course of business, we collect and software systems. While we believe westore confidential information, including proprietary business information belonging to us, our customers, suppliers, business partners and other third parties and personally identifiable information of our employees. We have taken many steps to protect our information systems, including the installation of protective systems that monitor, test, and backup our systems, as well as annual employee training. For third parties that manage our confidential data on cloud-based servers, we have a robust process to ensure the third party has appropriate systems and controls in place to manage potential cyber threats.

We regularly review our portfolio of businesses and pursue growth through the acquisition of other companies, assets and product lines that either complement or expand our existing business.businesses. Although we conduct what we believe to be a prudent level of investigation regarding the operating and financial condition of the businesses we purchase, a level of risk remains regarding the actual operating condition of these businesses. Until we actually assume operating control of these business assetsbusinesses and their operations, we may not be able to ascertain the actual value or understand the potential liabilities of, or challenges facing, the acquired entitiesbusinesses and their operations. Acquisitions involve a number of risks and present financial, managerial and operational challenges that could have a material adverse effect on our reputation, financial results, and business, including that an acquired business could under-perform relative to our expectations, the failure to realize expected synergies, difficulty in the integration of technology, operations, personnel and financial and other systems, the possibility that we have acquired substantial undisclosed liabilities, potentially insufficient internal controls over financial activities or financial reporting at an acquired company that could impact us on a consolidated basis, diversion of management attention from other businesses, loss of key employees of the acquired businesses, increased capital requirements and customer dissatisfaction or performance.dissatisfaction.

Our portfolio reviews also include the potential for cost-saving initiatives through restructuring and other initiatives. We strive for and expect to achieve cost savings in connection with certain initiatives, including: (i) manufacturing process and supply chain rationalization; (ii) streamlining redundant administrative overhead and support activities; and (iii) restructuring and repositioning organizations.realignment actions. Cost savings expectations are inherently estimates that are difficult to predictuncertain and, therefore, we cannot provide assurance that we will achieve any expected, or any actual cost savings. Our restructuring activities may place substantial demands on our management, which could lead to the diversion of management’s attention from other business priorities and result in a reduced customer focus. In addition, restructuring activities may result in a loss of knowledge or expertise or could negatively impact employee performance and retention. If any of these outcomes occur, it could have a material adverse impact on our business or financial results.

Since our supply chain is complex, ultimately we may not be able to sufficiently discover the origin of the conflict minerals (generally defined as the minerals tin, tantalum, titanium and gold which have been extracted from the Democratic Republic of the Congo or adjoining countries) used in interest ratesour products through the due diligence procedures that we implement, which may adversely affect our reputation with our customers, shareholders, and other factors could affect our earnings and cash flowsstakeholders. We may also face difficulties in future periods.

We are subject to a variety of federal, state, local and foreign laws, rules and regulations related to the use, storage, handling, discharge or disposal of certain toxic, volatile or otherwise hazardous chemicals, gases and other substances used in manufacturing our products. Some of these laws in the United States include the Federal Clean Water Act, Clean Air Act, Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act, Toxic Substances Control Act, and similar state and foreign statutes and regulations. In the European Union (EU), we are subject to the EU regulation on Registration, Evaluation, Authorization and Restriction of Chemicals. Compliance with these laws and regulations could require us to incur substantial expenses. Environmental laws and regulations allow for the assessment of substantial fines and criminal sanctions as well as facility shutdowns to address violations, and may require the installation of costly pollution control equipment or operational changes to limit emissions or discharges. In addition, the discovery of previously unknown or more extensive contamination at a site which the Company previously operated or currently operates could suddenly subject the Company to costly remediation efforts. We also could be affected by changes in environmental laws or regulations, including, for example, those imposed in response to vapor intrusion or climate change concerns.

Developments such as the adoption of new environmental laws and regulations, violations by us of such laws and regulations, discovery of previously unknown or more extensive contamination, litigation involving environmental impacts, the adequacy of insurance policies, our inability to recover costs associated with any such developments, or

financial insolvency of other potentially responsible parties could have a material adverse effect on our business, financial statements.condition and results of operations.

We operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws. We are subject, however, to the riskHowever, we cannot provide assurance that we, our affiliated entities,internal controls will always protect us from reckless or the respective officers, directors,criminal acts committed by our employees, agents or business partners that would violate U.S. and/or applicable non-U.S. laws, including anti-bribery, competition, trade sanctions and agents of ITT, may take action determined to be in violation of such anti-corruptionregulation, and other laws including but not limited to, the U.S. Foreign Corrupt Practices Act of 1977 and the U.K. Bribery Act of 2010, as well as trade sanctions administered by the Office of Foreign Assets Control, (OFAC)the U.S. Department of State and the U.S. Department of Commerce. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, suspension or debarment from government contracts, or curtailment of operations in certain jurisdictions, and might adversely affect our business, financial condition or results of operations or financial position. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Even the allegation or appearance of our employees, agents or business partners acting improperly or illegally could damage our reputation and result in significant expenditures in investigating and responding to such actions.

Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and marketing of products for the markets we serve. In addition, many of the devices we manufacture and sell are critical components designed to be used in harsh environments for long periods of time where the cost of failure is high. Component failures, manufacturing defects, design flaws, or inadequate disclosure of product-related risks or product-related information could result in an unsafe condition or injury to, or death of, an end-user of our products. The occurrence of such a problem could result in product liability claims or a recall of, or safety alert relating to, one or more of our products which could ultimately result, in certain cases, in the removal of such products from the marketplace and claims regarding costs associated therewith. Product liability claims or product recalls in the future, regardless of their ultimate outcome, could have a material adverse effect on our business and reputation and on our ability to attract and retain customers for our products.

From time to time we are involved in legal proceedings that are incidental to the operation of our businesses. Some of these proceedings allege damages relating to personal injury claims, employment and employee benefit matters and commercial or contractual disputes, sometimes related to acquisitions or divestitures. Additionally, we may become subject to significant claims of which we are currently unaware or the claims of which we are aware may result in our incurring a significantly greater liability than we anticipate or can estimate.

In connection withWe have divested a number of businesses, including as part of spin-offs in 1995 and 2011. With respect to some of these former businesses, we have contractually agreed to indemnify the 2011 spin-off,counterparties against, or otherwise retain, certain liabilities, including, for example certain lawsuits, tax liabilities, product liability claims, asbestos claims, or environmental matters. Even without ongoing contractual indemnification obligations, we maycould be exposed to potential liabilities. As partliabilities arising out of such divestitures.  In addition, the Distribution Agreement, ITT LLC, Exelis, and Xylem indemnified each other with respectcounterparties to such parties’ assumedthose divestitures may have agreed to indemnify us or retainedassume certain liabilities pursuantrelating to the Distribution Agreement and breaches of the Distribution Agreement or related spin agreements. Therethose divestitures.  Similarly, there can be no assurance that the indemnity from Exelis and Xylemor assumption of liability by the counterparties will be sufficient to protect us against the full amount of these and other liabilities, or that each of Exelis and Xylema counterparty will be able to fully satisfy its indemnification obligations.  Third-partiesThird parties also could also seek to hold us responsible for any of the liabilities that each of Exelis and Xylem hasa counterparty agreed to assume. Even if we ultimately succeed in recovering from Exelis and/or Xylem any amounts for which we arewere initially held liable, we may be temporarily required to bear these losses ourselves. In addition, performance on indemnities that we provided Exelis and Xylem may be significant. Each of these risks could negatively affect our business, results of operations and financial position.

Certain provisions of our articles of incorporation and by-laws may delay or prevent a merger or acquisition that a shareholder may consider favorable. For example, the articles of incorporation authorize our Board of Directors to issue one or more series of preferred stock. In addition, the articles of incorporation and by-laws, among other things, do not permit action by written consent of the shareholders. These provisions may also discourage acquisition proposals or delay or prevent a change in control, which could harm our stock price. Indiana law also imposes some restrictions on mergers and other business combinations between any holder of 10% or more of our outstanding common stock and us as well as certain restrictions on the voting rights of "control shares" of an "issuing public corporation."

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The current executive officers of the Company, as of February 1, 2017,2020, are listed below.

The table below reflects the range of market prices of ourOur common stock asis reported in the consolidated transaction reporting system of the New York Stock Exchange (NYSE), the principal market in which this security is traded (under the trading symbol "ITT").

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 deems relevant. Therefore, there can be no assurance as to what level of dividends, if any, will be paid in the future.

PERFORMANCE GRAPH

This graph is not, and is not intended to be, indicative of future performance of our common stock. This graph shall not be deemed "filed" with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any of our prior or subsequent filings under the Securities Act.

The following table presents selected historical financial data derived from the Consolidated Financial Statements for each of the five years presented. The selected financial data should be read in conjunction with, and is qualified in its entirety by reference to Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and the Notes thereto.

OVERVIEW

During 2016, it was important to maintain the proper balance between delivering solid operating results, as well as advancingIn 2019, we advanced our strategic goals.objectives to drive long-term growth and share gains. The following highlights a few examples of strategic actions that occurred during the year that will help position us well for long-termcontinued value creation.creation:

During the year, we expanded our geographic reach intodrove market share gains by expanding in new and existing key end markets and capitalized on relationships with previous customers.geographies, including:

In North America, our Motion Technologies segment was awarded their largest copper-free platform and also produced other key strategic wins with the "Detroit 3" OEM's. In Asia, MT won business with a major Korean OEM for the first time, and two of MT’s production facilities were certified by a major Korean Tier 1, which makes them the first non-Korean brake pad production site to receive this qualification. Further, the segment delivered an impressive 35% increase in new front-axle brake pad volumes which will expand our technological reach and accelerate future aftermarket demand.

Our success in 2019 was driven by our commitment to acquire Axtone Railway Componentsefficiency, speed, customer centricity, and operational excellence, and we intend to build on this momentum in 2020 to drive growth and innovation in the fourth quarterface of 2016, which is highly complementary to our KONI business. The acquisition closed on January 26, 2017.

Despite these uncertainties, in 2020, we will continue to focus our attention on areas that are within our control.control such as continuing to drive productivity and innovation across our businesses and executing on our extensive war chest of self-help opportunities. We will continue to progressdeploy our Lean transformation, and monitor and reduce our cost structure by taking approximately $30capital in restructuring and realignment actions in 2017. We also expect to realize significant benefits from our prior restructuring and productivity actions which will help to mitigate much of the uncertainty in our key end markets. In addition, we expect strong performances from our Automotive and Rail businesses to continue into 2017. We believe that the persistent volatility in the global macroeconomic environment, particularly in the oil and gas end market, may continue and that these conditions may have an impact on our businesses and financial results. Demand for our products that serve the oil and gas market, primarily pumps and connectors that represented approximately 10% of 2016 revenue, depend substantially on the level of expenditures by the oil and gas industry for development and production. These expenditures are generally dependent on the industry’s view of future demand for oil and natural gas. Oil and gas prices have been volatile and have remained at low levels for a sustained period of time, resulting in lower expenditures by the oil and gas industry. As a result, many of our customers have reduced or delayed spending, thus reducing the demand for our products and exerting downward pressure on the prices for our products. In addition, some of our customers are in regions with significant geopolitical instability, such as Venezuela. These conditions or worsening of economic conditions related to our business could result in the cancellation of contracts or impact the collectability of certain accounts and may have an adverse impact on our results of operations and financial condition, including but not limited to further restructuring and impairment charges.

Industrial ProcessMT revenue for the year ended December 31, 20162019 was $830.1, reflecting$1,241.8, a decrease of $283.7,$32.3, or 25.5%, including an unfavorable2.5%. Excluding the impact of foreign currency translation impact of $28.7. Organic$57.4, organic revenue decreased 22.9%, reflecting challenging conditions within oil and gas, mining, and chemical and industrial markets that haveincreased $25.1, or 2.0%. The increase was driven lower demand for original equipment and replacement parts,by strength in global rail as well as Friction OEM share gains which significantly outpaced the postponement of customer maintenance activities. These challenging conditions resulted in a decline in revenue from project pumps, baseline pumps and aftermarket of 44%, 18% and 12%, respectively. Our revenues derived from the oil and gasglobal auto market, declined approximately 36%. Our revenue in the mining market was down approximately 41%, due to low metal prices as well as strong prior year bookings in Latin America. Revenue stemming from the chemical market declined approximately 15% globally, which reflects significant impacts within North America drivenoffset by a decline in large projects.our Wolverine business. KONI & Axtone sales grew 11% on strength in rail in Europe and Asia. Friction sales increased 3% due to growth of 6% in OEM from market share gains in North America, Europe and China which helped offset contraction in the global auto market and lower aftermarket activity of 2%. Wolverine sales decreased 13% driven by weakness in shims and lost sealing business.

Orders for the year ended December 31, 20162019 were $779.1, reflecting$1,250.6, a decrease of $157.6,$45.0, or 16.8% including3.5%. Excluding the impact of foreign currency translation of $60.6, organic orders increased $15.6, or 1.2%. Friction drove the improvement with a 2% increase primarily due to the ramp up of new platform wins in North America. KONI-Axtone increased 8% due to passenger rail market share gains, partially offset by a prior year Russian rail order of $14. Organic order growth was partially offset by weakness in our Wolverine business.

IP revenue for the year ended December 31, 2019 was $943.8, an increase of $116.7, or 14.1%, which included revenue of $44.9 from our second quarter acquisition of Rheinhütte, and an unfavorable foreign currency translation impact of $23.6.$13.5. Organic revenue increased 10.3% primarily driven by 35% growth in pump projects due to significant strength in the chemical and mining markets mainly in North America. Within our short-cycle business, organic revenue increased 3% from baseline pumps and aftermarket parts in the oil and gas and chemical markets.

Orders for the year ended December 31, 2019 were $886.8, a decrease of $15.3, or 1.7% which included orders of $42.6 from our second quarter acquisition of Rheinhütte, and an unfavorable foreign currency translation impact of $15.3. Organic orders decreased 14.3%, from$42.6, or 4.7% due to a 7% reduction in projects driven by pump project declines and difficult comparisons to the prior year primarilyin the chemical and oil and gas markets, partially offset by strength in industrial. Orders from our short-cycle business declined 4% due to the challenging market conditions which drove delaysweakness in industrial valves, aftermarket parts, and cancellations of capital projects and customer maintenance and replacement activities. Partially offsetting these declines was a 27% increase in orders from the chemical market due to weak orders activity in the prior year.

The level of order and shipment activity related to engineeredproject pumps can vary significantly from period to period. Backlogperiod, which may impact year-over-year comparisons. IP's backlog as of December 31, 20162019 was $347.2,$395.4, reflecting a decrease of $63.7,$48.8, or 15.5%. The decrease reflects lower project order intake due11.0%, compared to global capital project delays and lower oil and gas and mining activity due to market uncertainty and volatility.December 31, 2018.

Motion TechnologiesCCT revenue for the year ended December 31, 20162019 was $983.4, reflecting$663.9, an increase of $216.2,$17.3, or 28.2% including incremental2.7%, which included revenue of $126.4$9.6 from theour third quarter acquisition of Wolverine, which was completed in the beginning of the fourth quarter of 2015,Matrix, and an unfavorable foreign currency translation impact of $4.7.$5.6. Organic revenue increased $94.5,$13.3, or 12.3%,2.1% driven primarily by strengthgrowth in automotive brake padscommercial aerospace of 8% mainly within components and aftermarket. This was partially offset by declines in defense components due to OEM share gains in China, Europe,prior year program strength and North America that increased OEM revenue approximately 21%. Sales grew in OES approximately 10% whileweaker sales in independent aftermarketfrom electric vehicle connectors.

Gross profit for 2019 was slightly offset by a weaker China rail market.

Sales and marketing expenses for the year ended December 31, 20162019 were $170.0, reflecting$165.9, a decrease of $13.2, or 7.2%, mainly due to focused cost reductions and lower headcount$2.3. Excluding incremental costs of $7.7 from our structural reset at Industrial Process, partially offset by incremental2019 acquisitions of Rheinhütte and Matrix and favorable foreign currency of $3.4, sales and marketing costs of $3.7, related to our fourth quarter 2015 acquisition of Wolverine.expenses decreased $6.6. The decrease was driven by cost reduction actions across all segments.

R&DResearch and development expenses for the year ended December 31, 20162019 were $80.8, reflecting an increase$97.9, a decrease of $1.9, or 2.4%. The increase was$0.5.

Gain on sale of long-lived assets of $40.7 for the year ended December 31, 2018 is primarily driven by incremental costs of $3.3 related to our acquisition of Wolverine in 2015. In addition, increased product development activities at Motion Technologies were offset by lower R&D spending at Control Technologies during 2016 due to the progress madea net gain of $38.5 recognized on the developmentsale of a major aerospace program.former operating location.