Investor Relations

News Release Details

Home Investor Relations News Releases News Release Details
//
Pentair Announces Strong Third Quarter Sales and Record Operating Income
10.23.2007

GOLDEN VALLEY, Minn.--(BUSINESS WIRE)--Oct. 23, 2007--Pentair, Inc. (NYSE: PNR):

  • Reports strong third quarter sales of $838 million, up 8 percent versus the third quarter 2006
  • Delivers third quarter net earnings per share from continuing operations (EPS) of $0.58 reported and $0.53 on an adjusted basis(a)
  • Generates strong free cash flow of $120 million in the third quarter and $189 million for the first three quarters of 2007, up $96 million year-to-date versus 2006
  • Updates full year 2007 EPS guidance range of $2.04 to $2.09 reported and $2.03 to $2.07 on an adjusted basis
  • Introduces full year 2008 guidance consisting of sales growth of 4 to 5 percent and net earnings per diluted share from continuing operations of between $2.25 and $2.40

(a) Adjusted 2007 and 2006 EPS exclude the benefit of non-recurring tax items as well as the negative impact associated with restructuring costs and other market related actions in the respective period. Adjusted 2007 and 2006 Operating Income and Margins exclude the negative impact associated with restructuring costs and other market related actions in the respective period (see reconciliation tables attached to this release).

Pentair, Inc. (NYSE:PNR) today announced third quarter 2007 net earnings per diluted share from continuing operations (EPS) of $0.58. This represents an increase of 76 percent as compared to the $0.33 of reported EPS from continuing operations in the third quarter last year. Current period results include the favorable impact of $0.11 per share from one-time net tax benefits and a negative $0.06 per share impact from restructuring costs and market related items. Adjusting for these items in both periods, third quarter 2007 EPS from continuing operations was $0.53, up 29 percent compared to adjusted earnings per share of $0.41 in the third quarter of 2006.

Total sales increased 8 percent to $838 million as compared with $778 million in the third quarter of 2006. The company delivered operating income for the third quarter of $91 million versus $60 million in the year-earlier quarter. On an adjusted basis, the company delivered operating income of $100 million versus third quarter, 2006 adjusted operating income of $77 million. Overall, operating margins expanded 320 basis points on a reported basis to 10.9 percent. On an adjusted basis, operating margins expanded 210 basis points to 12.0 percent, driven by a positive 530 basis point improvement from volume, price, mix, acquisitions and productivity. The positive impact from these items more than offset a negative 320 basis point impact related to total inflation.

Pentair generated free cash flow of $120 million for the quarter, driven primarily by a lower use of working capital year-over-year. Year-to-date the company has generated $189 million of free cash flow, reflecting a $96 million improvement as compared with the first three quarters of 2006.

"Our performance in the third quarter was first rate as we leveraged the strength of our business diversity and our growing international presence. Strong sales growth and earnings in our Technical Products business enabled us to exceed the third quarter earnings guidance we provided in July. In our Water businesses, we continue to navigate the challenging North American residential markets, which were as tough as we expected, while growing nicely in our international, industrial, commercial and municipal Water markets," said Randall J. Hogan, chairman and chief executive officer.

"Our earnings per share reflect effective execution against our goals as well as the positive impact from a recent change in the German corporate tax rate. We initiated additional actions in the third quarter to improve our cost structure and to solidify our productivity momentum for 2008. Our EPS of $0.53 on an adjusted basis was up 29 percent year-over-year, a very respectable performance given the challenges in a few of our key markets."

THIRD QUARTER BUSINESS HIGHLIGHTS

The Water Group delivered $562 million in sales or 6 percent year-over-year sales growth. Organic sales were down 1 percent excluding acquisitions or down 2 percent excluding foreign exchange. The decline in organic growth reflects continuing softness in the North American residential markets. Internationally, Water sales increased at a double-digit rate.

  • North American pump sales were down 4 percent as growth in commercial and municipal markets as well as new products and pricing actions could not overcome residential market declines.
  • North American filtration sales were up 11 percent or down 1 percent when adjusted for the Porous Media acquisition. Solid sales growth in food service and in other commercial and industrial markets was muted by declines in the residential water treatment markets.
  • North American pool and spa sales were down 5 percent organically as new products and price actions somewhat offset overall declines in the pool and spa markets.
  • Sales in Asia-Pacific grew 34 percent driven by strong growth in Australian sales and continued successful penetration in China.
  • Sales in Europe grew 47 percent or 10 percent excluding the Jung Pump acquisition. Sales growth outpaced the economy with particular strength in the industrial and food service markets.

The Water Group's third quarter operating income totaled $54 million, up 48 percent as compared to $36 million in the same period last year. On an adjusted basis, operating income was $64 million or 25 percent higher than the $51 million in the year-ago period. Adjusted operating margins expanded 170 basis points as the benefit from productivity, acquisitions and positive price more than offset the negative impact from inflation and decreased volumes.

Technical Products delivered third quarter 2007 sales of $276 million, an increase of 12 percent versus the year-earlier period. Sales were up approximately 11 percent excluding acquisitions or up 9 percent excluding foreign exchange. Strong sales in international regions, solid gains in the electrical markets, and a recovering electronics market combined to drive expanded growth.

  • Electrical third quarter sales grew approximately 11 percent driven by market share gains year-over-year in the industrial, commercial and networking market segments. New products contributed significantly to this growth, especially in the networking segment.
  • Global electronic sales were up approximately 13 percent. In North America, electronic sales declined approximately 2 percent. Electronic sales grew 15 percent in Europe and 83 percent in Asia Pacific, reflecting continuing penetration of the China market.

Technical Products' third quarter operating income totaled $46 million, up 24 percent as compared to $37 million in the same quarter last year. Operating margins were 16.8 percent, up 180 basis points. On an adjusted basis, margins were 16.5 percent, up 150 basis points versus the year ago period. In the quarter, the benefit from volume, price, productivity and acquisitions more than offset the negative impact from total inflation.

"Water and Technical Products performed very well in the quarter and we continue to see numerous opportunities for growth and productivity in both businesses," Hogan said. "The 6 cents, or $9.7 million, pre-tax charge represents an acceleration of actions initiated in the third quarter in light of the deep and extended downturn in North American residential markets. The benefits associated with these actions - as well as continued productivity actions driven by lean - are included in our 2008 outlook," he added.

OUTLOOK

The company introduces fourth quarter 2007 EPS guidance range of $0.42 to $0.47, which includes a negative EPS impact of $0.03 to $0.04 predominantly related to a new Q4 restructuring action associated with the recently announced closure of a North American Electronics facility. On an adjusted basis, the company expects fourth quarter EPS to be $0.46 to $0.50, an increase of 48 to 61 percent year-over-year.

"With our fourth quarter guidance we now expect full-year EPS in the range of $2.04 to $2.09 on a reported basis and $2.03 to $2.07 on an adjusted basis. This represents full year adjusted EPS growth of 18 to 20 percent. We continue to generate tremendous free cash flow which gives us confidence to increase our full year 2007 free cash flow range to 230 million to 250 million dollars," Hogan said. "We expect our positive performance momentum to continue despite North American residential weakness. We anticipate continued softness in the North American residential market, which impacts our Water business, and continued recovery in the electronics markets we serve.

"As we look ahead to 2008, we believe the productivity and growth actions we're taking in 2007 will help ensure another strong year of performance for Pentair. We anticipate total revenue growth of 4 to 5 percent, as our global growth initiatives in international, commercial, industrial and municipal markets should offset the softness of the North American residential market," said Hogan. "This sales growth, combined with carry-over 2007 productivity actions, more aggressive sourcing efforts, reduction in our manufacturing fixed cost structure, and an emphasis on reducing our general and administrative structure globally should position us to deliver EPS in the range of $2.25 to $2.40 in 2008. Furthermore, we continue to drive working capital performance and expect full year 2008 free cash flow to be at least 100 percent conversion of net income," he concluded.

EARNINGS CONFERENCE CALL

Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the Company's performance and Q4 and 2008 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 third quarter 2007 earnings release and in the third quarter 2007 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; the ability to successfully limit any judgment arising out of the Horizon litigation; 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.

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 2006 revenues of $3.15 billion, Pentair employs approximately 15,000 people worldwide.

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

                      Three months ended         Nine months ended
                  -------------------------- -------------------------
                   September 29 September 30 September 29 September 30
In thousands,
 except per-share
 data                  2007         2006         2007         2006
----------------------------------------------------------------------
Net sales             $837,834     $778,020   $2,568,474   $2,411,431
Cost of goods sold     591,667      565,533    1,801,459    1,713,747
----------------------------------------------------------------------
Gross profit           246,167      212,487      767,015      697,684
   % of net sales         29.4%        27.3%        29.8%        28.9%
Selling, general
 and
 administrative        140,745      137,923      436,837      406,843
   % of net sales         16.8%        17.7%        17.0%        16.9%
Research and
 development            14,446       14,271       44,204       44,017
   % of net sales          1.7%         1.9%         1.7%         1.8%
----------------------------------------------------------------------
Operating income        90,976       60,293      285,974      246,824
   % of net sales         10.9%         7.7%        11.1%        10.2%
Gain on sale of
 investment                 --          167           --          167
Net interest
 expense                18,836       13,024       52,841       38,861
   % of net sales          2.2%         1.7%         2.0%         1.6%
----------------------------------------------------------------------
Income from
 continuing
 operations before
 income taxes           72,140       47,436      233,133      208,130
   % of net sales          8.7%         6.1%         9.1%         8.6%
Provision for
 income taxes           14,096       13,995       70,958       62,985
Effective tax rate        19.5%        29.5%        30.4%        30.3%
----------------------------------------------------------------------
Income from
 continuing
 operations             58,044       33,441      162,175      145,145
Gain (loss) on
 disposal of
 discontinued
 operations, net
 of tax                     --        1,400          207          (51)
----------------------------------------------------------------------
Net income            $ 58,044     $ 34,841   $  162,382   $  145,094
======================================================================

Earnings (loss)
 per common share
Basic
Continuing
 operations           $   0.59     $   0.34   $     1.64   $     1.45
Discontinued
 operations                 --         0.01           --           --
----------------------------------------------------------------------
Basic earnings per
 common share         $   0.59     $   0.35   $     1.64   $     1.45
======================================================================

Diluted
Continuing
 operations           $   0.58     $   0.33   $     1.62   $     1.42
Discontinued
 operations                 --         0.01           --           --
----------------------------------------------------------------------
Diluted earnings
 per common share     $   0.58     $   0.34   $     1.62   $     1.42
======================================================================

Weighted average
 common shares
 outstanding
Basic                   98,747       99,419       98,859      100,133
Diluted                100,365      101,062      100,339      101,998

Cash dividends
 declared per
 common share         $   0.15     $   0.14   $     0.45   $     0.42
                    Pentair, Inc. and Subsidiaries
          Condensed Consolidated Balance Sheets (Unaudited)

                                 September 29 December 31 September 30
In thousands                         2007        2006         2006
----------------------------------------------------------------------
             Assets
Current assets
Cash and cash equivalents         $   56,555  $   54,820   $   45,153
Accounts and notes receivable,
 net                                 479,915     422,134      454,255
Inventories                          414,302     398,857      397,637
Deferred tax assets                   53,057      50,578       46,040
Prepaid expenses and other
 current assets                       48,512      31,239       28,736
----------------------------------------------------------------------
Total current assets               1,052,341     957,628      971,821

Property, plant and equipment,
 net                                 358,138     330,372      312,295

Other assets
Goodwill                           2,006,426   1,718,771    1,732,410
Intangibles, net                     492,882     287,011      261,261
Other                                 77,084      71,197       77,386
----------------------------------------------------------------------
Total other assets                 2,576,392   2,076,979    2,071,057
----------------------------------------------------------------------
Total assets                      $3,986,871  $3,364,979   $3,355,173
======================================================================

 Liabilities and Shareholders'
             Equity
Current liabilities
Short-term borrowings             $    4,800  $   14,563   $       --
Current maturities of long-term
 debt                                  5,099       7,625        6,912
Accounts payable                     208,505     206,286      191,206
Employee compensation and
 benefits                            107,828      88,882       93,431
Current pension and post-
 retirement benefits                   7,918       7,918           --
Accrued product claims and
 warranties                           47,719      44,093       44,016
Income taxes                          10,439      22,493           --
Accrued rebates and sales
 incentives                           37,115      39,419       41,982
Other current liabilities            112,673      90,003       95,122
----------------------------------------------------------------------
Total current liabilities            542,096     521,282      472,669

Other liabilities
Long-term debt                     1,103,023     721,873      788,066
Pension and other retirement
 compensation                        222,098     207,676      171,063
Post-retirement medical and
 other benefits                       46,499      47,842       73,398
Long-term income taxes payable        18,214          --           --
Deferred tax liabilities             136,886     109,781      124,393
Other non-current liabilities         89,898      86,526       84,783
----------------------------------------------------------------------
Total liabilities                  2,158,714   1,694,980    1,714,372

Shareholders' equity               1,828,157   1,669,999    1,640,801
----------------------------------------------------------------------
Total liabilities and
 shareholders' equity             $3,986,871  $3,364,979   $3,355,173
======================================================================

Days sales in accounts
 receivable (13 month moving
 average)                                 54          54           54
Days inventory on hand (13 month
 moving average)                          78          76           73
Days in accounts payable (13
 month moving average)                    54          56           56
Debt/total capital                      37.8%       30.8%        32.6%

NOTE: The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB No. 109 ("FIN 48") on January 1, 2007. As a result of adoption of FIN 48, the Company recorded an adjustment to retained earnings of $2.9 million in the first quarter of 2007. Additionally, the Company has added the line "Long-term income taxes payable" to the Company's Condensed Consolidated Balance Sheets to report its total long-term liability for unrecognized tax benefits.

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

                                                 Nine months ended
                                             -------------------------
                                             September 29 September 30
In thousands                                     2007         2006
----------------------------------------------------------------------
Operating activities
Net income                                    $  162,382    $ 145,094
Adjustments to reconcile net income to net
 cash provided by operating activities
(Gain) loss on disposal of discontinued
 operations                                         (207)          51
Depreciation                                      45,786       44,762
Amortization                                      18,665       13,955
Deferred income taxes                            (18,883)         (89)
Stock compensation                                17,071       18,058
Excess tax benefits from stock-based
 compensation                                     (2,706)      (2,677)
Gain on sale of assets                            (2,195)        (167)
Changes in assets and liabilities, net of
 effects of business acquisitions and
 dispositions
   Accounts and notes receivable                 (27,627)     (23,210)
   Inventories                                    10,620      (43,360)
   Prepaid expenses and other current assets      (8,673)      (3,671)
   Accounts payable                                  168      (22,136)
   Employee compensation and benefits              2,835       (7,153)
   Accrued product claims and warranties           3,199          547
   Income taxes                                   (4,813)     (14,800)
   Other current liabilities                      16,634       (2,263)
   Pension and post-retirement benefits            7,924       14,365
   Other assets and liabilities                    9,153        8,546
----------------------------------------------------------------------
     Net cash provided by continuing
      operations                                 229,333      125,852
     Net cash provided by operating
      activities of discontinued operations           --           48
----------------------------------------------------------------------
        Net cash provided by operating
         activities                              229,333      125,900

Investing activities
Capital expenditures                             (45,163)     (33,311)
Proceeds from sale of property and equipment       5,136          497
Acquisitions, net of cash acquired              (486,264)     (22,879)
Divestitures                                          --      (24,007)
Equity Investments                                    --          167
Other                                             (4,044)      (6,823)
----------------------------------------------------------------------
        Net cash used for investing
         activities                             (530,335)     (86,356)

Financing activities
Net short-term borrowings                        (10,378)          --
Proceeds from long-term debt                   1,147,132      568,996
Repayment of long-term debt                     (770,822)    (526,599)
Debt issuance costs                               (1,876)          --
Excess tax benefits from stock-based
 compensation                                      2,706        2,677
Proceeds from exercise of stock options            5,512        3,126
Repurchases of common stock                      (27,119)     (50,000)
Dividends paid                                   (44,986)     (42,616)
----------------------------------------------------------------------
        Net cash provided by (used for)
         financing activities                    300,169      (44,416)

Effect of exchange rate changes on cash and
 cash equivalents                                  2,568        1,525
----------------------------------------------------------------------
Change in cash and cash equivalents                1,735       (3,347)
Cash and cash equivalents, beginning of
 period                                           54,820       48,500
----------------------------------------------------------------------
Cash and cash equivalents, end of period      $   56,555    $  45,153
======================================================================

Free cash flow
Net cash provided by operating activities     $  229,333    $ 125,900
Less capital expenditures                        (45,163)     (33,311)
Proceeds from sale of property and equipment       5,136          497
----------------------------------------------------------------------
Free cash flow                                $  189,306    $  93,086
======================================================================
                    Pentair, Inc. and Subsidiaries
  Supplemental Financial Information by Reportable Business Segment
                              (Unaudited)

                         First Qtr  Second Qtr  Third Qtr  Nine Months
In thousands                2007       2007        2007       2007
----------------------------------------------------------------------

Net sales to external
 customers
Water                    $ 555,412  $ 665,495   $ 562,133  $1,783,040
Technical Products         252,583    257,150     275,701     785,434
----------------------------------------------------------------------
Consolidated             $ 807,995  $ 922,645   $ 837,834  $2,568,474
======================================================================

Intersegment sales
Water                    $     214  $      46   $     207  $      467
Technical Products             896      1,689       1,526       4,111
Other                       (1,110)    (1,735)     (1,733)     (4,578)
----------------------------------------------------------------------
Consolidated             $      --  $      --   $      --  $       --
======================================================================

Operating income (loss)
Water                    $  60,879  $  90,978   $  53,685  $  205,542
Technical Products          31,631     36,140      46,237     114,008
Other                      (12,357)   (12,273)     (8,946)    (33,576)
----------------------------------------------------------------------
Consolidated             $  80,153  $ 114,845   $  90,976  $  285,974
======================================================================

Operating income as a
 percent of net sales
Water                         11.0%      13.7%        9.6%       11.5%
Technical Products            12.5%      14.1%       16.8%       14.5%
Consolidated                   9.9%      12.4%       10.9%       11.1%



                         First Qtr  Second Qtr  Third Qtr  Nine Months
In thousands                  2006       2006        2006        2006
----------------------------------------------------------------------

Net sales to external
 customers
Water                    $ 517,169  $ 605,516   $ 531,703  $1,654,388
Technical Products         254,220    256,506     246,317     757,043
----------------------------------------------------------------------
Consolidated             $ 771,389  $ 862,022   $ 778,020  $2,411,431
======================================================================

Intersegment sales
Water                    $      50  $      55   $     140  $      245
Technical Products             889      1,312       1,133       3,334
Other                         (939)    (1,367)     (1,273)     (3,579)
----------------------------------------------------------------------
Consolidated             $      --  $      --   $      --  $       --
======================================================================

Operating income (loss)
Water                    $  55,587  $  84,191   $  36,226  $  176,004
Technical Products          37,704     39,678      37,050     114,432
Other                      (14,735)   (15,894)    (12,983)    (43,612)
----------------------------------------------------------------------
Consolidated             $  78,556  $ 107,975   $  60,293  $  246,824
======================================================================

Operating income as a
 percent of net sales
Water                         10.8%      13.9%        6.8%       10.6%
Technical Products            14.8%      15.5%       15.0%       15.1%
Consolidated                  10.2%      12.5%        7.7%       10.2%
                    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
In thousands, except per-       2007           2007          2007
 share data
----------------------------------------------------------------------
Net sales                       $807,995       $922,645      $837,834
----------------------------------------------------------------------

Operating income - as
 reported                         80,153        114,845        90,976
  % of net sales                     9.9%          12.4%         10.9%
Adjustments                           --             --         9,192
----------------------------------------------------------------------
Operating income - as
 adjusted                         80,153        114,845       100,168
  % of net sales                     9.9%          12.4%         12.0%

Income from continuing
 operations - as reported         42,130         62,001        58,044
Adjustments - tax affected            --             --         6,246
Non-recurring tax items             (145)           (83)      (11,517)
----------------------------------------------------------------------
Income from continuing
 operations - as adjusted         41,985         61,918        52,773
======================================================================

Continuing earnings per
 common share - diluted
Diluted earnings per common
 share - as reported            $   0.42       $   0.62      $   0.58
Adjustments                           --             --         (0.05)
----------------------------------------------------------------------
Diluted earnings per common
 share - as adjusted            $   0.42       $   0.62      $   0.53
======================================================================


Weighted average common
 shares outstanding -
 Diluted                         100,271        100,371       100,365



                                   Fourth Quarter          Year
In thousands, except per-share      2007 forecast      2007 forecast
 data
----------------------------------------------------------------------
Net sales                        $795,000 - $820,000 $3,375M - $3,400M
----------------------------------------------------------------------

Operating income - as reported       83,000 - 90,000     approx. 370M+
  % of net sales                       10.4% - 11.0%     approx. 11.0%
Adjustments                            approx. 5,000      approx. 15M+
----------------------------------------------------------------------
Operating income - as adjusted       88,000 - 95,000     approx. 385M+
  % of net sales                         11% - 11.5%     approx. 11.5%

Income from continuing
 operations - as reported            42,200 - 47,200       205M - 210M
Adjustments - tax affected             approx. 3,200       approx. 10M
Non-recurring tax items                           --     approx. (12M)
----------------------------------------------------------------------
Income from continuing
 operations - as adjusted            45,400 - 50,400       203M - 208M
======================================================================

Continuing earnings per common
 share - diluted
Diluted earnings per common
 share - as reported             $      0.42 - $0.47 $    2.04 - $2.09
Adjustments                              0.03 - 0.04   (0.01) - (0.02)
----------------------------------------------------------------------
Diluted earnings per common
 share - as adjusted             $      0.46 - $0.50 $    2.03 - $2.07
======================================================================


Weighted average common shares
 outstanding - Diluted                       100,400           100,400
                    Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2006
                      to the "Adjusted" non-GAAP
         excluding the effect of 2006 adjustments (Unaudited)



                            First Quarter Second Quarter Third Quarter
In thousands, except per-
 share data                     2006           2006          2006
----------------------------------------------------------------------
Net sales                       $771,389       $862,022      $778,020
----------------------------------------------------------------------

Operating income - as
 reported                         78,556        107,975        60,293
  % of net sales                    10.2%          12.5%          7.7%
Adjustments                           --             --        16,949
----------------------------------------------------------------------
Operating income - as
 adjusted                         78,556        107,975        77,242
  % of net sales                    10.2%          12.5%          9.9%

Income from continuing
 operations - as reported         43,071         68,633        33,441
Adjustments - tax affected            --             --        10,847
Non-recurring tax items             (878)        (8,023)       (3,080)
----------------------------------------------------------------------
Income from continuing
 operations - as adjusted         42,193         60,610        41,208
======================================================================

Continuing earnings per
 common share - diluted
Diluted earnings per common
 share - as reported            $   0.42       $   0.67      $   0.33
Adjustments                        (0.01)         (0.08)         0.08
----------------------------------------------------------------------
Diluted earnings per common
 share - as adjusted            $   0.41       $   0.59      $   0.41
======================================================================


Weighted average common
 shares outstanding -
 Diluted                         102,492        102,429       101,062



                                            Fourth Quarter    Year
In thousands, except per-share data              2006         2006
----------------------------------------------------------------------
Net sales                                        $743,038  $3,154,469
----------------------------------------------------------------------

Operating income - as reported                     60,162     306,986
  % of net sales                                      8.1%        9.7%
Adjustments                                            --      16,949
----------------------------------------------------------------------
Operating income - as adjusted                     60,162     323,935
  % of net sales                                      8.1%       10.3%

Income from continuing operations - as
 reported                                          38,622     183,767
Adjustments - tax affected                             --      10,847
Non-recurring tax items                            (8,285)    (20,266)
----------------------------------------------------------------------
Income from continuing operations - as
 adjusted                                          30,337     174,348
======================================================================

Continuing earnings per common share -
 diluted
Diluted earnings per common share - as
 reported                                        $   0.39  $     1.81
Adjustments                                         (0.08)      (0.09)
----------------------------------------------------------------------
Diluted earnings per common share - as
 adjusted                                        $   0.31  $     1.72
======================================================================


Weighted average common shares outstanding
 - Diluted                                        100,233     101,371
                    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
In thousands                    2007           2007          2007
----------------------------------------------------------------------
Water
Net sales                       $555,412       $665,495      $562,133
----------------------------------------------------------------------

Operating income - as
 reported                         60,879         90,978        53,685
   % of net sales                   11.0%          13.7%          9.6%
Adjustments                           --             --         9,843
----------------------------------------------------------------------
Operating income - as
 adjusted                         60,879         90,978        63,528
   % of net sales                   11.0%          13.7%         11.3%


Technical Products
Net sales                       $252,583       $257,150      $275,701
----------------------------------------------------------------------

Operating income - as
 reported                         31,631         36,140        46,237
   % of net sales                   12.5%          14.1%         16.8%
Adjustments                           --             --          (652)
----------------------------------------------------------------------
Operating income - as
 adjusted                         31,631         36,140        45,585
   % of net sales                   12.5%          14.1%         16.5%



                                   Fourth Quarter          Year
In thousands                        2007 forecast      2007 forecast
----------------------------------------------------------------------
Water
Net sales                        $540,000 - $550,000 $2,320M - $2,330M
----------------------------------------------------------------------

Operating income - as reported       59,000 - 61,000     approx. 266M+
   % of net sales                      approx. 11.0%     11.0% - 11.5%
Adjustments                                       --       approx. 10M
----------------------------------------------------------------------
Operating income - as adjusted       59,000 - 61,000     approx. 276M+
   % of net sales                     approx.  11.0%     approx. 12.0%


Technical Products
Net sales                        $260,000 - $265,000 $1,000M - $1,100M
----------------------------------------------------------------------

Operating income - as reported       34,100 - 35,700     approx. 150M+
   % of net sales                      13.0% - 13.5%     14.0% - 14.5%
Adjustments                            approx. 5,000      approx. 4.5M
----------------------------------------------------------------------
Operating income - as adjusted       39,100 - 40,700     approx. 155M+
   % of net sales                      15.0% - 15.5%     approx. 14.5%
                    Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2006
                      to the "Adjusted" non-GAAP
         excluding the effect of 2006 adjustments (Unaudited)



                            First Quarter Second Quarter Third Quarter
In thousands                    2006           2006          2006
----------------------------------------------------------------------
Water
Net sales                       $517,169       $605,516      $531,703
----------------------------------------------------------------------

Operating income - as
 reported                         55,587         84,191        36,226
   % of net sales                   10.7%          13.9%          6.8%
Adjustments                           --             --        14,906
----------------------------------------------------------------------
Operating income - as
 adjusted                         55,587         84,191        51,132
   % of net sales                   10.7%          13.9%          9.6%



Technical Products
Net sales                       $254,220       $256,506      $246,317
----------------------------------------------------------------------

Operating income - as
 reported                         37,704         39,678        37,050
   % of net sales                   14.8%          15.5%         15.0%
Adjustments                           --             --            --
----------------------------------------------------------------------
Operating income - as
 adjusted                         37,704         39,678        37,050
   % of net sales                   14.8%          15.5%         15.0%



                                            Fourth Quarter    Year
In thousands                                     2006         2006
----------------------------------------------------------------------
Water
Net sales                                        $500,837  $2,155,225
----------------------------------------------------------------------

Operating income - as reported                     36,494     212,498
   % of net sales                                     7.3%        9.9%
Adjustments                                            --      14,906
----------------------------------------------------------------------
Operating income - as adjusted                     36,494     227,404
   % of net sales                                     7.3%       10.6%



Technical Products
Net sales                                        $242,201  $  999,244
----------------------------------------------------------------------

Operating income - as reported                     34,473     148,905
   % of net sales                                    14.2%       14.9%
Adjustments                                            --          --
----------------------------------------------------------------------
Operating income - as adjusted                     34,473     148,905
   % of net sales                                    14.2%       14.9%

CONTACT: Pentair, Inc.
Todd Gleason, 763-656-5570
Vice President, Investor Relations
E-mail: todd.gleason@pentair.com
or
Rachael Jarosh, 763-656-5280
Director, Communications
E-mail: rachael.jarosh@pentair.com

SOURCE: Pentair, Inc.

Categories: Press Releases