Pentair's Fourth Quarter 2005 EPS Gains 15%, or 24% Excluding the Impact of Stock Option Expensing, on 12% Higher Sales

GOLDEN VALLEY, Minn., Feb. 2 /PRNewswire-FirstCall/ -- Pentair today announced its fourth quarter 2005 results, highlighting earnings per share (EPS) from continuing operations of $0.38, an increase of 15 percent, on sales of $732.1 million, a gain of 12 percent. Excluding the impact of stock options expensing (SOE), EPS of $0.41 gained 24 percent in the quarter. Pentair's FY2005 EPS from continuing operations gained 33 percent on a sales gain of 29 percent. Excluding the impact of SOE, EPS gained 42 percent in the year.

Pentair announced on December 19, 2005, that it would early adopt SFAS 123R for Share-Based Payment, an accounting change requiring companies to recognize an expense in the Income Statement for stock options. Pentair has adopted using the modified retrospective approach, restating the first three quarters of 2005 to reflect an impact of $9.1 million after tax expense or ($0.09) of EPS. In the fourth quarter 2005, the impact was $2.9 million after tax expense or ($0.03) of EPS, for a full year EPS impact of ($0.12). Pentair's reported fourth quarter 2005 and FY2005 results reflect the adoption of SFAS 123R. The reconciliation of the reported GAAP financial information to the non-GAAP financials excluding the adoption of SFAS 123R is provided on pages seven through 11 of this fourth quarter earnings announcement.

According to Pentair Chairman and Chief Executive Officer, Randall J. Hogan, "In our first full year after the transformation of Pentair into a Water-led business, we met our strategic and financial goals of replacing the earnings of our former Tools Group, and added an additional 14 percent to EPS on top of that, excluding stock option expensing. In 2005, we achieved organic growth of approximately six percent, while achieving the highest profitability and return on invested capital in the last five years. We also met our Free Cash Flow goal with $201 million and exceeded our 100% conversion of net income goal for the fifth consecutive year.

"In addition to the operating and financial progress in the year, we accelerated our investments to drive growth and instill operating excellence throughout the Company," Hogan said. "These activities included increasing R&D; adding international management, sales, engineering, sourcing and manufacturing talent; starting the implementation of a unified business system infrastructure in Europe; launching our Faradyne Motors joint venture with ITT Industries; and continuing to strengthen our global sourcing and operating competencies. In addition, through our disciplined M&A process, we examined a number of opportunities and completed two acquisitions that are consistent with our growth strategies. These actions lend confidence to our outlook for 2006 and, therefore, we are reaffirming our previous guidance for the full year 2006 of between $2.08 and $2.18, which includes the expensing of stock options. Further, we are expecting first quarter EPS of between $0.40 and $0.42."

Water Group Fourth Quarter Comments -- Sales of $517.8 million were up 10 percent over the same period last year, or approximately 11 percent excluding unfavorable foreign exchange. Sales in all markets grew by at least mid-single digits in local currencies, with the strongest growth occurring in pump and pool markets. -- Pump sales grew in the high single digits, spurred by new products, and strong municipal and industrial pump demand, as well as by pricing actions. Water systems sales also gained in the mid-single digits. -- Share gains, favorable weather conditions, and successful early buy programs bolstered pool and spa equipment sales in the quarter. -- Filtration grew in the mid-single digits, experiencing continued strength in foodservice markets and strong sales related to desalination projects. -- Pentair sales in Euros in European filtration markets were up in the high teens, supported by strength in Food and Beverage markets, while sales in European pool markets realized sales gains in the high single digits benefiting from early buy programs. Asian sales were up significantly as a result of the ramp-up of production at the Pentair Suzhou manufacturing facility in China. -- New Water products were significant in driving sales. New pumps included a bulk chemical transfer pump; a drainer pump; a gas engine transfer pump; and new split case, solids handling, and centrifugal pumps. Pool products included new heat pumps, automation controls, lights, filters, chlorinators, pumps, and pool finishes. New filtration products included a new modular filtration system and a number of new OEM products. -- Excluding the impact of SOE, operating income of $56.8 million increased 16 percent over the same period last year driven by higher volumes, supply savings, and pricing, which were somewhat offset by materials inflation and our accelerated investments focused on growth, operating excellence, and international expansion. Excluding the impact of SOE, operating margins of 11.0 percent for the quarter expanded by 50 basis points over fourth quarter 2004 margins of 10.5 percent. Including the impact of SOE, operating income totaled $55.5 million, up 13 percent. -- The integration of the water businesses continued on-track with $36 million of savings realized net of integration costs during 2005 against a total year goal of $30 million. These savings were somewhat offset by temporary operating inefficiencies related to product moves and plant consolidations undertaken to achieve future cost benefits, as well as investments made to support growth. -- Investments for growth during the quarter included low-cost country engineering and sourcing, start-up of Eastern European manufacturing capability, increased infrastructure in China and Europe to support local market opportunities, filtration R&D innovation programs, and the Faradyne Motor joint venture, announced December 15, 2005. Enclosures Group Fourth Quarter Comments -- Sales of $214.3 million reflect an 18 percent gain over the same period last year. Excluding the impact of acquisitions and unfavorable foreign exchange, sales grew approximately 13 percent, significantly above the growth rate of the addressed markets. Enclosure sales grew in all markets in the fourth quarter, including Europe. -- The strong sales performance was driven by share gains and pricing in the North American electrical market; new products and programs at Pentair Electronic Packaging and in Europe; and new customers in Asia. -- The Group's vertical market initiative drove growth in petrochemical, food & beverage, water & wastewater, and pharmaceutical markets. -- Electronics sales grew in the fourth quarter, with the new Advanced Telecommunications Computing Architecture (ATCA) platform supporting OEM customers worldwide. The Enclosures Group has secured a leading market position in ATCA, and sales of this product family are expected to accelerate throughout 2006. -- Excluding the impact of SOE, operating income of $30.7 million was 30 percent higher than the same period last year, setting a new record for quarterly operating income in the Enclosures Group. This performance resulted from higher volumes, supply savings, productivity improvements, and pricing, which more than offset material inflation. Including the impact of SOE, operating income totaled $30.0 million, up 26 percent. -- Excluding the impact of SOE, Enclosures margins were 14.3 percent for the quarter, expanding by 130 basis points over the fourth quarter 2004. The fourth quarter 2005 represents the Group's 16th consecutive quarter of sequential margin improvement. Including the impact of SOE, margins were 14.0 percent, up 100 basis points. -- The Thermal Management businesses acquired on December 1, 2005 are included in Pentair's financials for one month. Integration activities are off to a fast start with supplier negotiations, lean enterprise training, and kaizen events conducted in the first week after closing.

A Pentair conference call scheduled for 11:00 a.m. CST today will be webcast live via http://www.pentair.com/. A link to the conference call is posted on the site's "Financial Information" page and will be archived at the same location.

About Pentair, Inc.

Pentair (http://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 Enclosures Group is a leader in the global enclosures market, designing and manufacturing standard, modified, and custom enclosures that house and protect sensitive electronics and electrical components. With 2005 revenues of $2.95 billion, Pentair employs approximately 15,000 people worldwide.

Non-GAAP Financial Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included throughout this news release, the Company has provided information as if it had not adopted SFAS 123R during 2005 on a modified retrospective basis back to January 1, 2005 (non-GAAP financial measures). The adoption of SFAS 123R requires companies to recognize an expense in the Income Statement for stock options. Management believes presenting its financial information excluding stock option expensing is useful to both management and investors in comparing 2004 to 2005 because the GAAP results for 2005 include stock option expense on a fair value basis, but the results for 2004 do not. The financial information excluding stock option expensing should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP, or as a measure of profitability or liquidity. Also, financial information excluding stock option expensing, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies.

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; 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. 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.

Pentair Contacts: Rachael Jarosh Mark Cain Communications Investor Relations Tel.: (763) 656-5280 Tel.: (763) 656-5278 E-mail: rachael.jarosh@pentair.com E-mail: mark.cain@pentair.com Pentair, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Three months ended Year ended December 31 December 31 December 31 December 31 In thousands, 2005 2004 2005 2004 except per-share data Net sales $732,113 $651,476 $2,946,579 $2,278,129 Cost of goods sold 524,304 468,274 2,098,558 1,623,419 Gross profit 207,809 183,202 848,021 654,710 % of net sales 28.4% 28.1% 28.8% 28.7% Selling, general and administrative 128,002 111,221 478,907 376,015 % of net sales 17.5% 17.1% 16.2% 16.5% Research and development 12,935 9,932 46,042 31,453 % of net sales 1.8% 1.5% 1.6% 1.4% Operating income 66,872 62,049 323,072 247,242 % of net sales 9.1% 9.5% 11.0% 10.9% Gain on sale of investment 236 - 5,435 - Net interest expense 11,263 10,892 44,989 37,210 % of net sales 1.5% 1.7% 1.5% 1.6% Income from continuing operations before income taxes 55,845 51,157 283,518 210,032 % of net sales 7.6% 7.9% 9.6% 9.2% Provision for income taxes 16,889 17,460 98,469 73,008 Effective tax rate 30.2% 34.1% 34.7% 34.8% Income from continuing operations 38,956 33,697 185,049 137,024 Income from discontinued operations, net of tax - - - 40,248 Loss on disposal of discontinued operations, net of tax - (6,047) - (6,047) Net income $38,956 $27,650 $185,049 $171,225 Earnings per common share Basic Continuing operations $0.39 $0.34 $1.84 $1.38 Discontinued operations - (0.07) - 0.34 Basic earnings per common share $0.39 $0.27 $1.84 $1.72 Diluted Continuing operations $0.38 $0.33 $1.80 $1.35 Discontinued operations - (0.07) - 0.33 Diluted earnings per common share $0.38 $0.26 $1.80 $1.68 Weighted average common shares outstanding Basic 100,605 100,014 100,665 99,316 Diluted 102,314 102,541 102,618 101,706 Cash dividends declared per common share $0.13 $0.11 $0.52 $0.43 Pentair, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) December 31 December 31 In thousands 2005 2004 Assets Current assets Cash and cash equivalents $48,500 $31,495 Accounts and notes receivable, net 423,847 396,459 Inventories 349,312 323,676 Deferred tax assets 49,933 49,074 Prepaid expenses and other current assets 24,394 24,433 Total current assets 895,986 825,137 Property, plant and equipment, net 311,839 336,302 Other assets Non-current assets of discontinued operations - 393 Goodwill 1,718,207 1,620,404 Intangibles, net 266,533 258,126 Other 62,152 80,213 Total other assets 2,046,892 1,959,136 Total assets $3,254,717 $3,120,575 Liabilities and Shareholders' Equity Current liabilities Current maturities of long-term debt $4,137 $11,957 Accounts payable 207,320 195,289 Employee compensation and benefits 95,552 104,821 Accrued product claims and warranties 43,551 42,524 Current liabilities of discontinued operations 192 192 Income taxes 18,464 27,395 Accrued rebates and sales incentives 45,374 41,618 Other current liabilities 111,026 103,083 Total current liabilities 525,616 526,879 Long-term debt 748,477 724,148 Pension and other retirement compensation 152,780 135,356 Post-retirement medical and other benefits 73,949 69,667 Deferred tax liabilities 125,801 142,873 Other non-current liabilities 70,455 70,804 Non-current liabilities of discontinued operations 2,029 3,054 Total liabilities 1,699,107 1,672,781 Shareholders' equity 1,555,610 1,447,794 Total liabilities and shareholders' equity $3,254,717 $3,120,575 Days sales in accounts receivable (13 month moving average) 54 52 Days inventory on hand (13 month moving average) 70 62 Days in accounts payable (13 month moving average) 56 57 Debt/total capital 32.6% 33.7% Pentair, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Year ended December 31 December 31 In thousands 2005 2004 Operating activities Net income $ 185,049 $ 171,225 Adjustments to reconcile net income to net cash provided by operating activities Net income from discontinued operations - (40,248) Loss on disposal of discontinued operations 6,047 Depreciation 56,565 47,063 Amortization 15,995 7,501 Deferred income taxes 5,360 16,736 Stock compensation 24,186 6,345 Excess tax benefits from stock-based compensation (8,676) - Gain on sale of investment (5,435) - Changes in assets and liabilities, net of effects of business acquisitions and Dispositions Accounts and notes receivable (20,527) 26,918 Inventories (19,201) (51,996) Prepaid expenses and other current assets (452) 2,176 Accounts payable 6,629 17,274 Employee compensation and benefits (21,394) 4,596 Accrued product claims and warranties (1,099) 2,993 Income taxes 11,302 6,352 Other current liabilities 4,609 8,879 Pension and post-retirement benefits 16,512 11,508 Other assets and liabilities (2,114) 6,794 Net cash provided by continuing operations 247,309 250,163 Net cash (used for) provided by operating activities of discontinued operations (632) 13,928 Net cash provided by operating activities 246,677 264,091 Investing activities Capital expenditures (62,471) (48,867) Proceeds from sale of property and equipment 17,111 - Acquisitions, net of cash acquired (150,534) (869,155) Divestitures (10,155) 773,399 Proceeds from sale of investment 23,835 - Other (2,071) 60 Net cash used for investing activities (184,285) (144,563) Financing activities Net short-term borrowings - (4,162) Proceeds from long-term debt 875,746 343,316 Repayment of long-term debt (856,845) (440,518) Excess tax benefits from stock-based compensation 8,676 - Proceeds from exercise of stock options 8,380 10,862 Repurchases of common stock (25,000) (4,200) Dividends paid (53,134) (43,128) Net cash used for financing activities (42,177) (137,830) Effect of exchange rate changes on cash (3,210) 1,808 Change in cash and cash equivalents 17,005 (16,494) Cash and cash equivalents, beginning of period 31,495 47,989 Cash and cash equivalents, end of period $48,500 $31,495 Free cash flow Net cash provided by operating activities $ 246,677 $ 264,091 Less capital expenditures (62,471) (48,867) Proceeds from sale of property and equipment 17,111 - Free cash flow $ 201,317 $ 215,224 Excess tax benefits from stock-based compensation 8,676 - Free cash flow excluding stock option expensing $209,993 $215,224 Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable Business Segment for 2005 (Unaudited) First Qtr Second Qtr Third Qtr Fourth Qtr Year In thousands 2005 2005 2005 2005 2005 Net sales to external customers Water $512,088 $585,657 $515,945 $517,815 $2,131,505 Enclosures 197,547 202,866 200,363 214,298 815,074 Consolidated $709,635 $788,523 $716,308 $732,113 $2,946,579 Intersegment sales Water $ 22 $187 $280 $(341) $ 148 Enclosures 402 630 407 770 2,209 Other (424) (817) (687) (429) (2,357) Consolidated $ - $ - $ - $ - $ - Operating income (loss) Water $60,487 $92,167 $58,964 $55,520 $267,138 Enclosures 25,172 26,325 27,778 29,954 109,229 Other (13,573) (11,258) (9,862) (18,602) (53,295) Consolidated $72,086 $107,234 $76,880 $66,872 $323,072 Operating income as a percent of net sales Water 11.8% 15.7% 11.4% 10.7% 12.5% Enclosures 12.7% 13.0% 13.9% 14.0% 13.4% Consolidated 10.2% 13.6% 10.7% 9.1% 11.0% Operating income (loss) excluding impact of SFAS 123R adoption(a) Water $61,803 $93,481 $60,278 $56,834 $272,396 Enclosures 25,926 27,078 28,531 30,707 112,242 Other (11,356) (9,082) (8,033) (16,707) (45,178) Consolidated $76,373 $111,477 $80,776 $70,834 $339,460 Operating income as a percent of net sales excluding impact of SFAS 123R adoption(a) Water 12.1% 16.0% 11.7% 11.0% 12.8% Enclosures 13.1% 13.3% 14.2% 14.3% 13.8% Consolidated 10.8% 14.1% 11.3% 9.7% 11.5% (a) The Company adopted SFAS 123R in December 2005 using the modified retrospective method back to January 1, 2005. In connection with the adoption, the expense as disclosed in the first three quarters related to stock-based compensation was corrected for immaterial errors. The corrections resulted in no change to the quarterly EPS impact of stock option expensing. Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable Business Segment for 2004 (Unaudited) First Qtr Second Qtr Third Qtr Fourth Qtr Year In thousands 2004 2004 2004 2004 2004 Net sales to external customers Water $313,981 $353,316 $426,670 $469,427 $1,563,394 Enclosures 174,472 177,117 181,097 182,049 714,735 Consolidated $488,453 $530,433 $607,767 $651,476 $2,278,129 Intersegment sales Water $ 21 $ 29 $ 26 $ 42 $ 118 Enclosures 332 986 3 140 1,461 Other (353) (1,015) (29) (182) (1,579) Consolidated $ - $ - $ - $ - $ - Operating income (loss) Water $41,547 $59,253 $47,410 $49,100 $197,310 Enclosures 19,354 21,590 23,211 23,689 87,844 Other (10,791) (9,860) (6,521) (10,740) (37,912) Consolidated $50,110 $70,983 $64,100 $62,049 $247,242 Operating income as a percent of net sales Water 13.2% 16.8% 11.1% 10.5% 12.6% Enclosures 11.1% 12.2% 12.8% 13.0% 12.3% Consolidated 10.3% 13.4% 10.5% 9.5% 10.9% Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" three months ended December 31, 2005 to the "Adjusted" non-GAAP excluding the effect of SFAS 123R adoption (Unaudited) Three months ended As Reported Adjusted As Reported December 31 SFAS 123R December 31 December 31 In thousands, 2005 2005 2004 except per-share data Net sales $732,113 $ - $732,113 $651,476 Cost of goods sold 524,304 - 524,304 468,274 Gross profit 207,809 - 207,809 183,202 % of net sales 28.4% 28.4% 28.1% Selling, general and administrative 128,002 (3,962) 124,040 111,221 % of net sales 17.5% 16.9% 17.1% Research and development 12,935 - 12,935 9,932 % of net sales 1.8% 1.8% 1.5% Operating income 66,872 3,962 70,834 62,049 % of net sales 9.1% 9.7% 9.5% Gain on sale of investment 236 - 236 - Net interest expense 11,263 - 11,263 10,892 % of net sales 1.5% 1.5% 1.7% Income from continuing operations before income taxes 55,845 3,962 59,807 51,157 % of net sales 7.6% 8.2% 7.9% Provision for income taxes 16,889 1,073 17,962 17,460 Effective tax rate 30.2% 27.1% 30.0% 34.1% Income from continuing operations 38,956 2,889 41,845 33,697 Income from discontinued operations, net of tax - - - - Loss on disposal of discontinued operations, net of tax - - - (6,047) Net income $38,956 $2,889 $ 41,845 $27,650 Earnings per common share Basic Continuing operations $0.39 $0.03 $0.42 $0.34 Discontinued operations - - - (0.07) Basic earnings per common share $0.39 $0.03 $0.42 $0.27 Diluted Continuing operations $0.38 $0.03 $0.41 $0.33 Discontinued operations - - - (0.07) Diluted earnings per common share $0.38 $0.03 $0.41 $0.26 Weighted average common shares outstanding Basic 100,605 - 100,605 100,014 Diluted 102,314 52 102,366 102,541 Cash dividends declared per common share $0.13 $ - $ 0.13 $ 0.11 Pentair, Inc. and Subsidiaries

Reconciliation of the GAAP "As Reported" year ended December 31, 2005 to the

"Adjusted" non-GAAP excluding the effect of SFAS 123R adoption (Unaudited) Year ended As Reported Adjusted As Reported December 31 SFAS 123R December 31 December 31 In thousands, 2005 2005 2004 except per-share data Net sales $2,946,579 $ - $2,946,579 $2,278,129 Cost of goods sold 2,098,558 - 2,098,558 1,623,419 Gross profit 848,021 - 848,021 654,710 % of net sales 28.8% 28.8% 28.7% Selling, general and administrative 478,907 (16,388) 462,519 376,015 % of net sales 16.2% 15.7% 16.5% Research and development 46,042 - 46,042 31,453 % of net sales 1.6% 1.6% 1.4% Operating income 323,072 16,388 339,460 247,242 % of net sales 11.0% 11.5% 10.9% Gain on sale of investment 5,435 - 5,435 - Net interest expense 44,989 - 44,989 37,210 % of net sales 1.5% 1.5% 1.6% Income from continuing operations before income taxes 283,518 16,387 299,906 210,032 % of net sales 9.6% 10.2% 9.2% Provision for income taxes 98,469 4,389 102,949 73,008 Effective tax rate 34.7% 26.8% 34.3% 34.8% Income from continuing operations 185,049 11,999 196,957 137,024 Income from discontinued operations, net of tax - - - 40,248 Loss on disposal of discontinued operations, net of tax - - - (6,047) Net income $185,049 $ 11,999 $196,957 $171,225 Earnings per common share Basic Continuing operations $1.84 $0.12 $1.96 $1.38 Discontinued operations - - - 0.34 Basic earnings per common share $1.84 $0.12 $1.96 $1.72 Diluted Continuing operations $1.80 $0.12 $1.92 $1.35 Discontinued operations - - - 0.33 Diluted earnings per common share $1.80 $0.12 $1.92 $1.68 Weighted average common shares outstanding Basic 100,665 - 100,665 99,316 Diluted 102,618 144 102,762 101,706 Cash dividends declared per common share $0.52 $ - $0.52 $0.43

First Call Analyst: FCMN Contact: mark.cain@pentair.com