MINNEAPOLIS--(BUSINESS WIRE)--
Pentair, Inc. (NYSE: PNR):
- 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(a) EPS of $0.55, up
2 percent
- Introduces fourth quarter guidance and updates full year
guidance
(a) 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.
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.
"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.
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.
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, 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
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%
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
======================================================================
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%
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)
In thousands, except per- First Quarter Second Quarter Third Quarter
share data 2008 2008 2008
----------------------------------------------------------------------
Net sales $840,404 $ 909,757 $864,167
----------------------------------------------------------------------
Operating income - as
reported 96,819 95,002 83,650
% of net sales 11.5% 10.4% 9.7%
Adjustments -- 23,140 15,480
----------------------------------------------------------------------
Operating income - as
adjusted 96,819 118,142 99,130
% of net sales 11.5% 13.0% 11.5%
Income from continuing
operations - as reported 52,644 138,735 41,389
Adjustments - tax affected -- (70,560) 13,260
----------------------------------------------------------------------
Income from continuing
operations - as adjusted 52,644 68,175 54,649
======================================================================
Continuing earnings per
common share - diluted
Diluted earnings per common
share - as reported $ 0.53 $ 1.39 $ 0.42
Adjustments -- (0.71) 0.13
----------------------------------------------------------------------
Diluted earnings per common
share - as adjusted $ 0.53 $ 0.68 $ 0.55
======================================================================
Weighted average common
shares outstanding -
Diluted 99,558 99,509 99,319
Fourth Quarter Year
In thousands, except per-share data 2008 2008
----------------------------------------------------------------------
Net sales $840,000-$850,000 approx. $3,500M
----------------------------------------------------------------------
Operating income - as reported 43,000 - 47,000 318M - 322M
% of net sales 5.1% - 5.6% 9.1% - 9.3%
Adjustments approx. 53,000 approx. 92M
----------------------------------------------------------------------
Operating income - as adjusted 96,000 - 100,000 410M - 414M
% of net sales 11.3% - 11.9% 11.7% - 11.8%
Income from continuing operations -
as reported 17,000 - 20,000 250M - 253M
Adjustments - tax affected approx. 35,000 approx. (22M)
----------------------------------------------------------------------
Income from continuing operations -
as adjusted 52,000 - 55,000 228M - 231M
======================================================================
Continuing earnings per common
share - diluted
Diluted earnings per common share -
as reported $ 0.17 - $0.20 $ 2.51 - $2.54
Adjustments approx. 0.35 approx. (0.23)
----------------------------------------------------------------------
Diluted earnings per common share -
as adjusted $ 0.52 - $0.55 $ 2.28 - $2.31
======================================================================
Weighted average common shares approx. 99,200 approx. 99,400
outstanding - Diluted
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 Second Third Fourth
In thousands, except Quarter Quarter Quarter Quarter Year
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
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
In thousands 2008 2008 2008
----------------------------------------------------------------------
Water
Net sales $554,944 $605,497 $566,328
----------------------------------------------------------------------
Operating income - as
reported 64,419 57,822 47,612
% of net sales 11.6% 9.5% 8.4%
Adjustments -- 22,711 13,711
----------------------------------------------------------------------
Operating income - as
adjusted 64,419 80,533 61,323
% of net sales 11.6% 13.3% 10.8%
Technical Products
Net sales $285,460 $304,260 $297,839
----------------------------------------------------------------------
Operating income - as
reported 45,337 49,732 47,585
% of net sales 15.9% 16.3% 16.0%
Adjustments -- 429 633
----------------------------------------------------------------------
Operating income - as
adjusted 45,337 50,161 48,218
% of net sales 15.9% 16.4% 16.2%
Fourth Quarter Year
In thousands 2008 2008
----------------------------------------------------------------------
Water
Net sales approx.
$560,000 - $570,000 $2,290M
----------------------------------------------------------------------
Operating income - as reported 15,000 - 19,000 185M - 189M
% of net sales 2.6% - 3.5% 8.1% - 8.3%
Adjustments approx. 45,000 approx. 81M
----------------------------------------------------------------------
Operating income - as adjusted 60,000 - 64,000 266M - 270M
% of net sales 10.4% - 11.5% 11.6% - 11.8%
Technical Products
Net sales approx.
$280,000 - $285,000 $1,170M
----------------------------------------------------------------------
Operating income - as reported 38,000 - 40,000 181M - 183M
% of net sales 13.3% - 14.3% 15.4% - 15.7%
Adjustments approx. 5,000 approx. 6M
----------------------------------------------------------------------
Operating income - as adjusted 43,000 - 45,000 187M - 189M
% of net sales 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 Second Third Fourth
Quarter Quarter Quarter 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
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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
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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%
Source: Pentair, Inc.