Welcome to ITT Corporation’s first quarter 2009 earnings conference call. Hosting the call today from ITT headquarters is Steven Loranger, President and Chief Executive Officer. He is joined by Denise Ramos, Chief Financial Officer and additional speakers. Today’s call is being recorded and will be available for replay beginning at 1 p.m. EST. (Operator Instructions) It is now my pleasure to turn the floor over to Tom Scalera, Director of Investor Relations.

Good morning and welcome to ITT’s first quarter 2009 investor review. Thank you for joining us on a very busy earnings release day. We do appreciate that this may be the third or fourth call for some of you this morning, and we appreciate your participation. Presenting this morning are Chairman and CEO Steve Loranger and Chief Financial Officer Denise Ramos. Today, Steve will highlight first quarter 2009 results and other important developments at ITT. Denise will provide a detailed review of the quarter’s performance and the 2009 earnings outlook. I’d like to highlight that this morning’s presentation, press release, and all non-GAAP financial measures provided during the call can be found on our web site at www.ITT.com/IR. Lastly, please note that any remarks we may make about future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provision. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in ITT’s Form 10K as well as our other public SEC filings. Now, let me turn things over to Steve.

Thank you to all of you for joining us on a busy earnings day and week. In this economy, we are very pleased with our first quarter performance and the underlying resiliency of our portfolio. Across all three of our segments, our business leaders saw their way through challenging market conditions and they never lost sight of our long-term strategic goals. I’d like to highlight several important events in 2009 that demonstrate the long-term strategic value of ITT’s unique portfolio. I’m going to talk about some nice examples of our focus in critical enduring markets such as water, security, and air transportation. Our ITT business in India was awarded its largest contract to date for $22 million to supply water pumps to India’s most expansive irrigation project. We’re all very proud to know that ITT pumps will help irrigate over 250,000 acres of farmland in an area known as the rice bowl of India. Our Night Vision business celebrated a milestone anniversary this quarter. For 50 years, Night Vision technology and advanced components and strong operating execution have made them a leader in this important field. Our Night Vision team is a trusted partner for the US military and allied militaries; a trust that’s been earned over decades of hard work, and as a world’s leader in optimal intensification, we’re all very excited about what this team can do over the next 50 years. At Electronic Systems, we commemorated our shipment of 10,000 CREW IED jammers, and during that event, Capt. Mark Kavanaugh, the US Navy Program Manager, commented to our dedicated team, and I’ll quote him, “It’s truly incredible what you’ve done, and it’ll live forever. There are people walking around that are here today because of the work that you all have done.” In 2009, we celebrated South…

Starting on slide 5, our first quarter results clearly demonstrate the stabilizing benefits of our defense business and the impact of the current economic environment on our fluid and motion flow control businesses. Total revenues declined 9%. When you exclude foreign exchange, organic revenue declined 5%. The organic performance included flat results at defense, a 6% decline at fluid, and an 18% decline at motion. The revenue results at fluid and motion were better than our internal expectations for the first quarter, while defense revenue was in line. Total organic orders in the first quarter improved 1% due to defense’s 15% gain that more than offset declines at fluid and motion and flow control. Segment operating income decreased to $261 million due to lower volumes and higher restructuring and pension expenses compared to the prior year, so as a result, segment margins declined 130 basis points to 10.2%. Our cost-based productivity actions were in line with expectations for the quarter, and that sets us up nicely to deliver on our full year productivity targets. First quarter when you exclude favorable special items declined 21% to $0.72 per share, and this performance was $0.14 better than the midpoint of our previous guidance. Approximately 9% of this improvement was due to strong revenue and operational performances across the segment, and the remaining $0.05 of the improvement was due to lower interest expenses. The interest reflected lower commercial paper borrowing levels and lower interest rates. Our financial position highlighted on slide 6 remains solid. We delivered another quarter of strong free cash flow generation. Excluding the $58 million of non-cash income associated with the tax special item, our free cash flow conversion of income from continuing operations was 128%. This free cash flow performance reflects good accounts receivable and inventory management that offset…

We’re ready now to start the Q&A.

(Operator Instructions). Our first question is coming from John Inch - Merrill Lynch.

Question firstly on Defense; I think you said you are maintaining your guidance. Do you still expect the second half to improve as you had talked about before and could you remind us a little bit of the dynamics that go into that outlook?

In terms of Defense we are expecting it to improve and when we look at every quarter we will expect on the top line that we will see improvement basically every quarter, and the reason for that is that a lot of it is just the timing associated with various programs for Defense, and then also we do expect some international orders that will take place or international shipments in Q3 and Q4.

Those are pretty much locked down; the international shipments?

They’re almost all locked down John, but I would say between the combination of our domestic and international anticipation, we feel good about firming our guidance for the year on Defense.

I think also earlier in your prepared comments you talked about unfavorable mix; I think you said in Fluid and/or Motion Flow. Can you talk a little bit about what that is; what product areas you are experiencing unfavorable mix or maybe did I misinterpret what you were saying.

No, you were correct. It’s really happening in a couple of areas. A portion of it has to do with aftermarket; lower after market activity in both markets where we play in such as industrial and commercial where we see lower usage of factories and buildings and things like that; so that will naturally flow into the after market. The other thing that we’ve been seeing is that we’ve had some mix of products; some higher margin and some lower margin, that’s just getting impacted in the equation.

So is it that customers are trading down or is it that you’re cutting price; I am trying to infer what your comments are suggesting?

No more than the fact that based on our traditional OEM after market mix particularly in fluid technology we’re seeing less product usage which drives the higher-margin aftermarket. It’s that simple John. As an example, let’s take pulp and paper, International Paper is running a number of their plants at reduced capacity. They are a large customer. They’re just simply wearing and tearing our products at a lower rate and that is flowing through less of our traditional normal aftermarket.

Okay, and that presumably is just industrial, it wouldn’t have much to do with municipal water/waste water or anything like that?

That’s correct John, it’s mainly in those markets.

Yes, primarily and that’s why our waste water component is holding up a little bit better than everything else on a relative basis simply because despite the economic condition, water treatment and of course waste water management must go on.

You guys have done such a fantastic job in Defense with these order wins and products; I think what’s really concerning so many folks is really the outlook for the supplemental. You guys have about $1.4 billion or $1.5 billion tied to the supplemental heavily related to the Army; why isn’t that at risk as the new administration looks for ways to save in the out years?

The way we look at it John is the supplemental budget as Secretary Gates outlined is a funding mechanism that enabled greater flexibility in terms of funding, but it didn’t have anything to do with the requirement of your products. So in that our products are required as they are used in conflict and as we are increasing the number of troops as we are migrating from Iraq and Afghanistan and refreshing some of the troops supply. The transition from the supplemental funding requirement to now putting that into the base budget is essential neutral to us. So, think about our products more in the sense of what the requirement is rather than what budget element is actually funding it. I think I would add to that as an example we have over 2 years backlog in night vision. We have got backlog now as Denise mentioned well into 2010 on our growing CREW 2.1 program and we’ve got solid visibility in communications systems with our domestic and our international programs for maybe as well into 2010. Again, think about the usage of our products, think more about the number of troops and how they’re being used; that’s the way to think about it.

Your next question comes from the line of Shannon O’Callaghan - Barclays Capital. Shannon O’Callaghan - Barclays Capital: On Fluid, can you just give a little more quarterly clarity on how you end up at 13% organic decline from the first quarter and what drives that?

You are talking about the second quarter Shannon versus the first quarter? Shannon O’Callaghan - Barclays Capital: Yes, just how it was. The first quarter was down 6% right; so how do we go from here to get that down to 13% for the year?

When you look at it sequentially and when you look at Q1 to Q2, my revenues in Fluid were actually expecting to be higher in Q2 when versus Q1, and the reason for that is because there is some seasonality associated with RPW and then also we had some strong backlog coming into the year. When you look at it your 13% is on a year-over-year basis, and so last year the second quarter was a very strong quarter for us and it improved significantly from where we were in the first quarter. So when you look at it on a year-over-year basis, that’s why we are negative 13% versus negative 6% in Q1. Shannon O’Callaghan - Barclays Capital: So Q2 works out to be what year over year organically?

Q2 for Fluid organically is up roughly 4% to 5%. Shannon O’Callaghan - Barclays Capital: I mean year over year?

Year over year we are down about 13% in Q2 and we’re down 6% in Q1. Shannon O’Callaghan - Barclays Capital: How about stimulus were further down the pipeline there in terms of people starting to hear some more specifics; how are you guys thinking about that in terms of what there might be and timing of when you might see something?

Shannon, thanks for some very fine work with Collins, Sable, and Gretchen and your team. We were positively pleased with the quantity of money that was put into the US stimulus budget. We’ve been tracking that money; in fact Gretchen is in Washington D.C. today looking through some of the Biomerica clauses with the EPA, but we’re tracking that money. We know where it is, we know the projects it’s been allocated to the state, but of this kind as you all know, not only are waste water infrastructure projects, but almost all of the stimulus is quite subject to a great deal of government oversight and management, and we are not anticipating a shovel hitting the dirt on any one of our projects until at best the end of this year. So, I think the way to say this is that we are not anticipating any positive this year. It slowed down in the governmental processes, but ultimately we believe there will be some positive component with respect to our products. Shannon O’Callaghan - Barclays Capital: One last one; treatment seems to be doing well here. How do you feel about that piece of the business in terms of the changes you made to it in an effort to lower the cost base; how is treatment competitively positioned at this point?

A couple of components there. As you know we did integrate that with our Flygt in our water/waste water businesses and remember that our historical footprint with respect to our Flygt water/waste water is we have the largest global distribution and selling footprint in the water/waste water business. I have recently made a number of visits throughout Europe, United States, and even Australia where I’ve seen some very, very nice sales increases as a result of having a broader fluid technology approach to be selling treatment. So we’re very positive clearly. We also have had some new product development. We got some new Ozone generators, we’ve got some new efficient filtration systems, we got some new energy-efficient light bulbs for ultraviolet and these things are helping overall. So as the water scarcity issue and the need for reuse and in some cases desalination continues to improve, we believe that our treatment business is well positioned.

Your next question comes from the line of John Baliotti - FTN Equity Management.

Steve, could you give us an idea, you talked about the trends in the first quarter kind of how and toward the end of the quarter some trends got worse. On a weighted basis, I guess if you kind of look at the whole portfolio and the size of each business, how did the beginning of the next quarter look from that standpoint for the start?

The very beginning of the next quarter, we’re talking the second quarter on average was pretty close to our expectation. We did see in automotive, in industrial revenue to commercial slightly lower orders and that was probably offset with a bunch of puts and takes overall.

I mean, and despite some of the negative trends, you guys seem to have exceeded expectations with defense kind of doing what you expected. So it seems like the delta in the quarter came from Fluid and MoFlow combined. And, I’m just wondering how much of your new outlook for this year assumes that, those trends are in those some of those more cyclical businesses continue to go down versus some of the stability you’ve seen?

I think we are not; we are also not forecasting any significant quarter-over-quarter deterioration in any of these businesses with the possible exception of industrial where we’ve seen some accelerated order reduction. But essentially, the way to think about our forecast is that as we have interacted with customers around the world, we are not seeing subjective changes, which is the answer. In other words, we’re seeing continued uncertainty and caution by our customers. They still feel that the long-term projects be it mining, industrial, there is fresh water, whether it’s automotive, aerospace are still reasonably on track but they are being cautious in terms of advancing their projects and their initiatives. So what we’re really saying, John, is the absence of tangible good news and just as continued sort of uncertainty gives us the expectations that the economic inertia that we’ve seen in the first half, first quarter and second quarter essentially is what we’re going to see in the second half, and that’s why we are calling it flat.

You and Denise cited a couple cases where there were delays in projects rendering cancellations. If it’s a delay, then can we look at it as demand that should come, just said and prudently that you’re not expecting anything for stimulus till the end of this year best, but does that set you up nicely for next year, in terms of, there is a confidence, if those projects are going to come through just kind of push that into 2010?

I think the overall credit market liquidity and global consumer confidence will really drive that and our expectation is that this is not just a slow bucket that will be restated as an extraordinary upside in the future. We believe I think which is consistent with load second on the forecast that any recovery that we’ve seen in 2010 and beyond will be a fairly measured and slow recovery. And so, we’re looking at these project delays, there is a lot of uncertainty with respect to the customers’ perception. We do believe the projects will go on. There is vital mining, oil and gas exploration, energy efficiency kind of projects that we know that are being held up all over the globe. They will go on, but I don’t think; I would not encourage you thinking about this is just essentially a displacement to an upside in 2010. A long slow recovery is what we’re forecasting.

Your next question comes from Jeff Sprague with Citi Investment.

I was wondering if we could delve a little bit further into just what's going on, on the cancellations on the industrial side, Steve or Denise. Have you moved from deferrals to outright cancellations, are these projects still moving around, is there just anything about the complexion of how that’s playing out that you could add?

I would say, it’s more deferrals than uncertain. Let me quote the kind of input. I just met with the project manager at Chevron who was advancing a very important liquid natural gas development in Northern Australia. And this is what he said, he said, “our project is still on track. We still need the natural gas here as well as in China. But we’re thinking about slowing it down because we’re not sure what the capital markets are going to do so we’re going ahead and ordering the goods but we’re telling you to be cautious because we may not need them when we’re ordering them. So be prepared for us to change our minds.” And I only state that to give you a very clear feel for the level of uncertainty and caution that our customers are executing. Essentially, that’s just an example of someone saying, “the project is fundamentally sound.” It’s funded in this case inside of our capital budget but they are being cautious in terms of advancing the project and thereby we’re just seeing in the aggregate a lot of delay and slow in our forecast.

As part of that axis, you’re seeing re-bidding and new pricing and some downward price pressure?

We are actually seeing in terms of our request for proposal code activity is still very strong. At the working level, our customers are still continuing to plan for in detail these projects. I wouldn’t say that we’re seeing any widespread actual price pressure now but we’re certainly bracing forward and our teams are doing the best job they can to be selling system valve.

And secondly, on pension, can you give us any early read on what you’re thinking for pension headwind. You put out the assumption that you won’t do the asset returns and flat discount rates but some way refrain how to think about 2010?

Yeah, it’s a good question. It’s one that’s difficult for us to answer because our pension calculation is more complex that you might see, also because we have a huge defense reimbursement part associated with that. So it’s really hard to quantify. It will be a headwind for us, we know that, but right now it’s just really too early to call because of all the complexity that we get into when we have to figure out what that calculation should be.

Your next question comes from the line of Michael Schneider - Robert W. Baird & Co. Michael Schneider - Robert W. Baird & Co.: Maybe we can just circle back your municipal and the fact that you’ve raised your forecast there. I understand that 2010 is going to benefit from a lot of the stimulus activity and some of the newer products that are treatment, but why is it specifically you’ve raised your 2009 forecast for municipal and then if you could just address that by geography as well?

When we first put together the forecast for municipal; that was back last year when we were looking at what was happening on the municipal side, and there was funding issues that the municipalities were having and there was the fiscal stimulus that was not in place. Even though we’re not forecasting a lot of fiscal stimulus in ’09, but that was a timeframe within which we’re reporting together our forecast. Since then, what we’ve seen from a municipality standpoint is there has been more clarity around fiscal stimulus. There has also been sort of a freeing up a little bit in the credit markets from where it was back in November and December. And, municipalities, there is just an ongoing need to continue to upgrade with the products because you’ve got an aging infrastructure and you have other things there. So, there was a period of time when we were pulling together our forecast and we were uncertain how the economic situation and the credit situation is going to be impacting those municipal markets. Since then, what we’ve seen with the fiscal stimulus providing some clarity to the municipalities and then also looking at the credit market, we’ve seen some improvement from our prior expectation. So, we feel good about that and we think that’s why we’re forecasting that we’re going to be roughly flat. The other thing that Steve was talking about with our treatment business, and we see that the treatment business is a little bit stronger than what we had anticipated. So, that’s really why we’ve re-forecasted municipal and we’ve improved it from the last guidance call. Michael Schneider - Robert W. Baird & Co.: And have you actually see municipal; new municipal orders coming out as of late or quotes that were shelved for a time being brought back to market?

Yes, we are, that’s because they were delayed until there was more clarity around these other issues, and so, yes, we are seeing that. In fact, on the municipal side, we had an order in Q1 that was roughly $35 million to $40 million that’s related to things like that, but it’s going to be for 2010 delivery. Michael Schneider - Robert W. Baird & Co.: And then as it relates to the stimulus projects, you did reference to Biomerica clauses in there, I suspect your treatment businesses, Sanitaire and Wedeco are well positioned because they’ve got US manufacturing, but how does Flygt participate in this given its European manufacturing base and is that a risk that you do get excluded from some of these major projects because of the manufacturing footprint?

There’s a lot of variation in the interpretation of Biomerica, and as you know, we have some very large-scale pulp manufacturing capabilities in the United States. So, the question is relevant, and in fact, that is why Gretchen is in Washington D.C. today, working out the details on Biomerica and specifically with respect to our Flygt projects; and you are correct that most of our treatment is already US and most of our other small scale water pumping capability is in the United States. Remember that we also have a strong line in our grooves, industrial, and water businesses; I mean, that’s all USA. Michael Schneider - Robert W. Baird & Co.: Are you able to manufacture those Flygt pumps in the Seneca Falls plant?

We’re actively looking at strategies exactly like that right now; yes we are, and we just want to affirm with the EPA that as we’re contemplating US manufacture and US content on those pumps that we get free agreement in terms of qualification of the new Biomerica. I’m confident that Gretchen and her team will get to the right solution here. We are not forecasting any ultimate variable; we want to make sure we get this work through the EPA correctly right upfront.

Your next question comes from the line of Stephen Tusa - J.P. Morgan.

Just a question on the mix of business in Fluid; there seems to be a little bit of a bifurcation here with the industry now kind of rolling down a little bit; is there any business within Fluid that is particularly more profitable than any other business?

Well, clearly our aftermarket businesses tend to be more profitable, and then actually Stephen, you just have to stratify it down into by channel by product; I wouldn’t comment on any unique product lines that are more profitable than others at this point in time; what we really watch is that OEM need versus aftermarket mix.

I’m not sure if somebody already asked this question, but on the acquisition front, can you just give us an update of what you’re seeing out there. You did a small one here recently, but how is the tone out there from an acquisition standpoint?

We have a very active pipeline and we are obviously watching asset valuations. We are starting to see a separation in the marketplace between the stronger, which we put ourselves in that category, and some of those that are enduring less or having less success with respect to their portfolios. It’s a little too early to trend it in our mind, but let me say that we believe that acquisition opportunities will certainly be in front of us in terms of actually growing over the next year or so timeframe, which is more of the reason why we have been so focused on our liquidity and our balance sheet.

Your final question comes from the line of Gautam Khanna - Cowen & Co. Gautam Khanna - Cowen & Co.: A couple of question from the Defense portfolio; you mentioned CREW funded through some part of ’10, could you tell us what your expectations are in terms of unit deliveries this year and how that pace may change through the course of the year?

We’re expecting somewhere in the order of 7000 CREW 2.1 deliveries this year, and our expectation is we would see similar type production in the out years. What we have to recognize is that this CREW 2.1 Jammer is the most effective technology we have today against the highest threat to the lives of our women and men in service. It’s been very successful in use and we also have the capability of modifying the 2.1 system to adapt to future threats such as what we’re seeing in Afghanistan. So we’ve got a modular and scalable component that is addressing the needs in a very efficient way, and this last award that Denise referred to now being expanded to many other vehicle application and essentially all four services gives us great confidence that we’ve got a sound platform for the future. Now, as you know, we don’t have ordered backlog beyond the middle of 2010 or so, but that’s normal in this case, and all I am saying is that when we look at the strategic positioning of our technology vis-à-vis competition and you look at their need for technology vis-à-vis the global war on terror, we feel like we’re solidly positioned for the future. Gautam Khanna - Cowen & Co.: Just to follow up on that with respect to SINCGARS, the supplemental had declined year over year; I think you were expecting that, but how should we think about that business this year and the next year and how okay through the year; are we going to see sequential decline in the SINCGARS line item or how should we think about it?

I think the way to think about it is we really have a mix shift going on now. We have a minor reduction in our domestic SINCGARS; that’s down in the 10% range, and that was previously communicated, but our international SINCGARS is up nicely. In fact it’s up in the $130 million range, a 50% improvement. What has happened on the domestic SINCGARS is that compared to our view about less than a year ago, our view today is that our domestic SINCGARS platform has gotten a lot stronger than what we thought. We feel much better about it, and this is really a recognition of several things. While the domestic need is maturing, we also have backed up capability of the installed base with upgrades and retrofitted; some particularly nice new technology we’ve not talked and in software capability and in additional communication security capability. The number of troops is increasing. Secretary Gates has announced now as you know 45 Brigade Combat Teams; that’s a plus for SINCGARS. As you know we are migrating from Iraq to Afghanistan and going through a variety of refresh activities per what Secretary Gates said, that’s a plus, and as you all know the JTRS Program which is tied to the Future Combat System has the potential for delay and that coupled with our growing international gives us really solid confidence on our SINCGARS and our communication business. So between these domestic opportunities and these mix shifts I mentioned and these recompetes in the international order opportunity, we feel very confident on our communication base. Gautam Khanna - Cowen & Co.: If I just may ask one last one; there is some discussion now of the Congress puffing up the supplemental request by $10 billion to $12 billion before it passes at the end of May. Is there any opportunity for your supplemental funded products in that $10 billion to $12 billion that might be added; do you guys have a read on that yet?

I’ll go back and answer the same thing just as when Jeff Sprague asked; I can’t remember whether it was Jeff or John asked, when the supplemental goes away, why that’s not impacting our business; remember I said our business is tied to be an essential requirement for our product. So again, just because the supplemental was pumped up an extra $10 billion or $20 billion, it doesn’t really create a different need for our products. The government is going to buy our products because they need them regardless of the funding mechanism. So at this point in time we don’t see supplemental regardless of what level it’s funded at as something that is really changing the requirements of our products. Thank you all. I will take this moment to just offer my final thoughts and as we head up in this busy day, but we couldn’t be more pleased with the efforts of all of our teams across ITT. They’re working hard to address these challenging market conditions. When this economic crisis began, Denise and I encouraged all of our management team to focus to control what they could control and make sure that their actions preserve and protect the long-term future and the strategies of our portfolio. So to that end as we are managing through this economic downturn we are going to continue to put our customers first. We are going to deliver essential products and services that address their current needs. We are going to relentlessly pursue cost control measures that are responsive to the declining volumes. As Denise mentioned we have substantial and aggressive productivity in our plans. We’re restructuring, repositioning some discretionary budget reduction, but with our strategic planning and prioritization process, I am pleased to say that we are preserving most of our long-term investment and make sure that we are well positioned out of this downturn. As in the past we are going to continue to focus on cash, working capital, inventory, and preserving our balance sheet. So all these actions together are what’s giving us an underlying confidence in the execution of our portfolio and I guess I can close out by saying what I’ve been saying to our employees, a phrase I’ve used a lot recently, “I’m convinced that ITT’s best days are ahead of us.” So with that, thank you very much for your questions, your participation, and we’ll talk to you again next quarter.

This concludes today’s teleconference. Please disconnect your lines at this time and have a wonderful day.