PENTAIR
Q4 2012 EARNINGS RELEASEJanuary 29, 2013
PENTAIR 2
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This communication contains statements that Pentair believes to be "forward-looking statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including,
without limitation, statements regarding the anticipated benefits of the merger or Pentair's anticipated financial results, are
forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets",
"plans", "believes", "expects", "intends", "will", "likely", "may", "anticipates", "estimates", "projects", "should", "would",
"expect", "positioned", "strategy", "future" or words, phrases or terms of similar substance or the negative thereof, are
forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to
risks, uncertainties, assumptions and other factors, some of which are beyond Pentair's control, which could cause actual
results to differ materially from those expressed or implied by such forward-looking statements. These factors include the
ability to successfully integrate Pentair and the flow control business and achieve expected benefits from the merger;
overall global economic and business conditions; competition and pricing pressures in the markets Pentair serves; the
strength of housing and related markets; volatility in currency exchange rates and commodity prices; inability to generate
savings from excellence in operations initiatives consisting of lean enterprise, supply management and cash flow practices;
increased risks associated with operating foreign businesses; the ability to deliver backlog and win future project work;
failure of market to accept new product introductions and enhancements; the impact of changes in laws and regulations,
including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and the ability to
achieve Pentair's long-term strategic operating goals. Additional information concerning these and other factors is
contained in Pentair's filings with the U.S. Securities and Exchange Commission ("SEC"), including in Pentair’s Quarterly
Report on form 10-Q for the quarter ended September 29, 2012. All forward-looking statements speak only as of the date of
this communication. Pentair assumes no obligation, and disclaims any obligation, to update the information contained in
this communication.
FORWARD-LOOKING STATEMENTS
PENTAIR 3
Adj. Op Income Up 59%
Adj. Op Margins 8.5% … Down 240 bps
• Volume (incl. Acq. and FX) -100 pts.
• Price/Productivity/Mix +200 pts.
• Inflation -140 pts.
• Transition Costs -200 pts.
Adj. EPS Down 16% (Impact of Acquisition)
• Adj. Effective Tax Rate of 25%
• Adj. Net Interest of $18M; Adj. Share Count 212M
Q4 Adj. Free Cash Flow > 100% of Adj. NI
* All year-over-year comparisons against 2011 adjusted results. See Appendix for reconciliation of non GAAP measures.
FINANCIAL HIGHLIGHTS
SUMMARY
Sales Up 103% • Volume/Price +1%
• FX -1%
• Water & Fluid Solutions +27%
• Valves & Controls +100%
• Technical Solutions +68%
• Top Line and Operating Income in
Line with Prior Guidance
• Repositioning and Transition Actions Were
Prevalent in Quarter, Positioning to Deliver on
Synergies in 2013
• Share Buyback Well Underway
• Positioned for 25% Tax Rate in 2013
Q4 Delivered as Expected; Positioned to Deliver Synergies
Q4’12 PENTAIR RESULTS*Q4’12 Q4’11
Sales $1.8B $866M
Op Loss (Rpt.) ($304M) ($186M)
Op Income (Adj.) $150M $94M
ROS (Adj.) 8.5% 10.9%
Loss Per Share (Rpt.) ($1.31) ($1.77)
EPS (Adj.) $0.47 $0.56
PENTAIR 4
Operating Margins / Productivity HighlightsSales Highlights (by Vertical)
Adjusted Operating Margins 7.5%(Includes Q4 “Transition Costs”)
• Positive Productivity and Price Excluding
“Transition Costs” which include: Branding,
Signage, Packaging, Inventory, and Warranty
Adjustments
Residential and Food & Beverage Growth Continues
SALES OPERATING INCOME
Q4’12 WATER & FLUID SOLUTIONS PERFORMANCE**
YoY
Q4’11Adjusted
Prod./
PriceInfl.Growth
Q4’12
Adjusted
$1M
($9M)
$77M$766M $771M
($4M)
Q4’11 Price FX Q4’12
$8M
($11M)
1%YoY
(24%)YoY
1 pts 0 pts 1ptsROS
(1.4%)0.1% (1.1%)10.0%ROS
** All year-over-year comparisons against 2011 adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
$58M
7.5%ROS
Volume
0 pts
$1M
Sales Up 1% , Organic up 1% ex-FX• Residential/Commercial up 2% on NA Residential
Recovery Partially Offset by Weakness in Europe
• Infrastructure down 3% on Europe Weakness; NA
Backlog Remains Strong
• Food & Beverage up 2% Led by Food Service; Delayed
Beverage Projects Bode Well for 2013
Fast Growth Regions Up ~4% ex-FX
Flow
Control
PENTAIR 5
Operating Margins / Productivity Highlights
Sales Up 2% , Organic up 3% ex-FX• Energy up 2% on Strength in Oil & Gas
• Industrial Up Modestly on Q4 Project Delays
• Orders Flat; Book-to-Bill 1.0
• Backlog grew 2% to $1.4B
Fast Growth Regions Up ~5% ex-FX
Sales Highlights (by Vertical)
Backlog Remains Strong; Focus on Standardization
SALES OPERATING INCOME
Q4’12 VALVES & CONTROLS PERFORMANCE**
YoY
Q4’11Adjusted
Prod./
PriceInfl.Growth
Q4’12
Adjusted
$3M$42M$1M$43M$537M
$547M
($6M)
Q4’11 Price FX Q4’12
$3M
($5M)2%YoY
(3%)YoY
1 pts (1 pts) 2 pts
ROS
(1.0%)0.5% 0.1%8.0%ROS
7.6%ROS
Volume
2 pts
$13M
** All year-over-year comparisons against 2011 adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
Adjusted Operating Margins 7.6%(Includes Q4 “Transition Costs”)
• Positive Productivity and Price Excluding
“Transition Costs” which include: Branding,
Signage, Packaging, Inventory, and Warranty
Adjustments
PENTAIR 6
Q3 YTD
6
Q3 YTD
VALVES & CONTROLS BACKLOG/ORDERS**
Backlog Remains Near Record Levels
354 354 355 366 359 360 369 359
0
100
200
300
400
500
600
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
PROCESS (Industrial)
299 340
447 493 518 517 540 583
0
100
200
300
400
500
600
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
OIL & GAS (Energy)
423 426 393 397 390 409 379 374
0
100
200
300
400
500
600
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
POWER (Energy)
72 58 46 53 76 72 82 83
0
100
200
300
400
500
600
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
MINING (Energy)
• CY12: Revenue ~40%
• Fourth Quarter Orders up 1% Y-o-Y
• CY12: Revenue ~17%
• Fourth Quarter Orders down 15% Y-o-Y
• CY12: Revenue ~33%
• Fourth Quarter Orders down 16% Y-o-Y
• CY12: Revenue ~9%
• Fourth Quarter Orders up 41% Y-o-Y
** All year-over-year comparisons against 2011 adjusted results on a pro forma basis for the Flow Control acquisition.
Backlog ($ Millions) Backlog ($ Millions)
Backlog ($ Millions) Backlog ($ Millions)
PENTAIR 7
Sales Up 1% … Up 1% ex-FX
Fast Growth Regions Down ~3% ex-FX
Q4’12 TECHNICAL SOLUTIONS PERFORMANCE**
Margins Remain Strong Driven by Mix and Productivity
SALES OPERATING INCOME
Operating Margins / Productivity HighlightsSales Highlights (by Vertical)
YoY
$430M $434M
($2M)
Q4’11 Volume Price FX Q4’12
$6M
($0M)
1%YoY
0 pts 1 pts 0 pts 1 pts
16.4%ROS
• Industrial down 1% as Equipment Protection Saw
Inventory Destocking and Continued European
Weakness
• Energy up 7% on Seasonal Thermal
Management Demand
• Residential/Commercial up 1%
Q4’11Adjusted
Prod./
PriceInfl.Growth
Q4’12
Adjusted
($1M)
$76M$9M$75M
($7M)
+1%YoY
ROS(1.7%)(0.3%) 2.0%17.4% ROS 17.4%
ROS
Adjusted Operating Margins 17.4%(Includes Q4 “Transition Costs”)
• Positive Productivity and Price Excluding
“Transition Costs” which include: Branding,
Signage, Packaging, Inventory, and Warranty
Adjustments
** All year-over-year comparisons against 2011 adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
Flow
Control
PENTAIR 8
FY’12 FINANCIAL HIGHLIGHTS
KEY HIGHLIGHTS
A Significant Transformational Deal Positions PNR Well in Future
FULL YEAR 2012 PENTAIR RESULTS*FY’12 FY’11
Sales $4.4B $3.5B
Op Loss/Income (Rpt.) ($43M) $100M
Op Income (Adj.) $489M $404M
ROS (Adj.) 11.1% 11.7%
Loss Per Share (Rpt.) ($0.84) ($0.08)
EPS (Adj.) $2.39 $2.41
Adj. Op Income Up ~21%
Adj. Op Margins Down ~60 bps
• Water & Fluid Solutions Margins, 11.0%
• Valves & Controls Margins, 7.6%
• Technical Solutions Margins, 18.9%
Adj. FY EPS Flat
• Adj. Tax Rate ~26%
• Adj. Net Interest $66M; Adj. Shares 131M
Sales Up ~28%
• Water & Fluid Solutions Up ~11%
• Valves & Controls Up ~100%
• Technical Solutions Up ~13%
FY’12 Adj. Free Cash Flow of $318M
• Exceeds 100% Adj. NI Conversion
* All year-over-year comparisons against 2011 adjusted results. See Appendix for reconciliation of non GAAP measures.
• Solid Operational Performance
• Delivered on Transformational Acquisition
• Identified Standardization Opportunities and
Positioned PNR for Accelerated Growth
• Poised for Organic Growth Acceleration (Energy
& NA Residential Recovery)
PENTAIR
$7.3B$253M
$73M
($36M)
$25M
9
PRO FORMA YOY SALES PERFORMANCE***
2012 Price FX 2013Volume
$7.6B
YOY 1 pts (1 pts) 4 pts4 pts
4%YoY
Synergies
0 pts
Similar Growth Profile Year to Year
$7.0B
$290M $87M
($126M)
$0M
2011 Price FX 2012Volume
$7.3B
YOY 1 pts (2 pts) 4 pts5 pts
4%YoY
Synergies
0 pts
2011 to 2012
Pro-forma
Sales Growth
2012 to
2013 Outlook
Pro-forma
Sales Growth
*** Adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
.
PENTAIR 10
PRO FORMA YOY OI PERFORMANCE***
$790M$72M $125M
($127M)
$90M
2012 Inflation Prod / Price 2013Growth
$950M
ROS
(1.7%) 1.7%0.6%
Synergies
1.0%10.9% 12.5%
ROS
Base Performance Similar; Upside from Synergies
$720M$42M $132M
($104M)
2011 Inflation Prod / Price 2012Growth
$790M
ROS
(1.5%) 1.7%0.4%
Synergies
0.0%10.3% 10.9%
ROS
2011 to 2012
Pro-forma
Op. Income
Growth
2012 to
2013 Outlook
Pro-forma
Op. Income
Growth
$0M
*** Adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
PENTAIR 11
2013 OUTLOOK AFFIRMED**
Up ~3-5% Up ~20% Up ~22-30%
� Solid Secular Trends
Driving Demand Led by Global
Energy and NA Residential
� Fast Growth Regions
Continued Strength
� Still Foreign Currency &
W. Europe Headwinds
� Repositioning and Synergies
Driving OI Performance
� Base Business Performing
at Near Double Digit Op Income
Growth and $90M
of Synergies
� Strength in Residential &
Commercial and Energy Offset
by Weaker Industrial and
Infrastructure
� $90M of Synergies, 25% Tax
Rate, Continued Share Buyback
Solid Execution Expected to Deliver ~8-14% Adj. EPS Growth
$7.3B
~$7.6B
$790M
$2.54$3.10 - $3.30
2012 2013e 2012 2013e 2012 2013e
~$950M
ROS
10.9%
ROS
~12.5%
(at midpoint)
(at midpoint)
** All year-over-year comparisons against 2012 adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
Sales Adj. Op Income Adj. Diluted EPS
In Line With Analyst Day Expectations
PENTAIR 12
Impairment Charge Non-Cash; Repositioning Actions Taken
Adjusted EPS
Reported EPS
Acquisition
Related Costs(Deal Costs, Customer Backlog,
Inventory Step-Up)
Restructuring
$2.39
Trade name Impairment
($1.41)
($0.32)
($0.35)
($0.84)
� Q4 Impact of ~$192M Pre-Tax, FY = ~$262M
� In-Line with Initial Estimates
� Carryover into 2013 = ~$85M
� Payback ~1 Year, Annualized Savings of >$75M
� Includes Capacity and G&A Rationalization
� Q4 Restructuring of ~$55M pre-tax; FY=~$67M
� ~$61M Pre-Tax Non-Cash Charge Resulting from Brand
Rationalization Efforts
FY 2012
REPORTED TO ADJUSTED 2012 ITEMS
Pension “Mark to Market” ($0.75)� ~$142M Pre-Tax Non-Cash Charge Resulting from Change
in Accounting Method
Bond Redemption/Exchange ($0.40) � FY Impact of ~$77MM Pre-Tax
PENTAIR 13
TIMING & SEGMENTATION OF 2013 IST BENEFIT STATUS
INTEGRATION & STANDARDIZATION UPDATE
$0
$10
$20
$30
$40
Q1 Q2 Q3 Q4
Expecting $90M of IST Benefit …
Consistent with Previous Expectations$M
• $75M of Full Year Repositioning Benefit Expected
• Lean Savings Targeted at $10M
• Sourcing Benefit Expected to be $5M+
Sourcing
Lean/Ops
Repositioning
• Most of Repositioning
Actions Taken in Q4
2012 (80% of Benefit) ($55M
total cost)
• Lean & Sourcing Benefit
Delayed to 2nd Half due
to Timing of Inventory
Turns (Accelerating Pipeline
of Projects)
• Some Q1 Repositioning
Actions Remain … Fast
Growth Regions,
and Some Cross-GBU
Functional
Opportunities
$90M of Expected 2013 Benefit … On Track for >$230M by 2015
YOY IST Cost ($5M) ($5M) ($3M) +$3M
Trailing Costs ($5M) Netted Netted Netted
(3%)
Net
OI
+6%
Net
OI
+13%
Net
OI
+23%
Net
OI
$5M
$20M
$30M$35M
PENTAIR 14
Maturity Avg. Rate
Variable ‘17 0.7%
Fixed ’14 – ’30 3.2%
$2.5B*
Q4’12 Avg. Rate ~2.8%~84% Fixed …
$2.1B
$0.4B
BALANCE SHEET AND CASH FLOW
Free Cash Flow
DEBT ROLLFORWARD
CASH FLOW DEBT SUMMARY
Adjustments ($339M) Comprised Of:
• Accelerated Pension Funding ($193M)
• Acquisition Related Payments ($126M)
• Repositioning ($20M)
*Does Not Include $260M of cash On Hand
YTD YTD
Use of Cash: ($M) 2012 2011 YOY Chg
Beginning Debt 1,309$ 707$ (602)$
Generated Cash 96$ (248)$ (344)$
Share Repurchase 334$ 13$ (183)$
Dividends 112$ 80$ (32)$
Borrowings/Merger 1,515$ 755$ (760)$
Bond Redemption (575)$ -$ 575$
Other (196)$ 2$ 198$
Ending Debt 2,457$ 1,309$ (1,148)$
YTD YTD
($M) 2012 2011 YOY Chg
Net Income attributable
to Pentair, Inc. (107)$ (8)$ (100)$
Non-Cash Items 257$ 329$ (72)$
Subtotal 150$ 322$ (172)$
Working Capital 118$ (5)$ 123$
Capital Expenditures (95)$ (73)$ (22)$
Asset Sales 6$ 1$ 5$
Other Accruals/Other (200)$ 4$ (203)$
Free Cash Flow (21)$ 248$ (269)$
Adjustments 339$ -$ 339$
Adjusted Free Cash Flow 318$ 248$ 70$
PENTAIR 15
Op Income Up ~1-2%
Op Margins ~9.7%, Flat YoY
• Water & Fluid Solutions Margins, ~10.3%
• Valves & Controls Margins, ~10.2%
• Technical Solutions Margins, ~14.9%
Adj. EPS Up ~4%
• Tax Rate 25%
• Net Interest ~($18-$19M); Shares ~207M
Q1’13 FINANCIAL OUTLOOK
KEY HIGHLIGHTS
Sales Up ~1%
• Water & Fluid Solutions Up ~1-3%
• Valves & Controls Up ~1-2%
• Technical Solutions Down ~(1-3%)
Q1’13 Q1’12
Sales ~$1.8B $1.8B
Op Income (Rpt.) ~$98M $87M
Op Income (Adj.) ~$175M $173M
ROS (Adj.) ~9.7% 9.7%
EPS (Rpt.) ~$0.28 $0.62
EPS (Adj.) $0.54-$0.56 $0.54
• Infrastructure and Valves & Controls Backlog
• Residential & Commercial Rebound Continues
• Price and Productivity Continue to
Drive Margin Expansion
• Synergy Funnel Accelerating
• Share Buyback and Tax Rate
Synergy Contribution Ramps Throughout 2013
Q1’13 PENTAIR OUTLOOK**
Q1 Free Cash Flow Likely to Be Slightly
Negative Consistent with Seasonality
** All year-over-year comparisons against 2012 adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
PENTAIR 16
FY’13 FINANCIAL OUTLOOK
KEY HIGHLIGHTS
• Energy and Residential/Commercial Tailwinds
Remain; Infrastructure Backlog Improving
• Continued Price/Cost Momentum and More
Favorable Mix
• Repositioning Benefits and Driving
$90M in Synergies
• Expect to Generate FCF > Net Income with
Disciplined Allocation
Growth and Productivity In Place … Well Positioned for 2013
FULL YEAR 2013 PENTAIR OUTLOOK**FY’13 FY’12
Sales ~$7.6B $7.3B
Op Income/Loss (Rpt.) ~$865M ($43M)
Op Income (Adj.) ~$950M $790M
ROS (Adj.) ~12.5% 10.9%
Earnings/Loss PS (Rpt.) ~$2.89 ($0.84)
EPS (Adj.) $3.10-$3.30 $2.54
Adj. Op Income Up ~20%
Adj. Op Margins Up ~160 bps
• Water & Fluid Solutions Margins, ~12.8%
• Valves & Controls, ~11.9%
• Technical Solutions Margins, ~18.7%
Adj. FY EPS Up ~26%
• Adj. Tax Rate ~25%
• Adj. Net Interest ~($72-$74M); Shares ~205M
Sales Up ~4%
• Water & Fluid Solutions Up ~6%
• Valves & Controls Up ~4%
• Technical Solutions Up ~3%
** All year-over-year comparisons against 2012 adjusted results on a pro forma basis for the Flow Control acquisition. See Appendix for reconciliation of non GAAP measures.
FY’13 Free Cash Flow >100% Net
Income Conversion
PENTAIR 17
• Markets Performed as Expected … Slower than Q1-Q3- Cautious Optimism that Most Markets Have Stabilized and Will Grow Modestly in 2013
- Overall Backlog in Valves & Control Near Record Highs Entering 2013 … Expecting Modest Order Growth in ‘13
- NA Residential is Accelerating and We are Seeing Improvements in Commercial and Infrastructure
• Executed to Commitments– Minimized Distractions in Q4, Kept Teams Focused on the Critical Priorities, and Delivered
– Majority of Repositioning Actions to Achieve $75M in 2013 Savings Taken … a Few More to Do in Q1
– Built Solid 2013 Plans for the GBU’s … Counting on a Little Less Growth, More Productivity, More Prioritization
• PIMS is Building Momentum- Flow Control GBU’s Have Trained over 70% of Their Employees in PIMS … Embracing the Opportunity
- Over 10 “Priority” Sites from Flow Control Will Receive Accelerated Investment/Resources to Drive ‘13 Results
• Standardization Roadmaps Developed and Being Implemented- Corporate Structure Completed and $40M+ of Synergies Already Realized
- Roadmaps in Place to Reduce 73 ERP’s to <20 by 2015
- Significant Opportunities in Manufacturing, Distribution, Back Office, and Fast Growth Structure
Q4’12 SUMMARY
Q4 Performance Sets us Up to Deliver on 2013 Commitments
PENTAIR
SUMMARY
18
• Actions Taken in Q4 to Position for Cost Benefits and
Synergies in 2013
• Teams Working Closely to Execute On Cost and
Revenue Synergies
• PIMS Adoption by Flow Control Exceeding Expectations
• Some Market Tailwinds Emerging … NA Residential and
Global Energy
• Capital Allocation Remains Disciplined
Positioned to Control Parts of Our Own Destiny in 2013
PENTAIR 19
APPENDIXGAAP to Non-GAAP Measurements & Reconciliations
PENTAIR 20
REPORTED TO ADJUSTED 2012 RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2012 to the "Adjusted" non-GAAP
excluding the effect of 2012 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Year
In millions, except per-share data 2012 2012 2012 2012 2012
Total Pentair
Net sales 858.2$ 941.5$ 865.5$ 1,750.9$ 4,416.1$
Operating income (loss) - as reported 86.5 119.3 55.2 (304.1) (43.1)
% of net sales 10.1% 12.7% 6.4% (17.4%) (1.0%)
Adjustments:
Deal related costs and expenses 11.8 6.3 52.7 12.0 82.8
Inventory step-up and customer backlog — — — 179.6 179.6
Restructuring — 10.4 1.1 55.3 66.8
Trade name impairment — — — 60.7 60.7
Change in accounting method - pension and post-retirement (1.5) (1.5) (1.5) 146.2 141.7
Operating income - as adjusted 96.8 134.5 107.5 149.7 488.5
% of net sales 11.3% 14.3% 12.4% 8.5% 11.1%
Net income (loss) attributable to Pentair Ltd. - as reported 61.8 72.8 31.4 (273.1) (107.1)
Bond redemption and interest expense (0.8) — 1.8 51.9 52.9
Other adjustments net of tax 3.0 10.9 32.3 320.9 367.1
Net income from continuing operations attributable
to Pentair Ltd. - as adjusted 64.0 83.7 65.5 99.7 312.9
Continuing earnings per common share attributable to Pentair Ltd. - diluted
Diluted earnings (loss) per common share - as reported 0.62$ 0.72$ 0.31$ (1.31)$ (0.84)$
Adjustments 0.02 0.11 0.33 1.78 3.23
Diluted earnings per common share - as adjusted 0.64$ 0.83$ 0.64$ 0.47$ 2.39$
PENTAIR 21Note: Inventory step-up and customer backlog reflect amortization of fair market value step-up associated with inventory and in process customer contracts.
REPORTED TO ADJUSTED 2011 RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2011 to the "Adjusted" non-GAAP
excluding the effect of 2011 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Year
In millions, except per-share data 2011 2011 2011 2011 2011
Total Pentair
Net sales 790.3$ 910.2$ 890.5$ 865.7$ 3,456.7$
Operating income (loss) - as reported 85.5 108.7 92.2 (186.2) 100.2
% of net sales 10.8% 11.9% 10.4% (21.5%) 2.9%
Adjustments:
Deal related costs and expenses 1.7 6.1 — 0.5 8.3
Inventory step-up and customer backlog 0.2 5.3 5.8 2.2 13.5
Restructuring — — 2.1 10.8 12.9
Goodwill impairment — — — 200.5 200.5
Change in accounting method - pension and post-retirement 0.7 0.7 0.7 66.2 68.3
Operating income - as adjusted 88.1 120.8 100.8 94.0 403.7
% of net sales 11.1% 13.3% 11.3% 10.9% 11.7%
Net income (loss) attributable to Pentair Ltd. - as reported 50.1 66.3 50.6 (174.5) (7.5)
Adjustments net of tax 1.7 9.2 7.1 230.2 248.2
Net income from continuing operations attributable
to Pentair Ltd. - as adjusted 51.8 75.5 57.7 55.7 240.7
Continuing earnings per common share attributable to Pentair Ltd. - diluted
Diluted earnings (loss) per common share - as reported 0.50$ 0.66$ 0.50$ (1.77)$ (0.08)$
Adjustments 0.02 0.09 0.08 2.33 2.49
Diluted earnings per common share - as adjusted 0.52$ 0.75$ 0.58$ 0.56$ 2.41$
PENTAIR 22Note: Inventory step-up and customer backlog reflect amortization of fair market value step-up associated with inventory and in process customer contracts.
REPORTED TO ADJUSTED 2012 RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2012 to the "Adjusted" non-GAAP
excluding the effect of 2012 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Year
In millions 2012 2012 2012 2012 2012
Water & Fluid Solutions
Net sales 587.0$ 675.5$ 605.4$ 770.5$ 2,638.4$
Operating income (loss) - as reported 63.7 92.0$ 69.2$ (56.9)$ 168.0$
% of net sales 10.9% 13.6% 11.4% (7.4%) 6.4%
Adjustments:
Restructuring — 6.9 1.1 42.5 50.5
Inventory step-up and customer backlog — — — 23.4 23.4
Trade name impairment — — — 49.1 49.1
Operating income - as adjusted 63.7 98.9 70.3 58.1 291.0
% of net sales 10.9% 14.7% 11.6% 7.5% 11.0%
Valves & Controls
Net sales -$ -$ -$ 546.7$ 546.7$
Operating income - as reported — — — (76.8) (76.8)
% of net sales 0.0% 0.0% 0.0% (14.0%) (14.0%)
Adjustments:
Restructuring — — — 5.1 5.1
Inventory step-up and customer backlog — — — 113.5 113.5
Operating income - as adjusted — — — 41.8 41.8
% of net sales 0.0% 0.0% 0.0% 7.6% 7.6%
Technical Solutions
Net sales 271.2$ 266.0$ 260.1$ 433.7$ 1,231.0$
Operating income - as reported 50.5 50.6 52.3 11.6 165.0
% of net sales 18.6% 19.0% 20.1% 2.7% 13.4%
Adjustments:
Restructuring — 3.1 — 9.7 12.8
Inventory step-up and customer backlog — — — 42.7 42.7
Trade name impairment — — — 11.6 11.6
Operating income - as adjusted 50.5 53.7 52.3 75.6 232.1
% of net sales 18.6% 20.3% 20.1% 17.4% 18.9%
PENTAIR 23Note: Inventory step-up and customer backlog reflect amortization of fair market value step-up associated with inventory and in process customer contracts.
REPORTED TO ADJUSTED 2011 RECONCILIATION
Pentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2011 to the "Adjusted" non-GAAP
excluding the effect of 2011 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Year
In millions 2011 2011 2011 2011 2011
Water & Fluid Solutions
Net sales 515.4$ 632.0$ 614.6$ 607.9$ 2,369.8$
Operating income (loss) - as reported 56.5$ 84.5$ 59.6$ (142.3)$ 58.3$
% of net sales 11.0% 13.4% 9.7% (23.4%) 2.5%
Adjustments:
Restructuring — — 2.0 7.8 9.8
Inventory step-up and customer backlog 0.2 5.3 5.8 2.2 13.5
Goodwill impairment — — — 200.5 200.5
Operating income - as adjusted 56.7 89.8 67.4 68.2 282.1
% of net sales 11.0% 14.2% 11.0% 11.2% 11.9%
Technical Solutions
Net sales 274.9$ 278.2$ 276.0$ 257.8$ 1,086.9$
Operating income - as reported 48.1$ 48.3$ 48.6$ 40.3$ 185.3$
% of net sales 17.5% 17.3% 17.6% 15.6% 17.0%
Adjustments - restructuring — — 0.1 2.0 2.1
Operating income - as adjusted 48.1 48.3 48.7 42.3 187.4
% of net sales 17.5% 17.3% 17.7% 16.4% 17.2%
PENTAIR 24
REPORTED TO ADJUSTED 2013 RECONCILIATION
Note: Inventory step-up and customer backlog reflect amortization of fair market value step-up associated with inventory and in process customer contracts.
Pentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2013 to the "Adjusted" non-GAAP
excluding the effect of 2013 adjustments (Unaudited)
Forecast Forecast
First Quarter Year
In millions, except per-share data 2013 2013
Total Pentair
Net sales approx $1,800 approx $7,600
Operating income - as reported approx 97 approx 865
% of net sales approx 5.4% approx 11.4%
Adjustments:
Inventory step-up and customer backlog approx 78 approx 85
Operating income - as adjusted approx 175 approx 950
% of net sales approx 9.7% approx 12.5%
Net income attributable to Pentair Ltd. - as reported approx 58 approx 591
Adjustments net of tax approx 59 approx 64
Net income from continuing operations attributable
to Pentair Ltd. - as adjusted approx 117 approx 655
Continuing earnings per common share attributable to Pentair Ltd. - diluted
Diluted earnings per common share - as reported $0.26-$0.28 $2.79-$2.99
Adjustments 0.28 0.31
Diluted earnings per common share - as adjusted $0.54-$0.56 $3.10-$3.30
PENTAIR 25
2012 ADJUSTED FREE CASH FLOW
Pentair Ltd. and Subsidiaries
Reconciliation of Net Cash Provided By (Used For) Operating Activities
to Adjusted Free Cash Flow
For the Year Ended December 31, 2012
(in millions)
Net cash provided by (used for) operating activities 68.0$
Capital expenditures (94.5)
Proceeds from sale of property and equipment 5.5
Free cash flow (21.0)
Adjustments:
Accelerated pension funding 193.0
Acquisition related payments 126.0
Repositioning 20.0
Adjusted Free Cash Flow 318.0$
PENTAIR 26
2011 PRO FORMA ADJUSTMENTS – TOTAL PENTAIR
Note: “Other” adjustments represent the elimination of certain large projects and sales to sanctioned countries (which were terminated prior to the completion of the Flow Control acquisition),changes in corporate allocation assumptions, income taxes and share count.
Pro Forma Reconciliation
Pro Forma Adjustments
2011 Total Pentair
(in millions, except
EPS)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 790.3$ 798.1$ -$ (21.2)$ 1,567.2$
Operating Income 88.1$ 99.2$ (19.7)$ (21.2)$ 146.4$
Net Income 51.8$ 74.4$ (14.8)$ (9.9)$ 101.5$
Diluted EPS 0.52$ 0.35$ (0.07)$ (0.33)$ 0.47$
Second Quarter
Sales 910.2$ 922.6$ -$ (30.8)$ 1,802.0$
Operating Income 120.8$ 119.9$ (19.7)$ (19.6)$ 201.4$
Net Income 75.5$ 89.9$ (14.8)$ (11.5)$ 139.2$
Diluted EPS 0.75$ 0.42$ (0.07)$ (0.45)$ 0.65$
Third Quarter
Sales 890.5$ 1,079.1$ -$ (42.4)$ 1,927.2$
Operating Income 100.8$ 136.8$ (17.2)$ (20.4)$ 200.0$
Net Income 57.7$ 102.6$ (12.9)$ (11.0)$ 136.4$
Diluted EPS 0.58$ 0.48$ (0.06)$ (0.36)$ 0.64$
Fourth Quarter
Sales 865.7$ 923.0$ -$ (55.1)$ 1,733.6$
Operating Income 94.0$ 125.6$ (17.3)$ (28.8)$ 173.5$
Net Income 55.7$ 94.2$ (13.0)$ (20.0)$ 116.9$
Diluted EPS 0.56$ 0.44$ (0.06)$ (0.39)$ 0.55$
Full Year
Sales 3,456.7$ 3,722.8$ -$ (149.5)$ 7,030.0$
Operating Income 403.7$ 481.5$ (73.9)$ (90.0)$ 721.3$
Net Income 240.7$ 361.1$ (55.4)$ (52.4)$ 494.0$
Diluted EPS 2.41$ 1.68$ (0.26)$ (1.53)$ 2.30$
PENTAIR 27
2012 PRO FORMA ADJUSTMENTS – TOTAL PENTAIR
Note: “Other” adjustments represent the elimination of certain large projects and sales to sanctioned countries (which were terminated prior to the completion of the Flow Control acquisition),changes in corporate allocation assumptions, income taxes and share count.
Pro Forma Adjustments
2012 Total Pentair
(in millions, except
EPS )
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 858.2$ 995.9$ -$ (74.0)$ 1,780.1$
Operating Income 96.8$ 124.9$ (17.1)$ (32.2)$ 172.4$
Net Income 64.0$ 93.7$ (12.8)$ (28.1)$ 116.8$
Diluted EPS 0.64$ 0.44$ (0.06)$ (0.48)$ 0.54$
Second Quarter
Sales 941.5$ 980.8$ -$ (33.2)$ 1,889.1$
Operating Income 134.5$ 143.5$ (17.2)$ (24.0)$ 236.8$
Net Income 83.7$ 107.6$ (12.9)$ (14.0)$ 164.4$
Diluted EPS 0.83$ 0.50$ (0.06)$ (0.50)$ 0.77$
Third Quarter
Sales 865.5$ 1,019.8$ -$ (16.0)$ 1,869.3$
Operating Income 107.5$ 119.9$ (17.3)$ 5.5$ 215.6$
Net Income 65.5$ 89.9$ (13.0)$ 6.3$ 148.8$
Diluted EPS 0.64$ 0.42$ (0.06)$ (0.31)$ 0.69$
Fourth Quarter
Sales 1,750.9$ -$ -$ (7.1)$ 1,743.8$
Operating Income 149.7$ -$ -$ 16.6$ 166.3$
Net Income 99.7$ -$ -$ 12.7$ 112.4$
Diluted EPS 0.47$ -$ -$ 0.06$ 0.53$
Full Year
Sales 4,416.1$ 2,996.5$ -$ (130.3)$ 7,282.3$
Operating Income 488.5$ 388.3$ (51.6)$ (34.1)$ 791.1$
Net Income 312.9$ 291.3$ (38.7)$ (23.1)$ 542.4$
Diluted EPS 2.39$ 1.36$ (0.18)$ (1.03)$ 2.54$
PENTAIR 28
2011 PRO FORMA ADJUSTMENTS – WATER & FLUID SOLUTIONS
Note: “Other” adjustments represent changes in corporate allocation assumptions
Pro Forma Reconciliation
Pro Forma Adjustments
2011 Water & Fluid
Solutions Segment
(in millions)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 515.4$ 129.7$ -$ -$ 645.1$
Operating Income 56.7$ 9.7$ (0.1)$ (1.8)$ 64.5$
Second Quarter
Sales 632.0$ 168.7$ -$ -$ 800.7$
Operating Income 89.8$ 14.5$ (0.1)$ (1.7)$ 102.5$
Third Quarter
Sales 614.6$ 201.0$ -$ -$ 815.6$
Operating Income 67.4$ 5.8$ (0.1)$ (1.7)$ 71.4$
Fourth Quarter
Sales 607.9$ 158.5$ -$ -$ 766.4$
Operating Income 68.2$ 10.1$ (0.1)$ (1.7)$ 76.5$
Full Year
Sales 2,369.8$ 658.0$ -$ -$ 3,027.8$
Operating Income 282.1$ 40.0$ (0.3)$ (6.8)$ 315.0$
PENTAIR 29
2012 PRO FORMA ADJUSTMENTS – WATER & FLUID SOLUTIONS
Note: “Other” adjustments represent changes in corporate allocation assumptions
Pro Forma Adjustments
2012 Water & Fluid
Solutions Segment
(in millions)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 587.0$ 163.4$ -$ -$ 750.4$
Operating Income 63.7$ 11.1$ (0.1)$ (1.8)$ 72.9$
Second Quarter
Sales 675.5$ 202.3$ -$ -$ 877.8$
Operating Income 98.9$ 24.3$ (0.1)$ (1.7)$ 121.4$
Third Quarter
Sales 605.4$ 202.1$ -$ -$ 807.5$
Operating Income 70.3$ 14.9$ (0.1)$ 0.6$ 85.7$
Fourth Quarter
Sales 770.5$ -$ -$ -$ 770.5$
Operating Income 58.1$ -$ -$ 14.2$ 72.3$
Full Year
Sales 2,638.4$ 567.8$ -$ -$ 3,206.2$
Operating Income 291.0$ 50.3$ (0.3)$ 11.2$ 352.2$
PENTAIR 30
2011 PRO FORMA ADJUSTMENTS – VALVES & CONTROLS
Note: “Other” adjustments represent the elimination of sales to sanctioned countries (which were terminated prior to the completion of the Flow Control acquisition),and changes in corporate allocation assumptions
Pro Forma Reconciliation
Pro Forma Adjustments
2011 Valves &
Controls Segment
(in millions)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales -$ 506.2$ -$ (0.2)$ 506.0$
Operating Income -$ 66.4$ (14.9)$ (9.3)$ 42.2$
Second Quarter
Sales -$ 575.4$ -$ (0.9)$ 574.5$
Operating Income -$ 87.9$ (14.9)$ (9.4)$ 63.6$
Third Quarter
Sales -$ 661.1$ -$ (0.1)$ 661.0$
Operating Income -$ 101.9$ (12.4)$ (6.2)$ 83.3$
Fourth Quarter
Sales -$ 539.7$ -$ (3.0)$ 536.7$
Operating Income -$ 68.9$ (12.5)$ (13.3)$ 43.1$
Full Year
Sales -$ 2,282.4$ -$ (4.2)$ 2,278.2$
Operating Income -$ 328.2$ (54.4)$ (41.6)$ 232.2$
PENTAIR 31
2012 PRO FORMA ADJUSTMENTS – VALVES & CONTROLS
Note: “Other” adjustments represent the elimination of sales to sanctioned countries (which were terminated prior to the completion of the Flow Control acquisition),and changes in corporate allocation assumptions
Pro Forma Adjustments
2012 Valves &
Controls Segment
(in millions)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales -$ 621.3$ -$ (12.7)$ 608.6$
Operating Income -$ 83.7$ (12.3)$ (10.6)$ 60.8$
Second Quarter
Sales -$ 602.4$ -$ (5.0)$ 597.4$
Operating Income -$ 93.1$ (12.4)$ (9.8)$ 70.9$
Third Quarter
Sales -$ 629.6$ -$ (9.5)$ 620.1$
Operating Income -$ 70.9$ (12.5)$ 11.3$ 69.7$
Fourth Quarter
Sales 546.7$ -$ -$ -$ 546.7$
Operating Income 41.8$ -$ -$ 0.4$ 42.2$
Full Year
Sales 546.7$ 1,853.3$ -$ (27.2)$ 2,372.8$
Operating Income 41.8$ 247.7$ (37.2)$ (8.7)$ 243.6$
PENTAIR 32
2011 PRO FORMA ADJUSTMENTS – TECHNICAL SOLUTIONS
Note: “Other” adjustments represent the elimination of certain large projects and changes in corporate allocation assumptions.
Pro Forma Reconciliation
Pro Forma Adjustments
2011 Technical
Solutions Segment
(in millions)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 274.9$ 162.2$ -$ (21.0)$ 416.1$
Operating Income 48.1$ 29.4$ (4.7)$ (10.1)$ 62.7$
Second Quarter
Sales 278.2$ 178.5$ -$ (29.9)$ 426.8$
Operating Income 48.3$ 20.2$ (4.7)$ (8.5)$ 55.3$
Third Quarter
Sales 276.0$ 217.0$ -$ (42.3)$ 450.7$
Operating Income 48.7$ 33.6$ (4.7)$ (12.3)$ 65.3$
Fourth Quarter
Sales 257.8$ 224.8$ -$ (52.2)$ 430.4$
Operating Income 42.3$ 51.0$ (4.7)$ (13.8)$ 74.8$
Full Year
Sales 1,086.9$ 782.5$ -$ (145.4)$ 1,724.0$
Operating Income 187.4$ 134.1$ (18.8)$ (44.7)$ 258.0$
PENTAIR 33
2012 PRO FORMA ADJUSTMENTS – TECHNICAL SOLUTIONS
Note: “Other” adjustments represent the elimination of certain large projects and changes in corporate allocation assumptions.
Pro Forma Adjustments
2012 Technical
Solutions Segment
(in millions)
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 271.2$ 211.2$ -$ (61.3)$ 421.1$
Operating Income 50.5$ 35.8$ (4.7)$ (19.7)$ 61.9$
Second Quarter
Sales 266.0$ 176.1$ -$ (28.3)$ 413.8$
Operating Income 53.7$ 27.9$ (4.7)$ (12.4)$ 64.5$
Third Quarter
Sales 260.1$ 188.1$ -$ (6.5)$ 441.7$
Operating Income 52.3$ 39.0$ (4.7)$ (6.4)$ 80.2$
Fourth Quarter
Sales 433.7$ -$ -$ (7.2)$ 426.5$
Operating Income 75.6$ -$ -$ 2.0$ 77.6$
Full Year
Sales 1,231.0$ 575.4$ -$ (103.2)$ 1,703.2$
Operating Income 232.1$ 102.7$ (14.1)$ (36.6)$ 284.1$
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