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To: Spekulatius who wrote (45805)	12/4/2011 6:54:20 PM
From: Sergio H	Read Replies (1) \| Respond to of 78702

XLS Clownbuck, there was an adjustment to the amount of retirement obligation spun off to XLS: <as a result of third-quarter amendments to the U.S. retirement programs, ITT Corporation re-measured its projected benefit obligations and plan assets for certain U.S. and international pension plans. The re-measurement was as of September 30, 2011, and resulted in an increase to ITT's net pension liability of $661 million. The re-measured plans were primarily the salaried retirement plan and excess compensation plan, which will transfer to ITT Exelis upon completion of the spinoff on October 31. This increase in pension liability is not expected to result in a material impact on the future ITT Exelis financial condition. >

To: Spekulatius who wrote (45805)	12/15/2011 11:30:42 PM
From: Difco	Read Replies (1) \| Respond to of 78702

Clownbuck, Quick question on XLS: I saw that they made a dividend payment to ITT for $884 million and also had $662 million transfer to parent in 2010 (shown as transfer on the cash flow). Do you by any chance know why those payments were made? I presume in 2010 it might have been distribution of income, but for the $884 they borrowed the funds, so I am confused on that one. "In connection with the Spin-off, the Company issued senior notes and borrowed under a credit facility to fund an $884 dividend to ITT (“ITT Dividend”). Specifically, on September 20, 2011, we issued an aggregate principal amount of $650 senior notes (See Note 9, Debt) and on October 28, 2011 we borrowed $240 under a revolving credit facility (See Note 15, Subsequent Events). The net proceeds from the issuance of the senior notes and borrowings under the credit facility were paid to ITT to fund the ITT Dividend. Following the Spin-off on October 31, 2011, we will have cash and cash equivalents balance of at least $200." You bring good points on the presentation of their pension liabilities - I don't understand why the BS doesn't show the deferred tax asset, but instead there is $222 million of deferred tax liability? I would think that the auditors have signed off that the presentations are appropriate under GAAP. Thanks for your thoughts on this one.