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2011 ITT Corporation Distribution

Information Regarding Tax Basis for the Distribution of Xylem Inc. Common Stock and Exelis Inc. Common Stock and the ITT Reverse Stock Split as of November 1, 2011

Prior to the opening of the market on October 31, 2011, ITT Corporation ("ITT") distributed the common stock of Xylem Inc. ("Xylem") and the common stock of Exelis Inc. to ITT shareholders (the "Distribution"). Pursuant to the terms of the Distribution, ITT shareholders as of 5 p.m., New York time, on the record date of October 17, 2011, received a share of Xylem common stock and a share of Exelis common stock for each share of ITT common stock they held. In addition, ITT completed a 1-for-2 reverse stock split (the "Reverse Stock Split") that was effective as of 7 p.m., New York time, October 31, 2011.

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1995 ITT Corporation Distribution

Did you have ITT Corporation stock in your portfolio before Dec. 20, 1995? If so, you'll be glad to learn the Internal Revenue Service (IRS) ruled on Dec. 15, 1995 that the spin-off qualifies as a tax-free distribution.

The new tax basis for each of the incoming stocks is:

  • ITT Industries - 18.81607%
  • ITT Hartford stock - 40.48626%
  • New ITT - 40.69767%

To illustrate, if a shareholder had 100 shares of old ITT common stock with an aggregate tax basis of $8,000, his old stock was exchanged for:

  • 100 shares of ITT Industries (NYSE: IIN) stock having a tax basis of $1,505.29 (that is, 18.81607% x $8,000);
  • 100 shares of ITT Hartford stock having a tax basis of $3,238.90 (40.48626% x $8,000); and
  • 100 shares of New ITT Stock having a tax basis of $3,255.81 (40.69767% x $8,000).

The formula was calculated as follows. The aggregate tax basis of the ITT Industries, New ITT and ITT Hartford stocks held immediately after the Dec. 19, 1995 spin-off equals the tax basis of old ITT common stock immediately before the spin-off, allocated in proportion to the relative market values of each of the new stocks on Dec. 19, 1995. Specifically, the "when-issued" common stock closing price per share on the NYSE consolidated reporting system on Dec. 19, 1995 was: ITT Hartford, $47.875; New ITT, $48.125; and ITT Industries, $22.25.

Rayonier, Inc. Distribution

If you owned ITT Corporation shares on February 28, 1994 you would have received one share of Rayonier, Inc. common stock for every four shares of ITT Corporation stock held.

If a holder held ITT Corporation common stock, the new tax basis for such stock would be 91.6135% of the pre-existing basis for such stock and the new tax basis for Rayonier, Inc. would be 8.3865%.

To illustrate, if a holder held 100 shares of ITT Corporation common stock with an aggregate tax basis of $8,000, he would receive a distribution of 25 shares of Rayonier stock. After the distribution, his new tax basis in his ITT Corporation common stock would be $7,329.08 (that is, 91.6135% x $8,000) and his new tax basis in the Rayonier stock would be $6,70.92 (that is, 8.3865% x $8,000).

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