Financial Statements of Parent Company Guarantor

9 Months Ended

Sep. 26, 2015

Financial Statements of Parent Company Guarantor

Effective upon the Redomicile, Pentair plc (the "Parent Company Guarantor") and Pentair Investments Switzerland GmbH (the "Subsidiary Guarantor"), fully and unconditionally, guarantee the Notes of Pentair Finance S.A. (the "Subsidiary Issuer"). The Subsidiary Guarantor is a Switzerland limited liability company formed in April 2014 and 100 percent-owned subsidiary of the Parent Company Guarantor. The Subsidiary Issuer is a Luxembourg public limited liability company and 100 percent-owned subsidiary of the Subsidiary Guarantor. The guarantees provided by the Parent Company Guarantor and Subsidiary Guarantor are joint and several.

The following supplemental financial information sets forth the Company’s Condensed Consolidating Statement of Operations and Comprehensive Income (Loss), Condensed Consolidating Balance Sheets and Condensed Consolidating Statement of Cash Flows by relevant group within the Company: Pentair plc and Pentair Investments Switzerland GmbH as the guarantors, Pentair Finance S.A. as issuer of the debt and all other non-guarantor subsidiaries. Condensed consolidating financial information for Pentair plc, Pentair Investments Switzerland GmbH and Pentair Finance S.A. on a stand-alone basis is presented using the equity method of accounting for subsidiaries.

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three months ended September 26, 2015

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	—		$	—		$	—		$	1,552.1		$	—		$	1,552.1
Cost of goods sold	—			—			—			1,012.0			—			1,012.0
Gross profit	—			—			—			540.1			—			540.1
Selling, general and administrative	17.7			0.1			1.7			310.7			—			330.2
Research and development	—			—			—			29.9			—			29.9
Operating income (loss)	(17.7		)	(0.1		)	(1.7		)	199.5			—			180.0
Loss (earnings) from continuing operations of investment in subsidiaries	(132.9		)	(133.0		)	(148.3		)	—			414.2			—
Other (income) expense:
Equity income of unconsolidated subsidiaries	—			—			—			(0.9		)	—			(0.9		)
Net interest expense	—			—			18.0			13.3			—			31.3
Income (loss) from continuing operations before income taxes	115.2			132.9			128.6			187.1			(414.2		)	149.6
Provision for income taxes	—			—			—			34.4			—			34.4
Net income (loss) from continuing operations	115.2			132.9			128.6			152.7			(414.2		)	115.2
Net income (loss)	$	115.2		$	132.9		$	128.6		$	152.7		$	(414.2	)	$	115.2
Comprehensive income (loss), net of tax
Net income (loss)	$	115.2		$	132.9		$	128.6		$	152.7		$	(414.2	)	$	115.2
Changes in cumulative translation adjustment	(85.8		)	(85.8		)	(85.8		)	(85.8		)	257.4			(85.8		)
Changes in market value of derivative financial instruments	(0.7		)	(0.7		)	(0.7		)	(0.7		)	2.1			(0.7		)
Comprehensive income (loss)	$	28.7		$	46.4		$	42.1		$	66.2		$	(154.7	)	$	28.7

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Nine months ended September 26, 2015

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	—		$	—		$	—		$	4,688.3		$	—		$	4,688.3
Cost of goods sold	—			—			—			3,071.8			—			3,071.8
Gross profit	—			—			—			1,616.5			—			1,616.5
Selling, general and administrative	30.4			0.2			3.8			924.3			—			958.7
Research and development	—			—			—			88.7			—			88.7
Operating income (loss)	(30.4		)	(0.2		)	(3.8		)	603.5			—			569.1
Loss (earnings) from continuing operations of investment in subsidiaries	(417.0		)	(418.5		)	(428.6		)	—			1,264.1			—
Other (income) expense:
Equity income of unconsolidated subsidiaries	—			—			—			(2.0		)	—			(2.0		)
Net interest expense	—			1.3			21.8			45.0			—			68.1
Income (loss) from continuing operations before income taxes	386.6			417.0			403.0			560.5			(1,264.1		)	503.0
Provision (benefit) for income taxes	(0.7		)	—			—			116.4			—			115.7
Net income (loss) from continuing operations	387.3			417.0			403.0			444.1			(1,264.1		)	387.3
Loss from discontinued operations, net of tax	—			—			—			(5.6		)	—			(5.6		)
Loss from sale / impairment of discontinued operations, net of tax	—			—			—			(4.8		)	—			(4.8		)
Earnings (loss) from discontinued operations of investment in subsidiaries	(10.4		)	(10.4		)	(10.4		)	—			31.2			—
Net income (loss)	$	376.9		$	406.6		$	392.6		$	433.7		$	(1,232.9	)	$	376.9
Comprehensive income (loss), net of tax
Net income (loss)	$	376.9		$	406.6		$	392.6		$	433.7		$	(1,232.9	)	$	376.9
Changes in cumulative translation adjustment	(238.4		)	(238.4		)	(238.4		)	(238.4		)	715.2			(238.4		)
Changes in market value of derivative financial instruments	(1.6		)	(1.6		)	(1.6		)	(1.6		)	4.8			(1.6		)
Comprehensive income (loss)	$	136.9		$	166.6		$	152.6		$	193.7		$	(512.9	)	$	136.9

Condensed Consolidating Balance Sheet

September 26, 2015

In millions	Parent Company Guarantor		Subsidiary Guarantor		Subsidiary Issuer		Non-guarantor Subsidiaries		Eliminations			Consolidated Total
Assets
Current assets
Cash and cash equivalents	$	—	$	—	$	0.2	$	144.7	$	—		$	144.9
Accounts and notes receivable, net	—		—		—		1,136.5		—			1,136.5
Inventories	—		—		—		1,296.2		—			1,296.2
Other current assets	1.1		14.8		19.7		391.7		(41.6		)	385.7
Current assets held for sale	—		—		—		0.9		—			0.9
Total current assets	1.1		14.8		19.9		2,970.0		(41.6		)	2,964.2
Property, plant and equipment, net	—		—		—		921.4		—			921.4
Other assets
Investments in subsidiaries	4,981.6		4,969.9		9,873.3		—		(19,824.8		)	—
Goodwill	—		—		—		5,827.4		—			5,827.4
Intangibles, net	—		—		—		2,515.6		—			2,515.6
Other non-current assets	36.9		—		1,232.6		367.5		(1,210.3		)	426.7
Non-current assets held for sale	—		—		—		15.6		—			15.6
Total other assets	5,018.5		4,969.9		11,105.9		8,726.1		(21,035.1		)	8,785.3
Total assets	$	5,019.6	$	4,984.7	$	11,125.8	$	12,617.5	$	(21,076.7	)	$	12,670.9
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	—	$	—	$	—	$	3.2	$	—		$	3.2
Accounts payable	1.3		—		0.8		528.9		—			531.0
Employee compensation and benefits	0.3		0.1		—		264.2		—			264.6
Other current liabilities	66.1		1.4		15.8		652.2		(41.6		)	693.9
Current liabilities held for sale	—		—		—		3.5		—			3.5
Total current liabilities	67.7		1.5		16.6		1,452.0		(41.6		)	1,496.2
Other liabilities
Long-term debt	402.2		1.6		4,844.8		944.9		(1,210.3		)	4,983.2
Pension and other post-retirement compensation and benefits	—		—		—		301.6		—			301.6
Deferred tax liabilities	—		—		2.9		825.0		—			827.9
Other non-current liabilities	13.8		—		—		511.8		—			525.6
Non-current liabilities held for sale	—		—		—		0.5		—			0.5
Total liabilities	483.7		3.1		4,864.3		4,035.8		(1,251.9		)	8,135.0
Equity	4,535.9		4,981.6		6,261.5		8,581.7		(19,824.8		)	4,535.9
Total liabilities and equity	$	5,019.6	$	4,984.7	$	11,125.8	$	12,617.5	$	(21,076.7	)	$	12,670.9

Condensed Consolidating Statement of Cash Flows

Nine months endedSeptember 26, 2015

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Operating activities
Net cash provided by (used for) operating activities	$	421.3		$	393.3		$	406.1		$	408.1		$	(1,232.9	)	$	395.9
Investing activities
Capital expenditures	—			—			—			(100.6		)	—			(100.6		)
Proceeds from sale of property and equipment	—			—			—			24.8			—			24.8
Acquisitions, net of cash acquired	—			—			—			(1,913.0		)	—			(1,913.0		)
Net intercompany loan activity	—			—			1,657.8			(149.8		)	(1,508.0		)	—
Other	—			—			—			(0.8		)	—			(0.8		)
Net cash provided by (used for) investing activities of continuing operations	—			—			1,657.8			(2,139.4		)	(1,508.0		)	(1,989.6		)
Net cash provided by (used for) investing activities of discontinued operations	—			—			—			59.0			—			59.0
Net cash provided by (used for) investing activities	—			—			1,657.8			(2,080.4		)	(1,508.0		)	(1,930.6		)
Financing activities
Net repayments of short-term borrowings	—			—			—			(2.0		)	—			(2.0		)
Net receipts of commercial paper and revolving long-term debt	—			—			274.9			1.6			—			276.5
Proceeds from long-term debt	—			—			1,714.8			—			—			1,714.8
Repayments of long-term debt	—			—			—			(4.6		)	—			(4.6		)
Debt issuance costs	—			—			(26.8		)	—			—			(26.8		)
Net change in advances to subsidiaries	(48.0		)	(393.3		)	(4,021.2		)	1,721.6			2,740.9			—
Excess tax benefits from share-based compensation	—			—			—			6.0			—			6.0
Shares issued to employees, net of shares withheld	—			—			—			21.9			—			21.9
Repurchases of ordinary shares	(200.0		)	—			—			—			—			(200.0		)
Dividends paid	(173.3		)	—			—			—			—			(173.3		)
Net cash provided by (used for) financing activities	(421.3		)	(393.3		)	(2,058.3		)	1,744.5			2,740.9			1,612.5
Effect of exchange rate changes on cash and cash equivalents	—			—			(5.5		)	(37.8		)	—			(43.3		)
Change in cash and cash equivalents	—			—			0.1			34.4			—			34.5
Cash and cash equivalents, beginning of period	—			—			0.1			110.3			—			110.4
Cash and cash equivalents, end of period	$	—		$	—		$	0.2		$	144.7		$	—		$	144.9

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three months ended September 27, 2014

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	—		$	—		$	—		$	1,758.4		$	—		$	1,758.4
Cost of goods sold	—			—			—			1,133.7			—			1,133.7
Gross profit	—			—			—			624.7			—			624.7
Selling, general and administrative	3.2			1.5			0.8			323.3			—			328.8
Research and development	—			—			—			28.5			—			28.5
Operating income (loss)	(3.2		)	(1.5		)	(0.8		)	272.9			—			267.4
Loss (earnings) from continuing operations of investment in subsidiaries	(195.7		)	(198.1		)	(206.3		)	—			600.1			—
Other (income) expense:
Equity income of unconsolidated subsidiaries	—			—			—			(0.3		)	—			(0.3		)
Loss on sale of business	—			—			—			—			—			—
Net interest expense	—			0.9			1.0			15.2			—			17.1
Income (loss) from continuing operations before income taxes	192.5			195.7			204.5			258.0			(600.1		)	250.6
Provision for income taxes	—						—			58.1			—			58.1
Net income (loss) from continuing operations	192.5			195.7			204.5			199.9			(600.1		)	192.5
Income from discontinued operations, net of tax	—			—			—			1.6			—			1.6
Loss from sale of discontinued operations, net of tax	—			—			—			(380.1		)	—			(380.1		)
Earnings (loss) from discontinued operations of investment in subsidiaries	(378.5		)	(378.5		)	(378.5		)	—			1,135.5			—
Net income (loss)	$	(186.0	)	$	(182.8	)	$	(174.0	)	$	(178.6	)	$	535.4		$	(186.0	)
Comprehensive income (loss), net of tax
Net income (loss)	$	(186.0	)	$	(182.8	)	$	(174.0	)	$	(178.6	)	$	535.4		$	(186.0	)
Changes in cumulative translation adjustment	(178.8		)	(178.8		)	(178.8		)	(178.8		)	536.4			(178.8		)
Changes in market value of derivative financial instruments	0.8			0.8			0.8			0.8			(2.4		)	0.8
Comprehensive income (loss)	$	(364.0	)	$	(360.8	)	$	(352.0	)	$	(356.6	)	$	1,069.4		$	(364.0	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Nine months ended September 27, 2014

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	—		$	—		$	—		$	5,236.5		$	—		$	5,236.5
Cost of goods sold	—			—			—			3,401.4			—			3,401.4
Gross profit	—			—			—			1,835.1			—			1,835.1
Selling, general and administrative	10.6			4.2			6.8			1,049.4			—			1,071.0
Research and development	—			—			—			88.2			—			88.2
Operating income (loss)	(10.6		)	(4.2		)	(6.8		)	697.5			—			675.9
Loss (earnings) from continuing operations of investment in subsidiaries	(488.5		)	(493.9		)	(484.0		)	—			1,466.4			—
Other (income) expense:
Equity income of unconsolidated subsidiaries	—			—			—			(0.9		)	—			(0.9		)
Loss on sale of business	—			—			—			0.2			—			0.2
Net interest expense	0.7			1.2			2.0			47.2			—			51.1
Income (loss) from continuing operations before income taxes	477.2			488.5			475.2			651.0			(1,466.4		)	625.5
Provision for income taxes	—			—			1.0			147.3			—			148.3
Net income (loss) from continuing operations	477.2			488.5			474.2			503.7			(1,466.4		)	477.2
Income from discontinued operations, net of tax	—			—			—			2.6			—			2.6
Loss from sale/impairment of discontinued operations, net of tax	—			—			—			(385.7		)	—			(385.7		)
Earnings (loss) from discontinued operations of investment in subsidiaries	(383.1		)	(383.1		)	(383.1		)	—			1,149.3			—
Net income (loss)	$	94.1		$	105.4		$	91.1		$	120.6		$	(317.1	)	$	94.1
Comprehensive income (loss), net of tax
Net income (loss) before noncontrolling interest	$	94.1		$	105.4		$	91.1		$	120.6		$	(317.1	)	$	94.1
Changes in cumulative translation adjustment	(190.3		)	(190.3		)	(190.3		)	(190.3		)	570.9			(190.3		)
Changes in market value of derivative financial instruments	1.2			1.2			1.2			1.2			(3.6		)	1.2
Comprehensive income (loss)	$	(95.0	)	$	(83.7	)	$	(98.0	)	$	(68.5	)	$	250.2		$	(95.0	)

Condensed Consolidating Balance Sheet

December 31, 2014

In millions	Parent Company Guarantor		Subsidiary Guarantor		Subsidiary Issuer		Non-guarantor Subsidiaries		Eliminations			Consolidated Total
Assets
Current assets
Cash and cash equivalents	$	—	$	—	$	0.1	$	110.3	$	—		$	110.4
Accounts and notes receivable, net	—		—		—		1,206.8		(0.9		)	1,205.9
Inventories	—		—		—		1,130.4		—			1,130.4
Other current assets	—		17.6		2.0		367.6		(20.4		)	366.8
Current assets held for sale	—		—		—		80.6		—			80.6
Total current assets	—		17.6		2.1		2,895.7		(21.3		)	2,894.1
Property, plant and equipment, net	—		—		—		950.0		—			950.0
Other assets
Investments in subsidiaries	4,733.0		4,893.8		7,612.2		—		(17,239.0		)	—
Goodwill	—		—		—		4,741.9		—			4,741.9
Intangibles, net	—		—		—		1,608.1		—			1,608.1
Other non-current assets	80.2		—		1,381.8		345.0		(1,370.8		)	436.2
Non-current assets held for sale	—		—		—		24.9		—			24.9
Total other assets	4,813.2		4,893.8		8,994.0		6,719.9		(18,609.8		)	6,811.1
Total assets	$	4,813.2	$	4,911.4	$	8,996.1	$	10,565.6	$	(18,631.1	)	$	10,655.2
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	—	$	—	$	—	$	6.7	$	—		$	6.7
Accounts payable	0.9		—		—		583.1		(0.9		)	583.1
Employee compensation and benefits	0.2		0.6		—		304.7		—			305.5
Other current liabilities	120.6		2.2		10.9		595.8		(20.4		)	709.1
Current liabilities held for sale	—		—		—		35.1		—			35.1
Total current liabilities	121.7		2.8		10.9		1,525.4		(21.3		)	1,639.5
Other liabilities
Long-term debt	11.4		175.6		2,860.6		1,320.6		(1,370.8		)	2,997.4
Pension and other post-retirement compensation and benefits	—		—		—		322.0		—			322.0
Deferred tax liabilities	—		—		2.9		525.4		—			528.3
Other non-current liabilities	16.3		—		—		481.4		—			497.7
Non-current liabilities held for sale	—		—		—		6.5		—			6.5
Total liabilities	149.4		178.4		2,874.4		4,181.3		(1,392.1		)	5,991.4
Equity	4,663.8		4,733.0		6,121.7		6,384.3		(17,239.0		)	4,663.8
Total liabilities and equity	$	4,813.2	$	4,911.4	$	8,996.1	$	10,565.6	$	(18,631.1	)	$	10,655.2

Condensed Consolidating Statement of Cash Flows

Nine months ended September 27, 2014

In millions	Parent Company Guarantor			Subsidiary Guarantor			Subsidiary Issuer			Non-guarantor Subsidiaries			Eliminations			Consolidated Total
Operating activities
Net cash provided by (used for) operating activities	$	99.4		$	94.2		$	88.1		$	718.8		$	(317.1	)	$	683.4
Investing activities
Capital expenditures	—			—			—			(92.5		)	—			(92.5		)
Proceeds from sale of property and equipment	—			—			—			4.1			—			4.1
Other	—			—			—			0.9			—			0.9
Net cash provided by (used for) investing activities	—			—			—			(87.5		)	—			(87.5		)
Financing activities
Net receipts of short-term borrowings	—			—			—			0.3			—			0.3
Net receipts of commercial paper and revolving long-term debt	—			—			416.7			9.5			—			426.2
Repayments of long-term debt	—			—			—			(13.2		)	—			(13.2		)
Excess tax benefits from share-based compensation	—			—			—			10.0			—			10.0
Net change in advances to subsidiaries	455.6			(94.2		)	(551.6		)	(126.9		)	317.1			—
Shares issued to employees, net of shares withheld	—			—			—			30.3			—			30.3
Repurchases of ordinary shares	(399.3		)	—			—			(450.7		)	—			(850.0		)
Dividends paid	(156.2		)	—			—			—			—			(156.2		)
Purchase of noncontrolling interest	—			—			—			(134.7		)	—			(134.7		)
Net cash provided by (used for) financing activities	(99.9		)	(94.2		)	(134.9		)	(675.4		)	317.1			(687.3		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(8.0		)	—			(8.0		)
Change in cash and cash equivalents	(0.5		)	—			(46.8		)	(52.1		)	—			(99.4		)
Cash and cash equivalents, beginning of period	0.5			—			47.0			208.5			—			256.0
Cash and cash equivalents, end of period	$	—		$	—		$	0.2		$	156.4		$	—		$	156.6