q4 2012 earnings...

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


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






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


• Fourth Quarter Orders down 15% Y-o-Y


• Fourth Quarter Orders down 16% Y-o-Y


• 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


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





Adjustments


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)


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


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%


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.





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


% 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


to Pentair Ltd. - as adjusted 51.8 75.5 57.7 55.7 240.7


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$






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




% 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


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




% of net sales 18.6% 20.3% 20.1% 17.4% 18.9%


REPORTED TO ADJUSTED 2011 RECONCILIATION

Pentair Ltd. and Subsidiaries




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


% 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


% 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.




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


to Pentair Ltd. - as adjusted approx 117 approx 655


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


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$


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$


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$


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$


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.


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$


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$


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$


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



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$


Second Quarter

Sales 632.0$ 168.7$ -$ -$ 800.7$


Third Quarter

Sales 614.6$ 201.0$ -$ -$ 815.6$


Fourth Quarter

Sales 607.9$ 158.5$ -$ -$ 766.4$


Full Year

Sales 2,369.8$ 658.0$ -$ -$ 3,027.8$


PENTAIR 29

2012 PRO FORMA ADJUSTMENTS – WATER & FLUID SOLUTIONS

Note: “Other” adjustments represent changes in corporate allocation assumptions


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$


Second Quarter

Sales 675.5$ 202.3$ -$ -$ 877.8$


Third Quarter

Sales 605.4$ 202.1$ -$ -$ 807.5$


Fourth Quarter

Sales 770.5$ -$ -$ -$ 770.5$


Full Year

Sales 2,638.4$ 567.8$ -$ -$ 3,206.2$


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



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$


Third Quarter

Sales -$ 661.1$ -$ (0.1)$ 661.0$


Fourth Quarter

Sales -$ 539.7$ -$ (3.0)$ 536.7$


Full Year

Sales -$ 2,282.4$ -$ (4.2)$ 2,278.2$


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


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$


Second Quarter

Sales -$ 602.4$ -$ (5.0)$ 597.4$


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$


Full Year

Sales 546.7$ 1,853.3$ -$ (27.2)$ 2,372.8$


PENTAIR 32

2011 PRO FORMA ADJUSTMENTS – TECHNICAL SOLUTIONS

Note: “Other” adjustments represent the elimination of certain large projects and changes in corporate allocation assumptions.



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$


Second Quarter

Sales 278.2$ 178.5$ -$ (29.9)$ 426.8$


Third Quarter

Sales 276.0$ 217.0$ -$ (42.3)$ 450.7$


Fourth Quarter

Sales 257.8$ 224.8$ -$ (52.2)$ 430.4$


Full Year

Sales 1,086.9$ 782.5$ -$ (145.4)$ 1,724.0$


PENTAIR 33

2012 PRO FORMA ADJUSTMENTS – TECHNICAL SOLUTIONS

Note: “Other” adjustments represent the elimination of certain large projects and changes in corporate allocation assumptions.


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$


Second Quarter

Sales 266.0$ 176.1$ -$ (28.3)$ 413.8$


Third Quarter

Sales 260.1$ 188.1$ -$ (6.5)$ 441.7$


Fourth Quarter

Sales 433.7$ -$ -$ (7.2)$ 426.5$


Full Year

Sales 1,231.0$ 575.4$ -$ (103.2)$ 1,703.2$


q4 2012 earnings...

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