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Change in Accounting Principle
 12 Months Ended
Dec. 31, 2012
Change in Accounting Principle
Change in Accounting Principle
During the fourth quarter of 2012, we changed our method of recognizing actuarial gains and losses for all of our pension and other post-retirement plans. Historically, we recognized actuarial gains and losses as a component of AOCI in our Consolidated Balance Sheets and amortized them into our Consolidated Statements of Operations and Comprehensive Income (Loss) over the average future service period of the active employees of these plans to the extent such gains and losses were outside of a corridor. We elected to immediately recognize actuarial gains and losses in our Consolidated Statements of Operations and Comprehensive Income (Loss) on the basis that it is preferable to accelerate the recognition of such gains and losses into income rather than to delay such recognition. Additionally, for purposes of calculating the expected return on plan assets, we will no longer use a calculated value for the market-related valuation of plan assets, but instead will use the actual fair value of our plan assets. These changes will improve transparency in our operating results by more quickly recognizing the effects of external conditions on our plan obligations, investments and assumptions. We applied these changes retrospectively to all periods presented. The cumulative effect of the change on retained earnings as of January 1, 2010 was a reduction of $58.9 million, with an offset to AOCI. The annual recognition of actuarial losses totaled $146.6 million, $65.7 million and $13.6 million for the years ended December 31, 2012, 2011 and 2010, respectively. This change did not have an impact on cash provided by operating activities for any period presented.
The following table presents our results under our historical method and our results had we applied these new methods for the periods presented:
 
In thousands, except per-share data
Computed
under
previous
method
Recognized
under new
method
Effect of
Change
As of and for the year ended December 31, 2012
 
 
 
Statement of Operations and Comprehensive Income (Loss)
 
 
 
Selling, general and administrative
$
1,016,698

$
1,158,436

$
141,738

Provision (benefit) for income taxes
(24,076
)
(79,353
)
(55,277
)
Income (loss) from continuing operations
(18,151
)
(104,612
)
(86,461
)
Net income (loss) attributable to Pentair Ltd.
(20,725
)
(107,186
)
(86,461
)
Amortization of pension and other post-retirement prior service cost and transition obligation
(86,714
)
(253
)
86,461

Basic earnings (loss) per share attributable to Pentair Ltd.
$
(0.16
)
$
(0.84
)
$
(0.68
)
Diluted earnings (loss) per share attributable to Pentair Ltd.
(0.16
)
(0.84
)
$
(0.68
)
Balance Sheet
 
 
 
Retained earnings
$
1,492,258

$
1,292,288

$
(199,970
)
Accumulated other comprehensive income (loss)
(211,568
)
(11,598
)
199,970

Statement of Cash Flows
 
 
 
Net income (loss) before noncontrolling interest
$
(18,151
)
$
(104,612
)
$
(86,461
)
Pension and other post-retirement expense
25,798

167,536

141,738

Other current liabilities
82,455

27,178

(55,277
)

 
Previously
Reported
Adjusted
Effect of
Change
As of and for the year ended December 31, 2011
 
 
 
Statement of Operations and Comprehensive Income (Loss)
 
 
 
Selling, general and administrative
$
626,527

$
694,841

$
68,314

Provision for income taxes
73,059

46,417

(26,642
)
Income (loss) from continuing operations
38,521

(3,151
)
(41,672
)
Net income (loss) attributable to Pentair Ltd.
34,222

(7,450
)
(41,672
)
Amortization of pension and other post-retirement prior service cost and transition obligation
(41,683
)
(11
)
41,672

Basic earnings (loss) per share attributable to Pentair Ltd.
$
0.35

$
(0.08
)
$
(0.43
)
Diluted earnings (loss) per share attributable to Pentair Ltd.
0.34

(0.08
)
$
(0.42
)
Balance Sheet
 
 
 
Retained earnings
$
1,579,290

$
1,465,780

$
(113,510
)
Accumulated other comprehensive income (loss)
(151,241
)
(37,731
)
113,510

Statement of Cash Flows
 
 
 
Net income (loss) before noncontrolling interest
$
38,521

$
(3,151
)
$
(41,672
)
Pension and other post-retirement expense
16,031

84,345

68,314

Other current liabilities
18,688

(7,954
)
(26,642
)

  
Previously
Reported
Adjusted
Effect of
Change
For the year ended December 31, 2010
 
 
 
Statement of Operations and Comprehensive Income (Loss)
 
 
 
Selling, general and administrative
$
529,329

$
550,501

$
21,172

Provision for income taxes
97,200

88,943

$
(8,257
)
Income from continuing operations
202,947

190,032

$
(12,915
)
Net income attributable to Pentair Ltd.
197,828

184,913

$
(12,915
)
Amortization of pension and other post-retirement prior service cost and transition obligation
(12,762
)
153

$
12,915

Basic earnings per share attributable to Pentair Ltd.
$
2.01

$
1.88

$
(0.13
)
Diluted earnings per share attributable to Pentair Ltd.
1.99

1.86

$
(0.13
)
Statement of Cash Flows
 
 
 
Net income (loss) before noncontrolling interest
$
202,321

$
189,406

$
(12,915
)
Pension and other post-retirement expense
12,926

34,098

$
21,172

Other current liabilities
7,462

(795
)
$
(8,257
)