Financial Statements of Parent Company Guarantor

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Financial Statements of Parent Company Guarantor

Supplemental Guarantor Information

Pentair plc (the "Parent Company Guarantor") and PISG (the "Subsidiary Guarantor"), fully and unconditionally, guarantee the Notes of PFSA (the "Subsidiary Issuer"). The Subsidiary Guarantor is a Switzerland limited liability company and 100 percent-owned subsidiary of the Parent Company Guarantor. The Subsidiary Issuer is a Luxembourg private limited liability company and 100 percent-owned subsidiary of the Subsidiary Guarantor. The guarantees provided by the Parent Company Guarantor and Subsidiary Guarantor are joint and several.

The following supplemental financial information sets forth the Company's Condensed Consolidating Statement of Operations and Comprehensive Income (Loss), Condensed Consolidating Balance Sheets and Condensed Consolidating Statement of Cash Flows by relevant group within the Company: Pentair plc and PISG as the guarantors, PFSA as issuer of the debt and all other non-guarantor subsidiaries. Condensed consolidating financial information for Pentair plc, PISG and PFSA on a stand-alone basis is presented using the equity method of accounting for subsidiaries.

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three months ended March 31, 2018

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	—		$	—		$	—		$	1,269.7		$	—		$	1,269.7
Cost of goods sold	—			—			—			807.7			—			807.7
Gross profit	—			—			—			462.0			—			462.0
Selling, general and administrative	7.1			—			0.1			272.4			—			279.6
Research and development	—			—			—			30.1			—			30.1
Operating income (loss)	(7.1		)	—			(0.1		)	159.5			—			152.3
Loss (earnings) from continuing operations of investment in subsidiaries	(111.3		)	(110.7		)	(123.7		)	—			345.7			—
Other (income) expense:
Loss on sale of business	—			—			—			5.3			—			5.3
Net interest (income) expense	—			(0.3		)	12.6			1.5			—			13.8
Other expense	—			—			—			1.4			—			1.4
Income (loss) from continuing operations before income taxes	104.2			111.0			111.0			151.3			(345.7		)	131.8
Provision for income taxes	—			—			—			27.6			—			27.6
Net income (loss) from continuing operations	104.2			111.0			111.0			123.7			(345.7		)	104.2
Loss from discontinued operations, net of tax	—			—			—			(1.3		)	—			(1.3		)
Earnings (loss) from discontinued operations of investment in subsidiaries	(1.3		)	(1.3		)	(1.3		)	—			3.9			—
Net income (loss)	$	102.9		$	109.7		$	109.7		$	122.4		$	(341.8	)	$	102.9
Comprehensive income (loss), net of tax
Net income (loss)	$	102.9		$	109.7		$	109.7		$	122.4		$	(341.8	)	$	102.9
Changes in cumulative translation adjustment	2.4			2.4			2.4			2.4			(7.2		)	2.4
Changes in market value of derivative financial instruments, net of tax	(3.8		)	(3.8		)	(3.8		)	(3.8		)	11.4			(3.8		)
Comprehensive income (loss)	$	101.5		$	108.3		$	108.3		$	121.0		$	(337.6	)	$	101.5

Condensed Consolidating Balance Sheet

March 31, 2018

In millions	Parent Company Guarantor		Subsidiary Guarantor		Subsidiary Issuer		Non-guarantor Subsidiaries		Eliminations			Consolidated Total
Assets
Current assets
Cash and cash equivalents	$	0.2	$	—	$	—	$	907.3	$	—		$	907.5
Accounts and notes receivable, net	—		—		—		985.2		—			985.2
Inventories	—		—		—		593.5		—			593.5
Other current assets	0.9		0.2		5.1		236.1		(9.5		)	232.8
Total current assets	1.1		0.2		5.1		2,722.1		(9.5		)	2,719.0
Property, plant and equipment, net	—		—		—		546.5		—			546.5
Other assets
Investments in subsidiaries	5,104.8		5,009.0		7,068.3		—		(17,182.1		)	—
Goodwill	—		—		—		4,380.1		—			4,380.1
Intangibles, net	—		—		—		1,536.5		—			1,536.5
Other non-current assets	2.2		96.0		870.6		1,283.4		(2,066.2		)	186.0
Total other assets	5,107.0		5,105.0		7,938.9		7,200.0		(19,248.3		)	6,102.6
Total assets	$	5,108.1	$	5,105.2	$	7,944.0	$	10,468.6	$	(19,257.8	)	$	9,368.1
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	—	$	—	$	—	$	0.2	$	—		$	0.2
Accounts payable	1.5		—		—		402.5		—			404.0
Employee compensation and benefits	0.4		—		—		142.3		—			142.7
Other current liabilities	69.8		0.4		12.5		407.4		(9.5		)	480.6
Total current liabilities	71.7		0.4		12.5		952.4		(9.5		)	1,027.5
Other liabilities
Long-term debt	286.5		—		2,922.7		1,530.1		(2,066.2		)	2,673.1
Pension and other post-retirement compensation and benefits	—		—		—		291.9		—			291.9
Deferred tax liabilities	—		—		—		369.1		—			369.1
Other non-current liabilities	30.2		—		—		256.6		—			286.8
Total liabilities	388.4		0.4		2,935.2		3,400.1		(2,075.7		)	4,648.4
Equity	4,719.7		5,104.8		5,008.8		7,068.5		(17,182.1		)	4,719.7
Total liabilities and equity	$	5,108.1	$	5,105.2	$	7,944.0	$	10,468.6	$	(19,257.8	)	$	9,368.1

Condensed Consolidating Statement of Cash Flows

Three months endedMarch 31, 2018

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Operating activities
Net cash provided by (used for) operating activities	$	83.4		$	111.3		$	109.1		$	(129.7	)	$	(341.7	)	$	(167.6	)
Investing activities
Capital expenditures	—			—			—			(16.8		)	—			(16.8		)
Proceeds from sale of property and equipment	—			—			—			2.3			—			2.3
Payments due to sale of businesses, net	—			—			—			(13.8		)	—			(13.8		)
Acquisitions, net of cash acquired	—			—			—			(2.9		)	—			(2.9		)
Net intercompany loan activity	—			(1.9		)	(262.6		)	103.1			161.4			—
Net cash provided by (used for) investing activities	—			(1.9		)	(262.6		)	71.9			161.4			(31.2		)
Financing activities
Net receipts of short-term borrowings	—			—			—			0.2			—			0.2
Net repayments of commercial paper and revolving long-term debt	—			—			223.8			193.7			—			417.5
Proceeds from long-term debt	—			—			—			800.0			—			800.0
Debt issuance costs	—			—			—			(7.5		)	—			(7.5		)
Net change in advances to subsidiaries	129.2			(109.4		)	(91.4		)	(108.7		)	180.3			—
Shares issued to employees, net of shares withheld	0.9			—			—			—			—			0.9
Repurchases of ordinary shares	(150.0		)	—			—			—			—			(150.0		)
Dividends paid	(63.3		)	—			—			—			—			(63.3		)
Net cash provided by (used for) financing activities	(83.2		)	(109.4		)	132.4			877.7			180.3			997.8
Effect of exchange rate changes on cash and cash equivalents	—			—			21.1			(25.9		)	—			(4.8		)
Change in cash and cash equivalents	0.2			—			—			794.0			—			794.2
Cash and cash equivalents, beginning of period	—			—			—			113.3			—			113.3
Cash and cash equivalents, end of period	$	0.2		$	—		$	—		$	907.3		$	—		$	907.5

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three months ended March 31, 2017

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	—		$	—		$	—		$	1,183.5	$	—		$	1,183.5
Cost of goods sold	—			—			—			761.2		—			761.2
Gross profit	—			—			—			422.3		—			422.3
Selling, general and administrative	(11.0		)	0.1			0.4			262.2		—			251.7
Research and development	—			—			—			30.0		—			30.0
Operating income (loss)	11.0			(0.1		)	(0.4		)	130.1		—			140.6
Loss (earnings) from continuing operations of investment in subsidiaries	(69.7		)	(69.7		)	(98.5		)	—		237.9			—
Other (income) expense:
Net interest expense (income)	—			(0.1		)	28.4			6.7		—			35.0
Other expense	—			—			—			2.0					2.0
Income (loss) from continuing operations before income taxes	80.7			69.7			69.7			121.4		(237.9		)	103.6
Provision for income taxes	—			—			—			22.9		—			22.9
Net income (loss) from continuing operations	80.7			69.7			69.7			98.5		(237.9		)	80.7
Income from discontinued operations, net of tax	—			—			—			7.1		—			7.1
Earnings (loss) from discontinued operations of investment in subsidiaries	7.1			7.1			7.1			—		(21.3		)	—
Net income (loss)	$	87.8		$	76.8		$	76.8		$	105.6	$	(259.2	)	$	87.8
Comprehensive income (loss), net of tax
Net income (loss)	$	87.8		$	76.8		$	76.8		$	105.6	$	(259.2	)	$	87.8
Changes in cumulative translation adjustment	75.7			75.7			75.7			75.7		(227.1		)	75.7
Changes in market value of derivative financial instruments, net of tax	1.6			1.6			1.6			1.6		(4.8		)	1.6
Comprehensive income (loss)	$	165.1		$	154.1		$	154.1		$	182.9	$	(491.1	)	$	165.1

Condensed Consolidating Balance Sheet

December 31, 2017

In millions	Parent Company Guarantor		Subsidiary Guarantor		Subsidiary Issuer		Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Assets
Current assets
Cash and cash equivalents	$	—	$	—	$	—	$	113.3		$	—		$	113.3
Accounts and notes receivable, net	—		—		—		831.6			—			831.6
Inventories	—		—		—		581.0			—			581.0
Other current assets	10.8		1.8		1.5		239.3			(30.5		)	222.9
Total current assets	10.8		1.8		1.5		1,765.2			(30.5		)	1,748.8
Property, plant and equipment, net	—		—		—		545.5			—			545.5
Other assets
Investments in subsidiaries	5,205.1		5,109.6		7,156.1		—			(17,470.8		)	—
Goodwill	—		—		—		4,351.1			—			4,351.1
Intangibles, net	—		—		—		1,558.4			—			1,558.4
Long-term intercompany debt	—		94.1		614.0		(708.1		)	—			—
Other non-current assets	2.2		—		—		2,317.1			(1,889.4		)	429.9
Total other assets	5,207.3		5,203.7		7,770.1		7,518.5			(19,360.2		)	6,339.4
Total assets	$	5,218.1	$	5,205.5	$	7,771.6	$	9,829.2		$	(19,390.7	)	$	8,633.7
Liabilities and Equity
Current liabilities
Accounts payable	$	1.4	$	—	$	—	$	494.3		$	—		$	495.7
Employee compensation and benefits	0.4		—		—		186.2			—			186.6
Other current liabilities	99.6		0.4		9.4		438.2			(30.5		)	517.1
Total current liabilities	101.4		0.4		9.4		1,118.7			(30.5		)	1,199.4
Other liabilities
Long-term debt	48.4		—		2,652.8		628.9			(1,889.4		)	1,440.7
Pension and other post-retirement compensation and benefits	—		—		—		285.6			—			285.6
Deferred tax liabilities	—		—		—		394.8			—			394.8
Other non-current liabilities	30.5		—		—		244.9			—			275.4
Total liabilities	180.3		0.4		2,662.2		2,672.9			(1,919.9		)	3,595.9
Equity	5,037.8		5,205.1		5,109.4		7,156.3			(17,470.8		)	5,037.8
Total liabilities and equity	$	5,218.1	$	5,205.5	$	7,771.6	$	9,829.2		$	(19,390.7	)	$	8,633.7

Condensed Consolidating Statement of Cash Flows

Three months endedMarch 31, 2017

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Operating activities
Net cash provided by (used for) operating activities	$	49.8		$	75.1		$	69.5		$	(41.0	)	$	(259.4	)	$	(106.0	)
Investing activities
Capital expenditures	—			—			—			(23.6		)	—			(23.6		)
Acquisitions, net of cash acquired	—			—			—			(56.7		)	—			(56.7		)
Net intercompany loan activity	—			—			(530.4		)	(290.2		)	820.6			—
Net cash provided by (used for) investing activities of continuing operations	—			—			(530.4		)	(370.5		)	820.6			(80.3		)
Net cash provided by (used for) investing activities of discontinued operations	—			—			—			(3.7		)	—			(3.7		)
Net cash provided by (used for) investing activities	—			—			(530.4		)	(374.2		)	820.6			(84.0		)
Financing activities
Net repayments of short-term borrowings	—			—			—			(0.1		)	—			(0.1		)
Net receipts (repayments) of commercial paper and revolving long-term debt	—			—			234.0			(4.9		)	—			229.1
Net change in advances to subsidiaries	10.2			(75.1		)	206.9			419.2			(561.2		)	—
Shares issued to employees, net of shares withheld	2.8			—			—			—			—			2.8
Dividends paid	(62.8		)	—			—			—			—			(62.8		)
Net cash provided by (used for) financing activities	(49.8		)	(75.1		)	440.9			414.2			(561.2		)	169.0
Effect of exchange rate changes on cash and cash equivalents	—			—			20.1			0.5			—			20.6
Change in cash and cash equivalents	—			—			0.1			(0.5		)	—			(0.4		)
Cash and cash equivalents, beginning of period	—			—			—			238.5			—			238.5
Cash and cash equivalents, end of period	$	—		$	—		$	0.1		$	238.0		$	—		$	238.1