EX-99.1 2 c47153exv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
Pentair, Inc.
5500 Wayzata Blvd., Suite 800
Minneapolis, MN 55416
763 545 1730 Tel
763 656 5400 Fax
(PENTAIR LOGO)
News Release
Pentair Reports Third Quarter Net Income Per Share from
Continuing Operations of $0.42; Adjusted EPS of $0.55, up 2%

  •   Reports third quarter sales of $864 million, up 5 percent versus the third quarter 2007
 
  •   Delivers earnings per share from continuing operations (EPS) of $0.42 on a reported basis and adjusted* EPS of $0.55, up 2 percent
 
  •   Introduces fourth quarter guidance and updates full year guidance
 
*   Adjusted 2008 and 2007 EPS exclude the impact of gains/losses from acquisitions and divestitures, the settlement of the Horizon litigation and the negative impact associated with restructuring costs and other market related actions. Adjusted 2008 and 2007 Operating Income and Margins exclude the settlement of the Horizon litigation, the negative impact associated with restructuring costs and other market related actions in the respective period. All financial information and period-to-period references are on a continuing operations basis unless otherwise noted. Reconciliations to discontinued operations as well as GAAP and non-GAAP reconciliations are in the attached financial tables.
MINNEAPOLIS, Minn. — October 21, 2008 — Pentair, Inc. (NYSE: PNR) today announced third quarter 2008 net earnings per diluted share from continuing operations (EPS) of $0.42. This represents a decrease of 29 percent as compared to the $0.59 of reported EPS from continuing operations in the third quarter last year. Current period results include a negative $0.13 per share impact from restructuring charges and other market-related actions. Adjusting for these items, third quarter 2008 EPS was $0.55, up two percent over year-earlier adjusted EPS of $0.54.
Total company sales increased five percent to $864 million, compared with $821 million in the third quarter of 2007. The company delivered third quarter operating income of $84 million. On an adjusted basis, the company delivered operating income of $99 million versus $102 million in the year-ago quarter. The company’s adjusted operating income includes the impact of approximately $6 million of integration, intangible amortization and inventory step-up expenses related to the second quarter 2008 transaction with GE Water & Process Technologies, a unit of the General Electric Company (GE), to combine the companies’ respective residential water filtration businesses. Overall, adjusted operating margins for the third quarter contracted 100 basis points to 11.5 percent. A positive 400 basis point impact from price and productivity did not offset a negative 500 basis point impact related to total inflation, foreign exchange and lower volumes.
Pentair generated free cash flow of $70 million for the quarter. Year-to-date, the company has generated $128 million of free cash flow. These figures exclude $23 million associated with the settlement of the Horizon litigation case. The company said it expects to achieve free cash flow greater than adjusted net income for 2008.
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“Overall, our businesses performed well in the third quarter as we navigated through increasingly more difficult and less predictable end-markets. Our strong balance sheet, with stable financing arrangements in place, enabled us to look past many of the credit issues troubling other firms and focus on our growth and productivity strategies,” said Randall J. Hogan, Pentair chairman and chief executive officer.
Third Quarter Business Highlights
The Water Group delivered $566 million in sales, up four percent year over year. Organic sales were flat; excluding the impact of foreign exchange, organic sales were down one percent driven by continuing softness in the North American residential markets and slowing Western European markets. In Asia, the Middle East and Eastern Europe, Water sales increased at double-digit rates.
  •   Global Flow Technologies sales were up seven percent versus the year-ago quarter, as sales of pump equipment for global commercial, municipal and agricultural markets outpaced declines in North American residential markets.
 
  •   Global Filtration sales grew ten percent, or down one percent excluding the increased sales associated with the recent transaction with GE in residential water filtration. Sales increases in the industrial filtration, food service and desalination vertical markets offset declines in the North American residential market.
 
  •   Global Pool and Spa sales were down ten percent as the prolonged decline in North American residential pool and spa markets continued to impact sales.
 
  •   International Water sales grew as demand in Asia-Pacific produced sales growth of 21 percent. Sales in Europe, Middle East and Africa were essentially flat versus last year as Western European economies slowed in the third quarter.
The Water Group’s third quarter reported operating income totaled $48 million, down 15 percent as compared to $56 million in the same period last year. In the quarter, the company had $14 million in pre-tax restructuring charges associated with severance from headcount reductions and costs related to facility rationalizations. Excluding these items, adjusted operating income was $61 million, down seven percent versus $66 million a year-ago. Adjusted operating margins of 10.8 percent were down 130 basis points as benefits from productivity, price and product mix did not offset the negative impact from inflation, volume declines, inventory step-up and integration expenses associated with the residential filtration business combination with GE.
Technical Products delivered third quarter 2008 sales of $298 million, an increase of eight percent versus the year-earlier period. Sales were up five percent excluding the impact of foreign exchange.
  •   Global Electrical sales were up nine percent, led by continued strength in several key vertical markets, price increases and new product introductions.
 
  •   Global Electronic sales were up seven percent. In Asia, electronic sales were up over 20 percent while sales in Europe were up five percent in local currencies. North American sales were down nine percent.
 
     
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Technical Products’ third quarter reported operating income totaled $48 million, up three percent compared to $46 million in the same quarter last year. Reported operating margins were 16.0 percent. Adjusting for a modest restructuring charge, operating margins were 16.2 percent, down 30 basis points versus the third quarter 2007. In the quarter, the benefits from volume, productivity and price did not fully offset the negative impact from inflation and foreign exchange.
“We continue to perform well in our respective markets. In the third quarter, our Technical Products business maintained outstanding market and financial momentum - achieving solid results even when compared against a record quarter a year ago. In our Water businesses, we continue to drive solid growth in our industrial, commercial and municipal Water markets globally to help compensate for severe declines in the North American residential market and slowing Western European markets,” Hogan said.
Outlook
The company introduced its fourth quarter reported 2008 EPS guidance range of $0.17 to $0.20. Adjusting for charges associated with restructuring, fourth quarter EPS is expected to be $0.52 to $0.55, approximately flat when compared against the fourth quarter 2007. The fourth quarter 2008 adjusted EPS range includes approximately $0.03 per share of expenses associated mainly with integration and intangibles amortization charges related to the GE residential filtration transaction.
The company updates its full year 2008 reported EPS guidance range to $2.51 to $2.54, up 18 to 20 percent versus reported full year 2007 EPS. Adjusting for the GE transaction gain, the settlement of the Horizon litigation, restructuring actions and the expenses incurred in connection with the August repurchase of $116 million of the company’s publicly-held bonds, full year EPS is expected to be $2.28 to $2.31, up about 10 percent versus adjusted full year 2007 EPS. The full year adjusted EPS guidance includes approximately $0.07 per share of expenses mainly associated with integration, inventory step-up, and intangibles amortization charges related to the GE residential filtration transaction.
“We expect our positive performance to continue in many of our non-residential and international Water and global Technical Products’ businesses. However, with more difficult economic conditions on the horizon, we are taking additional actions to improve our cost structure and better position the company to continue to control our own destiny,” Hogan said.
“We expect that unpredictable end-markets will soften sales volumes but we have a solid path to deliver full year earnings, which remains fundamentally the same as that which we have outlined in previous quarters. We have been battling very difficult residential end-markets for several years now, which gives us confidence we can continue to navigate challenging environments. Additionally, we remain committed to delivering on the long-term strategic outlook we presented at our September 10th Investor and Analyst Day and we have not wavered from our multi-year outlook,” Hogan added.
Presentations regarding the company’s long-term strategic outlook discussed at the Pentair 2008 Investor and Analyst Day can be accessed at www.pentair.com/Investors.aspx.
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Earnings Conference Call
Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the Company’s performance and fourth quarter and full year 2008 guidance on a two-way conference call with investors at 12:00 p.m. Eastern today. Reconciliation of non-GAAP financial measures are set forth in the attachments to this third quarter 2008 earnings release and in the third quarter 2008 earning release conference call presentation, both of which can be found at Pentair’s web site (www.pentair.com). Related financial charts and certain other information to be discussed on the conference call will be available on the company’s website shortly before the conference call. The web cast and presentation will be archived at the same site following the conclusion of the conference call.
Caution concerning forward-looking statements
Any statements made about the company’s anticipated financial results are forward-looking statements subject to risks and uncertainties such as continued economic growth, including the strength of housing and related markets; the ability to integrate acquisitions successfully and the risk that expected synergies may not be fully realized or may take longer to realize than expected; foreign currency effects; retail and industrial demand; product introductions; and pricing and other competitive pressures, as well as other risk factors set forth in our SEC filings. Forward-looking statements included herein are made as of the date hereof, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results.
About Pentair, Inc.
Pentair (www.pentair.com) is a diversified operating company headquartered in Minnesota. Its Water Group is a global leader in providing innovative products and systems used worldwide in the movement, treatment, storage and enjoyment of water. Pentair’s Technical Products Group is a leader in the global enclosures and thermal management markets, designing and manufacturing thermal management products and standard, modified, and custom enclosures that house and protect sensitive electronics and electrical components. With 2007 revenues of $3.30 billion, Pentair employs approximately 16,000 people worldwide.
         
 
  Pentair Contacts:    
 
  Todd Gleason   Rachael Jarosh
 
  Vice President, Investor Relations   Vice President, Communications
 
  Tel.: (763) 656-5570   Tel.: (763) 656-5280
 
  E-mail:todd.gleason@pentair.com   E-mail: rachael.jarosh@pentair.com
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Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
                                 
    Three months ended   Nine months ended
    September 27   September 29   September 27   September 29
In thousands, except per-share data   2008   2007   2008   2007
 
Net sales
   $ 864,167     $ 821,215     $ 2,614,328     $ 2,513,359  
Cost of goods sold
     608,854       576,519       1,829,622       1,753,183  
 
 
                                
Gross profit
     255,313       244,696       784,706       760,176  
% of net sales
     29.5 %     29.8 %     30.0 %     30.2 %
Selling, general and administrative
     154,972       137,100       439,929       428,463  
% of net sales
     17.9 %     16.7 %     16.8 %     17.0 %
Research and development
     16,691       14,446       48,871       44,204  
% of net sales
     1.9 %     1.8 %     1.9 %     1.8 %
Legal settlement
     —       —       20,435       —  
 
 
                                
Operating income
     83,650       93,150       275,471       287,509  
% of net sales
     9.7 %     11.3 %     10.5 %     11.4 %
 
                                
Other (income) expense:
                                
 
                                
Gain on sale of interest in subsidiaries
     —       —       (109,648 )     —  
Equity losses of unconsolidated subsidiary
     669       845       2,433       1,838  
Loss on early extinguishment of debt
     4,611       —       4,611       —  
Net interest expense
     13,735       18,157       45,685       51,351  
% of net sales
     1.6 %     2.2 %     1.7 %     2.0 %
 
 
                                
Income from continuing operations before income taxes and minority interest
     64,635       74,148       332,390       234,320  
% of net sales
     7.5 %     9.0 %     12.7 %     9.3 %
Provision for income taxes
     21,146       14,869       97,522       71,419  
Effective tax rate
     32.7 %     20.1 %     29.3 %     30.5 %
Minority interest
     2,100       —       2,100       —  
 
 
                                
Income from continuing operations
     41,389       59,279       232,768       162,901  
 
                                
Loss from discontinued operations, net of tax
     —       (1,235 )     (1,217 )     (726 )
 
                                
Gain (loss) on disposal of discontinued operations, net of tax
     (269 )     —       (7,406 )     207  
 
Net income
   $ 41,120     $ 58,044     $ 224,145     $ 162,382  
 
 
                                
Earnings (loss) per common share
                                
Basic
                                
Continuing operations
   $ 0.42     $ 0.60     $ 2.37     $ 1.65  
Discontinued operations
     —       (0.01 )     (0.08 )     (0.01 )
 
Basic earnings per common share
   $ 0.42     $ 0.59     $ 2.29     $ 1.64  
 
 
                                
Diluted
                                
Continuing operations
   $ 0.42     $ 0.59     $ 2.34     $ 1.63  
Discontinued operations
     —       (0.01 )     (0.08 )     (0.01 )
 
Diluted earnings per common share
   $ 0.42     $ 0.58     $ 2.26     $ 1.62  
 
 
                                
Weighted average common shares outstanding
                                
Basic
     97,827       98,747       98,049       98,859  
Diluted
     99,319       100,365       99,372       100,339  
 
                                
Cash dividends declared per common share
   $ 0.17     $ 0.15     $ 0.51     $ 0.45  
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Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
                         
    September 27   December 31   September 29
In thousands   2008   2007   2007
 
Assets
                        
Current assets
                        
Cash and cash equivalents
   $ 93,544     $ 70,795     $ 56,555  
Accounts and notes receivable, net
     517,240       466,675       473,496  
Inventories
     430,386       392,416       395,638  
Deferred tax assets
     50,061       50,511       52,038  
Prepaid expenses and other current assets
     53,504       35,908       47,746  
Current assets of discontinued operations
     —       21,716       26,868  
 
Total current assets
     1,144,735       1,038,021       1,052,341  
 
                        
Property, plant and equipment, net
     363,352       365,990       356,594  
 
                        
Other assets
                        
Goodwill
     2,134,031       2,004,720       1,989,620  
Intangibles, net
     539,133       491,263       492,732  
Other
     69,874       82,237       77,084  
Non-current assets of discontinued operations
     —       18,383       18,500  
 
Total other assets
     2,743,038       2,596,603       2,577,936  
 
Total assets
   $ 4,251,125     $ 4,000,614     $ 3,986,871  
 
 
                        
Liabilities and Shareholders’ Equity
                        
Current liabilities
                        
Short-term borrowings
   $ —     $ 13,586     $ 4,800  
Current maturities of long-term debt
     3,913       5,075       4,992  
Accounts payable
     225,928       229,937       204,360  
Employee compensation and benefits
     107,163       111,475       107,271  
Current pension and post-retirement benefits
     8,557       8,557       7,918  
Accrued product claims and warranties
     43,012       49,382       47,719  
Income taxes
     7,806       12,919       10,862  
Accrued rebates and sales incentives
     35,907       36,663       36,910  
Other current liabilities
     101,662       90,377       111,833  
Current liabilities of discontinued operations
     —       2,935       5,431  
 
Total current liabilities
     533,948       560,906       542,096  
 
                        
Other liabilities
                        
Long-term debt
     1,035,150       1,041,925       1,102,707  
Pension and other retirement compensation
     164,776       161,042       222,098  
Post-retirement medical and other benefits
     34,218       37,147       46,499  
Long-term income taxes payable
     25,356       21,306       18,214  
Deferred tax liabilities
     184,514       167,633       134,683  
Other non-current liabilities
     96,941       97,086       89,898  
Non-current liabilities of discontinued operations
     —       2,698       2,519  
 
Total liabilities
     2,074,903       2,089,743       2,158,714  
 
                        
Minority interest
     120,230       —       —  
 
                        
Shareholders’ equity
     2,055,992       1,910,871       1,828,157  
 
Total liabilities and shareholders’ equity
   $ 4,251,125     $ 4,000,614     $ 3,986,871  
 
 
                        
Days sales in accounts receivable (13 month moving average)
     56       53       54  
Days inventory on hand (13 month moving average)
     78       75       76  
Days in accounts payable (13 month moving average)
     57       54       54  
Debt/total capital
     33.6 %     35.7 %     37.8 %
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Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
                 
    Nine months ended
    September 27   September 29
In thousands   2008   2007
 
Operating activities
                
Net income
   $ 224,145     $ 162,382  
Adjustments to reconcile net income to net cash provided by (used for) operating activities
                
(Income) loss from discontinued operations
     1,217       726  
(Gain) loss on disposal of discontinued operations
     7,406       (207 )
Equity losses of unconsolidated subsidiary
     2,433       1,838  
Minority interest
     2,100       —  
Depreciation
     45,759       45,538  
Amortization
     20,220       18,635  
Deferred income taxes
     25,927       (18,883 )
Stock compensation
     15,948       17,071  
Excess tax benefits from stock-based compensation
     (1,617 )     (2,706 )
Gain on sale of investment
     87       (2,195 )
Gain on sale of interest in subsidiaries
     (109,648 )     —  
Changes in assets and liabilities, net of effects of business acquisitions and dispositions
                
Accounts and notes receivable
     (55,727 )     (27,927 )
Inventories
     (26,518 )     13,973  
Prepaid expenses and other current assets
     (15,798 )     (8,681 )
Accounts payable
     1,343       (1,088 )
Employee compensation and benefits
     (7,471 )     3,037  
Accrued product claims and warranties
     (6,483 )     3,199  
Income taxes
     (5,792 )     (4,573 )
Other current liabilities
     9,380       15,955  
Pension and post-retirement benefits
     592       7,924  
Other assets and liabilities
     13,146       7,396  
 
Net cash provided by (used for) continuing operations
     140,649       231,414  
Net cash provided by (used for) operating activities of discontinued operations
     (3,432 )     (2,081 )
 
Net cash provided by (used for) operating activities
     137,217       229,333  
 
                
Investing activities
                
Capital expenditures
     (40,107 )     (45,163 )
Proceeds from sale of property and equipment
     4,304       5,136  
Acquisitions, net of cash acquired or received
     (1,609 )     (486,264 )
Divestitures
     29,526       —  
Other
     (7 )     (4,044 )
 
Net cash provided by (used for) investing activities
     (7,893 )     (530,335 )
 
                
Financing activities
                
Net short-term borrowings (repayments)
     (14,180 )     (10,378 )
Proceeds from long-term debt
     479,405       1,147,132  
Repayment of long-term debt
     (486,492 )     (770,822 )
Debt issuance costs
     (114 )     (1,876 )
Excess tax benefits from stock-based compensation
     1,617       2,706  
Proceeds from exercise of stock options
     5,140       5,512  
Repurchases of common stock
     (37,342 )     (27,119 )
Dividends paid
     (50,541 )     (44,986 )
 
Net cash provided by (used for) financing activities
     (102,507 )     300,169  
 
                
Effect of exchange rate changes on cash and cash equivalents
     (4,068 )     2,568  
 
Change in cash and cash equivalents
     22,749       1,735  
Cash and cash equivalents, beginning of period
     70,795       54,820  
 
Cash and cash equivalents, end of period
   $ 93,544     $ 56,555  
 
 
                
Free cash flow
                
 
Net cash provided by (used for) continuing operations
   $ 140,649     $ 231,414  
Capital expenditures
     (40,107 )     (45,163 )
Proceeds from sale of property and equipment
     4,304       5,136  
Net cash — Horizon settlement
     22,680       —  
 
Free cash flow
   $ 127,526     $ 191,387  
 
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Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment (Unaudited)
                                 
    First Qtr   Second Qtr   Third Qtr   Nine Months
In thousands   2008   2008   2008   2008
 
Net sales to external customers
                                
Water Group
   $ 554,944     $ 605,497     $ 566,328     $ 1,726,769  
Technical Products Group
     285,460       304,260       297,839       887,559  
 
Consolidated
   $ 840,404     $ 909,757     $ 864,167     $ 2,614,328  
 
 
                                
 
                                
Intersegment sales
                                
Water Group
   $ 372     $ 139     $ 305     $ 816  
Technical Products Group
     1,138       1,034       765       2,937  
Other
     (1,510 )     (1,173 )     (1,070 )     (3,753 )
 
Consolidated
   $ —     $ —     $ —     $ —  
 
 
                                
Operating income (loss)
                                
Water Group
   $ 64,419     $ 57,822     $ 47,612     $ 169,853  
Technical Products Group
     45,337       49,732       47,585       142,654  
Other
     (12,937 )     (12,552 )     (11,547 )     (37,036 )
 
Consolidated
   $ 96,819     $ 95,002     $ 83,650     $ 275,471  
 
 
                                
Operating income as a percent of net sales
                                
Water Group
     11.6 %     9.5 %     8.4 %     9.8 %
Technical Products Group
     15.9 %     16.3 %     16.0 %     16.1 %
Consolidated
     11.5 %     10.4 %     9.7 %     10.5 %
                                 
    First Qtr     Second Qtr     Third Qtr     Nine Months  
In thousands   2007     2007     2007     2007  
 
Net sales to external customers
                                
Water Group
   $ 540,262     $ 642,149     $ 545,514     $ 1,727,925  
Technical Products Group
     252,583       257,150       275,701       785,434  
Other
     —       —               —  
 
Consolidated
   $ 792,845     $ 899,299     $ 821,215     $ 2,513,359  
 
 
                                
Intersegment sales
                                
Water Group
   $ 214     $ 46     $ 207     $ 467  
Technical Products Group
     896       1,689       1,526       4,111  
Other
     (1,110 )     (1,735 )     (1,733 )     (4,578 )
 
Consolidated
   $ —     $ —     $ —     $ —  
 
 
                                
Operating income (loss)
                                
Water Group
   $ 62,426     $ 89,195     $ 56,061     $ 207,682  
Technical Products Group
     31,631       36,140       46,237       114,008  
Other
     (12,558 )     (12,475 )     (9,148 )     (34,181 )
 
Consolidated
   $ 81,499     $ 112,860     $ 93,150     $ 287,509  
 
 
                                
Operating income as a percent of net sales
                                
Water Group
     11.6 %     13.9 %     10.3 %     12.0 %
Technical Products Group
     12.5 %     14.1 %     16.8 %     14.5 %
Consolidated
     10.3 %     12.5 %     11.3 %     11.4 %
(more)

 

-9-

Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP “As Reported” year ending December 31, 2008 to the “Adjusted” non-GAAP
excluding the effect of 2008 adjustments (Unaudited)
                                         
    First Quarter   Second Quarter   Third Quarter   Fourth Quarter   Year
In thousands, except per-share data   2008   2008   2008   2008   2008
 
Net sales
   $ 840,404     $ 909,757     $ 864,167     $ 840,000-$850,000     approx. $3,500M
 
 
                                        
Operating income — as reported
     96,819       95,002       83,650       43,000 - 47,000       318M - 322M
% of net sales
     11.5 %     10.4 %     9.7 %     5.1% - 5.6 %     9.1% - 9.3 %
Adjustments
     —       23,140       15,480     approx. 53,000     approx. 92M
 
Operating income — as adjusted
     96,819       118,142       99,130       96,000 - 100,000       410M - 414M
% of net sales
     11.5 %     13.0 %     11.5 %     11.3% - 11.9 %     11.7% - 11.8 %
 
                                        
Income from continuing operations — as reported
     52,644       138,735       41,389       17,000 - 20,000       250M - 253M
Adjustments — tax affected
     —       (70,560 )     13,260     approx. 35,000     approx. (22M)
 
Income from continuing operations — as adjusted
     52,644       68,175       54,649       52,000 - 55,000       228M - 231M
 
 
                                        
Continuing earnings per common share — diluted
                                        
Diluted earnings per common share — as reported
   $ 0.53     $ 1.39     $ 0.42     $ 0.17 - $0.20     $ 2.51 - $2.54  
Adjustments
     —       (0.71 )     0.13     approx. 0.35     approx. (0.23)
 
Diluted earnings per common share — as adjusted
   $ 0.53     $ 0.68     $ 0.55     $ 0.52 - $0.55     $ 2.28 - $2.31  
 
 
                                        
Weighted average common shares outstanding — Diluted
     99,558       99,509       99,319     approx. 99,200   approx. 99,400
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP “As Reported” year ending December 31, 2007 to the “Adjusted” non-GAAP
excluding the effect of 2007 adjustments (Unaudited)
                                         
    First Quarter   Second Quarter   Third Quarter   Fourth Quarter   Year
In thousands, except per-share data   2007   2007   2007   2007   2007
 
Net sales
   $ 792,845     $ 899,299     $ 821,215     $ 817,518     $ 3,330,877  
 
 
                                        
Operating income — as reported
     81,499       112,860       93,150       91,518       379,027  
% of net sales
     10.3 %     12.5 %     11.3 %     11.2 %     11.4 %
Adjustments
     —       —       9,192       5,970       15,162  
 
Operating income — as adjusted
     81,499       112,860       102,342       97,488       394,189  
% of net sales
     10.3 %     12.5 %     12.5 %     11.9 %     11.8 %
 
                                        
Income from continuing operations — as reported
     42,629       60,994       59,279       49,468       212,370  
Adjustments — tax affected
     —       —       6,246       3,881       10,127  
Non-recurring tax items
     (145 )     (83 )     (11,517 )     (1,073 )     (12,818 )
 
Income from continuing operations — as adjusted
     42,484       60,911       54,008       52,276       209,679  
 
 
                                        
Continuing earnings per common share — diluted
                                        
Diluted earnings per common share — as reported
   $ 0.42     $ 0.61     $ 0.59     $ 0.50     $ 2.12  
Adjustments
     —       —       (0.05 )     0.03       (0.02 )
 
Diluted earnings per common share — as adjusted
   $ 0.42     $ 0.61     $ 0.54     $ 0.53     $ 2.10  
 
 
                                        
Weighted average common shares outstanding — Diluted
     100,271       100,371       100,365       99,859       100,205  
(more)

 

-10-

Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP “As Reported” year ending December 31, 2008 to the “Adjusted” non-GAAP
excluding the effect of 2008 adjustments (Unaudited)
                                         
    First Quarter   Second Quarter   Third Quarter   Fourth Quarter   Year
In thousands   2008   2008   2008   2008   2008
 
Water
                                        
Net sales
   $ 554,944     $ 605,497     $ 566,328     $ 560,000 - $570,000     approx. $2,290M
 
 
                                        
Operating income — as reported
     64,419       57,822       47,612       15,000 - 19,000       185M - 189M  
% of net sales
     11.6 %     9.5 %     8.4 %     2.6% - 3.5 %     8.1% - 8.3 %
Adjustments
     —       22,711       13,711     approx. 45,000     approx. 81M
 
Operating income — as adjusted
     64,419       80,533       61,323       60,000-64,000       266M - 270M  
% of net sales
     11.6 %     13.3 %     10.8 %     10.4% - 11.5 %     11.6% - 11.8 %
 
                                        
Technical Products
                                        
Net sales
   $ 285,460     $ 304,260     $ 297,839     $ 280,000 - $285,000     approx. $1,170M
 
 
                                        
Operating income — as reported
     45,337       49,732       47,585       38,000-40,000       181M - 183M  
% of net sales
     15.9 %     16.3 %     16.0 %     13.3% - 14.3 %     15.4% - 15.7 %
Adjustments
     —       429       633     approx. 5,000     approx. 6M
 
Operating income — as adjusted
     45,337       50,161       48,218       43,000-45,000       187M - 189M  
% of net sales
     15.9 %     16.4 %     16.2 %     15.1% - 16.1 %     15.9% - 16.2 %
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP “As Reported” year ending December 31, 2007 to the “Adjusted” non-GAAP
excluding the effect of 2007 adjustments (Unaudited)
                                         
    First Quarter   Second Quarter   Third Quarter   Fourth Quarter   Year
In thousands   2007   2007   2007   2007   2007
 
Water
                                        
Net sales
   $ 540,262     $ 642,149     $ 545,514     $ 552,819     $ 2,280,744  
 
 
                                        
Operating income — as reported
     62,426       89,195       56,061       65,541       273,223  
% of net sales
     11.6 %     13.9 %     10.3 %     11.9 %     12.0 %
Adjustments
     —       —       9,843       3,897       13,740  
 
Operating income — as adjusted
     62,426       89,195       65,904       69,438       286,963  
% of net sales
     11.6 %     13.9 %     12.1 %     12.6 %     12.6 %
 
                                        
Technical Products
                                        
Net sales
   $ 252,583     $ 257,150     $ 275,701     $ 264,699     $ 1,050,133  
 
 
                                        
Operating income — as reported
     31,631       36,140       46,237       39,578       153,586  
% of net sales
     12.5 %     14.1 %     16.8 %     15.0 %     14.6 %
Adjustments
     —       —       (652 )     2,073       1,421  
 
Operating income — as adjusted
     31,631       36,140       45,585       41,651       155,007  
% of net sales
     12.5 %     14.1 %     16.5 %     15.7 %     14.8 %
# # #