8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 3, 2009

Commission file number 000-04689

Pentair, Inc.

(Exact name of Registrant as specified in its charter)

Minnesota	41-0907434
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification number)
5500 Wayzata Blvd, Suite 800, Golden Valley, Minnesota	55416
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (763) 545-1730

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 Results of Operations and Financial Condition

On February 3, 2009, Pentair, Inc. (the “Company”) issued a press release announcing its earnings for the fourth quarter and fiscal year 2008 and a conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

This press release refers to certain non-GAAP financial measures (adjusted operating income, adjusted margins, adjusted earnings per share and free cash flow) and a reconciliation of those non-GAAP financial measures to the corresponding financial measures contained in the Company’s financial statements prepared in accordance with generally accepted accounting principles.

Adjusted operating income, adjusted margins and adjusted earnings per share eliminate (i) certain expenses incurred in the second, third and fourth quarters of 2008 and third and fourth quarters of 2007 to restructure certain operations of the Company by reducing capacity, closing facilities and reducing headcount, (ii) the impact of the additional reserve recorded for the Horizon litigation settlement and (iii) the gain on the transaction entered into with GE Water & Process Technologies, a unit of General Electric Company (“GE”), to combine GE’s and the Company’s respective global water softener and residential water filtration businesses. Adjusted earnings per share also eliminates the tax impact on the aforementioned items. Management utilizes these adjusted financial measures to assess the run-rate of its continuing operations against those of prior periods without the distortion of these factors. The Company believes that these non-GAAP financial measures will be useful to investors as well to assess the continuing strength of the Company’s underlying operations in light of the downturn in these markets.

The Company uses free cash flow and free cash flow excluding certain items (pension, Horizon settlement and severance) to assess its cash flow performance. The Company believes free cash flow and free cash flow excluding certain items (pension, Horizon settlement and severance) are important measures of operating performance because they provide the Company and its investors a measurement of cash generated from operations that is available to pay dividends, repurchase common stock and repay debt. In addition, these measures are used as a criterion to measure and pay compensation-based incentives. The Company’s measures of free cash flow and free cash flow excluding certain items (pension, Horizon settlement and severance) may not be comparable to similarly titled measures reported by other companies.

The information contained in this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01 Financial Statements and Exhibits

(a)	Financial Statements of Businesses Acquired
	Not applicable.
(b)	Pro Forma Financial Information
	Not applicable.
(c)	Shell Company Transactions
	Not applicable
(d)	Exhibits
	The following exhibits are provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:

Exhibit	Description
99.1	Pentair, Inc. press release dated February 3, 2009 announcing the earnings results for the fourth quarter and fiscal year 2008.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 3, 2009.

PENTAIR, INC.
Registrant
 

By /s/ John L. Stauch  

     John L. Stauch 

     Executive Vice President and Chief Financial Officer 

PENTAIR, INC.

Exhibit Index to Current Report on Form 8-K
Dated February 3, 2009

Exhibit
Number	Description
99.1	Pentair, Inc. press release dated February 3, 2009 announcing the earnings results for the fourth quarter and fiscal year 2008.

EX-99.1

Exhibit 99.1

Pentair, Inc.
5500 Wayzata Blvd., Suite 800
Minneapolis, MN 55416
763 545 1730 Tel
763 656 5400 Fax

News Release

Pentair Announces Full Year 2008 Net Earnings Per Share From Continuing Operations of $2.59; Adjusted EPS of $2.20, Up Five Percent

• Delivers record full year net earnings per share from continuing operations (EPS) of $2.59; or $2.20 on adjusted basis, up 5 percent versus 2007 adjusted EPS of $2.09

• Reports fourth quarter sales of $768 million, down 5 percent year over year

• Announces fourth quarter EPS of 22 cents or 41 cents on an adjusted basis

Adjusted 2008 and 2007 EPS exclude the impact of gains/losses from acquisitions and divestitures (2008), the settlement of the Horizon litigation (2008) and the negative impact associated with restructuring costs and impairment charges (2008 and 2007) and the one-time net tax benefits (2007). Adjusted 2008 and 2007 Operating Income and Margins exclude the settlement of the Horizon litigation, the negative impact associated with restructuring costs and impairment charges 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. — February 3, 2009 — Pentair, Inc. (NYSE: PNR) today announced fourth quarter 2008 net earnings per diluted share from continuing operations (EPS) of $0.22. This represents a decrease of 55 percent as compared to the $0.49 of EPS in the fourth quarter last year. Current period results include a negative $0.19 per share impact from restructuring and impairment charges. Adjusting for these items, fourth quarter 2008 EPS was $0.41, down 21 percent when compared to the year-earlier adjusted EPS of $0.52. The $0.41 per share of adjusted earnings was at the midpoint of the per share adjusted earnings guidance range of $0.40 to $0.42 that the company provided in December 2008.

Total company fourth quarter sales decreased five percent to $768 million, compared with $807 million in the fourth quarter of 2007. The company delivered fourth quarter operating income of $45 million. Excluding the effects of restructuring and impairment charges, the company delivered operating income of $74 million versus $97 million in the year-ago quarter. The company’s adjusted operating income included the negative impact of $3 million of integration and intangible amortization 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 into Pentair Residential Filtration (PRF). Overall, adjusted operating margins for the fourth quarter contracted 240 basis points to 9.6 percent. A positive 400 basis point impact from price and productivity did not offset a negative 640 basis point impact related to total inflation, lower sales volume and foreign exchange.

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“Through the first three quarters of 2008, a period when we met or exceeded our financial outlook, we recognized the global economy was slowing and we began taking aggressive cost reduction actions,” said Randall J. Hogan, Pentair chairman and CEO. “However, as we exited the third quarter, the speed and magnitude of the economic deterioration increased dramatically. This caused us to miss our original fourth quarter sales and earnings forecasts and set into motion an acceleration of additional cost actions. By the end of 2009, when compared to June of 2008, we will have reduced our headcount by over 15 percent and closed 17 facilities,” he added.

Fourth Quarter Business Highlights

The Water Group delivered $509 million in sales, a six percent decline year-over-year. The formation of PRF added three points of growth and foreign exchange reduced sales by two points. Slowing international and non-residential markets joined continuing softness in North American residential markets to negatively impact sales.

• Global Flow Technologies sales were down five percent versus the year-ago quarter. Sales growth in pump equipment for global commercial, municipal and agricultural markets did not outpace further declines in North American and European residential markets.

• Global Filtration sales declined two percent, or down twelve percent organically offset by the increased sales associated with PRF. Sales increases in the industrial filtration and desalination vertical markets did not offset declines in North American and European residential markets and in global foodservice markets.

• Global Pool Equipment sales were down 12 percent as sales increases to commercial pool markets could not offset the prolonged decline in residential pool markets.

• Europe, Middle East and Africa sales declined seven percent versus the year-ago quarter as Western European economies continued to slow in the fourth quarter.

• Asia-Pacific sales declined seven percent as growth in China and India did not overcome volume declines and negative currency fluctuations in Australia and New Zealand.

The Water Group’s fourth quarter operating income totaled $32 million, a decrease of 51 percent as compared to $65 million in the same period last year. Excluding the effects of restructuring and impairment charges, the Group’s operating income was $52 million or 25 percent lower than the $69 million in the year-ago period. Adjusted operating margins of 10.2 percent contracted 250 basis points as the benefit from productivity actions and positive price did not offset the negative impact from inflation, decreased volumes and integration costs associated with the formation of PRF.

Technical Products delivered fourth quarter 2008 sales of $258 million, a decrease of two percent versus the year-earlier period as industrial and commercial demand slowed throughout the quarter.

• Total electrical sales were up slightly as growth in energy, network and commercial overcame contraction in automotive and machine tools and other key markets.

• Global electronic sales decreased approximately six percent as each major region experienced year-over-year sales declines.

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Technical Products’ fourth quarter reported operating income totaled $27 million, a decrease of 33 percent as compared to $40 million in the same quarter last year. Adjusting for restructuring expenses and impairment charges, operating income totaled $34 million, down 19 percent versus the $42 million in the fourth quarter 2007. Adjusted operating margins were 13.1 percent, a decrease of 260 basis points versus the year-ago period. In the quarter, the benefits from productivity and price could not offset the negative impact from total inflation, predominantly steel costs, and foreign exchange.

“The insurmountable combination of sales volume declines, high period-costs for steel and other materials, and actions we took to temporarily curb production in December impacted margins in the fourth quarter considerably,” said Hogan. “However, we are taking aggressive actions to align our cost structure and growth strategies to reflect the reality of the economy.”

fiscal year 2008 results

Total company sales of $3.35 billion for fiscal year 2008 increased 2.2 percent from $3.28 billion a year ago. For the year, the company reported EPS of $2.59. This represents an increase of 22 percent as compared to the $2.12 of reported EPS in 2007. Full year 2008 results included the favorable impact of the 86 cents per share gain from the formation of PRF, the negative 33 cents per share impact from restructuring actions and impairment charges and the negative 14 cents per share impact from the settlement of the Horizon litigation. Full year 2007 adjusted EPS of $2.09 excluded the favorable impact of $0.13 per share from one-time net tax benefits and a negative $0.10 per share impact from restructuring costs.

For the year, Pentair generated $164 million in free cash flow. Excluding the impact of $28 million for the settlement of the Horizon litigation, $18 million for restructuring and related expenses and $8 million for pension fund contributions, free cash flow was $218 million. In 2007, the company generated $281 million of free cash flow on a continuing operations basis. In 2008, the company paid a $0.68 dividend for each share of common stock and repurchased 1.55 million shares of stock in 2008. The company recently announced a dividend increase to $0.72 for each share of common stock.

“Pentair delivered solid results in 2008 despite a tumultuous economic environment that included unplanned headwinds around commodities, currency, and market-based credit and financial crises,” said Hogan. “We generated record full year sales and earnings per share, we improved our portfolio by divesting three non-core businesses and we strengthened our position in filtration by the formation of PRF. We exit the year with new technologies, more global distribution capabilities, a leaner manufacturing footprint and many actions underway that will enable us to remain competitive.”

Outlook

The company updates first quarter 2009 earnings per share guidance in the range of $0.20 to $0.30, a decrease of 43 to 62 percent year-over-year. The updated first quarter guidance range reflects additional in-the-period restructuring expenses associated with increased severance costs, plant shutdowns, and a continued curbing of production early in the quarter. The company maintains its full year 2009 EPS guidance range of $1.70 to $2.00, a decrease of 9 to 23 percent versus 2008 adjusted EPS. The company expects full year 2009 free cash flow to equal or exceed net income.

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“We expect our quarterly 2009 earnings results will improve sequentially as we realize the benefits of our cost actions and the benefit of approximately three percent net material deflation,” said Hogan. “However, we expect first quarter 2009 results will be down significantly year-over-year. In the first quarter of 2009, we are forecasting sales levels at December 2008 run-rates levels in each business except for our Pool business, which we believe will be more negative. Additionally, restructuring related expenses will be at their peak early in the year. Unfortunately, the benefits from those restructuring actions, as well as from material deflation, will not yet have been realized in our first quarter operating results,” Hogan added.

“Given the uncertain depth and length of the global recession, our full year 2009 outlook reflects our expectation that sales volumes across our four global business units will decline around 10 percent as the economic environment remains soft,” said Hogan. “While we don’t see the global economy improving in 2009, we believe that when it does improve our structural cost reductions and improved end-market focus position us for rapid earnings growth and cash flow generation.”

Earnings Conference Call

Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the Company’s 2008 performance, and first quarter and full year 2009 guidance on a two-way conference call with investors at 12:00 p.m. Eastern today. Reconciliation of any non-GAAP financial measures are set forth in the attachments to this fourth quarter 2008 earnings release and in the fourth quarter 2008 earnings 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 the breadth and severity of the global economic downturn; 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 2008 revenues of $3.35 billion, Pentair employs approximately 15,000 people worldwide.

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Pentair Contacts:
Todd Gleason
Vice President, Strategic Planning & Investor Relations
Tel.: (763) 656-5570
E-mail: todd.gleason@pentair.com

Media Inquiries: please call Betsy Day at (763) 656-5537

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Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)

	Three months ended						Year ended
	December 31			December 31			December 31			December 31
In thousands, except per-share data	2008			2007			2008			2007
Net sales	$	767,637		$	806,670		$	3,351,976		$	3,280,903
Cost of goods sold		538,144			551,123			2,337,426			2,268,205
Gross profit		229,493			255,547			1,014,550			1,012,698
% of net sales		29.9	%		31.7	%		30.3	%		30.9	%
Selling, general and administrative		169,149			150,424			606,980			576,828
% of net sales		22.0	%		18.6	%		18.1	%		17.6	%
Research and development		15,147			14,123			62,450			56,821
% of net sales		2.0	%		1.8	%		1.9	%		1.7	%
Legal settlement		—			—			20,435			—
Operating income		45,197			91,000			324,685			379,049
% of net sales		5.9	%		11.3	%		9.7	%		11.6	%
Other (income) expense:
Gain on sale of interest in subsidiaries		—			—			(109,648	)		—
Equity losses of unconsolidated subsidiary		608			1,027			3,041			2,865
Loss on early extinguishment of debt		—			—			4,611			—
Net interest expense		13,744			16,907			59,435			68,393
% of net sales		1.8	%		2.1	%		1.8	%		2.1	%
Other		106			1,230			106			1,230
Income from continuing operations before income taxes and minority interest		30,739			71,836			367,140			306,561
% of net sales		4.0	%		8.9	%		11.0	%		9.3	%
Provision for income taxes		9,245			22,758			108,344			94,443
Effective tax rate		30.1	%		31.8	%		29.5	%		30.8	%
Minority interest		333			—			2,433			—
Income from continuing operations		21,161			49,078			256,363			212,118
Loss from discontinued operations, net of tax		(2,131	)		(764	)		(5,783	)		(1,629	)
Gain (loss) on disposal of discontinued operations, net of tax		(14,441	)		231			(21,846	)		438
Net income	$	4,589		$	48,545		$	228,734		$	210,927
Earnings (loss) per common share
Basic
Continuing operations	$	0.22		$	0.50		$	2.62		$	2.15
Discontinued operations		(0.17	)		(0.01	)		(0.28	)		(0.01	)
Basic earnings per common share	$	0.05		$	0.49		$	2.34		$	2.14
Diluted
Continuing operations	$	0.22		$	0.49		$	2.59		$	2.12
Discontinued operations		(0.17	)		(0.01	)		(0.28	)		(0.01	)
Diluted earnings per common share	$	0.05		$	0.48		$	2.31		$	2.11
Weighted average common shares outstanding
Basic		97,422			98,448			97,887			98,762
Diluted		98,299			99,859			99,068			100,205
Cash dividends declared per common share	$	0.17		$	0.15		$	0.68		$	0.60

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Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

	December 31			December 31
In thousands	2008			2007
Assets
Current assets
Cash and cash equivalents	$	39,344		$	70,795
Accounts and notes receivable, net		461,081			461,408
Inventories		417,287			379,018
Deferred tax assets		51,354			50,511
Prepaid expenses and other current assets		63,113			35,799
Current assets of discontinued operations		—			40,490
Total current assets		1,032,179			1,038,021
Property, plant and equipment, net		343,881			361,690
Other assets
Goodwill		2,101,851			1,999,119
Intangibles, net		515,508			487,028
Other		59,794			82,238
Non-current assets of discontinued operations		—			32,518
Total other assets		2,677,153			2,600,903
Total assets	$	4,053,213		$	4,000,614
Liabilities and Shareholders’ Equity
Current liabilities
Short-term borrowings	$	—		$	13,586
Current maturities of long-term debt		624			5,075
Accounts payable		217,898			227,786
Employee compensation and benefits		90,210			111,082
Current pension and post-retirement benefits		8,890			8,557
Accrued product claims and warranties		41,559			49,077
Income taxes		5,451			14,999
Accrued rebates and sales incentives		28,897			36,430
Other current liabilities		104,975			90,021
Current liabilities of discontinued operations		—			3,704
Total current liabilities		498,504			560,317
Other liabilities
Long-term debt		953,468			1,041,925
Pension and other retirement compensation		270,139			161,042
Post-retirement medical and other benefits		34,723			37,147
Long-term income taxes payable		28,139			21,306
Deferred tax liabilities		146,559			166,917
Other non-current liabilities		101,612			97,085
Non-current liabilities of discontinued operations		—			4,004
Total liabilities		2,033,144			2,089,743
Minority interest		121,388			—
Shareholders’ equity		1,898,681			1,910,871
Total liabilities and shareholders’ equity	$	4,053,213		$	4,000,614
Days sales in accounts receivable (13 month moving average)		57			53
Days inventory on hand (13 month moving average)		79			74
Days in accounts payable (13 month moving average)		59			55
Debt/total capital		33.4	%		35.7	%

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Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

	Year ended
	December 31			December 31
In thousands	2008			2007
Operating activities
Net income	$	228,734		$	210,927
Adjustments to reconcile net income to net cash provided by (used for) operating activities
Loss from discontinued operations		5,783			1,629
(Gain) loss on disposal of discontinued operations		21,846			(438	)
Equity losses of unconsolidated subsidiary		3,041			2,865
Minority interest		2,433			—
Depreciation		59,673			57,603
Amortization		27,608			25,561
Deferred income taxes		40,754			(16,652	)
Stock compensation		20,572			22,913
Excess tax benefits from stock-based compensation		(1,617	)		(4,204	)
Other		510			(1,929	)
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		(18,247	)		(19,068	)
Inventories		(33,311	)		14,714
Prepaid expenses and other current assets		(27,394	)		2,175
Accounts payable		(1,973	)		19,482
Employee compensation and benefits		(21,919	)		3,995
Accrued product claims and warranties		(7,286	)		4,763
Income taxes		(4,409	)		2,849
Other current liabilities		8,987			(3,218	)
Pension and post-retirement benefits		301			6
Other assets and liabilities		18,174			13,017
Net cash provided by (used for) continuing operations		212,612			336,990
Net cash provided by (used for) operating activities of discontinued operations		(8,397	)		4,288
Net cash provided by (used for) operating activities		204,215			341,278
Investing activities
Capital expenditures		(53,089	)		(61,516	)
Proceeds from sale of property and equipment		4,741			5,198
Acquisitions, net of cash acquired or received		(2,027	)		(487,561	)
Divestitures		37,907			—
Other		(12	)		(5,544	)
Net cash provided by (used for) investing activities		(12,480	)		(549,423	)
Financing activities
Net short-term borrowings (repayments)		(16,994	)		(1,830	)
Proceeds from long-term debt		715,000			1,269,428
Repayment of long-term debt		(805,016	)		(954,077	)
Debt issuance costs		(114	)		(1,876	)
Excess tax benefits from stock-based compensation		1,617			4,204
Proceeds from exercise of stock options		5,590			7,388
Repurchases of common stock		(50,000	)		(40,641	)
Dividends paid		(67,284	)		(59,910	)
Net cash provided by (used for) financing activities		(217,201	)		222,686
Effect of exchange rate changes on cash and cash equivalents		(5,985	)		1,434
Change in cash and cash equivalents		(31,451	)		15,975
Cash and cash equivalents, beginning of period		70,795			54,820
Cash and cash equivalents, end of period	$	39,344		$	70,795
Free cash flow
Net cash provided by (used for) continuing operations	$	212,612		$	336,990
Capital expenditures		(53,089	)		(61,516	)
Proceeds from sale of property and equipment		4,741			5,198
Free cash flow	$	164,264		$	280,672

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Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment for 2008 (Unaudited)

	First Qtr			Second Qtr			Third Qtr			Fourth Qtr			Year
In thousands	2008			2008			2008			2008			2008
Net sales to external customers
Water	$	544,686		$	594,118		$	557,976		$	509,362		$	2,206,142
Technical Products		285,460			304,260			297,839			258,275			1,145,834
Consolidated	$	830,146		$	898,378		$	855,815		$	767,637		$	3,351,976
Intersegment sales
Water	$	372		$	139		$	305		$	228		$	1,044
Technical Products		1,138			1,034			765			1,081			4,018
Other		(1,510	)		(1,173	)		(1,070	)		(1,309	)		(5,062	)
Consolidated	$	—		$	—		$	—		$	—		$	—
Operating income (loss)
Water	$	65,035		$	59,475		$	49,684		$	32,163		$	206,357
Technical Products		45,337			49,732			47,585			26,661			169,315
Other		(13,045	)		(12,660	)		(11,655	)		(13,627	)		(50,987	)
Consolidated	$	97,327		$	96,547		$	85,614		$	45,197		$	324,685
Operating income as a percent of net sales
Water		11.9	%		10.0	%		8.9	%		6.3	%		9.4	%
Technical Products		15.9	%		16.3	%		16.0	%		10.3	%		14.8	%
Consolidated		11.7	%		10.7	%		10.0	%		5.9	%		9.7	%

Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment for 2007 (Unaudited)

	First Qtr			Second Qtr			Third Qtr			Fourth Qtr			Year
In thousands	2007			2007			2007			2007			2007
Net sales to external customers
Water	$	527,703		$	627,420		$	533,676		$	541,971		$	2,230,770
Technical Products		252,583			257,150			275,701			264,699			1,050,133
Consolidated	$	780,286		$	884,570		$	809,377		$	806,670		$	3,280,903
Intersegment sales
Water	$	214		$	46		$	207		$	196		$	663
Technical Products		896			1,689			1,526			1,192			5,303
Other		(1,110	)		(1,735	)		(1,733	)		(1,388	)		(5,966	)
Consolidated	$	—		$	—		$	—		$	—		$	—
Operating income (loss)
Water	$	63,535		$	89,394		$	55,615		$	65,133		$	273,677
Technical Products		31,631			36,140			46,237			39,578			153,586
Other		(12,665	)		(12,582	)		(9,256	)		(13,711	)		(48,214	)
Consolidated	$	82,501		$	112,952		$	92,596		$	91,000		$	379,049
Operating income as a percent of net sales
Water		12.0	%		14.2	%		10.4	%		12.0	%		12.3	%
Technical Products		12.5	%		14.1	%		16.8	%		15.0	%		14.6	%
Consolidated		10.6	%		12.8	%		11.4	%		11.3	%		11.6	%

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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	$	830,146		$	898,378		$	855,815		$	767,637		$	3,351,976
Operating income — as reported		97,327			96,547			85,614			45,197			324,685
% of net sales		11.7	%		10.7	%		10.0	%		5.9	%		9.7	%
Adjustments:
Restructuring and asset impairment		—			2,586			15,207			28,377			46,170
Horizon settlement		—			20,435			—			—			20,435
Operating income — as adjusted		97,327			119,568			100,821			73,574			391,290
% of net sales		11.7	%		13.3	%		11.8	%		9.6	%		11.7	%
Income from continuing operations — as reported		52,463			139,837			42,902			21,161			256,363
Adjustments — tax affected
Restructuring and asset impairment		—			1,707			10,037			18,729			30,473
Horizon settlement		—			13,487			—			—			13,487
Gain on PRF transaction		—			(85,832	)		—			—			(85,832	)
Bond tender		—			—			3,043			—			3,043
Income from continuing operations — as adjusted		52,463			69,199			55,982			39,890			217,534
Continuing earnings per common share — diluted
Diluted earnings per common share — as reported	$	0.53		$	1.41		$	0.43		$	0.22		$	2.59
Adjustments		—			(0.71	)		0.13			0.19			(0.39	)
Diluted earnings per common share — as adjusted	$	0.53		$	0.70		$	0.56		$	0.41		$	2.20
Weighted average common shares outstanding — Diluted		99,558			99,509			99,319			98,299			99,068

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	$	780,286		$	884,570		$	809,377		$	806,670		$	3,280,903
Operating income — as reported		82,501			112,952			92,596			91,000			379,049
% of net sales		10.6	%		12.8	%		11.4	%		11.3	%		11.6	%
Adjustments		—			—			9,192			5,970			15,162
Operating income — as adjusted		82,501			112,952			101,788			96,970			394,211
% of net sales		10.6	%		12.8	%		12.6	%		12.0	%		12.0	%
Income from continuing operations — as reported		43,197			60,976			58,867			49,078			212,118
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		43,052			60,893			53,596			51,886			209,427
Continuing earnings per common share — diluted
Diluted earnings per common share — as reported	$	0.43		$	0.61		$	0.59		$	0.49		$	2.12
Adjustments		—			—			(0.06	)		0.03			(0.03	)
Diluted earnings per common share — as adjusted	$	0.43		$	0.61		$	0.53		$	0.52		$	2.09
Weighted average common shares outstanding — Diluted		100,271			100,371			100,365			99,859			100,205

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- 11 -

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	$	544,686		$	594,118		$	557,976		$	509,362		$	2,206,142
Operating income — as reported		65,035			59,475			49,684			32,163			206,357
% of net sales		11.9	%		10.0	%		8.9	%		6.3	%		9.4	%
Adjustments
Restructuring and asset impairment		—			2,157			13,438			19,628			35,223
Horizon settlement		—			20,435			—			—			20,435
Operating income — as adjusted		65,035			82,067			63,122			51,791			262,015
% of net sales		11.9	%		13.8	%		11.3	%		10.2	%		11.9	%
Technical Products
Net sales	$	285,460		$	304,260		$	297,839		$	258,275		$	1,145,834
Operating income — as reported		45,337			49,732			47,585			26,661			169,315
% of net sales		15.9	%		16.3	%		16.0	%		10.3	%		14.8	%
Adjustments/Restructuring and asset impairment		—			429			633			7,209			8,271
Operating income — as adjusted		45,337			50,161			48,218			33,870			177,586
% of net sales		15.9	%		16.4	%		16.2	%		13.1	%		15.5	%

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	$	527,703		$	627,420		$	533,676		$	541,971		$	2,230,770
Operating income — as reported		63,535			89,394			55,615			65,133			273,677
% of net sales		12.0	%		14.2	%		10.4	%		12.0	%		12.3	%
Adjustments		—			—			9,843			3,897			13,740
Operating income — as adjusted		63,535			89,394			65,458			69,030			287,417
% of net sales		12.0	%		14.2	%		12.3	%		12.7	%		12.9	%
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	%

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