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): July 17, 2003

Commission file number 1-11625

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

ITEM 7.     FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(c) Exhibits – The following exhibit is provided as part of the information furnished under Item 9 and Item 12 of this Current Report on Form 8-K:

Exhibit	Description
99.1	Pentair, Inc. press release dated July 17, 2003 announcing earnings results for the second quarter and first six months of 2003.

ITEM 9.     REGULATION FD DISCLOSURE

On July 17, 2003, Pentair, Inc. issued a press release announcing earnings for the three and six months ended June 28, 2003. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference. This Current Report on Form 8-K and the press release attached hereto are being furnished by Pentair pursuant to Item 9 and Item 12 of Form 8-K.

This press release contains information regarding a non-GAAP financial measure, free cash flow. Pentair uses free cash flow (cash from operations less capital expenditures) as a measure of cash generation from the business and we believe the free cash flow trend is a useful measure to investors to demonstrate the sustainability of Pentair’s operations and the ability to continue to pay dividends and fund acquisitions.

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 July 17, 2003.

PENTAIR, INC.
Registrant
By	/s/ David D. Harrison
	David D. Harrison
	Executive Vice President and Chief Financial Officer
	(Chief Accounting Officer)

EX-99.1

Pentair, Inc. 5500 Wayzata Blvd., Suite 800 Golden Valley, MN 55416 763 545 1730 Tel 763 656 5204 Fax Exhibit 99.1

News Release [LOGO OF PENTAIR]

For release at 5:00 A.M. CDT

Contact: Mark Cain (763) 656-5278

Pentair’s Second Quarter 2003 EPS Totals $0.88, First Half 2003 EPS Up 12%

Enclosures Margins Improve 310 Basis Points, Water Technologies Delivers Record Quarter

GOLDEN VALLEY, Minn. — July 17, 2003 — Pentair (NYSE: PNR) today announced that its second quarter 2003 earnings per share (EPS) of $0.88 gained two percent over EPS of $0.86 in the same period last year, resulting in first-half EPS of $1.44, a 12 percent increase over EPS of $1.29 in the first half of 2002.

Pentair’s second quarter net sales totaled $719.0 million, up from sales of $708.1 million in the same period a year ago. Operating income for the second quarter 2003 totaled $76.3 million, two percent greater than the $74.6 million reported in the second quarter of 2002.

Pentair generated Free Cash Flow (Cash from Operations less Capital Expenditures) of $68.8 million in the second quarter of 2003, resulting in a positive year-to-date Free Cash Flow of $58.7 million.

“Our supply management, lean enterprise, and cash flow initiatives continued to improve our performance in the second quarter, despite the impact of the slow economy, unfavorable weather conditions, and a challenging comparison against what was a very strong performance in the second quarter of 2002,” said Randall J. Hogan, Pentair chairman and CEO. “Our Enclosures Group realized its sixth quarter of sequential margin improvement with a 100 basis point gain over the first quarter of 2003. Our Water Technologies Group, which is now at a billion-dollar run rate, delivered a record quarter in terms of sales and operating income as a result of initiatives that are beginning to show promising results, with new growth in pumps, filtration, the European pool business, and Asia.”

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In the Tools Group, net sales of $283.4 million in the second quarter of 2003 were down seven percent compared to the same period last year. These results were attributed to the effects of an uncertain economy, unfavorable weather conditions that hampered sales of certain product lines into industrial and retail channels, and the lingering impact of the first quarter 2003 loss of compressor SKUs in the home center channel. The continued decline in demand also led to increased pricing pressure and higher promotional costs. Operating income of $23.1 million was 25 percent lower than in the same period last year, and margins of 8.2 percent were 200 basis points below those of the same period last year due to sales declines driven by lower units and price pressure, coupled with increased costs related to capacity reductions.

In the Water Technologies Group, second quarter 2003 sales of $290.7 million increased nearly 10 percent versus the same period last year due to the contributions of the Plymouth Products business and favorable effects of currency translation. The Group’s operating income of $46.0 million was up more than five percent for the quarter compared to those of the same period last year, while margins declined by 70 basis points on the same comparison. The lower margins resulted from unfavorable product mix due primarily to the slow start of the pool season, and costs associated with downsizing the Chardon, Ohio operation.

In the Enclosures Group, sales of $145.2 million in the second quarter of 2003 were up five percent compared to the same period in 2002, driven by favorable currency exchange. Second quarter operating income of $11.7 million gained 67 percent over that of the previous year’s second quarter, while margins gained 310 basis points to 8.1 percent. The continued margin improvement was attributed to productivity improvements from lean enterprise activities and supply chain initiatives.

“While sales were weak in the Tools Group, growth initiatives in both the Enclosures and Water Technologies Groups are showing promising results,” Hogan said. “Given continued gains in our Enclosures and Water Technologies businesses, and our cautious outlook on Tools, we are targeting third quarter 2003 EPS of between $0.70 and $0.80.”

Pentair EPS guidance for the full year 2003 of between $2.90 and $3.05 is unchanged from guidance provided on April 17, 2003.

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A Pentair conference call scheduled for 11:00 a.m. CDT today will be webcast live via http://www.pentair.com. The conference call, which can be found on the site’s “Financial Information” page, will be archived at the same location.

Pentair is a Minnesota-based manufacturer whose core businesses compete in tools, water technologies, and enclosures markets. The company employs 12,000 people in more than 50 locations around the world.

Any statements made about the company’s anticipated financial results are forward-looking statements subject to risks and uncertainties such as continued economic growth; foreign currency effects; retail and industrial demand; product introductions; and pricing and other competitive pressures. 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.

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Pentair, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

	Three months ended				Six months ended
In thousands, except per-share data	June 28 2003		June 29 2002		June 28 2003		June 29 2002
Net sales	$	718,989	$	708,116	$	1,356,505	$	1,311,179
Cost of goods sold		535,501		532,136		1,017,726		998,188
Gross profit		183,488		175,980		338,779		312,991
% of net sales		25.5%		24.9%		25.0%		23.9%
Selling, general and administrative		95,932		92,367		188,914		175,287
% of net sales		13.3%		13.0%		13.9%		13.4%
Research and development		11,224		9,021		21,345		17,385
% of net sales		1.6%		1.3%		1.6%		1.3%
Operating income		76,332		74,592		128,520		120,319
% of net sales		10.6%		10.5%		9.5%		9.2%
Net interest expense		9,837		10,476		19,830		24,206
% of net sales		1.4%		1.5%		1.5%		1.8%
Income before income taxes		66,495		64,116		108,690		96,113
% of net sales		9.2%		9.1%		8.0%		7.3%
Provision for income taxes		22,608		21,140		36,954		31,699
Effective tax rate		34.0%		33.0%		34.0%		33.0%
Net income (loss)	$	43,887	$	42,976	$	71,736	$	64,414
Earnings per common share
Basic	$	0.89	$	0.87	$	1.45	$	1.31
Diluted	$	0.88	$	0.86	$	1.44	$	1.29
Weighted average common shares outstanding
Basic		49,381		49,228		49,364		49,201
Diluted		49,812		50,039		49,715		49,812
Cash dividends declared per common share	$	0.21	$	0.18	$	0.40	$	0.36

Pentair, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

In thousands	June 28 2003		December 31 2002		June 29 2002
Assets
Current assets
Cash and cash equivalents	$	45,465	$	39,648	$	29,289
Accounts and notes receivable, net		442,366		403,793		450,701
Inventories		333,370		293,202		305,663
Deferred income taxes		57,524		55,234		67,087
Prepaid expenses and other current assets		20,695		17,132		21,189
Net assets of discontinued operations		2,166		1,799		2,399
Total current assets		901,586		810,808		876,328
Property, plant and equipment, net		342,784		351,316		314,655
Goodwill		1,245,812		1,218,341		1,098,952
Other assets		137,339		133,985		110,894
Total assets	$	2,627,521	$	2,514,450	$	2,400,829
Liabilities and Shareholders’ Equity
Current liabilities
Short-term borrowings	$	329	$	686	$	—
Current maturities of long-term debt		58,516		60,488		6,089
Accounts and notes payable		214,213		171,709		206,159
Employee compensation and benefits		76,884		84,965		76,548
Accrued product claims and warranties		38,920		36,855		39,678
Income taxes		17,086		12,071		15,234
Other current liabilities		109,186		109,426		118,775
Total current liabilities		515,134		476,200		462,483
Long-term debt		669,687		673,911		638,554
Pension and other retirement compensation		132,622		124,301		80,405
Post-retirement medical and other benefits		42,293		42,815		43,102
Deferred income taxes		33,745		31,728		35,143
Other noncurrent liabilities		62,497		59,771		63,005
Total liabilities		1,455,978		1,408,726		1,322,692
Shareholders’ equity		1,171,543		1,105,724		1,078,137
Total liabilities and shareholders’ equity	$	2,627,521	$	2,514,450	$	2,400,829
Days sales in accounts receivable (13 month moving average)		58		59		63
Days inventory on hand (13 month moving average)		65		63		68
Days in accounts payable (13 month moving average)		53		53		56
Debt/total capital		38.3%		39.9%		37.4%

Pentair, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six months ended
In thousands	June 28 2003			June 29 2002
Operating activities
Net income	$	71,736		$	64,414
Depreciation		32,031			30,376
Other amortization		2,566			1,728
Deferred income taxes		(614	)		3,485
Stock compensation		306			—
Changes in assets and liabilities, net of effects of business acquisitions
Accounts and notes receivable		(31,013	)		(43,461	)
Inventories		(33,148	)		(1,620	)
Prepaid expenses and other current assets		(3,899	)		(5,087	)
Accounts payable		38,753			25,407
Employee compensation and benefits		(8,783	)		1,099
Accrued product claims and warranties		1,125			1,894
Income taxes		3,816			8,496
Other current liabilities		(3,515	)		8,077
Pension and post-retirement benefits		4,795			3,508
Other assets and liabilities		3,863			1,217
Net cash provided by continuing operations		78,019			99,533
Net cash provided by (used for) discontinued operations		(367	)		2,926
Net cash provided by operating activities		77,652			102,459
Investing activities
Capital expenditures		(18,935	)		(15,275	)
Proceeds (payments) from sale of businesses		(2,400	)		1,547
Acquisitions, net of cash acquired		(15,150	)		—
Equity investments		(5,461	)		(4,169	)
Other		47			(165	)
Net cash used for investing activities		(41,899	)		(18,062	)
Financing activities
Net short-term borrowings (repayments)		(549	)		665
Proceeds from long-term debt		291,691			119,689
Repayment of long-term debt		(301,300	)		(201,388	)
Proceeds from exercise of stock options		699			2,107
Dividends paid		(19,738	)		(17,713	)
Net cash used for financing activities		(29,197	)		(96,640	)
Effect of exchange rate changes on cash		(739	)		1,688
Change in cash and cash equivalents		5,817			(10,555	)
Cash and cash equivalents, beginning of period		39,648			39,844
Cash and cash equivalents, end of period	$	45,465		$	29,289
Free cash flow
Net cash provided by operating activities	$	77,652		$	102,459
Less capital expenditures (including buyout of synthetic lease)		(18,935	)		(15,275	)
Free cash flow	$	58,717		$	87,184

Pentair, Inc. and Subsidiaries

Supplemental Financial Information by Reportable Business Segment (Unaudited)

In thousands	First Qtr 2003			Second Qtr 2003			Six Months 2003			First Qtr 2002			Second Qtr 2002			Six Months 2002
Net sales to external customers
Tools	$	251,765		$	283,416		$	535,181		$	252,092		$	303,771		$	555,863
Water		246,440			290,692			537,132			211,411			265,531			476,942
Enclosures		139,311			144,881			284,192			139,560			138,814			278,374
Consolidated	$	637,516		$	718,989		$	1,356,505		$	603,063		$	708,116		$	1,311,179
Intersegment sales
Tools	$	—		$	—		$	—		$	—		$	—		$	—
Water		—			—			—			—			—			—
Enclosures		142			355			497			—			—			—
Other		(142	)		(355	)		(497	)		—			—			—
Consolidated	$	—		$	—		$	—		$	—		$	—		$	—
Operating income (loss)
Tools	$	17,686		$	23,148		$	40,834		$	16,686		$	30,837		$	47,523
Water		29,504			46,002			75,506			29,747			43,708			73,455
Enclosures		9,865			11,703			21,568			4,608			6,995			11,603
Other		(4,867	)		(4,521	)		(9,388	)		(5,314	)		(6,948	)		(12,262	)
Consolidated	$	52,188		$	76,332		$	128,520		$	45,727		$	74,592		$	120,319
Operating income as a percent of net sales
Tools		7.0%			8.2%			7.6%			6.6%			10.2%			8.5%
Water		12.0%			15.8%			14.1%			14.1%			16.5%			15.4%
Enclosures		7.1%			8.1%			7.6%			3.3%			5.0%			4.2%
Consolidated		8.2%			10.6%			9.5%			7.6%			10.5%			9.2%

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