Investor Relations

News Release Details

Home Investor Relations News Releases News Release Details
//
Pentair Reports Second Quarter Net Income Per Share From Continuing Operations of $1.39; Adjusted EPS of $0.68, Up 11%
07.22.2008

MINNEAPOLIS--(BUSINESS WIRE)--July 22, 2008--Pentair, Inc. (NYSE:PNR):

  • Reports second quarter sales of $910 million, up 1 percent versus the second quarter 2007
  • Delivers earnings per share from continuing operations (EPS) of $1.39 on a reported basis and adjusted(a) EPS of $0.68 up 11 percent
  • Delivers adjusted income from continuing operations of $68 million, up 12 percent
  • Announces transaction with GE to create residential water filtration business, settles Horizon legal case, and announces significant restructuring and other actions
  • Introduces third 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 second quarter 2008 net earnings per diluted share from continuing operations (EPS) of $1.39. This represents an increase of 228 percent as compared to the $0.61 of reported EPS from continuing operations in the second quarter last year. Current period results include a 86 cents per share gain from the transaction with GE Water & Process Technologies, a unit of General Electric Company (NYSE:GE), to combine residential water filtration businesses as well as a negative $0.14 per share impact from the Horizon settlement, and a $0.01 per share negative impact from restructuring charges. Adjusting for these items, second quarter 2008 EPS was $0.68, up 11 percent year over year.

Total company sales increased 1 percent to $910 million as compared with $899 million in the second quarter of 2007. The company delivered second quarter operating income of $95 million. On an adjusted basis, the company delivered operating income of $118 million versus $113 million in the year-ago quarter. Overall, adjusted operating margins for the second quarter expanded 50 basis points to 13.0 percent driven by a positive 360 basis point improvement from productivity, price, and product mix. The positive impact from these items more than offset a negative 310 basis point impact related to total inflation and foreign exchange.

Pentair generated free cash flow of $135 million for the quarter. Year-to-date, the company has generated $57 million of free cash flow. The company said it remains on track to achieve free cash flow greater than $235 million.

"Overall, our businesses performed very well in the second quarter as we navigated through persistently soft residential markets and a weaker-than-expected residential pool market. Our business diversity, growing international market penetration, and aggressive cost-takeout measures continue to enable us to meet the commitments we laid out earlier in the year," said Randall J. Hogan, chairman and chief executive officer.

SECOND QUARTER BUSINESS HIGHLIGHTS

The Water Group delivered $605 million in sales, down 6 percent year over year. Organic sales were down 9 percent excluding foreign exchange, driven by continuing softness in the North American residential markets and aggressive inventory reductions in pool equipment distribution. Internationally, Water sales increased at a double-digit rate.

  • Global Flow Technologies sales were down 3 percent versus the year-ago quarter, as unfavorable comparisons associated with the $21 million municipal pump project for New Orleans in the second quarter 2007 were not overcome. Sales of pump equipment for global commercial, municipal and agricultural markets continue to outpace declines in North American residential markets.
  • Global Filtration sales grew 8 percent or 5 percent excluding the 2007 acquisition of Porous Media. Steady gains in industrial filtration, food service and desalination markets offset declines in the North American residential market.
  • Global Pool and Spa sales were down 22 percent. The prolonged decline in North American residential pool and spa markets, coupled with distributor inventory reductions, impacted sales.
  • International Water sales grew 15 percent in Europe, Middle East and Africa led by growth in the Middle East and Eastern Europe. Asia-Pacific sales grew 20 percent driven by strong double-digit growth in China and India.

The Water Group's second quarter reported operating income totaled $58 million, down 65 percent as compared to $89 million in the same period last year. In the quarter, the company settled the Horizon litigation lawsuit, which resulted in a $20 million charge to operating income. The company also had $2 million in pre-tax restructuring charges associated with severance from headcount reductions and costs related to facility rationalizations. Adjusting for these items, adjusted operating income was $81 million, down 10 percent versus the $89 million a year-ago. Adjusted operating margins of 13.3 percent were down 60 basis points as benefits from productivity, price and product mix could not offset the negative impact from inflation and decreased volumes.

Technical Products delivered second quarter 2008 sales of $304 million, an increase of 18 percent versus the year-earlier period. Sales were up 14 percent excluding foreign exchange.

  • Global Electrical sales were up 14 percent, led by strong double-digit increases in its Thermal applications product line and continued strength in energy and natural resource related markets (e.g., Oil, Gas and Mining).
  • Global Electronic sales were up 24 percent. In Asia, electronic sales were up over 44 percent while sales in Europe were up 12 percent in local currencies. North American sales were up 12 percent.

Technical Products' second quarter operating income totaled $50 million, up 38 percent compared to $36 million in the same quarter last year. Reported operating margins were 16.3 percent. Adjusting for a modest restructuring charge, operating margins were 16.4 percent, up 230 basis points versus the second quarter 2007. In the quarter, the benefits from volume, productivity and price more than offset the negative impact from total inflation.

"We continue to perform well in our respective markets. In the second quarter, our Technical Products business maintained outstanding market and financial momentum. 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," Hogan said.

"We believe our restructuring and other market-related actions better position the company for sustainable, positive performance as demonstrated by what we accomplished in the quarter and have announced this week. For example, the formation of the residential water filtration business with GE combines our leading technologies and distribution channels. We expect this combination will create a stronger business, enabling us to more effectively serve our customers. Additionally, the settlement of the Horizon legal case removes a long-standing uncertainty," Hogan added.

MAJOR ACTIONS UNDERWAY

In July 2008, the company announced several significant actions that will affect reported and adjusted earnings guidance for the second half of 2008.

First, the company recently announced actions to rationalize three international and three United States Water segment factories. The production at these sites will shift to Mexico, China, and other United States facilities. Additionally, the company plans to embark on an operational restructuring plan associated with its Spa/Bath business. The company continues to evaluate other restructuring actions to improve overall cost structure. In aggregate, these major restructuring actions are expected to result in a charge of over 50 cents per share in the second half of 2008. The annualized savings associated with these actions is expected to be approximately 40 cents per share when fully realized.

Next, the company recently issued a tender offer to bondholders of the company's 7.85 percent bonds due in October 2009. The company expects the outcome of the tender will result in a pre-tax charge of $3 to $5 million assuming a participation of 50 percent of the bondholders. The resulting quarterly benefit is expected to be a penny per share of reduced interest expense.

OUTLOOK

The company introduced its third quarter reported 2008 EPS guidance range of $0.31 to $0.33. Adjusting for charges associated with restructuring and the bond tender offer, third quarter EPS is expected to be $0.51 to $0.53, a decrease of 2 to 6 percent versus the third quarter 2007. This third quarter range includes $0.06 of expenses associated mainly with integration, inventory step-up and intangibles amortization charges related to the GE transaction.

The company updates its full year 2008 reported EPS guidance range to $2.44 to $2.49, up 15 to 17 percent versus reported full year 2007 EPS. Adjusting for non-recurring items associated with the GE transaction gain, Horizon settlement, restructuring actions and the bond tender, full year EPS is expected to be $2.28 to $2.33, up 9 to 11 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 and step-up charges related to the residential filtration transaction.

"We expect our positive performance to continue in our non-residential and international Water and global Technical Products' businesses. We are launching a number of actions to improve our cost structure and better position the company to control our own destiny. These actions introduce a new full year EPS guidance range of $2.28 to $2.33, which includes 7 cents of incremental expenses to restructure our Water businesses. Absent these incremental expenses, our business outlook would be higher than previous guidance," Hogan said.

EARNINGS CONFERENCE CALL

Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the Company's performance and third 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 second quarter 2008 earnings release and in the second 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     Six months ended
                          -------------------- -----------------------
In thousands, except per-  June 28    June 30    June 28     June 30
 share data                  2008      2007       2008        2007
----------------------------------------------------------------------
Net sales                 $ 909,757  $899,299  $1,750,161  $1,692,144
Cost of goods sold          631,695   619,750   1,220,768   1,176,664
----------------------------------------------------------------------
Gross profit                278,062   279,549     529,393     515,480
    % of net sales             30.6%     31.1%       30.3%       30.5%

Selling, general and
 administrative             146,311   151,881     284,957     291,363
    % of net sales             16.1%     16.9%       16.3%       17.2%

Research and development     16,314    14,808      32,180      29,758
    % of net sales              1.8%      1.6%        1.8%        1.8%

Legal settlement             20,435        --      20,435          --
    % of net sales              2.3%       --         1.2%         --
----------------------------------------------------------------------
Operating income             95,002   112,860     191,821     194,359
    % of net sales             10.4%     12.5%       11.0%       11.5%

Other (income) expense:

Gain on sale of interest
 in subsidiaries           (109,648)       --    (109,648)         --
Equity losses of
 unconsolidated
 subsidiary                     847        36       1,764         993
Net interest expense         15,862    18,483      31,950      33,194
    % of net sales              1.7%      2.1%        1.8%        2.0%
----------------------------------------------------------------------
Income from continuing
 operations before income
 taxes                      187,941    94,341     267,755     160,172
    % of net sales             20.7%     10.5%       15.3%        9.5%
Provision for income
 taxes                       49,206    33,348      76,376      56,550
    Effective tax rate         26.2%     35.4%       28.5%       35.3%
----------------------------------------------------------------------
Income from continuing
 operations                 138,735    60,993     191,379     103,622
Income (loss) from
 discontinued operations,
 net of tax                      --     1,008      (1,217)        509
Gain (loss) on disposal
 of discontinued
 operations, net of tax          --        64      (7,137)        207
----------------------------------------------------------------------
Net income                $ 138,735  $ 62,065  $  183,025  $  104,338
======================================================================

Earnings (loss) per
 common share
Basic
Continuing operations     $    1.41  $   0.62  $     1.95  $     1.04
Discontinued operations          --      0.01       (0.09)       0.01
----------------------------------------------------------------------
Basic earnings per common
 share                    $    1.41  $   0.63  $     1.86  $     1.05
======================================================================

Diluted
Continuing operations     $    1.39  $   0.61  $     1.92  $     1.03
Discontinued operations          --      0.01       (0.08)       0.01
----------------------------------------------------------------------
Diluted earnings per
 common share             $    1.39  $   0.62  $     1.84  $     1.04
======================================================================

Weighted average common
 shares outstanding
Basic                        98,062    98,874      98,172      98,915
Diluted                      99,509   100,371      99,462     100,294

Cash dividends declared
 per common share         $    0.17  $   0.15  $     0.34  $     0.30
                    Pentair, Inc. and Subsidiaries
          Condensed Consolidated Balance Sheets (Unaudited)

                                     June 28   December 31   June 30
In thousands                          2008        2007        2007
----------------------------------------------------------------------
              Assets
Current assets
Cash and cash equivalents          $   74,616  $   70,795  $   52,016
Accounts and notes receivable, net    558,928     466,675     523,941
Inventories                           437,421     392,416     395,330
Deferred tax assets                    51,961      50,511      51,621
Prepaid expenses and other current
 assets                                46,213      35,908      41,605
Current assets of discontinued
 operations                                --      21,716      31,750
----------------------------------------------------------------------
Total current assets                1,169,139   1,038,021   1,096,263

Property, plant and equipment, net    379,471     365,990     352,853

Other assets
Goodwill                            2,158,229   2,004,720   1,924,208
Intangibles, net                      558,451     491,263     503,663
Other                                  78,732      82,237      77,821
Non-current assets of discontinued
 operations                                --      18,383      18,436
----------------------------------------------------------------------
Total other assets                  2,795,412   2,596,603   2,524,128
----------------------------------------------------------------------
Total assets                       $4,344,022  $4,000,614  $3,973,244
======================================================================

  Liabilities and Shareholders'
              Equity
Current liabilities
Short-term borrowings              $      217  $   13,586  $   10,202
Current maturities of long-term
 debt                                   4,442       5,075       4,516
Accounts payable                      238,656     229,937     211,504
Employee compensation and benefits     98,816     111,475      95,960
Current pension and post-
 retirement benefits                    8,557       8,557       7,918
Accrued product claims and
 warranties                            47,528      49,382      48,867
Income taxes                           18,115      12,919      20,322
Accrued rebates and sales
 incentives                            36,687      36,663      42,075
Other current liabilities             130,431      90,377      93,948
Current liabilities of
 discontinued operations                   --       2,935       9,616
----------------------------------------------------------------------
Total current liabilities             583,449     560,906     544,928

Other liabilities
Long-term debt                      1,024,160   1,041,925   1,173,184
Pension and other retirement
 compensation                         171,923     161,042     218,420
Post-retirement medical and other
 benefits                              35,095      37,147      46,806
Long-term income taxes payable         24,442      21,306      14,705
Deferred tax liabilities              189,214     167,633     110,412
Other non-current liabilities          95,544      97,086      87,949
Non-current liabilities of
 discontinued operations                   --       2,698       2,546
----------------------------------------------------------------------
Total liabilities                   2,123,827   2,089,743   2,198,950

Minority interest                     122,960          --          --
                                           --
Shareholders' equity                2,097,235   1,910,871   1,774,294
----------------------------------------------------------------------
Total liabilities and
 shareholders' equity              $4,344,022  $4,000,614  $3,973,244
======================================================================

Days sales in accounts receivable
 (13 month moving average)                 56          53          55
Days inventory on hand (13 month
 moving average)                           77          75          76
Days in accounts payable (13 month
 moving average)                           57          54          55
Debt/total capital                       32.9%       35.7%       40.1%
                    Pentair, Inc. and Subsidiaries
     Condensed Consolidated Statements of Cash Flows (Unaudited)

                                                   Six months ended
                                                ----------------------
                                                 June 28     June 30
In thousands                                       2008       2007
----------------------------------------------------------------------
Operating activities
Net income                                      $ 183,025  $  104,338
Adjustments to reconcile net income to net cash
 provided by (used for) operating activities
(Income) loss from discontinued operations          1,217        (509)
(Gain) loss on disposal of discontinued
 operations                                         7,137        (207)
Equity losses of unconsolidated subsidiary          1,764         993
Depreciation                                       30,795      30,043
Amortization                                       13,101      12,952
Deferred income taxes                              21,037      (6,476)
Stock compensation                                 11,932      12,626
Excess tax benefits from stock-based
 compensation                                        (776)     (2,213)
Gain on sale of assets                               (443)         --
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                   (85,203)    (84,466)
  Inventories                                     (20,300)      8,040
  Prepaid expenses and other current assets        (7,852)     (3,465)
  Accounts payable                                 11,044      10,308
  Employee compensation and benefits              (18,482)     (4,915)
  Accrued product claims and warranties            (2,298)      4,561
  Income taxes                                      4,131       5,157
  Other current liabilities                        31,261       2,525
  Pension and post-retirement benefits              3,320       7,730
  Other assets and liabilities                      4,986       2,554
----------------------------------------------------------------------
    Net cash provided by (used for) continuing
     operations                                    79,748      99,576
    Net cash provided by (used for) operating
     activities of discontinued operations         (4,137)     (1,660)
----------------------------------------------------------------------
      Net cash provided by (used for) operating
       activities                                  75,611      97,916

Investing activities
Capital expenditures                              (26,328)    (30,058)
Proceeds from sale of property and equipment        3,802       1,526
Acquisitions, net of cash acquired or received      6,237    (482,885)
Divestitures                                       29,959          --
Other                                                  --        (779)
----------------------------------------------------------------------
      Net cash provided by (used for) investing
       activities                                  13,670    (512,196)

Financing activities
Net short-term borrowings (repayments)            (13,965)     (4,708)
Proceeds from long-term debt                      279,405   1,121,402
Repayment of long-term debt                      (297,740)   (673,341)
Debt issuance costs                                   (50)     (1,782)
Excess tax benefits from stock-based
 compensation                                         776       2,213
Proceeds from exercise of stock options             2,175       4,922
Repurchases of common stock                       (21,721)     (9,280)
Dividends paid                                    (33,747)    (29,991)
----------------------------------------------------------------------
      Net cash provided by (used for) financing
       activities                                 (84,867)    409,435

Effect of exchange rate changes on cash and
 cash equivalents                                    (593)      2,041
----------------------------------------------------------------------
Change in cash and cash equivalents                 3,821      (2,804)
Cash and cash equivalents, beginning of period     70,795      54,820
----------------------------------------------------------------------
Cash and cash equivalents, end of period        $  74,616  $   52,016
======================================================================

Free cash flow
----------------------------------------------------------------------
Net cash provided by (used for) continuing
 operations                                     $  79,748  $   99,576
Capital expenditures                              (26,328)    (30,058)
Proceeds from sale of property and equipment        3,802       1,526
----------------------------------------------------------------------
Free cash flow                                  $  57,222  $   71,044
======================================================================
                    Pentair, Inc. and Subsidiaries
  Supplemental Financial Information by Reportable Business Segment
                              (Unaudited)


                                      First Qtr Second Qtr Six Months
In thousands                            2008       2008       2008
----------------------------------------------------------------------

Net sales to external customers
Water Group                           $554,944  $ 605,497  $1,160,441
Technical Products Group               285,460    304,260     589,720
----------------------------------------------------------------------
Consolidated                          $840,404  $ 909,757  $1,750,161
======================================================================

Intersegment sales
Water Group                           $    372  $     139  $      511
Technical Products Group                 1,138      1,034       2,172
Other                                   (1,510)    (1,173)     (2,683)
----------------------------------------------------------------------
Consolidated                          $     --  $      --  $       --
======================================================================

Operating income (loss)
Water Group                           $ 64,419  $  57,822  $  122,241
Technical Products Group                45,337     49,732      95,069
Other                                  (12,937)   (12,552)    (25,489)
----------------------------------------------------------------------
Consolidated                          $ 96,819  $  95,002  $  191,821
======================================================================

Operating income as a percent of net
 sales
Water Group                               11.6%       9.5%       10.5%
Technical Products Group                  15.9%      16.3%       16.1%
Consolidated                              11.5%      10.4%       11.0%

                                      First Qtr Second Qtr Six Months
In thousands                            2007       2007       2007
----------------------------------------------------------------------

Net sales to external customers
Water Group                           $540,262  $ 642,149  $1,182,411
Technical Products Group               252,583    257,150     509,733
----------------------------------------------------------------------
Consolidated                          $792,845  $ 899,299  $1,692,144
======================================================================

Intersegment sales
Water Group                           $    214  $      46  $      260
Technical Products Group                   896      1,689       2,585
Other                                   (1,110)    (1,735)     (2,845)
----------------------------------------------------------------------
Consolidated                          $     --  $      --  $       --
======================================================================

Operating income (loss)
Water Group                           $ 62,426  $  89,195  $  151,621
Technical Products Group                31,631     36,140      67,771
Other                                  (12,558)   (12,475)    (25,033)
----------------------------------------------------------------------
Consolidated                          $ 81,499  $ 112,860  $  194,359
======================================================================

Operating income as a percent of net
 sales
Water Group                               11.6%      13.9%       12.8%
Technical Products Group                  12.5%      14.1%       13.3%
Consolidated                              10.3%      12.5%       11.5%
                    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  First Quarter Second Quarter    Third Quarter
 per-share data           2008           2008             2008
----------------------------------------------------------------------
Net sales                  $840,404       $909,757 $845,000 - $855,000
----------------------------------------------------------------------

Operating income - as
 reported                    96,819         95,002    67,000 - 71, 000
   % of net sales             11.5%          10.4%         7.8% - 8.4%
Adjustments                      --         23,140      approx. 25,000
----------------------------------------------------------------------
Operating income - as
 adjusted                    96,819        118,142     92,000 - 96,000
   % of net sales             11.5%          13.0%       10.8% - 11.4%

Income from
 continuing
 operations - as
 reported                    52,644        138,735     31,000 - 33,000
Adjustments - tax
 affected                        --       (70,560)      approx. 20,000
----------------------------------------------------------------------
Income from
 continuing
 operations - as
 adjusted                    52,644         68,175     51,000 - 53,000
======================================================================

Continuing earnings
 per common share -
 diluted
Diluted earnings per
 common share - as
 reported                     $0.53          $1.39       $0.31 - $0.33
Adjustments                      --         (0.71)        approx. 0.20
----------------------------------------------------------------------
Diluted earnings per
 common share - as
 adjusted                     $0.53          $0.68       $0.51 - $0.53
======================================================================


Weighted average
 common shares
 outstanding -
 Diluted                     99,558         99,509      approx. 99,400




In thousands, except per-share      Fourth Quarter          Year
 data                                    2008               2008
----------------------------------------------------------------------
Net sales                         $880,000 - $895,000  approx. $3,500M
----------------------------------------------------------------------

Operating income - as reported        56,000 - 62,000      315M - 325M
   % of net sales                          6.3% -7.0%      9.0% - 9.3%
Adjustments                            approx. 52,000     approx. 100M
----------------------------------------------------------------------
Operating income - as adjusted      108,000 - 114,000      415M - 425M
   % of net sales                       12.1% - 13.0%    11.9% - 12.2%

Income from continuing operations
 - as reported                        20,000 - 23,000      243M - 248M
Adjustments - tax affected             approx. 35,000    approx. (16M)
----------------------------------------------------------------------
Income from continuing operations
 - as adjusted                        55,000 - 58,000      227M - 232M
======================================================================

Continuing earnings per common
 share - diluted
Diluted earnings per common share
 - as reported                          $0.20 - $0.23    $2.44 - $2.49
Adjustments                              approx. 0.35   approx. (0.16)
----------------------------------------------------------------------
Diluted earnings per common share
 - as adjusted                          $0.55 - $0.58    $2.28 - $2.33
======================================================================


Weighted average common shares
 outstanding - Diluted                 approx. 99,200   approx. 99,300



                    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)



In thousands, except per-   First Quarter Second Quarter Third Quarter
 share data                     2007           2007          2007
----------------------------------------------------------------------
Net sales                        $792,845       $899,299      $821,214
----------------------------------------------------------------------

Operating income - as
 reported                          81,499        112,860        93,149
   % of net sales                   10.3%          12.5%         11.3%
Adjustments                            --             --         9,192
----------------------------------------------------------------------
Operating income - as
 adjusted                          81,499        112,860       102,341
   % of net sales                   10.3%          12.5%         12.5%

Income from continuing
 operations - as reported          42,629         60,994        59,277
Adjustments - tax affected             --             --         6,246
Non-recurring tax items             (145)           (83)      (11,517)
----------------------------------------------------------------------
Income from continuing
 operations - as adjusted          42,484         60,911        54,006
======================================================================

Continuing earnings per
 common share - diluted
Diluted earnings per common
 share - as reported                $0.42          $0.61         $0.59
Adjustments                            --             --        (0.05)
----------------------------------------------------------------------
Diluted earnings per common
 share - as adjusted                $0.42          $0.61         $0.54
----------------------------------------------------------------------

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


                                             Fourth Quarter    Year
In thousands, except per-share data               2007         2007
----------------------------------------------------------------------
Net sales                                          $817,519 $3,330,877
----------------------------------------------------------------------

Operating income - as reported                       91,519    379,027
   % of net sales                                     11.2%      11.4%
Adjustments                                           5,970     15,162
----------------------------------------------------------------------
Operating income - as adjusted                       97,489    394,189
   % of net sales                                     11.9%      11.8%

Income from continuing operations - as
 reported                                            49,470    212,370
Adjustments - tax affected                            3,881     10,127
Non-recurring tax items                             (1,073)   (12,818)
----------------------------------------------------------------------
Income from continuing operations - as
 adjusted                                            52,278    209,679
======================================================================

Continuing earnings per common share -
 diluted
Diluted earnings per common share - as
 reported                                             $0.50      $2.12
Adjustments                                            0.03     (0.02)
----------------------------------------------------------------------
Diluted earnings per common share - as
 adjusted                                             $0.53      $2.10
----------------------------------------------------------------------

Weighted average common shares outstanding -
 Diluted                                             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 $555,000 - $560,000
----------------------------------------------------------------------

Operating income - as
 reported                    64,419         57,822     36,000 - 38,000
   % of net sales             11.6%           9.5%         6.4% - 6.8%
Adjustments                      --         22,711      approx. 23,000
----------------------------------------------------------------------
Operating income - as
 adjusted                    64,419         80,533     59,000 - 61,000
   % of net sales             11.6%          13.3%       10.5% - 11.0%


Technical Products
Net sales                  $285,460       $304,260 $290,000 - $295,000
----------------------------------------------------------------------

Operating income - as
 reported                    45,337         49,732     45,000 - 47,000
   % of net sales             15.9%          16.3%       15.3% - 16.2%
Adjustments                      --            429       approx. 2,000
----------------------------------------------------------------------
Operating income - as
 adjusted                    45,337         50,161     47,000 - 49,000
   % of net sales             15.9%          16.4%       15.9% - 16.9%



                                   Fourth Quarter          Year
In thousands                            2008               2008
----------------------------------------------------------------------
Water
Net sales                        $585,000 - $595,000  approx. $2,300M+
----------------------------------------------------------------------

Operating income - as reported       26,000 - 30,000       184M - 190M
   % of net sales                        4.4% - 5.1%       8.0% - 8.3%
Adjustments                           approx. 50,000       approx. 96M
----------------------------------------------------------------------
Operating income - as adjusted       76,500 - 80,500       280M - 286M
   % of net sales                      12.8% - 13.7%     12.1% - 12.4%


Technical Products
Net sales                        $295,000 - $300,000 $1,175M - $1,185M
----------------------------------------------------------------------

Operating income - as reported       45,000 - 47,000       185M - 189M
   % of net sales                      15.0% - 15.9%     15.6% - 16.1%
Adjustments                            approx. 2,000        approx. 4M
----------------------------------------------------------------------
Operating income - as adjusted       47,000 - 49,000       189M - 193M
   % of net sales                      15.7% - 16.6%     16.0% - 16.5%


                    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
In thousands                    2007           2007          2007
----------------------------------------------------------------------
Water
Net sales                        $540,262       $642,149      $545,513
----------------------------------------------------------------------

Operating income - as
 reported                          62,426         89,195        56,061
   % of net sales                   11.6%          13.9%         10.3%
Adjustments                            --             --         9,843
----------------------------------------------------------------------
Operating income - as
 adjusted                          62,426         89,195        65,904
   % of net sales                   11.6%          13.9%         12.1%


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         2007
----------------------------------------------------------------------
Water
Net sales                                          $552,820 $2,280,744
----------------------------------------------------------------------

Operating income - as reported                       65,541    273,223
   % of net sales                                     11.9%      12.0%
Adjustments                                           3,897     13,740
----------------------------------------------------------------------
Operating income - as adjusted                       69,438    286,963
   % of net sales                                     12.6%      12.6%


Technical Products
Net sales                                          $264,699 $1,050,133
----------------------------------------------------------------------

Operating income - as reported                       39,578    153,586
   % of net sales                                     15.0%      14.6%
Adjustments                                           2,073      1,421
----------------------------------------------------------------------
Operating income - as adjusted                       41,651    155,007
   % of net sales                                     15.7%      14.8%

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

SOURCE: Pentair, Inc.

Categories: Press Releases