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Strategies & Market Trends : Value Investing
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From: Rex Torro12/16/2011 3:08:48 PM
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Subject: ITT Exelis (XLS)

Hi,

I'm hoping someone can answer a question I have about ITT Exelis (XLS).

A 10/28/11 ITT news release indicated the pension liability transferred to XLS was re-measured upwards by $661 million. My question is was this revaluation reflected in the 6/30/11 pro forma balance sheet shown in final amdended form 10?

Otherwise, I'm assuming the other side of the entry to the revaluation would be equity thus reducing book value by the same amount, or nearly halving it. I'm guessing the 6/30/11 pro forma financials did not contemplate this revaluation, since the press release states "The re-measurement was as of September 30, 2011".

If this is the case, am I correct that the other side of the entry would be a debit to equity for $661M? 6/30/11 pro forma equity was $1.2B. This would result in a current MC/BV multiple of around 2.6 i.e. 1.62/(1.24-.61)=2.6.

Thanks.

itt.com
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