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Exelis Reports Third-quarter 2012 Financial Results; Maintains 2012 Full-year Outlook

ITT Exelis (NYSE: XLS) today reported 2012 third-quarter revenue of $1.4 billion, an 11 percent decrease from the same previous-year period. Third-quarter 2012 earnings were $0.47 per share, a 13 percent decrease from the same period in 2011 and, adjusted earnings per share were $0.45 for the quarter. Adjusted operating income was $149 million and adjusted operating margin was 10.9 percent. Free cash flow for the quarter of $167 million was driven by lower required pension contributions and improved collections.

During the third quarter, Exelis secured $1.3 billion in new orders, including upgrade and delivery of airborne electronic warfare equipment for domestic and international customers, base operations and logistics support at Ft. Rucker, Ala., ancillary equipment and upgrades for SINCGARS radios, as well as global logistics services and cyber solutions for the U.S. military. The company also partnered to develop a wide-area surveillance solution for the border security market and entered into agreements with the Greater Orlando Aviation Authority and Metron Aviation to provide air traffic management solutions.

“During the third quarter we improved our free cash flow and continue to be aggressive in driving efficiencies, controlling costs and earning business from new and existing customers as we execute against our corporate strategy,” said Exelis CEO and President David F. Melcher. “Revenue and income impacts in this quarter have been primarily market driven and consistent with our previous forecasts.”

Segment Results

C4ISR Electronics and Systems

C4ISR Electronics and Systems third-quarter 2012 revenue was $611 million, down 18 percent from the same period in 2011, due to expected lower demand for night vision goggles, jammers and radios. C4ISR Electronics and Systems third-quarter adjusted operating income was $87 million, down 23 percent from the third-quarter of 2011, due to lower volume and sales mix partially offset by lower discretionary expenses.

Information and Technical Services

Information and Technical Services third-quarter 2012 revenue was $750 million, 5 percent lower than the same period in 2011 mainly due to the completion of an information systems contract and decreased activity on two overseas services contracts, partially offset by increased activity on our Afghanistan programs. Third-quarter adjusted operating income for the segment was $62 million, up 19 percent over the third quarter of 2011, primarily driven by productivity improvements and lower discretionary expenses.

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