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ITT Exelis' revenue drops 5 percent in 2012; bigger drop forecast this year

Friday, March 1, 2013 - 4:54 pm

ITT Exelis, which employs more than 1,000 people in Fort Wayne, reported that its revenue was down 5 percent in 2012, and it anticipates a larger drop in revenue next year.

For the full year 2012, the company said its revenue was $5.5 billion, a 5 percent decline from 2011; and its earnings were $1.75 per share, the same as the previous year. Its guidance for investors next year forecast 2013 earnings of $5 billion-$5.1 billion, or about 7 to 9 percent less than 2012 revenue. The company forecast earnings of $1.45-$1.55 per share next year.

Why the slump? In large part, it’s because the company depends so strongly on the federal government as a customer.

“Approximately 86 percent of our 2012 revenues were derived from products and services ultimately sold to the U.S. government, including the Department of Defense. These sales are affected by the federal budget and related federal spending levels,” the company said in a filing Friday with the Securities & Exchange Commission.

2012 was ITT Exelis’ first full year as an independent company after it was spun off from ITT.

The company said that it’s not only the pressure to cut federal budget deficits that impinges on its prospects. The U.S. military isn’t creating as much demand as it recently did.

“The company’s future results could be affected by budgetary actions taken by Congress to reduce federal spending. However, national security spending is also driven by our nation’s national security posture and the perceived threat environment. U.S. funding in Afghanistan will likely continue to decrease as the U.S. government plans for its departure in 2014. … Overall, we expect that top-line defense spending will decline over the next several years,” the company said in its filing.

Two of ITT Exelis’ major divisions are represented in its Fort Wayne operations.

Its Night Vision and Tactical Communication Systems makes the SINCGAR radio and related communications systems here. More than 650,000 of the SINCGARS units have been manufactured, and they’re in use in more than 35 countries, according to the companies. Tim White, an ITT Exelis spokesman, said Friday that 828 people are employed by that division in Fort Wayne.

A smaller number of people work in the company’s Geospatial Systems operations in Fort Wayne, developing satellites and payloads.

White also said about 200 people in Fort Wayne work provide administrative support, such as information systems, throughout the company.