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

Leases (ASU 2016-02)

In ~~March~~February 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.

~~Accounting Pronouncements Not Yet Adopted~~

~~In March 2017, the FASB issued ASU 2017-07~~ which amends the Statement of Operations presentation for the components of net periodic benefit cost for entities that sponsor defined benefit pension and other postretirement plans. Under the ASU, entities are now required to disaggregate the service cost component 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 the first quarter of 2018, at which time we expect to adopt the new standard. We have yet to finalize the evaluation of the potential impact of this ASU on our financial statements; however, we do not expect these changes to have a material impact.

~~In February 2016, the FASB issued ASU 2016-02 impacting~~updated the accounting for leases ~~intending~~in order 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~~new standard ~~will require~~requires entities to recognize a liability for their lease obligations and a corresponding right-of-use asset, ~~representing the right to use the underlying asset over the lease term. Lease obligations are to be~~initially measured at the present value of the lease ~~payments and accounted for using the effective interest method. The~~payments. Subsequent accounting ~~for the leased asset will differ slightly depending~~depends on whether

the agreement is deemed to be a financing or operating lease. For ~~finance~~operating leases, ~~the leased asset is depreciated on~~ a ~~straight-line basis and recorded separately from the interest~~lessee recognizes its total lease expense ~~in the statements of operations, resulting in higher~~as an operating expense ~~in the earlier part of~~over the lease term. For financing leases, a lessee recognizes amortization of the right-of-use asset as an operating ~~leases, the depreciation~~

~~and interest~~ expense ~~components are combined, recognized evenly~~ over the lease term ofseparately from interest on the lease ~~and presented as a reduction to operating income.~~liability. The ASU requires that assets and liabilities be presented orand disclosed separately and the liabilities must be classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The ASU was effective for the Company beginning on January 1, 2019, at which time we adopted the new standard using the modified retrospective approach as of the date of adoption. The Company elected to not reassess certain lease characteristics including whether expired or certain existing contracts contain leases, the lease classification prior to adoption, and initial direct costs. Upon adoption, we recognized a right-of-use asset of $80.0 (net of deferred rent of $3.4 previously included within Accrued liabilities and Other non-current liabilities) and a lease liability of $83.4 related to existing leases of real estate, vehicles, and other equipment that are classified as operating leases, and have terms greater than 12 months. The right-of-use asset is included within Other non-current assets and the lease liabilities are included within Accrued liabilities and Other non-current liabilities on the Consolidated Balance Sheet. A summary of the impact to our Consolidated Balance Sheet on January 1, 2019 is as follows:



	December 31, 2018		Effect of Change		January 1, 2019
Other non-current assets	$	196.8	$	80.0	$	276.8
Accrued liabilities	416.7		18.7		435.4
Other non-current liabilities	166.5		61.3		227.8

Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12)

In August 2017, the FASB issued amended guidance that simplifies the requirements of hedge accounting. The ASU enables companies to more accurately present the economic effects of risk management activities in the financial statements. The guidance requires the presentation of all items that affect earnings in the same income statement line as the hedged item and is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. The Company adopted the provisions of ASU 2017-12 on January 1, 2019. The adoption did not result in an impact to our financial results since the Company did not have any derivatives outstanding at the time of adoption. As of September 30, 2019, the U.S. dollar equivalent notional value of the Company’s outstanding foreign currency forward contracts designated for hedge accounting was $4.7 and the fair value was nominal.

Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income (ASU 2018-02)

In February 2018, the FASB issued guidance related to the U.S. Tax Cuts and Jobs Act of 2017 (the Tax Act), which permits an optional reclassification of residual tax effects that are included within accumulated other comprehensive loss, to retained earnings. The reclassification represents the difference between the amount recorded in other comprehensive loss at the historical U.S. federal tax rate at the time the Tax Act became effective, and the amount that would have been recorded at the newly enacted rate. This guidance became effective during the first quarter of 2019, however we did not elect to make the optional reclassification.

Accounting Pronouncements Not Yet Adopted

Measurement of Credit Losses on Financial Instruments (ASU 2016-13)

In June 2016, the FASB issued updated guidance that requires entities to use a current expected credit loss model to measure credit-related impairments for financial instruments held at amortized cost, including trade receivables. The current expected credit loss model is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect collectability. Current expected credit losses, and subsequent adjustments, represent an estimate of lifetime expected credit losses that are recorded as an allowance deducted from the amortized cost of the financial instrument. The updated guidance is effective for the Company beginning inon January 1, 2020 and will be adopted using a modified retrospective transition approach. The Company is currently evaluating 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~~effect of ~~these amendments~~adoption 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, 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 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, environmental-related assets, deferred taxes, and certain property, plant and equipment.



	Revenue						Operating Income						Operating Margin
For the Three Months Ended September 30	2019			2018			2019			2018			2019		2018
Motion Technologies	$	304.5		$	310.3		$	56.7		$	58.5		18.6	%	18.9	%
Industrial Process	240.3			205.0			22.0			23.7			9.2	%	11.6	%
Connect & Control Technologies	167.9			166.0			28.4			26.0			16.9	%	15.7	%
Total segment results	712.7			681.3			107.1			108.2			15.0	%	15.9	%
Asbestos-related benefit, net	—			—			56.2			4.3			—		—
Gain on sale of long-lived assets	—			—			—			38.0			—		—
Eliminations / Other corporate costs	(0.8		)	(0.7		)	(10.8		)	(12.7		)	—		—
Total Eliminations / Corporate and Other costs	(0.8		)	(0.7		)	45.4			29.6			—		—
Total	$	711.9		$	680.6		$	152.5		$	137.8		21.4	%	20.2	%

	Revenue						Operating Income						Operating Margin
For the Nine Months Ended September 30	2019			2018			2019			2018			2019		2018
Motion Technologies	$	937.4		$	982.8		$	169.6		$	175.9		18.1	%	17.9	%
Industrial Process	688.6			598.0			70.2			64.0			10.2	%	10.7	%
Connect & Control Technologies	503.1			488.0			85.4			76.3			17.0	%	15.6	%
Total segment results	2,129.1			2,068.8			325.2			316.2			15.3	%	15.3	%
Asbestos-related benefit, net	—			—			31.8			10.5			—		—
Gain on sale of long-lived assets	—			—			0.5			38.0			—		—
Eliminations / Corporate and other costs	(1.8		)	(2.1		)	(28.4		)	(36.0		)	—		—
Total Eliminations / Corporate and Other costs	(1.8		)	(2.1		)	3.9			12.5			—		—
Total	$	2,127.3		$	2,066.7		$	329.1		$	328.7		15.5	%	15.9	%

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 %



	Total Assets				Capital Expenditures				Depreciation & Amortization
As of and for the Nine Months Ended September 30	2019		2018^(a)		2019		2018		2019		2018
Motion Technologies	$	1,188.2	$	1,147.2	$	44.8	$	54.1	$	42.9	$	42.8
Industrial Process	1,115.2		1,000.1		8.5		3.5		19.8		20.5
Connect & Control Technologies	756.0		694.0		13.4		6.0		15.9		16.2
Corporate and Other	1,004.8		1,005.5		2.6		0.2		2.5		3.0
Total	$	4,064.2	$	3,846.8	$	69.3	$	63.8	$	81.1	$	82.5

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


(a)	Amounts reflect balances as of December 31, ~~2016.~~2018.

NOTE 4

REVENUE

The following table represents our revenue disaggregated by end market for the three and nine months ended September 30, 2019 and 2018.



For the Three Months Ended September 30, 2019	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations				Total
Automotive and rail		$	301.1		$	—		$	—		$	—			$	301.1
Chemical and industrial pumps		—			185.7			—			—				185.7
Aerospace and defense		1.1			—			104.0			—				105.1
Oil and gas		—			54.6			11.4			—				66.0
General industrial		2.3			—			52.5			(0.8		)		54.0
Total		$	304.5		$	240.3		$	167.9		$	(0.8	)		$	711.9

For the Nine Months Ended September 30, 2019
Automotive and rail		$	923.2		$	—		$	—		$	(0.1	)		$	923.1
Chemical and industrial pumps		—			515.9			—			—				515.9
Aerospace and defense		6.2			—			308.8			—				315.0
Oil and gas		—			172.7			30.0			—				202.7
General industrial		8.0			—			164.3			(1.7		)		170.6
Total		$	937.4		$	688.6		$	503.1		$	(1.8	)		$	2,127.3



For the Three Months Ended September 30, 2018	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations				Total
Automotive and rail		$	305.4		$	—		$	—		$	—			$	305.4
Chemical and industrial pumps		—			145.6			—			—				145.6
Aerospace and defense		1.3			—			92.9			—				94.2
Oil and gas		—			59.4			12.5			—				71.9
General industrial		3.6			—			60.6			(0.7		)		63.5
Total		$	310.3		$	205.0		$	166.0		$	(0.7	)		$	680.6

For the Nine Months Ended September 30, 2018
Automotive and rail		$	966.5		$	—		$	—		$	(0.1	)		$	966.4
Chemical and industrial pumps		—			440.3			—			—				440.3
Aerospace and defense		5.8			—			276.6			—				282.4
Oil and gas		—			157.7			31.6			—				189.3
General industrial		10.5			—			179.8			(2.0		)		188.3
Total		$	982.8		$	598.0		$	488.0		$	(2.1	)		$	2,066.7

Contract Assets and Liabilities

Contract assets consist of unbilled amounts where revenue recognized exceeds customer billings. Contract liabilities consist of advance payments and billings in excess of revenue recognized. The following table represents our net contract assets and liabilities as of September 30, 2019 and December 31, 2018.



	September 30, 2019				December 31, 2018				Change
Current contract assets		$	33.6			$	21.8			54.1	%
Non-current contract assets		—				0.7				(100.0	)%
Current contract liabilities		(52.7		)		(61.0		)		(13.6	)%
Net contract liabilities		$	(19.1	)		$	(38.5	)		(50.4	)%

During the three and nine months ended September 30, 2019, we recognized revenue of $9.2 and $41.6, related to contract liabilities as of December 31, 2018.

Remaining Performance Obligations

For contracts greater than one year, the aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of September 30, 2019 was $98.9. Of this amount, we expect to recognize approximately $15 to $20 of revenue during 2019, approximately $65 to $75 in 2020, and the remainder thereafter.

NOTE 5

RESTRUCTURING ACTIONS

The table below summarizes the restructuring costs presented within general and administrative expenses in our Consolidated Condensed Statements of Operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018. We have initiated various restructuring activities throughout our businesses during the past two years, however there were no restructuring activities considered individually significant.



	Three Months				Nine Months
For the Periods Ended September 30	2019		2018		2019		2018
Severance and other employee-related	$	6.5	$	0.8	$	10.5	$	2.4
Other	0.2		0.1		0.4		0.6
Total restructuring costs	$	6.7	$	0.9	$	10.9	$	3.0
By segment:
Motion Technologies	0.7		0.4		$	4.5	$	1.7
Industrial Process	5.1		—		5.5		—
Connect & Control Technologies	0.9		0.5		0.8		1.3
Corporate and Other	—		—		0.1		—

Three Months Nine Months
For the Periods Ended September 30 2017 2016 2017 2016
Severance costs $ 4.6
$ 3.1
$ 7.3
$ 22.0
Asset write-offs 0.1
0.2
0.1
0.4
Other restructuring costs —
0.7
1.6
1.4
Total restructuring costs $ 4.7
$ 4.0
$ 9.0
$ 23.8
By segment:
Industrial Process $ 3.2
$ 2.9
$ 4.9
$ 19.9
Motion Technologies 0.5
1.1
1.3
2.5
Connect & Control Technologies 1.6
—
2.8
0.9
Corporate and Other (0.6 ) —
—
0.5

The following table displays a rollforward of the restructuring accruals, presented on our Consolidated Condensed Balance Sheet within accrued liabilities, for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.



For the Periods Ended September 30	2019			2018
Restructuring accruals - beginning balance	$	6.7		$	8.9
Restructuring costs	10.9			3.0
Cash payments	(7.8		)	(5.9		)
Foreign exchange translation and other	(0.4		)	0.8
Restructuring accrual - ending balance	$	9.4		$	6.8
By accrual type:
Severance and other employee-related	$	9.1		$	6.0
Other	0.3			0.8

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

We have initiated various restructuring activities throughout our businesses during the past two years, of which only those noted below are considered 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 the overall cost structure of the Industrial Process segment in an effort to align with the declining oil and gas market conditions experienced over the past two years. During the first nine months of 2017, we continued to pursue these objectives and we recognized $4.9 of restructuring costs primarily related to the exit of certain office space and severance for 61 employees. Cash payments related to the remaining accrual are expected to be substantially complete in 2018. However, we will continue to monitor 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.~~

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								Nine Months
For the Periods Ended September 30	2019			2018			Change		2019			2018			Change
Income tax expense	$	34.1		$	25.9		31.7	%	$	73.1		$	42.4		72.4	%
Effective tax rate	22.3		%	18.9		%	340bp		22.1		%	13.1		%	900bp

The higher effective tax rate ~~in 2016~~during the third quarter of 2019 was primarily ~~driven by an increase~~due to the 2018 release of unrecognized tax benefits of $3.4 related to audit closures and tax benefits of $1.8 in ~~the~~2018 from valuation allowance reversals on deferred tax ~~liability~~assets. The higher effective tax rate during the year-to-date period was primarily due to tax benefits of $21.6 in 2018 from German valuation allowance reversals on foreign earnings which are not considered indefinitely reinvested. Refer to Note 2, Recent Accounting Pronouncements, for further information on ASU 2016-09. In addition, the Company continues to benefit from a larger mix of earnings in non-U.S. jurisdictions with favorabledeferred tax ~~rates.~~assets.

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, Japan, 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 by approximately ~~$17~~$14 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 months ended September 30, ~~2017~~2019 and ~~2016~~2018.



	Three Months		Nine Months
For the Periods Ended September 30	2019	2018	2019	2018
Basic weighted average common shares outstanding	87.8	87.6	87.7	87.7
Add: Dilutive impact of outstanding equity awards	0.9	1.1	0.9	1.0
Diluted weighted average common shares outstanding	88.7	88.7	88.6	88.7

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 the number of~~There were 0 anti-dilutive shares underlying stock options 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 the~~ three and nine months ended September 30, ~~2017~~2019 and ~~2016, as the necessary performance conditions had not yet been satisfied.~~2018.

NOTE 78

RECEIVABLES, NET



	September 30, 2019				December 31, 2018
Trade accounts receivable		$	556.8			$	531.7
Notes receivable		7.6				3.7
Other		21.3				22.9
Receivables, gross		585.7				558.3
Less: Allowance for doubtful accounts		(11.4		)		(18.3		)
Receivables, net		$	574.3			$	540.0

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 89

INVENTORIES, NET



	September 30, 2019			December 31, 2018
Finished goods		$	60.8		$	64.2
Work in process		101.9			83.1
Raw materials		251.9			233.2
Inventories, net		$	414.6		$	380.5

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

Inventory related to long-term contracts of $45.7 as of December 31, 2018 has been reclassified to the respective inventory categories to conform with the current year presentation.

NOTE 910

OTHER CURRENT AND NON-CURRENT ASSETS



	September 30, 2019			December 31, 2018
Asbestos-related assets		$	77.1		$	67.1
Advance payments and other prepaid expenses		34.4			44.5
Current contract assets		33.6			21.8
Prepaid income taxes		15.0			19.6
Other		1.6			10.4
Other current assets		$	161.7		$	163.4
Other employee benefit-related assets		$	119.1		$	104.7
Operating lease right-of-use assets (see Note 2)		88.9			—
Capitalized software costs		31.0			35.3
Environmental-related assets		22.1			23.4
Equity method investments		9.4			7.7
Other		29.1			25.7
Other non-current assets		$	299.6		$	196.8

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)	September 30, 2019				December 31, 2018
Machinery and equipment	2 - 10		$	1,080.9			$	1,056.9
Buildings and improvements	5 - 40		272.2				265.3
Furniture, fixtures and office equipment	3 - 7		78.7				69.1
Construction work in progress			66.4				67.9
Land and improvements			32.6				27.8
Other			9.8				10.3
Plant, property and equipment, gross			1,540.6				1,497.3
Less: Accumulated depreciation			(1,018.9		)		(978.5		)
Plant, property and equipment, net			$	521.7			$	518.8

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~~$20.7 and ~~$18.1~~$20.7, and ~~$57.2~~$61.4 and ~~$55.5~~$62.4 was recognized in the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

The Company entered into an agreement to sell excess property for a cash purchase price of approximately $41. On April 16, 2017, the purchaser’s due diligence period ended. There are remaining conditions to closing which are anticipated to be finalized in the first half of 2018. At closing, the Company will receive the cash proceeds and is expected to record a gain of approximately $38 to $40.

NOTE 1112

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following table provides a rollforward of the carrying amount of goodwill for the nine months ended September 30, ~~2017~~2019 by segment.



	Motion Technologies				Industrial Process				Connect & Control Technologies				Total
Goodwill - December 31, 2018		$	294.5			$	315.8			$	265.6		$	875.9
Acquired		—				36.6				8.7			45.3
Foreign exchange translation		(3.6		)		(6.8		)		(1.0		)	(11.4		)
Goodwill - September 30, 2019		$	290.9			$	345.6			$	273.3		$	909.8

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~~is related to our ~~acquisition~~acquisitions of ~~Axtone Railway Components (Axtone)~~Rheinhütte Pumpen Group (Rheinhütte) and Matrix Composites, Inc. (Matrix) in the second and third quarters of 2019, respectively. Goodwill acquired represents the preliminary calculation of 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,~~ 21, Acquisitions, for additional information.

Other Intangible Assets, Net

Information regarding our other intangible assets is as follows:



	September 30, 2019										December 31, 2018
	Gross Carrying Amount			Accumulated Amortization				Net Intangibles			Gross Carrying Amount			Accumulated Amortization				Net Intangibles
Customer relationships		$	179.3		$	(95.7	)		$	83.6		$	164.1		$	(86.2	)		$	77.9
Proprietary technology		57.9			(26.8		)		31.1			53.7			(25.6		)		28.1
Patents and other		12.6			(9.7		)		2.9			12.3			(9.4		)		2.9
Finite-lived intangible total		249.8			(132.2		)		117.6			230.1			(121.2		)		108.9
Indefinite-lived intangibles		30.1			—				30.1			27.2			—				27.2
Other intangible assets		$	279.9		$	(132.2	)		$	147.7		$	257.3		$	(121.2	)		$	136.1

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

Amortization expense related to finite-lived intangible assets was $5.3 and $4.4, and $13.3 and $13.3 for the three and nine months ended September 30, 2019 and 2018, respectively.

The preliminary fair value of intangible assets acquired in connection with the purchase of ~~Axtone, based on~~Rheinhütte includes $7.4 of proprietary technology with a ~~preliminary valuation, include $7.4~~useful life of 7 years, $4.5 of customer relationships with a useful life of 9 years, and ~~$2.3~~$3.3 for a trade name with an indefinite life. As of ~~trademarks. These~~September 30, 2019, intangible assets ~~will be amortized straight-line over their~~acquired in connection with the purchase of Matrix have been estimated ~~useful lives~~to have a preliminary fair value of ~~12 years and 10 years, respectively. Refer to Note 18,~~ ~~Acquisitions, for additional information.~~

~~Amortization expense~~$12 related to ~~finite-lived intangible assets was $5.2~~customer relationships.

NOTE 13

ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES



	September 30, 2019			December 31, 2018
Compensation and other employee-related benefits		$	149.2		$	152.2
Contract liabilities and other customer-related liabilities		72.2			82.2
Asbestos-related liability		86.2			74.2
Accrued income taxes and other tax-related liabilities		28.6			33.7
Operating lease liabilities (see Note 2)		18.2			—
Accrued warranty costs		17.2			16.2
Environmental liabilities and other legal matters		17.1			24.0
Other		37.0			34.2
Accrued liabilities		$	425.7		$	416.7
Environmental liabilities		$	55.3		$	59.5
Operating lease liabilities (see Note 2)		74.4			—
Compensation and other employee-related benefits		34.4			34.2
Deferred income taxes and other tax-related accruals		24.4			25.0
Other		49.2			47.8
Other non-current liabilities		$	237.7		$	166.5

NOTE 14

LEASES

The Company’s lease portfolio primarily relates to real estate, which may be used for manufacturing or non-manufacturing purposes, and ~~$5.5~~contains lease terms generally ranging between one and ~~$14.4~~18 years. Our lease portfolio also includes vehicles and ~~$15.6~~other equipment such as forklifts. Substantially all of our leases are classified as operating leases. For leases with terms greater than 12 months, we record a right-of-use asset and lease liability equal to the present value of the lease payments. In determining the discount rate used to measure the right-of-use asset and lease liability, we utilize the Company’s incremental borrowing rate and consider the term of the lease, as well as the geographic location of the leased asset.

Where options to renew a lease are available, they are included in the lease term and capitalized on the balance sheet to the extent there would be a significant economic penalty not to elect the option. Certain real estate leases are subject to periodic changes in an index or market rate. While lease liabilities are not remeasured as a result of changes to an index or rate, these changes are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. Variable lease expense also includes property tax and property insurance costs.

For the three and nine months ended September 30, ~~2017~~2019, operating lease costs were $6.3 and ~~2016,~~$18.6, respectively. Short-term lease costs, variable lease costs, and sublease income are not considered material.

~~NOTE~~Future operating lease payments under non-cancellable operating leases with an initial term in excess of 12

~~ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES~~ months as of September 30, 2019 are shown below.



2019	$	5.6
2020	20.3
2021	16.2
2022	13.1
2023	10.4
2024 and thereafter	58.6
Total lease payments	124.2
Less: amount of lease payments representing interest	(31.6		)
Present value of future lease payments	$	92.6

Short-term lease liability	$	18.2
Long-term lease liability	74.4
Present value of future lease payments	$	92.6

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

Future minimum operating lease payments under non-cancellable operating leases with an initial term in excess of 12 months as of December 31, 2018 are shown below.



2019	$	22.2
2020	16.8
2021	12.6
2022	10.2
2023	8.1
2024 and thereafter	46.4
Total minimum lease payments	$	116.3

Our lease portfolio has a weighted average remaining lease term of 13.7 years, and the weighted average discount rate is 3.2%. During the nine months ended September 30, 2019, we recognized non-cash right-of-use assets of $25.8 for new leases entered into during the period, primarily related to the lease renewal of a key manufacturing site in our Connect & Control segment. Operating cash outflows from operating leases during the nine months ended September 30, 2019 were $16.8.

NOTE 1315

DEBT



	September 30, 2019			December 31, 2018
Commercial paper		$	120.3		$	114.4
Current maturities of long-term debt and finance leases		2.4			1.8
Commercial paper and current maturities of long-term debt		122.7			116.2
Long-term debt and finance leases		12.6			8.8
Total debt and finance leases		$	135.3		$	125.0

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

Commercial Paper

Commercial paper outstanding as of September 30, 2019 and December 31, 2018 was issued entirely through the Company’s euro program and had an associated weighted average interest rate of ~~1.61%~~0.05% and ~~1.14% and~~0.06%, respectively. The outstanding commercial paper for both periods had maturity terms less than ~~one month~~three months from the date of ~~issuance as of September 30, 2017 and December 31, 2016, respectively.~~issuance.

~~Short-term Loans~~

Short-term loans consist of outstanding borrowings under our $500 Revolving Credit Agreement. Outstanding borrowings were denominated in Euros with an associated weighted average interest rate of 1.1% as of September 30, 2017 and were denominated in U.S. dollars with an associated weighted average interest rate of 1.87% as of December 31, 2016. Refer to the Liquidity section within ~~"Item~~“Item 2. ~~Management's~~Management’s Discussion and Analysis,"” for additional information on ~~the revolving credit facility as well as~~ our overall funding and liquidity strategy.

NOTE 1416

POSTRETIREMENT BENEFIT PLANS

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 months ended September 30, ~~2017~~2019 and ~~2016.~~2018.



	2019												2018
For the Three Months Ended September 30	Pension				Other Benefits				Total				Pension				Other Benefits				Total
Service cost		$	0.4			$	0.2			$	0.6			$	0.4			$	0.2			$	0.6
Interest cost		3.1				1.0				4.1				3.0				1.0				4.0
Expected return on plan assets		(3.8		)		(0.1		)		(3.9		)		(4.4		)		—				(4.4		)
Amortization of prior service cost (benefit)		0.2				(1.3		)		(1.1		)		0.2				(1.3		)		(1.1		)
Amortization of net actuarial loss		1.3				0.6				1.9				1.5				0.9				2.4
Net periodic benefit cost		1.2				0.4				1.6				0.7				0.8				1.5
Loss from settlement or curtailment		—				—				—				1.4				—				1.4
Total net periodic benefit cost		$	1.2			$	0.4			$	1.6			$	2.1			$	0.8			$	2.9

	2019												2018
For the Nine Months Ended September 30	Pension				Other Benefits				Total				Pension				Other Benefits				Total
Service cost		$	1.1			$	0.5			$	1.6			$	1.2			$	0.6			$	1.8
Interest cost		9.4				3.0				12.4				8.6				3.2				11.8
Expected return on plan assets		(11.0		)		(0.1		)		(11.1		)		(11.2		)		(0.2		)		(11.4		)
Amortization of prior service cost (benefit)		0.6				(3.9		)		(3.3		)		0.6				(3.9		)		(3.3		)
Amortization of net actuarial loss		3.9				1.7				5.6				4.5				3.1				7.6
Net periodic benefit cost		4.0				1.2				5.2				3.7				2.8				6.5
Loss from settlement or curtailment		—				—				—				1.4				—				1.4
Total net periodic benefit cost		$	4.0			$	1.2			$	5.2			$	5.1			$	2.8			$	7.9

2017 2016
For the Three Months Ended September 30 Pension
Other
Benefits
Total Pension
Other
Benefits
Total
Service cost $ 1.5
$ 0.2
$ 1.7
$ 1.5
$ 0.2
$ 1.7

Interest cost 3.0
1.1
4.1
3.3
1.2
4.5

Expected return on plan assets (4.6 ) (0.1 ) (4.7 ) (5.0 ) (0.1 ) (5.1 )
Amortization of prior service cost (benefit) 0.2
(1.4 ) (1.2 ) 0.2
(1.6 ) (1.4 )
Amortization of net actuarial loss 2.1
1.1
3.2
2.0
1.2
3.2

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

In the third quarter of ~~2017~~2018, we recorded ~~curtailment~~a settlement loss of ~~$3.7~~$1.4 related to ~~a freeze of benefit accruals for certain current employees at~~retiree lump sum pension payments in our Industrial Process segment.

We made contributions to our global postretirement plans of ~~$14.3~~$19.7 and ~~$11.9~~$9.7 during the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, which included a discretionary contribution of $5$9 to our U.S. pension plan during ~~2017.~~2019. We expect to make contributions of approximately $2$3 to $4 during the remainder of ~~2017,~~2019, principally related to our other ~~postretirement employee~~employee-related benefit plans.

Amortization from accumulated other comprehensive income into earnings related to prior service cost and net actuarial loss was ~~$3.6~~$0.6 and ~~$5.9,~~$2.1, and ~~$1.2~~$1.7 and ~~$3.5,~~$4.3, net of tax, ~~for~~during the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. No other reclassifications from accumulated other comprehensive income into earnings were recognized during any of the presented periods.

NOTE 1517

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 months ended September 30, ~~2017~~2019 and ~~2016~~2018.



	Three Months				Nine Months
For the Periods Ended September 30	2019		2018		2019		2018
Equity-based awards	$	3.9	$	6.7	$	12.3	$	16.9
Liability-based awards	0.3		0.9		1.7		1.7
Total share-based compensation expense	$	4.2	$	7.6	$	14.0	$	18.6

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

At September 30, ~~2017~~,2019, there was $21.3 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,~~$1.8, which is expected to be recognized ratably over a weighted-average period of ~~1.9~~1.5 years.

Year-to-Date ~~2017~~2019 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 months ended September 30, ~~2017,~~2019, 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) 0.4 $ 41.86

Performance stock units (PSUs) 0.1 $ 44.87

During the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, 0.3 and ~~0.4~~0.2 of non-qualified stock options were exercised resulting in proceeds of ~~$6.7~~$11.6 and ~~$8.8,~~$5.8, respectively. During the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, RSUs of 0.2 ~~and 0.3~~ vested and were ~~issued, respectively. There were no~~issued. During the nine months ended September 30, 2019 and 2018, PSUs of 0.2 and 0.1 that vested on December 31, ~~2016 because~~2018 and 2017, respectively, were issued.

NOTE 18

CAPITAL STOCK

On October 27, 2006, our Board of Directors approved a three-year, $1 billion share repurchase program, which it modified in 2008 to make the ~~minimum performance requirements were not met. PSUs~~term indefinite. During the nine months ended September 30, 2019 and 2018, we repurchased and retired 0.5 and 1.0 shares of common stock for $28.7 and $50.0, respectively, under this program. To date, the Company has repurchased 22.7 shares for $938.1 under this program. On October 30, 2019, the Board of Directors approved a new $40 share repurchase authorization to effectively close out the current share repurchase program and approved a new indefinite term $500 share repurchase program.

Separate from the share repurchase program, the Company repurchased 0.2 ~~were issued~~and 0.1 shares during the nine months ended September 30, ~~2016 that vested on December 31, 2015.~~

~~NOTE 16~~

~~CAPITAL STOCK~~

On October 27, 2006, a three-year $1 billion share repurchase program was approved by 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 term with an indefinite term. During the nine months ended September 30, 20172019 and ~~2016, we repurchased and retired 0.8 and 1.9 shares of common stock for $30.0 and $66.6,~~2018, respectively, ~~under this program~~. ~~To date, the Company has repurchased 21.2 shares for $859.4 under the Share Repurchase Program.~~

~~Separate from the Share Repurchase Program, the Company repurchased 0.1 shares and~~ ~~0.2~~ ~~shares~~ for an aggregate price of ~~$2.9~~$9.6 and ~~$7.8, during the nine months ended September 30, 2017 and~~ ~~2016~~,$5.8, respectively, in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs.

NOTE 1719

ACCUMULATED OTHER COMPREHENSIVE LOSS



	Postretirement Benefit Plans			Cumulative Translation Adjustment			Accumulated Other Comprehensive Loss
December 31, 2018	$	(131.6	)	$	(243.9	)	$	(375.5	)
Net change during period	0.6			(2.4		)	(1.8		)
March 31, 2019	(131.0		)	(246.3		)	(377.3		)
Net change during period	0.5			5.3			5.8
June 30, 2019	(130.5		)	(241.0		)	(371.5		)
Net change during period	2.3			(34.4		)	(32.1		)
September 30, 2019	$	(128.2	)	$	(275.4	)	$	(403.6	)


	Postretirement Benefit Plans			Cumulative Translation Adjustment			Accumulated Other Comprehensive Loss
December 31, 2017	$	(137.6	)	$	(210.6	)	$	(348.2	)
Net change during period	1.1			26.5			27.6
March 31, 2018	(136.5		)	(184.1		)	(320.6		)
Net change during period	1.1			(47.1		)	(46.0		)
June 30, 2018	(135.4		)	(231.2		)	(366.6		)
Net change during period	3.9			(5.0		)	(1.1		)
September 30, 2018	$	(131.5	)	$	(236.2	)	$	(367.7	)

NOTE 20

COMMITMENTS AND CONTINGENCIES

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 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 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 asbestos exposure. These claims generally allege that certain products sold by our 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~~,2019, there were approximately 2724 thousand pending claims against ITT subsidiaries, including Goulds Pumps LLC, filed in various state and federal courts alleging injury as a result of exposure to asbestos. Activity related to these asserted asbestos claims during the period was as follows:



~~For the Nine Months Ended September 30 (in thousands)~~	~~2017~~
Pending claims – Beginning	3024
New claims	3
Settlements	(1	)
Dismissals	(52	)
Pending claims – Ending	2724

Frequently, plaintiffs are unable 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 majority of the pending claims have little or no value. In addition, because claims are sometimes dismissed in large groups, the average cost per resolved claim can fluctuate significantly from period 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 of litigation. Frequently, 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 to estimate the maximum potential exposure to 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~~Company’s asbestos exposures, ~~although~~while 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~~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,~~2019, we decreased our estimated undiscounted asbestos liability, including legal fees, by ~~$66.4,~~$4.5, reflecting a decrease in costs the company estimates will be incurred to resolve all pending claims, as well as unasserted claims estimated to be filed over the next 10 years. The decrease in our estimated liability is a result of several developments, primarily favorable experience in ~~settlement values~~dismissal rates and a decrease in the number of cases expected to be ~~adjudicated.~~adjudicated, partially offset by an increase in settlement values. Further, in the third quarter of ~~2017,~~2019, the Company increased its estimated asbestos-related assets by ~~$10.0,~~$63.6, primarily due to ~~favorable developments~~an increase in insurance ~~litigation.~~recoveries since a recent favorable court ruling.

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. The table below summarizes the total net asbestos charges for the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.


	Three Months						Nine Months						Three Months						Nine Months
For the Periods Ended September 30	2017			2016			2017			2016			2019			2018			2019			2018
Asbestos provision	$	13.6		$	13.7		$	43.4		$	44.3		$	11.9		$	13.4		$	36.3		$	39.3
Net asbestos remeasurement benefit	(76.4		)	(81.8		)	(76.4		)	(81.8		)
Defense cost adjustment	—			—			—			(4.9		)
Settlement agreements	—			—			—			2.1
Net asbestos remeasurement (benefit) cost													(68.1		)	7.2			(68.1		)	7.2
Insurance settlement agreements^(a)													—			(24.9		)	—			(57.0		)
Asbestos-related benefit, net	$	(62.8	)	$	(68.1	)	$	(33.0	)	$	(40.3	)	$	(56.2	)	$	(4.3	)	$	(31.8	)	$	(10.5	)


(a)	During 2018, we entered into a settlement agreement and a settlement-in-principle with insurers to settle responsibility for multiple insurance claims. Under the terms of the agreements, the insurers agreed to upfront payments to a Qualified Settlement Fund for past costs in addition to providing coverage for certain future asbestos claims on specified terms and conditions.

Changes in Financial Position

The Company's estimated asbestos exposure, net of expected recoveries for the resolution of all pending claims and claims estimated to be filed in the next 10 years was ~~$501.2~~$420.7 and ~~$573.7~~$472.6 as of September 30, ~~2017~~2019 and December 31, ~~2016.~~ 2018.

The following table provides a rollforward of the estimated asbestos liability and related assets for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.


	2017									2016									2019									2018
For the Nine Months Ended September 30	Liability			Asset			Net			Liability			Asset			Net			Liability			Asset			Net			Liability			Asset			Net
Beginning balance	$	954.3		$	380.6		$	573.7		$	1,042.8		$	412.0		$	630.8		$	849.3		$	376.7		$	472.6		$	877.2		$	368.7		$	508.5
Asbestos provision(a)	51.1			7.7			43.4			51.6			7.3			44.3			45.1			8.8			36.3			48.5			9.2			39.3
Asbestos remeasurement	(66.4		)	10.0			(76.4		)	(75.9		)	5.9			(81.8		)	(4.5		)	63.6			(68.1		)	(8.6		)	(15.8		)	7.2
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		)
Insurance settlement agreement																			—			—			—			—			57.0			(57.0		)
Net cash activity^(a)																			(62.1		)	(42.0		)	(20.1		)	(72.0		)	(29.7		)	(42.3		)
Ending balance	$	875.5		$	374.3		$	501.2		$	951.8		$	385.8		$	566.0		$	827.8		$	407.1		$	420.7		$	845.1		$	389.4		$	455.7
Current portion	$	77.4		$	64.7					$	76.1		$	66.0					$	86.2		$	77.1					$	73.3		$	67.1
Noncurrent portion	$	798.1		$	309.6					$	875.7		$	319.8					$	741.6		$	330.0					$	771.8		$	322.3


(a)	Includes certain administrative costs such as legal-related costs for insurance asset recoveries.

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 months endedSeptember 30, ~~2017~~2019 and ~~2016.~~2018.



For the Nine Months Ended September 30	2019			2018
Environmental liability - beginning balance	$	66.8		$	73.9
Change in estimates for pre-existing accruals	0.2			3.4
Accruals added during the period for new matters	—			2.0
Payments^(a)	(4.4		)	(14.6		)
Foreign currency	(0.2		)	0.1
Environmental liability - ending balance	$	62.4		$	64.8


(a)	Includes cash payments of $9.7 for the nine months ended September 30, 2018 related to the sale of a former operating location.

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 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 assetEnvironmental-related assets, representing estimated recoveries from insurance providers 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~~other third parties, were $22.1 and $23.3 as of September 30, ~~2017~~2019 and ~~December 31, 2016 was $24.3 and $33.4,~~2018, respectively.

We are currently involved with 3529 active environmental investigation and remediation sites. At September 30, ~~2017,~~2019, we have estimated the potential high-end liability range of environmental-related matters to be ~~$119.6.~~$109.0.

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

~~The Company received a civil subpoena from the Department of Defense, Office of the Inspector General, in~~In the second quarter of ~~2015 as part of an investigation being led by~~2019, the ~~Civil Division of~~Company settled a civil matter with the U.S. Department of Justice (DOJ)~~. The subpoena and~~ related to an investigation ~~involve~~that began in 2015 involving 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~~paid $11 to ~~the subpoena to the Civil Division. Based~~DOJ, acting on ~~its current analysis following discussions with DOJ to resolve the civil matter, the Company has accrued $5 as its current best estimate~~behalf of the ~~minimum amount of probable loss. It is reasonably possible that any actual loss related~~U.S. government, to settle this matter ~~may be higher than this amount, but at this time management is unable to estimate~~and avoid the expense and uncertainty of litigation. The Company also received a ~~range~~related insurance recovery of ~~potential loss in excess~~$1.

NOTE 21

ACQUISITIONS

Rheinhütte Pumpen Group (Rheinhütte)

On April 30, 2019, we completed the acquisition 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)~~Rheinhütte for a purchase price of ~~$123.1,~~€81 euros, net of cash acquired. The transaction was funded from the Company’s cash and European commercial paper program. The purchase price ~~allocation~~ is subject to change ~~during the measurement period (up to one year from the acquisition date). Axtone, which had 2016~~based on customary net working capital adjustments. Rheinhütte, with 2018 revenue of approximately ~~$72,~~€61.5 euros and approximately 430 employees, has manufacturing locations in Germany and Brazil. Rheinhütte is a designer and manufacturer of highly engineered pumps suited for harsh and ~~customized energy absorption solutions, including springs, buffers, and coupler components~~corrosive environments for the ~~railway~~industrial market. Rheinhütte is reported within the Industrial Process segment.

Matrix Composites, Inc. (Matrix)

On July 3, 2019, we completed the acquisition of 100% of the privately held stock of Matrix for a purchase price of $25.8, net of cash acquired, that is subject to change based on customary net working capital adjustments. The transaction was funded from the Company’s cash. Matrix, a manufacturer of precision composite components within the aerospace and ~~industrial markets.~~defense market, had 2018 revenue of approximately $12 with growth expected due to a ramp up in production on several next-generation aircraft engine platforms. Matrix has approximately 115 employees and is reported within the Connect & Control Technologies segment.

The purchase ~~price~~prices for ~~Axtone was~~Rheinhütte and Matrix were allocated to net ~~tangible~~ assets acquired and liabilities assumed based on their preliminary fair values as of ~~January 26, 2017,~~the respective acquisition date, with the excess of the purchase price of ~~$79.5~~$36.6 and $8.7 recorded as ~~goodwill.~~goodwill, respectively. Other intangibles identified for Rheinhütte include customer relationships, proprietary technology and trade names. Preliminary intangible assets for Matrix consist of customer relationships. The primary areas of the purchase price ~~allocation~~allocations that are not yet finalized relate to the valuation of certain tangible and intangible assets, liabilities, income tax, and residual goodwill. WeFor each acquisition, we expect to obtain the information necessary to finalize the fair value of the net assets and liabilities during the measurement ~~period.~~period, not to exceed one year from the relevant acquisition date. Changes to the preliminary estimates of the fair value during the measurement period will be recorded as adjustments to those assets and liabilities with a corresponding adjustment to goodwill in the period they occur. The goodwill arising from ~~this acquisition, which~~these acquisitions is not expected to be deductible for income tax ~~purposes, has been assigned to the Motion Technologies segment.~~purposes.

Preliminary ~~Allocation~~Allocations of Purchase Price ~~for Axtone~~



	Rheinhütte			Matrix
Cash	$	4.7		$	0.5
Receivables	9.7			1.1
Inventory	15.2			1.8
Plant, property and equipment	22.2			2.9
Goodwill	36.6			8.7
Other intangible assets	15.2			12.0
Other assets	3.4			1.9
Accounts payable and accrued liabilities	(6.7		)	(2.0		)
Other liabilities	(5.3		)	(0.6		)
Net assets acquired	$	95.0		$	26.3

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

Pro forma results of operations have not been presented because the ~~acquisition was~~acquisitions were not deemed material atas of the acquisition ~~date.~~dates.

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 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 equipment systems and manufacturing processes in our 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~~special business fit 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~~to achieve 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, Industrial Process, ~~Motion Technologies,~~ and Connect & Control Technologies. See Note 3, Segment Information, in this Report for a summary description of each segment. Additional information is also available in our ~~2016~~2018 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 months ended September 30, ~~2016,~~2018, unless stated otherwise.

DISCUSSION OF FINANCIAL RESULTS

Three and Nine Months Ended September 30



	Three Months								Nine Months
	2019			2018			Change		2019			2018			Change
Revenue	$	711.9		$	680.6		4.6	%	$	2,127.3		$	2,066.7		2.9	%
Gross profit	231.3			226.5			2.1	%	682.1			676.7			0.8	%
Gross margin	32.5		%	33.3		%	(80	)bp	32.1		%	32.7		%	(60	)bp
Operating expenses	78.8			88.7			(11.2	%)	353.0			348.0			1.4	%
Operating expense to revenue ratio	11.1		%	13.0		%	(190	)bp	16.6		%	16.8		%	(20	)bp
Operating income	152.5			137.8			10.7	%	329.1			328.7			0.1	%
Operating margin	21.4		%	20.2		%	120	bp	15.5		%	15.9		%	(40	)bp
Interest and non-operating (income) expenses, net	(0.4		)	0.7			(157.1	%)	(1.3		)	4.0			(132.5	%)
Income tax expense	34.1			25.9			31.7	%	73.1			42.4			72.4	%
Effective tax rate	22.3		%	18.9		%	340	bp	22.1		%	13.1		%	900	bp
Income from continuing operations attributable to ITT Inc.	118.7			111.0			6.9	%	256.9			281.8			(8.8	%)
Net income attributable to ITT Inc.	118.6			110.9			6.9	%	256.7			281.8			(8.9	%)

Executive Summary

In the third quarter of ~~2017, we~~2019, ITT continued to ~~optimize execution across the enterprise while driving~~deliver top-line growth and ~~share gains in stabilizing key end-markets. We strengthened project performance within~~increased operating margin despite the Industrial Process segment, drove productivity improvements at our Connect and Control Technologies facilities, and continued to leverage the benefits 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~~challenging global economic environment. Our results are 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, 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 operationsreflection 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~~continued focus on operational excellence and cost reduction actions, that will help us win share 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.

~~Orders of $658.6, reflecting year-over-year growth of $85.2 or 14.9% driven by continued share gains in the~~key global ~~automotive brake pad~~end 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.combat future market uncertainty.

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.



Summary of Key Performance Indicators for the Third Quarter of 2019
Revenue	Orders	Operating Income	Operating Margin	EPS	Operating Cash Flow
$712	$702	$153	21.4%	$1.34	$222
5% Increase	3% Decrease	11% Increase	120bp Increase	7% Increase	10% Decrease
Organic Revenue	Organic Orders	Adjusted Operating Income	Adjusted Operating Margin	Adjusted EPS	Adjusted Free Cash Flow
$705	$695	$108	15.2%	$0.97	$194
4% Increase	4% Decrease	14% Increase	130bp Increase	18% Increase	9% Decrease

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 a definition and reconciliations between GAAP and non-GAAP metrics.

Our third quarter 2019 results include:

Revenue of $711.9 increased $31.3, or 4.6%. Excluding an unfavorable foreign currency impact of $15.6 and revenue of $22.6 from our acquisitions of Rheinhütte and Matrix, organic revenue increased 3.6%, driven by the strength of our diversified portfolio as industrial grew 10% and transportation grew 2%, more than offsetting a 5% decline in oil and gas.

Orders of $702.1 decreased $20.0, or 2.8%. Excluding unfavorable foreign currency of $16.0, and orders of $22.8 from the Rheinhütte and Matrix acquisitions, organic orders decreased 3.7%. The decrease was driven mainly by a decline in pump projects due to project delays and difficult prior year comparisons and slower industrial demand. Transportation orders were flat as strong growth in rail and commercial aerospace was offset by lower defense orders due to program timing. Compared to the second quarter of 2019, third quarter organic orders were flat.

Operating income of $152.5 increased $14.7, or 10.7%, as a higher net asbestos benefit of $52 primarily driven by our annual remeasurement, was partially offset by a $38 gain in the prior year from the sale of a former operating location. Segment operating income declined 1.0% to $107.1, reflecting a margin of 15.0%, which included higher restructuring and acquisition-related costs of $11.2. Adjusted segment operating income grew 10% to $117.9 and produced a margin of 16.6% from continued productivity and supply chain improvements and cost containment actions, as well as benefits from volume leverage. The growth was partially offset by higher commodity costs, strategic investments, unfavorable product mix and tariffs.

Income from continuing operations of $1.34 per diluted share increased $0.09, due to higher operating income, partially offset by an increase in tax expense. Adjusted income from continuing operations was $0.97 per diluted share, reflecting a $0.15, or 18.3%, increase from the prior year.

In terms of capital deployment, during the third quarter we returned $18 to shareholders in the form of share repurchases and recently our Board of Directors approved a $40 share repurchase authorization to effectively close out our current $1 billion share repurchase program. In addition, the Board of Directors approved a new indefinite term $500 share repurchase program. Earlier this year, we also completed two close-to-core strategic acquisitions that were already accretive to adjusted EPS and will continue to pursue opportunities going forward. Additionally, we are investing in a new CCT plating line, Value Analysis and Value Engineering to improve pump performance and reduce costs in IP, and the development of the ITT Smart Pad in MT along with the expansion of our global production facility in Mexico.

REVENUE

The following tables illustrate our revenue derived from each of our segments for the three and nine months ended September 30, 2019 and 2018.


For the Three Months Ended September 30	2017			2016			Change		Organic Revenue Growth^(a)		2019			2018			Change		Organic Growth (Decline)^(a)
Motion Technologies											$	304.5		$	310.3		(1.9	)%	1.7	%
Industrial Process	$	196.2		$	195.0		0.6	%	(0.1	)%	240.3			205.0			17.2	%	9.9	%
Motion Technologies	300.1			238.7			25.7	%	11.9	%
Connect & Control Technologies	149.4			149.0			0.3	%	(0.2	)%	167.9			166.0			1.1	%	(0.8	)%
Eliminations	(0.7		)	(1.0		)	(30.0	)%	—		(0.8		)	(0.7		)
Revenue	$	645.0		$	581.7		10.9	%	4.8	%
Total Revenue											$	711.9		$	680.6		4.6	%	3.6	%


For the Nine Months Ended September 30	2017			2016			Change		Organic Revenue Growth^(a)
Motion Technologies											$	937.4		$	982.8		(4.6	)%	0.5	%
Industrial Process	$	574.6		$	618.0		(7.0	)%	(7.2	)%	688.6			598.0			15.2	%	12.7	%
Motion Technologies	877.5			755.3			16.2	%	8.8	%
Connect & Control Technologies	452.3			446.8			1.2	%	1.4	%	503.1			488.0			3.1	%	3.3	%
Eliminations	(2.7		)	(3.1		)	(12.9	)%	—		(1.8		)	(2.1		)
Revenue	$	1,901.7		$	1,817.0		4.7	%	1.6	%
Total Revenue											$	2,127.3		$	2,066.7		2.9	%	4.7	%

ORDERS

The following tables illustrate our orders derived from each of our segments for the three and nine months ended September 30, 2019 and 2018.



For the Three Months Ended September 30	2019			2018			Change		Organic Growth (Decline)^(a)
Motion Technologies	$	309.0		$	314.2		(1.7	)%	2.0	%
Industrial Process	235.0			241.7			(2.8	)%	(8.6	)%
Connect & Control Technologies	158.8			166.8			(4.8	)%	(7.4	)%
Eliminations	(0.7		)	(0.6		)
Total Orders	$	702.1		$	722.1		(2.8	)%	(3.7	)%


For the Nine Months Ended September 30
Motion Technologies	$	952.4		$	1,011.7		(5.9	)%	(0.6	)%
Industrial Process	666.6			689.2			(3.3	)%	(5.4	)%
Connect & Control Technologies	517.4			525.8			(1.6	)%	(1.6	)%
Eliminations	(2.6		)	(1.6		)
Total Orders	$	2,133.8		$	2,225.1		(4.1	)%	(2.4	)%


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

~~Industrial Process~~Motion Technologies (MT)

~~Revenue~~MT revenue for the three months ended September 30, 2017 increased $1.2 or 0.6%, which includes favorable foreign currency impacts of $1.4. Organic revenue 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~~2019 decreased ~~$43.4~~$5.8, or ~~7.0%~~1.9%, ~~which includes favorable~~and $45.4, or 4.6%, respectively. Excluding the impact of foreign currency ~~impacts~~translation of ~~$1.2. Organic~~$11.2 and $50.5 for the three and nine month periods, organic revenue increased $5.4 and $5.1, respectively. This performance was driven by strength in global rail as well as Friction OEM share gains which significantly outpaced the global auto market, offset by a decline in our Wolverine business. KONI & Axtone sales grew 11% and 12%, for the three and nine month periods, respectively, on strength in rail in Europe and Asia. Friction sales increased 2% and 1%, for the three and nine month periods, respectively, due to OEM market share gains in North America, Europe and China which helped offset contraction in the global auto market and lower aftermarket activity. Wolverine sales decreased 9% and 14% during the three and nine month periods due to weakness in global auto markets and customer share loss.

Orders for the three and nine months ended September 30, ~~2017~~2019 decreased ~~$44.6,~~$5.2, or ~~7.2%. The decrease was driven by a decline in project pump revenue~~1.7%, and $59.3, or 5.9%, respectively. Excluding unfavorable foreign currency translation impacts of ~~approximately 26%, mostly due to lower North American oil~~$11.6 and ~~gas projects in backlog entering~~$53.7, respectively, organic orders increased $6.4, or 2.0% during the ~~year. Revenue from valves decreased approximately 12%. Revenues from aftermarket parts and service activity increased approximately 1%.~~

~~Orders~~third quarter of 2019, but decreased $5.6, or ~~2.8%, during~~0.6% year-to-date. Excluding a prior year Russian rail order of $14, MT year-to-date organic orders increased $8.4, or 0.8%. In 2019, global rail market share gains were partially offset by weakness in our Wolverine business.

Industrial Process (IP)

IP revenue for the three and nine months ended September 30, ~~2017,~~2019 increased $35.3, or 17.2%, and $90.6, or 15.2%, respectively, which ~~includes favorable~~included revenue of $18.4 and $26.3, from our second quarter acquisition of Rheinhütte, and an unfavorable foreign currency ~~impacts~~translation impact of ~~$1.5. The decrease was primarily~~$3.4 and $11.4, respectively. Organic revenue for the three and nine month periods increased $20.3, or 9.9%, and $75.7, or 12.7%, respectively, driven by ~~lower project~~significant growth in pump ~~orders which declined approximately 10% due to stronger prior year~~projects.

During the three and nine months ended September 30, 2019, revenue from pump projects increased 38% and 44%, respectively, driven by strength in the chemical and mining markets primarily within North ~~American petrochemical market orders, partially offset by higher order activity~~America. Within our short-cycle business, revenue for the three and nine month periods increased 2% and 5%, respectively, from baseline pumps and aftermarket parts in the oil and gas ~~and general industrial markets. Short-cycle orders declined approximately 2% as unfavorable timing related to parts activity~~market. Revenue from our short-cycle business for the quarter was ~~partially offset~~also impacted by ~~growth in baseline pumps.~~weaker service demand.

~~During~~Orders for the three and nine months ended September 30, ~~2017 orders increased $18.1,~~2019 decreased $6.7, or ~~3.1%~~2.8%, and $22.6, or 3.3%, which ~~includes favorable~~included orders of $17.5 and $27.7, respectively, from our second quarter acquisition of Rheinhütte, and an unfavorable foreign currency ~~impacts~~translation impact of ~~$1.2. The increase in~~$3.5 and $12.8, respectively. Organic orders ~~reflects stronger aftermarket activity as orders for service~~decreased $20.7, or 8.6%, and ~~parts increased approximately 13% and 2%~~$37.5, or 5.4%, respectively, for the three and ~~growth in short-cycle baseline pumps of approximately 4%~~nine month periods due to ~~stronger general industrial orders. Order activity for 2017 also included a $26 downstream~~pump project declines of 12% and 13%, driven by project delays and difficult comparisons to the prior year in the chemical and oil and gas ~~order in Africa received during the first quarter of 2017. Growth was~~markets partially offset by ~~lower project pump orders~~industrial. Orders from our short-cycle business during the third quarter and year-to-date periods declined 7% and 3% due mainly to weakness in ~~North America~~industrial valves and ~~Asia.~~aftermarket parts. In addition, for the quarter there was a decline in service demand in the Middle East.

The level of order and shipment activity related to project pumps can vary significantly from period to period, which may impact year-over-year comparisons. ~~Backlog~~IP’s backlog as of September 30, ~~2017~~2019 was ~~$375.5, reflecting an increase~~$425.2, a decrease of ~~$28.3,~~$19.0, or ~~8.2%~~4.3%, ~~from the~~compared to December 31, ~~2016 level.~~2018.

Connect & Control Technologies (CCT)

~~Motion Technologies~~

~~Revenue of $300.1~~CCT revenue for the three months ended September 30, ~~2017~~2019 increased ~~$61.4,~~$1.9, or ~~25.7%~~1.1%, which ~~includes incremental~~included revenue of ~~$19.6~~$4.2 from our ~~2017~~third quarter acquisition of ~~Axtone~~Matrix and ~~favorable~~an unfavorable foreign currency translation ~~impacts~~impact of ~~$13.5. Revenue~~$1.0. Organic revenue decreased $1.3, or 0.8% driven by lower defense component sales due to strong prior year program activity and decreases in industrial and oil and gas sales. This was partially offset by growth in commercial aerospace of 7%.

CCT revenue for the nine months ended September 30, ~~2017~~2019 increased ~~$122.2,~~$15.1, or ~~16.2%~~3.1%, which ~~includes incremental~~included revenue of ~~$55.6~~$4.2 from our ~~2017~~third quarter acquisition of ~~Axtone~~Matrix, and ~~favorable~~an unfavorable foreign currency translation ~~impacts~~impact of ~~$0.4. During the three and nine months ended September 30, 2017, organic~~$5.1. Organic revenue increased ~~$28.3,~~$16.0, or ~~11.9%, and $66.2, or 8.8%, respectively. The~~3.3% driven by growth in ~~organic revenue for both periods~~commercial aerospace of 12% mainly within components and aftermarket. This was ~~primarily driven~~partially offset by ~~our friction materials business from our continued strength~~declines in defense components due to prior year programs and oil and gas due to lower activity in the ~~automotive OEM sales channel primarily due to market growth~~Middle East and ~~share gains in China and Europe in both periods and North~~Latin America in third quarter, as well as strength 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.regions.

Orders for the three months ended September 30, ~~2017 increased $86.9,~~2019, decreased $8.0, or ~~36.7%~~4.8%, ~~including incremental~~which included orders of ~~$21.5~~$5.3 from our ~~2017~~third quarter acquisition of ~~Axtone~~Matrix and ~~favorable~~an unfavorable foreign currency translation ~~impacts~~impact of ~~$13.7.~~ $0.9. Organic orders decreased $12.4, or 7.4%, due to lower defense connectors on strong prior year program activity and lower industrial orders, partially offset by an increase in commercial aerospace components of 7%.

Orders for the nine months ended September 30, ~~2017 increased $136.5,~~2019 decreased $8.4 or ~~17.9%~~1.6%, ~~including incremental~~which included orders of ~~$54.0~~$5.3 from our ~~2017~~third quarter acquisition of ~~Axtone~~Matrix and an unfavorable foreign currency translation ~~impacts~~impact of ~~$0.2. During the three and nine months ended September 30, 2017 organic~~$5.5. Organic orders ~~grew $51.7,~~decreased $8.2, or ~~21.8%~~1.6%, 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%due to weakness 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~~lower rotorcraft orders. This 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. Aerospace and defense market revenues declined 2% and 3% during the three and nine months ended September 30, 2017, respectively, as weak commercial aerospace demand and impacts from restrictions on the sales of certain military-specification connectors were partially offset by ~~rotorcraft share gains~~commercial aerospace 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, due to increased activity for energy absorption and actuation components and electric vehicle connectors 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.growth.

On July 11, 2017, the U.S. Defense Logistics Agency, Land and Maritime (DLA) issued a notice that it ~~has~~had removed certain of our ~~connectors business~~military-specification connector products 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~~were estimated to range from $8 to ~~$10.~~$10 prior to the removal of these products from the QPL. The Company ~~will seek to restore its~~is making progress as the status of approximately half of these products has been restored 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~~and we expect the majority of the remaining products will be ~~any further negative impacts to our revenue and results~~restored by the middle of ~~operations related to the QPL removal.~~2020.

GROSS PROFIT

Gross profit for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 was ~~$203.1~~$231.3 and ~~$183.9,~~$226.5, reflecting a gross margin of ~~31.5%~~32.5% and ~~31.6%~~33.3%, respectively. Gross profit for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 was ~~$609.8~~$682.1 and ~~$584.8,~~$676.7, reflecting a gross margin of 32.1% and ~~32.2%~~32.7%, respectively. ~~Unfavorable automotive and aerospace pricing and sales mix impacts, increased direct material costs~~The declines in gross margin were primarily due to higher commodity ~~prices impacting our Motion Technologies segment,~~costs and tariffs and unfavorable ~~impacts from certain military-specification connectors~~product mix. These were ~~almost fully~~partially offset by ~~improved project performance at~~supply chain and productivity improvements across all segments and sales volume leverage.

OTHER

Tariffs

In 2018, the U.S. government announced tariffs on certain imported goods, and began renegotiating existing trade terms with China, Europe and other countries. These tariffs have negatively impacted the price of certain parts and materials we utilize to manufacture finished products we sell. Since announced, we have been managing the impacts of these tariffs and will attempt to mitigate the impact of higher input costs through pricing and supply chain actions, efficient utilization of our ~~Industrial Process segment, lower labor costs as a result~~global manufacturing footprint, and supplier negotiations and diversification strategies. Tariffs and related impacts remain highly uncertain due to the current dynamic landscape and ongoing negotiations. Therefore, we are unable to estimate the ultimate outcome tariffs will have on our results of ~~restructuring benefits from our structural cost reset at our Industrial Process segment~~operations, financial position and ~~operational improvements at our Connect & Control Technologies segment.~~cash flows.

OPERATING EXPENSES


	Three Months								Nine Months								Three Months								Nine Months
For the Periods Ended September 30	2017			2016			Change		2017			2016			Change		2019			2018			Change		2019			2018			Change
General and administrative expenses	$	73.7		$	59.2		24.5	%	$	205.2		$	202.2		1.5	%	$	69.5		$	68.0		2.2	%	$	187.5		$	196.6		(4.6	)%
Sales and marketing expenses	41.3			39.4			4.8	%	128.3			128.7			(0.3	)%	41.6			40.8			2.0	%	124.5			127.7			(2.5	)%
Research and development expenses	23.1			18.6			24.2	%	68.2			58.9			15.8	%	23.8			24.2			(1.7	)%	73.1			74.7			(2.1	)%
Loss (gain) on sale of long-lived assets																	0.1			(40.0		)	**		(0.3		)	(40.5		)	**
Asbestos-related benefit, net	(62.8		)	(68.1		)	(7.8	)%	(33.0		)	(40.3		)	(18.1	)%	(56.2		)	(4.3		)	**		(31.8		)	(10.5		)	**
Total operating expenses	$	75.3		$	49.1		53.4	%	$	368.7		$	349.5		5.5	%	$	78.8		$	88.7		(11.2	)%	$	353.0		$	348.0		1.4	%
Total Operating Expenses By Segment:
Motion Technologies																	$	40.0		$	40.6		(1.5	)%	$	120.0		$	131.9		(9.0	)%
Industrial Process	$	47.5		$	51.2		(7.2	)%	$	134.8		$	167.9		(19.7	)%	50.5			44.2			14.3	%	136.9			127.4			7.5	%
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	%	33.7			33.5			0.6	%	100.0			101.1			(1.1	)%
Corporate & Other	(51.2		)	(67.9		)	(24.6	)%	(5.4		)	(24.2		)	(77.7	)%	(45.4		)	(29.6		)	53.4	%	(3.9		)	(12.4		)	(68.5	)%

** Resulting percentage change not considered meaningful.

General and administrative (G&A) expenses for the three ~~and nine~~ months ended September 30, ~~2017~~2019 increased ~~$14.5, or 24.5%~~$1.5, due to higher legal and ~~$3.0, or 1.5%, respectively. The increase in~~acquisition-related costs of $5.9 and restructuring costs of $5.8, partially offset by lower compensation and benefit costs of $7.2 and favorable foreign exchange of $4.0. G&A expenses was primarily due to higher incentive compensation of $5.7 and $13.7, respectively, a pension curtailment of $3.7 in 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 these costs in the third quarter and almost fully offset these costs duringfor the nine months ended September 30, ~~2017. In addition, the nine-month period included unfavorable~~2019 decreased $9.1, due to favorable compensation and benefit costs of $13.6, European investment incentives of $5.0, and favorable foreign ~~currency impacts~~exchange of ~~$5.1 and a $5.0 legal accrual recorded during the second quarter of 2017,~~$5.3, which were partially offset by ~~a prior year trade name impairment~~higher restructuring costs of ~~$4.1~~$7.9 and ~~income~~acquisition-related costs of ~~$3.8 related to an amendment to our environmental QSF in the second quarter of 2017.~~$5.7.

Sales and marketing expenses for the three and nine months ended September 30, ~~2017~~2019 increased ~~$1.9, or 4.8%,~~$0.8 and decreased ~~$0.4, or 0.3%, respectively, as~~$3.2, respectively. The three and nine month periods include incremental costs ~~related to Axtone~~ of ~~$1.4~~$2.9 and ~~$2.9,~~$4.4, respectively, from our 2019 acquisitions of Rheinhütte and ~~higher overall selling costs at Motion Technologies were only partially offset~~Matrix and favorable foreign currency impact of $0.6 and $2.8, respectively. Excluding these items, sales and marketing expenses decreased $1.5 and $4.8 for the three and nine month periods, respectively, primarily driven 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.cost reduction actions across all segments.

Research and development expenses for the three and nine months ended September 30, ~~2017 increased $4.5, or 24.2%,~~2019 decreased $0.4 and ~~$9.3, or 15.8%, respectively,~~$1.6, respectively.

During the third quarter of 2018, we recognized a gain on sale of long-lived assets of $40.0 primarily due to the sale of a former operating location for a net gain of $38.

Asbestos-related benefit increased ~~product development activities at our Motion Technologies~~$51.9, and ~~Connect and Control Technologies segments. Incremental costs related to our acquisition of Axtone were $0.3 and $0.9~~$21.3, during the three and nine months ended September 30, ~~2017.~~

~~Asbestos-related benefit, net, decreased $5.3, or 7.8% and $7.3, or 18.1%, respectively, during~~2019, respectively. The change for the three and nine ~~months ended September 30, 2017~~month periods was primarily due to ~~a lower~~the current year remeasurement benefit of $68.1 compared to a remeasurement cost of $7.2 in the prior year, offset by a prior year insurance settlement of $24.9. The year-to-date fluctuation also includes a $32.1 benefit from ~~our annual remeasurement.~~an insurance settlement recorded in the first quarter of 2018. See Note ~~17,~~ 20, Commitments and Contingencies, to the Consolidated Condensed Financial Statements for further information.

OPERATING INCOME


	Three Months								Nine Months								Three Months								Nine Months
For the Periods Ended September 30	2017			2016			Change		2017			2016			Change		2019			2018			Change		2019			2018			Change
Motion Technologies																	$	56.7		$	58.5		(3.1	)%	$	169.6		$	175.9		(3.6	)%
Industrial Process	$	9.9		$	4.3		130.2	%	$	32.0		$	19.6		63.3	%	22.0			23.7			(7.2	)%	70.2			64.0			9.7	%
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	%	28.4			26.0			9.2	%	85.4			76.3			11.9	%
Segment operating income	76.5			66.9			14.3	%	235.6			211.0			11.7	%	107.1			108.2			(1.0	)%	325.2			316.2			2.8	%
Asbestos-related benefit, net	62.8			68.1			(7.8	)%	33.0			40.3			(18.1	)%	56.2			4.3			**		31.8			10.5			**
Gain on sale of long-lived assets																	—			38.0			**		0.5			38.0			**
Other corporate costs	(11.5		)	(0.2		)	**		(27.5		)	(16.0		)	(71.9	)%	(10.8		)	(12.7		)	15.0	%	(28.4		)	(36.0		)	21.1	%
Total corporate and other benefit	51.3			67.9			(24.4	)%	5.5			24.3			77.4	%
Total corporate																	45.4			29.6			53.4	%	3.9			12.5			(68.8	)%
Total operating income	$	127.8		$	134.8		(5.2	)%	$	241.1		$	235.3		2.5	%	$	152.5		$	137.8		10.7	%	$	329.1		$	328.7		0.1	%
Operating margin:
Motion Technologies																	18.6		%	18.9		%	(30	)bp	18.1		%	17.9		%	20	bp
Industrial Process	5.0		%	2.2		%	280	bp	5.6		%	3.2		%	240	bp	9.2		%	11.6		%	(240	)bp	10.2		%	10.7		%	(50	)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	16.9		%	15.7		%	120	bp	17.0		%	15.6		%	140	bp
Segment operating margin	11.9		%	11.5		%	40	bp	12.4		%	11.6		%	80	bp	15.0		%	15.9		%	(90	)bp	15.3		%	15.3		%	—
Consolidated operating margin	19.8		%	23.2		%	(340	)bp	12.7		%	12.9		%	(20	)bp	21.4		%	20.2		%	120	bp	15.5		%	15.9		%	(40	)bp

** Resulting percentage change not considered meaningful.

~~Industrial Process~~MT 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~~2019 decreased $1.8, and ~~pricing~~had a margin decline 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.~~30 basis points. 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~~2019 decreased $6.3, and had a margin improvement of 20 basis points. Operating income for both periods was ~~primarily driven~~unfavorably impacted by ~~improved project performance as well as net savings of approximately $20 due to restructuring benefits, productivity,~~higher commodity costs and ~~sourcing initiatives, a decrease in restructuring costs of $15~~tariffs, foreign currency, and ~~a trade name impairment of $4.1 recorded in the second quarter of 2016.~~higher strategic investment. These ~~items~~ were partially offset by ~~an unfavorable impact~~supply chain, productivity and restructuring actions which provided a benefit of ~~approximately $20~~$12 and $33 for the quarter and year-to-date periods, respectively. In addition, the nine month period benefited from ~~lower sales volume and a pension curtailment~~European investment incentives of ~~$3.7 recorded in the third quarter of 2017.~~$5.

~~Motion Technologies~~IP operating income for the three months ended September 30, 2019 decreased $1.7, and had a margin decline of 240 basis points. The decrease in operating income was primarily driven by an increase in restructuring and acquisition costs, higher commodity costs and unfavorable sales mix, partially offset by favorable volume, benefits from productivity and supply chain actions, and project execution. Operating income for the nine months ended September 30, ~~2017~~2019 increased ~~$3.9, or 8.6%,~~$6.2, and ~~$11.3, or 7.8%. Operating~~had a margin ~~for the three and nine months ended September 30, 2017 decreased 250~~decline of 50 basis ~~points to 16.4% and 140 basis points to 17.8%, respectively.~~points. The increase in operating income was primarily driven by favorable volume, price, and savings from productivity and supply chain actions, which more than offset higher ~~sales volume, which provided a benefit of approximately $14~~commodity costs and ~~$31, respectively and productivity improvements at our brake component facilities. These items were partially offset by~~tariffs, unfavorable ~~pricing and~~ sales mix, and higher ~~material costs,~~restructuring and ~~incremental investments to support recent long-term global automotive platform wins. Foreign currency fluctuations provided~~acquisition costs.

CCT operating income for the three months ended September 30, 2019 increased $2.4, and had a ~~favorable impact~~margin improvement of ~~$1.4 during the third quarter and an unfavorable impact of $5 during~~120 basis points. CCT operating income for the nine months ended September 30, ~~2017. In addition, our acquisition~~2019 increased $9.1, and had a margin improvement of ~~Axtone produced an operating loss of $1.4 due to acquisition related costs of $2.6 during the third quarter of 2017~~140 basis points. The increase was driven by benefits from productivity, supply chain, 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 months ended September 30, 2017~~restructuring actions, which were flat in both periods. Operating income was favorably impacted by net savings of approximately $6 and $14, respectively, due to restructuring benefits, productivity, and sourcing initiatives, primarily at our North American Connector facility. These items werepartially offset by unfavorable commodity costs, strategic investments, and sales mix and pricing of approximately $3 and $7 for the three and nine months ended September 30, 2017, respectively, as well as unfavorable foreign currency impacts of $0.7 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.mix.

Other corporate costs for the three and nine months ended September 30, ~~2017 increased $11.3~~2019 decreased $1.9 and ~~$11.5, respectively, primarily reflecting higher incentive~~$7.6, respectively. The decline in corporate costs for the three month period reflects lower compensation costs ~~of $8 and $10, respectively, and insurance-related benefits recorded in 2016. During the nine-month period ended September 30, 2017, disposal costs associated with a pending sale of property was~~which included savings from cost reduction actions, partially offset by ~~income of $3.8 related to an amendment to~~higher legal costs. The decline in corporate costs for the nine month period reflects lower compensation costs which included cost reduction actions as well as lower environmental ~~Qualified Settlement Fund (QSF) in the second quarter of 2017.~~costs.

INTEREST AND NON-OPERATING INCOME AND EXPENSES, NET

~~During~~



	Three Months							Nine Months
For the Periods Ended September 30	2019			2018		Change		2019			2018		Change
Interest and non-operating (income) expenses, net	$	(0.4	)	$	0.7	(157.1	)%	$	(1.3	)	$	4.0	(132.5	)%

The change during the three ~~months ended September 30, 2017~~ and ~~2016, we recognized interest and non-operating expenses, net of $0.2 and $0.3, respectively. During the~~ nine months ended September 30, ~~2017 and 2016, we recognized~~2019 was due to favorable 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~~rates on commercial paper borrowings, interest income ~~from~~earned on time deposits, and lower pension-related expense, partially offset by interest income in the ~~current year.~~prior year related to a change in uncertain tax position.

INCOME TAX EXPENSE



	Three Months								Nine Months
For the Periods Ended September 30	2019			2018			Change		2019			2018			Change
Income tax expense	$	34.1		$	25.9		31.7	%	$	73.1		$	42.4		72.4	%
Effective tax rate	22.3		%	18.9		%	340	bp	22.1		%	13.1		%	900	bp

The higher effective tax rate ~~in 2016~~during the third quarter of 2019 was primarily ~~driven by an increase in~~due to the deferred tax liability on foreign earnings which are not considered indefinitely reinvested. Refer to Note 2, Recent Accounting Pronouncements, for further information on ASU 2016-09. In addition, the Company continues to benefit from a larger mix2018 release of ~~earnings in non-U.S. jurisdictions with favorable tax rates.~~

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, Germany, Hong Kong, 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~~$3.4 related to audit closures and regulations in various tax jurisdictions. Due 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 liability for unrecognized tax benefits of $1.8 in ~~foreign and domestic jurisdictions could change by approximately $17~~2018 from valuation allowance reversals on deferred tax assets. The higher effective tax rate during the year-to-date period was primarily due to ~~changes~~tax benefits of $21.6 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~~2018 from German valuation allowance reversals on deferred 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.~~assets.

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. We expect to fund our ongoing working capital, capital expenditures, dividends and financing requirements through cash flows from operations and cash on hand, or by accessing the U.S. or European commercial paper ~~market. If our access to the commercial paper market were adversely affected, we believe that alternative sources of liquidity, including~~markets or our Revolving Credit ~~Agreement, described below, would be sufficient to meet our short-term funding requirements.~~Agreement.

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~~The passage of the ~~U.S. consistent with~~Tax Act provides greater flexibility around our ~~overall intention~~global cash management strategy related to the amount and timing of transfers, and we will 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,~~year ended December 31, 2018, 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 U.S. of $318.1. Net cash distributions from foreign countries to the U.S. during the nine months ended September 30, ~~2017. Cash distributions from foreign countries amounted to $100.0 for the year ended December 31, 2016.~~2019 was $11.4. The timing and amount of any additional future distributions ~~if any,~~ remains under evaluation.

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. InThrough the third quarter of ~~2017,~~2019, we declared ~~a dividend~~dividends of ~~$0.128~~$0.147 per share for shareholders

of record on March 11, 2019, June 10, 2019 and September ~~11, 2017, which was paid on October 2, 2017.~~10, 2019. The ~~dividend~~dividends declared in ~~the third quarter~~2019 of ~~2017 is~~$39.0 were a ~~3.2%~~9.6% increase from ~~the third quarter of 2016.~~dividends declared in 2018.

During the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, we repurchased ~~0.8~~ and ~~1.9~~retired 0.5 and 1.0 shares of common stock for ~~$30.0~~$28.7 and ~~$66.6,~~$50.0, respectively, under our $1 billion share repurchase program. To date, under the program, the Company has repurchased ~~21.2~~22.7 shares for ~~$859.4.~~$938.1. In addition, on October 30, 2019, the Board of Directors approved a new $40 share repurchase authorization to effectively close out our current $1 billion share repurchase program and approved the adoption of a new indefinite term $500 share repurchase program.

Significant factors that affect our overall management of liquidity include our credit ratings, the ~~adequacy~~availability of commercial paper, ~~and supporting~~access to 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 have access to 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 and other funding requirements. We manage our short-term liquidity through the use of our commercial paper program by adjusting the level of commercial paper borrowings as opportunities to deploy additional capital arise and it is cost effective to do so. As of September 30, ~~2017,~~2019, we had an outstanding commercial paper ~~balance~~ of ~~$130.9.~~$120.3 through our European program. The average outstanding commercial paper balance during the nine months ended September 30, ~~2017~~2019 was ~~$131.6.~~$129.8. There have been no other material changes that have impacted our funding and liquidity capabilities since December 31, ~~2016.~~2018.

Revolving Credit ~~Facilities~~Agreement

Our $500 revolving ~~$500~~ credit agreement (the Revolving Credit Agreement) provides for increases of up to $200 for a possible maximum total of $700 in aggregate principal amount, at the request of the Company and with the consent of the institutions providing such increased commitments. The Revolving Credit Agreement is intended to provide access to additional liquidity 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. 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~~Our interest coverage ratio and leverage ratio were within the prescribed ~~thresholds.~~thresholds as of September 30, 2019, and as of that date there were no outstanding borrowings under our Revolving Credit Agreement. In the event of ~~certain~~a ratings ~~downgrades~~downgrade 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. The Revolving Credit Agreement matures in November 2021.

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 operating, investing, and financing activities from continuing operations, as well as net cash from discontinued operations, for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.


For the Nine Months Ended September 30	2017			2016			2019			2018
Operating activities	$	178.4		$	146.7		$	221.7		$	246.6
Investing activities	(189.3		)	(22.5		)	(180.8		)	(21.1		)
Financing activities	(75.3		)	(78.4		)	(36.9		)	(76.2		)
Foreign exchange	22.3			9.0			(10.6		)	(11.4		)
Total net cash flow (used in) provided by continuing operations	(63.9		)	54.8			(6.6		)	137.9
Net cash (used in) provided by discontinued operations	(1.2		)	5.3
Net cash provided by (used) in discontinued operations							1.1			(1.9		)
Net change in cash and cash equivalents	$	(65.1	)	$	60.1		$	(5.5	)	$	136.0

~~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.~~ Operating Activities

The ~~change~~decrease in net cash provided by operating activities ~~primarily reflects~~was driven by $19.0 in proceeds received in 2018 from an ~~increase~~environmental insurance-related settlement, higher income tax payments of $16.9 in ~~segment operating income~~2019, a discretionary postretirement contribution of ~~approximately $14, after adjustments for non-cash charges, such as depreciation~~$9.0 and ~~amortization as well as higher incentive compensation payments~~unfavorable changes in ~~the prior year.~~working capital. These items were partially offset by a decline in net asbestos and environmental payments of $22.2 and $10.2, respectively, and an increase in ~~asbestos-related payments~~segment operating income. Additionally, in 2019 the Company’s net settlement of ~~$15.0 due to~~a $10 civil matter with 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~~DOJ was partially offset by ~~a decrease~~proceeds received of $9 from an intellectual property settlement.

Investing Activities

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

~~Net~~net cash used byin investing activities was ~~$189.3~~driven by our 2019 acquisitions of Rheinhütte and Matrix for a total of $113.1 and proceeds of $40 in 2018 from the ~~nine months ended September 30, 2017,~~sale of a former operating location. In addition, capital expenditures increased $5.5 compared to ~~$22.5 of~~the prior year.

Financing Activities

The change in net cash used by investing activities during the same prior year period. The year-over-year increase reflects the purchase of Axtone for $113.7 (net 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~~from financing activities was ~~$75.3 reflecting~~driven by an increase in net borrowings of $18.7 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~~$17.5. In addition, proceeds from the issuance of common stock increased $5.8.

Discontinued Operations

The change in net ~~borrowings and lower proceeds of $2.1~~cash from ~~employee stock option exercises.~~

~~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~~tax-related reimbursement of $1.8 from ~~Xylem Inc. related to the Tax Matters Agreement.~~a former subsidiary and lower payments for environmental remediation activities.

Asbestos

Based on the estimated undiscounted asbestos liability as of September 30, ~~2017~~2019 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%~~49% 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%~~29%. 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.~~2019.

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~~$20 to ~~$25~~$30 over the next five years and increase to an average of approximately ~~$30~~$35 to ~~$40~~$45 per year over the remainder of the projection ~~period. Total net~~period as certain insurance coverage is exhausted. Net cash outflows for defense and indemnity, net of tax, averaged ~~$13, including~~$21 over the past three annual periods. Total net asbestos cash outflows also include certain administrative costs, such as ~~legal related~~legal-related costs for insurance ~~asset recoveries, over~~recovery strategies not included in the ~~past three annual periods.~~defense and indemnity projections.

In light of the variables and uncertainties inherent in the long-term projection of the ~~Company's~~Company’s asbestos exposures and potential recoveries, ~~although~~while 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.~~2029.

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, earnings per share, order growth, and backlog, some of which are non-GAAP financial measures. 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 metrics, however, are not measures of financial performance under accounting principles generally accepted in the United States of America (GAAP) and should not be considered a substitute for measures determined in accordance with GAAP.

We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:

~~"organic revenue" and "organic orders"~~

“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 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 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 months ended September 30, ~~2017~~2019 are provided ~~below:~~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 %



Three Months Ended September 30	Motion Technologies				Industrial Process				Connect & Control Technologies				Eliminations				Total ITT
2019 Revenue		$	304.5			$	240.3			$	167.9			$	(0.8	)		$	711.9
Acquisitions		—				(18.4		)		(4.2		)		—				(22.6		)
Foreign currency translation		11.2				3.4				1.0				—				15.6
2019 Organic revenue		$	315.7			$	225.3			$	164.7			$	(0.8	)		$	704.9
2018 Revenue		$	310.3			$	205.0			$	166.0			$	(0.7	)		$	680.6
Organic growth (decline)		5.4				20.3				(1.3		)		(0.1		)		24.3
Percentage change		1.7		%		9.9		%		(0.8		)%						3.6		%


Nine Months Ended September 30
2019 Revenue		$	937.4			$	688.6			$	503.1			$	(1.8	)		$	2,127.3
Acquisitions		—				(26.3		)		(4.2		)		—				(30.5		)
Foreign currency translation		50.5				11.4				5.1				(0.2		)		66.8
2019 Organic revenue		$	987.9			$	673.7			$	504.0			$	(2.0	)		$	2,163.6
2018 Revenue		$	982.8			$	598.0			$	488.0			$	(2.1	)		$	2,066.7
Organic growth		5.1				75.7				16.0				0.1				96.9
Percentage change		0.5		%		12.7		%		3.3		%						4.7		%

"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.



Three Months Ended September 30	Motion Technologies				Industrial Process				Connect & Control Technologies				Eliminations				Total ITT
2019 Orders		$	309.0			$	235.0			$	158.8			$	(0.7	)		$	702.1
Acquisitions		—				(17.5		)		(5.3		)		—				(22.8		)
Foreign currency translation		11.6				3.5				0.9				—				16.0
2019 Organic orders		$	320.6			$	221.0			$	154.4			$	(0.7	)		$	695.3
2018 Orders		$	314.2			$	241.7			$	166.8			$	(0.6	)		$	722.1
Organic growth (decline)		6.4				(20.7		)		(12.4		)		(0.1		)		(26.8		)
Percentage change		2.0		%		(8.6		)%		(7.4		)%						(3.7		)%


Nine Months Ended September 30
2019 Orders		$	952.4			$	666.6			$	517.4			$	(2.6	)		$	2,133.8
Acquisitions		—				(27.7		)		(5.3		)		—				(33.0		)
Foreign currency translation		53.7				12.8				5.5				—				72.0
2019 Organic orders		$	1,006.1			$	651.7			$	517.6			$	(2.6	)		$	2,172.8
2018 Orders		$	1,011.7			$	689.2			$	525.8			$	(1.6	)		$	2,225.1
Organic decline		(5.6		)		(37.5		)		(8.2		)		(1.0		)		(52.3		)
Percentage change		(0.6		)%		(5.4		)%		(1.6		)%						(2.4		)%

“Adjusted operating income” and “Adjusted segment operating income” are defined as operating income, 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, and unusual or infrequent 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. “Adjusted operating margin” and “Adjusted segment operating margin” is defined as adjusted operating income or adjusted 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.

Reconciliations of ~~segment~~ operating income to adjusted ~~segment~~ operating income for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 are provided below.

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
Three Months Ended September 30, 2019														Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate				Total ITT
Operating income															$	56.7			$	22.0			$	28.4			$	107.1			$	45.4			$	152.5
Asbestos-related benefit, net															—				—				—				—				(56.2		)		(56.2		)
Restructuring costs		2.9			1.1				—			4.0			0.7				5.1				0.9				6.7				—				6.7
Acquisition-related expenses		—			0.6				—			0.6			—				3.0				0.3				3.3				—				3.3
Realignment costs and other^(a)		—			—				1.3			1.3			(0.1		)		1.0				(0.1		)		0.8				0.8				1.6
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
Adjusted operating income (loss)															$	57.3			$	31.1			$	29.5			$	117.9			$	(10.0	)		$	107.9
Adjusted operating margin															18.8		%		12.9		%		17.6		%		16.6		%						15.2		%


Nine Months Ended September 30, 2019														Nine Months Ended September 30, 2019
Operating income															$	169.6			$	70.2			$	85.4			$	325.2			$	3.9			$	329.1
Asbestos-related benefit, net															—				—				—				—				(31.8		)		(31.8		)
Restructuring costs		19.9			2.5				0.9			23.3			4.5				5.5				0.8				10.8				0.1				10.9
Acquisition-related expenses		—			2.8				1.5			4.3			—				5.9				1.1				7.0				—				7.0
Realignment costs and other^(a)		4.1			(0.1		)		3.4			7.4			1.2				1.5				0.2				2.9				0.5				3.4
Adjusted segment operating income		$	43.6		$	150.0			$	52.4		$	246.0
Adjusted operating income (loss)															$	175.3			$	83.1			$	87.5			$	345.9			$	(27.3	)		$	318.6
Adjusted operating margin															18.7		%		12.1		%		17.4		%		16.3		%						15.0		%

(a)

~~Primarily reflects realignment~~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, andother includes costs associated with a legal matter at MT, an intangible asset impairment and 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~~IP, as well as costs associated with a resolved DOJ civil matter at ~~our Industrial Process segment for trade names as~~CCT. Realignment costs and other at Corporate primarily relate to a ~~result of the downturn in the upstream oil and gas market.~~management reorganization.



Three Months Ended September 30, 2018	Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate				Total ITT
Operating income		$	58.5			$	23.7			$	26.0			$	108.2			$	29.6			$	137.8
Net gain related to sale of former operating location		—				—				—				—				(38.0		)		(38.0		)
Asbestos-related benefit, net		—				—				—				—				(4.3		)		(4.3		)
Restructuring costs		0.4				—				0.5				0.9				—				0.9
Acquisition-related expenses		(2.1		)		—				—				(2.1		)		—				(2.1		)
Realignment costs and other		—				—				—				—				0.1				0.1
Adjusted operating income (loss)		$	56.8			$	23.7			$	26.5			$	107.0			$	(12.6	)		$	94.4
Adjusted operating margin		18.3		%		11.6		%		16.0		%		15.7		%						13.9		%

Nine Months Ended September 30, 2018
Operating income		$	175.9			$	64.0			$	76.3			$	316.2			$	12.5			$	328.7
Net gain related to sale of former operating location		—				—				—				—				(38.0		)		(38.0		)
Asbestos-related benefit, net		—				—				—				—				(10.5		)		(10.5		)
Restructuring costs		1.7				—				1.3				3.0				—				3.0
Acquisition-related expenses		(0.6		)		—				—				(0.6		)		—				(0.6		)
Realignment costs and other		—				—				—				—				(0.4		)		(0.4		)
Adjusted operating income (loss)		$	177.0			$	64.0			$	77.6			$	318.6			$	(36.4	)		$	282.2
Adjusted operating margin		18.0		%		10.7		%		15.9		%		15.4		%						13.7		%

“Adjusted income from continuing operations” is defined as income from continuing operations attributable to ITT Inc. 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 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. 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” 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 income from continuing operations per diluted share 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.

"adjusted income from continuing operations" and "adjusted income from continuing operations per diluted share" are 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 adjusted income from continuing operations per diluted share, for the three and nine months ended September 30, 2019 and 2018 is provided below.

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



	Three Months						Nine Months
For the Periods Ended September 30	2019			2018			2019			2018
Income from continuing operations attributable to ITT Inc.	$	118.7		$	111.0		$	256.9		$	281.8
Net asbestos-related benefit, net of tax expense of $13.2, $1.0, $7.5 and $2.5, respectively	(43.0		)	(3.3		)	(24.3		)	(8.0		)
Net gain related to sale of a former operating location, net of tax expense of $0.0, $8.9, $0.1, and $8.9, respectively	—			(29.0		)	(0.3		)	(29.1		)
Restructuring costs, net of tax benefit of $1.7, $0.3 $2.9, and $0.7, respectively	5.0			0.6			8.0			2.3
Acquisition-related costs (benefit), net of tax (benefit) expense of ($1.1), $0.6, ($2.0) and $0.2, respectively	2.2			(1.5		)	5.0			(0.4		)
Tax-related special items^(a)	2.2			(5.4		)	1.7			(32.6		)
Realignment costs, net of tax benefit of $0.2, $0.0, $0.3, and $0.1, respectively^(b)	0.5			—			1.0			—
Other unusual or infrequent items, net of tax (benefit) expense of $(0.3), $0.0, ($0.6) and $0.1, respectively^(c)	0.6			0.3			1.9			(0.1		)
Adjusted income from continuing operations	$	86.2		$	72.7		$	249.9		$	213.9
Income from continuing operations attributable to ITT Inc. per diluted share	$	1.34		$	1.25		$	2.90		$	3.18
Adjusted income from continuing operations per diluted share	$	0.97		$	0.82		$	2.82		$	2.41


(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~~during the three and nine months ended September 30, ~~2017~~2019 primarily relate to tax expense ~~due to the distribution of foreign earnings offset by a tax benefit~~ on undistributed foreign ~~earnings~~earnings. Tax-related special items during the nine months ended September 30, 2018 are due to favorable valuation allowance impacts on deferred tax assets in Germany and adjustments to our provisional tax estimate associated with the Tax Act. Both the three and nine month periods in 2018 also include benefits onfrom uncertain tax positions. ~~Tax-related special items for~~


(b)	Realignment costs during the three and nine months ended September 30, ~~2016~~2019 primarily relate to ~~tax expense due to distributions of foreign earnings offset by a benefit for previously unrecognized tax positions.~~management reorganizations costs at IP and our Corporate Headquarters.

(c)

Other unusual or infrequent items in ~~2017 primarily consist of a pension curtailment, as well as second quarter items which~~2019 include a legal ~~accrual of $5, income of $3.8 related to an amendment to the environmental QSF~~matter at MT 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 2016costs associated with a resolved DOJ civil matter 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.CCT.

“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 adjusted free cash flow may not be available for discretionary purposes. “Adjusted free cash flow conversion” is defined as adjusted free cash flow divided by adjusted income from continuing operations. We believe that adjusted free cash flow and adjusted free cash flow conversion provide useful information to investors because they are the additional cash flow metrics used by management to monitor and evaluate cash flows generated by our operations.

"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.

A reconciliation of adjusted free cash flow, including adjusted free cash flow conversion for the nine months ended September 30, 2019 and 2018 is provided below.


For the Nine Months Ended September 30	2017			2016			2019			2018
Net cash provided by operating activities	$	178.4		$	146.7		$	221.7		$	246.6
Capital expenditures	(79.2		)	(68.1		)	(69.3		)	(63.8		)
Net asbestos cash flows							20.1			42.3
Insurance settlement agreement, net							—			(16.9		)
Restructuring cash payments	13.8			22.7			7.8			5.9
Net asbestos cash flows	39.5			24.5
Realignment and discretionary pension payments	12.2			4.2
Discretionary pension contributions, net of tax							6.9			—
Legal settlements, net							5.1			—
Acquisition and other							1.5			—
Adjusted free cash flow	$	164.7		$	130.0		$	193.8		$	214.1
Adjusted free cash flow conversion							77.6		%	100.1		%

RECENT ACCOUNTING PRONOUNCEMENTS

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

CRITICAL ACCOUNTING ESTIMATES

The preparation of ~~ITT's~~ITT’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 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~~2018 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 changes concerning ~~ITT's~~ITT’s critical accounting estimates as described in our ~~2016~~2018 Annual 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~~2018 Annual ~~Report.~~Report.



~~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 Exchange Act) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this 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 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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 of these proceedings allege 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. Descriptions of certain legal proceedings to which the Company is a party are contained in Note ~~17,~~ 20, Commitments and Contingencies to the Consolidated Condensed Financial Statements included in Part I, Item 1 of this Report and are incorporated by reference herein. Such descriptions include the following recent developments:

Asbestos Proceedings

Subsidiaries of ITT, ITT LLC and Goulds Pumps LLC, are joined as a defendant with numerous other companies in product liability lawsuits alleging personal injury due 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~~Company’s 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~~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~~Company’s asbestos exposures and potential recoveries. As of September 30, ~~2017,~~2019, 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,~~$827.8, including expected legal fees, and an associated asset of ~~$374.3~~$407.1 which represents estimated recoveries from insurers, resulting in a net asbestos exposure of ~~$501.2.~~$420.7.

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~~“Risk Factors,"” of our ~~2016~~2018 Annual Report, which are incorporated by reference herein. There have been no material changes with regard to the risk factors disclosed in such report.



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

Purchases of equity securities by the issuer and affiliated purchasers

(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



(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⁾
7/1/2019 - 7/31/2019	—		$	—		—		$	80.1
8/1/2019 - 8/31/2019	0.3		$	55.77		0.3		$	61.9
9/1/2019 - 9/30/2019	—		$	—		—		$	61.9


(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~~share repurchase program which it modified on December 16, 2008 ~~our Board of Directors modified~~to make the ~~provisions of the Share Repurchase Program to replace the original three-year~~ term ~~with an indefinite term.~~indefinite. As of September 30, ~~2017,~~2019, we had repurchased ~~21.2~~22.7 shares for ~~$859.4,~~$938.1, including commissions, under this program. On October 30, 2019, the ~~Share Repurchase Program. The~~Board of Directors approved a $40 share repurchase authorization to effectively close out the current share repurchase program and in addition approved a new $500 share repurchase program with an indefinite life. We intend to utilize the program 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 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 million~~€2.2 euros and ~~Euros 1.5 million,~~€1.5 euros, respectively. Prior to its acquisition by ITT, Bornemann issued a performance bond to its Iranian customer in the amount of ~~Euros 1.3 million~~€1.3 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,~~2019, however, Bornemann did pay fees ~~in 2016~~ of approximately ~~Euros 11~~€8 thousand euros during the nine months ended September 30, 2019 and approximately €11 thousand euros during 2018 to the German financial institution which is maintaining the Bond.



~~ITEM 6.~~	ITEM 6. EXHIBITS



EXHIBIT NUMBER		DESCRIPTION

(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,~~2019, 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 September 30, 2019, formatted in Inline XBRL (included in Exhibit 101).

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.

		(Registrant)

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

November ~~2, 2017~~1, 2019

4041



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



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



☑	Large accelerated filerþ	☐	Accelerated filero	☐	Non-accelerated filero	☐	Smaller reporting companyo
☐	Emerging growth companyo		~~(Do not check if a smaller reporting company)~~



	September 30, 2017			December 31, 2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	395.6		$	460.7
Receivables, net	611.6			523.9
Inventories, net	327.9			295.2
Other current assets	130.1			122.0
Total current assets	1,465.2			1,401.8
Plant, property and equipment, net	503.5			464.5
Goodwill	882.6			774.7
Other intangible assets, net	159.8			160.3
Asbestos-related assets	309.6			314.6
Deferred income taxes	285.7			297.4
Other non-current assets	193.7			188.4
Total non-current assets	2,334.9			2,199.9
Total assets	$	3,800.1		$	3,601.7
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term loans and current maturities of long-term debt	$	191.1		$	214.3
Accounts payable	334.7			301.7
Accrued liabilities	399.6			350.2
Total current liabilities	925.4			866.2
Asbestos-related liabilities	798.1			877.5
Postretirement benefits	251.3			248.6
Other non-current liabilities	172.1			181.0
Total non-current liabilities	1,221.5			1,307.1
Total liabilities	2,146.9			2,173.3
Shareholders’ equity:
Common stock:
Authorized – 250.0 shares, $1 par value per share
Issued and Outstanding – 88.0 shares and 88.4 shares, respectively	88.0			88.4
Retained earnings	1,924.5			1,789.2
Total accumulated other comprehensive loss	(360.9		)	(451.2		)
Total ITT Inc. shareholders' equity	1,651.6			1,426.4
Noncontrolling interests	1.6			2.0
Total shareholders’ equity	1,653.2			1,428.4
Total liabilities and shareholders’ equity	$	3,800.1		$	3,601.7



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



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


ITEM		PAGE		PAGE
PART I – FINANCIAL INFORMATION
1.	Financial Statements		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 Operations	1	Consolidated Condensed Statements of Cash Flows	4
	Consolidated Condensed Statements of Comprehensive Income	2	Consolidated Condensed Statements of Changes in Shareholders’ Equity	5
	Consolidated Condensed Balance Sheets	3	Notes to Consolidated Condensed Financial Statements:
	Consolidated Condensed Statements of Cash Flows	4	Note 1. Description of Business and Basis of Presentation	7
	Consolidated Condensed Statements of Changes in Shareholders' Equity	5	Note 2. Recent Accounting Pronouncements	7
	Notes to Consolidated Condensed Financial Statements:		Note 3. Segment Information	9
	Note 1. Description of Business and Basis of Presentation	6	Note 4. Revenue	10
	Note 2. Recent Accounting Pronouncements	7	Note 5. Restructuring Actions	11
	Note 3. Segment Information	9	Note 6. Income Taxes	12
	Note 4. Restructuring Actions	10	Note 7. Earnings Per Share Data	12
	Note 5. Income Taxes	11	Note 8. Receivables, Net	12
	Note 6. Earnings Per Share Data	12	Note 9. Inventories, Net	13
	Note 7. Receivables, Net	12	Note 10. Other Current and Non-Current Assets	13
	Note 8. Inventories, Net	12	Note 11. Plant, Property and Equipment, Net	13
	Note 9. Other Current and Non-Current Assets	13	Note 12. Goodwill and Other Intangible Assets, Net	14
	Note 10. Plant, Property and Equipment, Net	13	Note 13. Accrued Liabilities and Other Non-Current Liabilities	15
	Note 11. Goodwill and Other Intangible Assets, Net	14	Note 14. Leases	15
	Note 12. Accrued Liabilities and Other Non-Current Liabilities	15	Note 15. Debt	16
	Note 13. Debt	15	Note 16. Postretirement Benefit Plans	17
	Note 14. Postretirement Benefit Plans	16	Note 17. Long-Term Incentive Employee Compensation	18
	Note 15. Long-Term Incentive Employee Compensation	17	Note 18. Capital Stock	18
	Note 16. Capital Stock	17	Note 19. Accumulated Other Comprehensive Loss	19
	Note 17. Commitments and Contingencies	18	Note 20. Commitments and Contingencies	19
	Note 18. Acquisitions	21	Note 21. Acquisitions	22

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Overview	22	Overview	24
	Discussion of Financial Results	22	Discussion of Financial Results	24
	Liquidity	28	Liquidity	30
	Key Performance Indicators and Non-GAAP Measures	32	Key Performance Indicators and Non-GAAP Measures	33
	Recent Accounting Pronouncements	36	Recent Accounting Pronouncements	37
	Critical Accounting Estimates	36	Critical Accounting Estimates	37
3.	Quantitative and Qualitative Disclosures about Market Risk	36	Quantitative and Qualitative Disclosures about Market Risk	37
4.	Controls and Procedures	36	Controls and Procedures	37
PART II – OTHER INFORMATION
1.	Legal Proceedings	37	Legal Proceedings	38
1A.	Risk Factors	38	Risk Factors	38
2.	Unregistered Sales of Equity Securities and Use of Proceeds	38	Unregistered Sales of Equity Securities and Use of Proceeds	39
3.	Defaults Upon Senior Securities	38	Defaults Upon Senior Securities	39
4.	Mine Safety Disclosures	38	Mine Safety Disclosures	39
5.	Other Information	38	Other Information	39
6.	Exhibits	39	Exhibits	40
	Signature	40	Signature	41



	Common Stock					Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total Shareholders' Equity
	(Shares)		(Dollars)

December 31, 2018	87.6		$	87.6		$	2,110.3		$	(375.5	)	$	2.5		$	1,824.9

Net income	—		—			71.3			—			0.1			71.4
Activity from stock incentive plans	0.6		0.6			8.9			—			—			9.5
Share repurchases	(0.4	)	(0.4		)	(19.5		)	—			—			(19.9		)
Dividends declared ($0.147 per share)	—		—			(12.9		)	—			—			(12.9		)
Total other comprehensive loss, net of tax	—		—			—			(1.8		)	—			(1.8		)
Other	—		—			—			—			0.1			0.1
March 31, 2019	87.8		$	87.8		$	2,158.1		$	(377.3	)	$	2.7		$	1,871.3

Net income	—		—			66.8			—			0.2			67.0
Activity from stock incentive plans	0.1		0.1			7.1			—			—			7.2
Share repurchases	—		—			(0.1		)	—			—			(0.1		)
Dividends declared ($0.147 per share)	—		—			(13.1		)	—			—			(13.1		)
Dividend to noncontrolling interest	—		—			—			—			(0.7		)	(0.7		)
Total other comprehensive income, net of tax	—		—			—			5.8			—			5.8
June 30, 2019	87.9		$	87.9		$	2,218.8		$	(371.5	)	$	2.2		$	1,937.4

Net income	—		—			118.6			—			0.1			118.7
Activity from stock incentive plans	—		—			7.2			—			—			7.2
Share repurchases	(0.3	)	(0.3		)	(18.0		)	—			—			(18.3		)
Dividends declared ($0.147 per share)	—		—			(13.0		)	—			—			(13.0		)
Total other comprehensive loss, net of tax	—		—			—			(32.1		)	—			(32.1		)
September 30, 2019	87.6		$	87.6		$	2,313.6		$	(403.6	)	$	2.3		$	1,999.9



	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	%



	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



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

# of Awards Granted

Weighted Average Grant Date Fair Value Per Share

Restricted stock units (RSUs)

Performance stock units (PSUs)