Environmental Savings* The front portion of this report was printed on paper made from 100% post-consumer recycled fiber. The 10K was printed on 10% post-consumer recycled paper, because we believe in being part of the solution. Using post-consumer recycled paper saves: 26,789 LBS OF WOOD, or the total of 86 TREES that supplies enough OXYGEN FOR 43 PEOPLE annually 39,119 GALLONS OF WATER, or enough water to take 2,274 EIGHT-MINUTE SHOWERS 27 MLN BTUS ENERGY, or enough energy to power an average American household for 109 DAYS 8,122 LBS EMISSIONS, or carbon sequestered by 94 tree seedlings grown over 10 YEARS 2,375 LBS OF SOLID WASTE, or trash thrown away by 516 PEOPLE in a single day Producing the front portion with 100% renewable energy saves: 10,212 LBS CO 2, SO 2, AND NOX, or 666 HOURS OF TOTAL CONTINUOUS ELECTRICITY USED by a single-family home 3,108 LBS OF WASTE RECYCLED instead of landfilled *Sources: Environmental impact estimates for savings pertaining to the use of post consumer recycled fiber share the same common reference data as the Environmental Defense Fund paper calculator v2.0, which is based on research done by the Paper Task Force, a peer-reviewed study of the lifecycle environmental impacts of paper production and disposal. Environmental impact estimates for savings pertaining to the use of papers made with renewable energy are based on the U.S. EPA Power Profiler. SERVING CRITICAL NEEDS CUSTOMER FIRST STRATEGY EXPANDING GLOBALLY IMPROVING EVERY DAY OUR SUSTAINABLE FUTURE 10K pe012011ar ANNUAL REPORT 2010 5500 Wayzata Blvd, Suite 800 Minneapolis, MN 55416–1261 763.545.1730 www.pentair.com Our Vision Investor Information TO BE A DIVERSIFIED INDUSTRIAL GROWTH COMPANY, GLOBAL ENTERPRISE AND RESPONSIBLE CITIzEN kNOWN FOR OPERATIONAL EXCELLENCE, INNOVATION, TOP TALENT AND GROWING BY SERVING CUSTOMERS WELL TO DELIVER SUPERIOR LONG-TERM SHAREHOLDER VALUE. 2010 Sales BY GEOG RAP HY US | 66% EMEA | 18% APAC ROW* | | 8% 8% *Rest of World Pentair Water 2010 Sales BY DIVISION technical products residential flow pool engineered flow residential filtration filtration solutions | | | | | | 33% 21% 15% 12% 11% 8% Pentair Technical Products Stock Exchange Listing At $2 billion in sales, a global leader in providing innovative solutions used worldwide in the movement, storage, treatment and enjoyment of water. With a broad offering of water pumps, filters, systems and solutions, Pentair helps to efficiently provide clean, safe water in every aspect of the water cycle and serves a diverse group of end-markets, including residential, industrial, commercial, municipal and agriculture. A global leader in the enclosures and thermal management systems designed to house and protect sensitive electronics and electrical components with $1 billion in sales. With a broad product portfolio and global scale, Pentair provides solutions to customers—how, where and when they need it—and serves a diverse group of end-markets, including industrial, communications and energy. 2010 Sales BY MARKET FOR WATER 2010 Sales BY REGION WITHIN WATER residential | 56% industrial | 14% commercial | 13% municipal | 12% agricultural | 5% US | 66% EMEA | 17% APAC | ROW | 9% 8% 2010 Sales BY MAR KET FOR T EC H PR ODUC TS 2010 Sales BY R EGION WIT HIN T EC H PR ODUC TS industrial | 34% communications | 24% energy | 10% general electronics | 10% commercial | infrastructure | security & defense | medical | 7% 6% 6% 3% US | 67% EMEA | 18% ROW | APAC | 9% 6% Annual Meeting The Annual Meeting of Pentair shareholders will take Independent Registered Public Accounting Firm place on Thursday, April 28, 2011 at 10:00 a.m. Central Deloitte & Touche LLP, Minneapolis, Minnesota in the auditorium of Thrivent Financial (625 Fourth Avenue South, Minneapolis, Minnesota). Caution Concerning Forward-Looking Statements Investor Information Any statements made about the Company’s anticipated Shareholders seeking more information about the financial results are forward-looking statements Company can access news releases describing significant subject to risks and uncertainties such as the magnitude, Company events and earnings results for each quarter timing and scope of recovery from the global economic and the fiscal year as well as Form 10-K and other downturn; the strength of housing and related markets; Securities and Exchange filings at www.pentair.com. the risk that expected benefits from our recent Information may also be obtained by request from the restructuring and other cost reduction plans may not Pentair Investor Relations Department, 5500 Wayzata be fully realized, or may take longer to realize than Boulevard, Suite 800, Minneapolis, Minnesota 55416. expected; foreign currency effects; material inflation outpacing our productivity and pricing actions; retail, commercial and industrial demand; product and the company’s ability to achieve its long-term strategic operating goals, as well as other risk factors New York Stock Exchange (symbol: PNR) introductions; pricing and other competitive pressures; Dividends Dividends are currently paid $0.20 per share quarterly, set forth in our SEC filings. Forward-looking statements in February, May, August and November. Pentair has included herein are made as of the date hereof, paid 140 consecutive quarterly dividends. and the company undertakes no obligation to update Dividend Reinvestment Pentair offers a Dividend Reinvestment Plan which materially from anticipated results. publicly such statements to reflect subsequent events or circumstances. Actual results could differ enables shareholders of record the opportunity to automatically reinvest Pentair dividends and to invest up to an additional $3,000 per calendar quarter in Pentair common stock, with any costs of purchasing the shares paid by the Company. Plan and enrollment information are available from the Company or Wells Fargo Bank, N.A. Registrar, Stock Transfer and Paying Agent Wells Fargo Bank, N.A., P.O. Box 64854 St. Paul, Minnesota 55164-0854 Tel. 877-536-3554 Website: www.wellsfargo.com/com/shareowner_services Letter to Our Shareholders: 2010 was a tremendous year for Pentair. Clear focus and execution on our growth initiatives drove robust top-line growth, and our lower cost structure, along with Lean Enterprise disciplines, enabled meaningful margin expansion. We continued to invest in innovation, fast growth markets and capabilities to build our sustainable future. P e n t a i r A n n u a l R e p o r t 2 0 1 0 | 1 Sales exceeded $3 billion in 2010, up 13 percent on an organic basis as all businesses and geographies contributed. The investments we maintained through the global recession in new product development and fast growth regions, along with a strengthening global economy and a return in business spending, helped fuel top-line growth. Pentair Water sales grew 10 percent for the year, even though U.S. residential markets have yet to show a meaningful recovery. In Pentair Technical Products, sales increased 17 percent in 2010, reflecting broad-based strength across all the markets we serve. Randall J. Hogan, Chairman & CEO In 2009, we made tough but necessary decisions to reduce our cost structure while we remained committed to key growth investments to ensure we emerged stronger. We believe our performance in 2010 demonstrates this strength. Our relentless focus on operational excellence using Lean Enterprise disciplines, along with a lower cost structure, drove total operating profits up over 30 percent. We achieved diluted earnings per share from continuing operations (EPS) of $2.00, up 71 percent when compared to 2009 EPS of $1.17. Adjusting 2009 to exclude restructuring and impairment items and the impact from the early redemption of bonds, 2010 EPS increased 36 percent. Pentair has a long history of generating strong cash flow—consistently converting greater than 100 percent of net income to free cash flow. We generated $211 million in free cash flow and effectively managed capital spending to $60 million, or approximately 2 percent of sales. This strong cash flow performance enables us to return cash to shareholders, as evidenced by our 35th consecutive year of dividend increases, resulting in an annual dividend of $0.80 in 2011. With our balance sheet flexibility we can pursue acquisitions to augment our organic growth strategy while maintaining our capital-to-shareholder-first approach. More Global Today, we are a stronger, more global company— expanding our presence in key growth markets. In 2010, we doubled our water manufacturing capacity in Suzhou, China; added localized innovation capabilities and design teams; and expanded distribution, including rolling out our residential filtration systems in over 100 retail stores in China. While sales were up 26 percent in China, we believe we are just beginning to see the benefits of these actions. We are also investing to expand our capabilities in Latin America, where sales grew 18 percent, and India, where sales nearly doubled. Fast growth regions remain a key priority for us, and I am confident we will continue to see strong sales in each of these regions. In Water, we are focused on serving the growing need for access to clean, safe water supply across the globe with the utmost attention to water conservation and efficiency. We supplied a hospital in Yemen, for example, with containerized water treatment systems that now provide the water it needs each day, marking our first-ever sale of this new containerized solution. We also expanded in Brazil with the recent acquisition of Hidro Filtros, which strengthens our share of the residential filtration market and provides a platform for future growth through an expanded product portfolio and an established sales and distribution network. In Technical Products, we are leveraging our global manufacturing capabilities and strong brands to build our position in key growth markets and strengthen our global customer relationships. We have doubled our number of distributors in China, for example, helping to grow China sales in Technical Products over 45 percent in 2010. We also added key distributors in the Middle East, Turkey and Russia. Today, our combined sales in fast growth regions are over $425 million and in position to grow strong double digits in 2011. Rapid Growth 2010 was a breakthrough year in new product innovation. Most of our businesses doubled new product launches from 2009. We introduced a wall-mounted point-of-use filtration With a stronger and differentiated product portfolio, we continue to expand our reach and post strong sales gains. 2 | 0 1 0 2 t r o p e R l a u n n A r i a t n e P system for India; expanded our agriculture portfolio to include a high efficiency irrigation pump; and launched a new cooling management system integrated with our industry-leading cabinets used in data centers—to name a few. We also rolled out over 15 new filtration system designs, building the foundation for our global systems business. SALES EXCEEDED $3 BILLION IN 2010, UP 13% ON AN ORGANIC BASIS AS ALL BUSINESSES AND GEOGRAPHIES CONTRIBUTED. Core Belief Around the world, our employees are driving a sustainable culture. It begins with the belief in ‘improving every day’ through the application of our Pentair Integrated We have established stronger innovation capabilities, driven by the voice of the customer, to build further momentum. We’ve made a firm commitment to develop and offer environmentally responsible products. This commitment is part of our value system and it is what our customers want. We introduced a new rainwater reuse pump in Australia with an innovative remote monitoring device called H2O Informer that tracks the quantity of rainwater captured and percentage of water savings. Our Eco Select pool products — the “greenest” and most efficient in the marketplace — are another great example. We continued to innovate in channel and distribution. In Technical Products, for example, we are leveraging our brand strength in enclosures to expand in high growth vertical markets including global data communications, railway infrastructure and parking stations for electric vehicles. In 2010, we also completed delivery of some of the largest pumps in the world as we supplied the Gulf Intracoastal Water Way (GIWW) project in New Orleans, adding $56 million in sales. This demonstrates the type of massive infrastructure project that Pentair can support. Management System (PIMS). PIMS drives performance improvement and accelerates growth through systematic processes, including Lean Enterprise. We continue to advance our already strong workplace safety levels and we remain committed to improving our customer service experiences around product quality and on-time delivery. With improvements in these areas as well as product cost and cash flow management—the hallmarks of Lean Enterprise—we will continue to serve our global customers better every day. In 2010, we expanded these tools to include a new growth capability — the Rapid Growth Process. By developing a standard methodology to fuel product and market innovation, we are better positioned to rapidly test and implement growth programs. We are excited about the Rapid Growth Process and how it can provide a differentiated capability for Pentair. Whether it’s Lean Enterprise or our Rapid Growth Process, everything we do begins with our “Win Right” culture. These two words embody both our drive for success and dedication to doing business with the highest ethical standards. We are committed to building success by following practices of candor, integrity, trust and respect embraced by every employee. Net Sales ($ IN BI LLIO N S) Diluted EPS from Continuing Operations ($) Free Cash Flow ($ IN MILLIONS) Annual Dividend ($ PER SHARE) 3.4 2.7 3.0 2.59 1.17 2.00 164 207 211 0.68 0.72 0.76 ’08 ’09 ’10 ’08 ’09 ’10 ’08 ’09 ’10 ’08 ’09 ’10 Our Sustainable Future The tremendous progress we’ve made in 2010 positions us for another strong year. And while it’s great to be back above $3 billion in sales and $2.00 of EPS, we are constructively dissatisfied. We rebounded nicely and our new cost structure and profitability provide confidence that new earnings records will be in our near future but we are not yet back to 2008 sales and EPS levels. We are rapidly moving forward in 2011—finding ways to improve in everything we do. We know there will be challenges. Material inflation is already proving to be a global issue, which is why we are driving pricing actions and accelerating productivity initiatives to ensure we maintain our growth and earnings momentum. We believe, by focusing on what we can control and driving our Lean Enterprise and Rapid Growth Processes, we can move with speed to create an even stronger sustainable company. The organization is aligned with clear priorities and a focus on delivering sustainable, profitable growth today and in the future through: · Leveraging the investments in fast growth regions that we’ve seeded over the past several years, adding scale and accelerating growth. · Driving another robust new product launch calendar to build on the significant momentum from 2010 and aligning with the growing, global needs of our customers. · Expanding our systems capabilities and product offerings to accelerate growth through the broad reach that our global distributor channels provide. P e n t a i r A n n u a l R e p o r t 2 0 1 0 | 3 MAKING AN IMPACT Every year we help thousands of people and organizations around the world with our commitment to charitable giving led by The Pentair Foundation. The Foundation is funded through our commitment to dedicate two percent of our annual pre-tax income to charitable efforts. The Foundation acted quickly after the devastating earthquake in Haiti in 2010. With the critical need for clean, safe drinking water, the Foundation donated tanks, pressure pumps, pre-filters and submersible pumps for the production of solar-powered water purification systems , removing harmful elements from the water and providing 5,000 gallons of purified drinking water per day with each system. Additionally, the Foundation donated portable water · Serving the significant installed base in the U.S. treatment systems and related operating supplies to residential market, with roughly 100 million houses and over 8 million pools in the U.S. We have a terrific foundation for growth. As a leader in both Water and Technical Products, our businesses are well positioned to serve the critical needs of our customers across the globe. Our sustainable future is bright. Thank you for your support and I look forward to reporting on our continued progress. Randall J. Hogan Chairman and Chief Executive Officer Haiti through its charitable partner, Water Missions International. These Living WaterTM Treatment Systems (LWTS) provide clean, safe drinking water to approximately 100,000 people daily. In 2010, the over 14,000 employees of Pentair were inspired to help make a direct impact in their communities through the Global Impact Fund. This fund is designed to encourage employees worldwide to act as “employee sponsors” of charitable efforts that address either sustainability issues related to water, workforce development or education programs. Providing sustainable solutions to meet the world’s growing need for clean, safe water and a better environment is a high priority for Pentair and the Foundation. 4 Globalization | 0 1 0 2 t r o p e R l a u n n A r i a t n e P As the world population and developing economies grow, so does demand for a clean, safe and sustainable water supply. The accelerated pace of change also requires new technology and greater productivity—all driving demand for our protective enclosures and thermal management solutions for electronics and electrical systems. Our sales in fast growth regions grew double digits to greater than $425 million in 2010, but still only represent 14 percent of our sales mix. The growth opportunity is significant. In China, for example, 35 percent of the water supply is polluted and not suitable for drinking due mainly to excessive industrial and residential pollution. Pentair Water’s suite of solutions — including filtration systems, pumps and valves—help provide energy efficient solutions for a clean, safe water supply. The global growth opportunity is tremendous for Pentair’s Technical Products as well, particularly within the energy and infrastructure end-markets we serve. In Asia, for example, infrastructure railway investment is significant — resulting in strong demand for our protective undercarriage and control enclosures. As customers expand globally, we are one of the few companies that can support their broad needs anywhere in the world with production in Mexico, Eastern Europe, China, India and Brazil. Pentair is poised to capture these global growth opportunities. Over the past several years we have invested over $40 million in fast growth markets by building cost-effective local operations with local engineering and local products to provide solutions that best fit each country’s needs. To capture the substantial growth opportunity in these markets, we are expanding our market coverage by adding distributors and retail outlets. In Country, For Country. Our new state-of-the-art research and product development lab in Suzhou, China provides the resources and capabilities to innovate for the local needs and better serve our customers. In addition to new NSF (National Sanitation Foundation) water testing capabilities, we are expanding into carbon filtration and membrane technologies. This investment provides the local resources, testing and in-house technology to differentiate ourselves in the marketplace. With a similar research and development center in Goa, India, we have doubled the number of new products launched specifically for China and India compared to 2009. Providing Chinese Households a Clean Water Solution. We are building the Pentair Water brand in countries around the world with a focus on growing our presence in fast growth regions. We have rolled out Pentair Water product displays in over 100 Gome stores in China and expect to expand to an additional 200 stores in 2011—with the goal of reaching the 300 million people in these markets with clean, safe drinking water solutions. P e n t a i r A n n u a l R e p o r t 2 0 1 0 | 5 CHINA SALES GREW IN 2010, AS WE ADDED DISTRIBUTORS, INCREASED PRESENCE IN THE RETAIL CHANNEL AND DEVELOPED PRODUCTS SPECIFICALLY TAILORED TO SERVE THE LOCAL NEEDS. Global Solutions. In order to provide standardized, scalable components benefitting global customers, Pentair’s Technical Products business gathered customer research and feedback from seven countries and four continents. The data was incorporated into the development of one of the most robust cooling solutions offered in the marketplace, SPECTRACOOL,™ with the ability to address a wide range of temperatures for indoor and outdoor environments. Notably, this cooling solution can yield up to 20 percent greater energy efficiency and uses earth-friendly refrigerants—all while standardizing the design and features to drive profitable growth. OF P ENTAIR SALES ARE IN F AST G ROWTH REGIONS, UP FROM ONLY IN 2005, AS WE ALLOCATE RESOURCES AND BUILD CAPABILITIES IN ATTRACTIVE GROWTH MARKETS SUCH AS C HINA, LATIN A MERICA AND I NDIA. 6 Accelerating Growth through Innovation | 0 1 0 2 t r o p e R l a u n n A r i a t n e P Today, over 40 percent of our engineers are in India and China, globalizing our resources to support the growth and demand for our innovative and energy efficient solutions. We are building a new innovation lab in India that includes development capabilities for NSF water testing, rapid prototyping, electronics and controls, as well as pump and system design. In China, we opened new customer application test centers in Shanghai for our food service and energy businesses. We also strengthened our local product development capabilities with a new design laboratory with NSF water testing capabilities located in our Suzhou manufacturing center. 2010 was a breakthrough year in new product innovation with a drive towards ‘greener’ products, smarter solutions and greater efficiency. We are making a deliberate shift from components to solutions, systems and controls — providing more value to our customers around the world. To sustain this momentum, we have established stronger new product development capabilities beginning with a process we call 3D — Discover, Develop and Deploy. This process is driven by the voice of the customer and ensures that we are investing and filling the growth funnel with the best opportunities. Rain DRain Clean GReen Sustainable Solutions pentair.com Water Reuse Hits a Homerun In 2010, Pentair designed, developed and installed a Rain Water Recycle System (RWRS) at Target Field, home of Major League Baseball’s Minnesota Twins. The system is designed to capture, recycle and reuse rain water for irrigating the ball field and washing down the lower stadium decks, saving more than two million gallons of water annually. The system also helped Target Field achieve a LEED (Leadership in Energy and Environmental Design) Silver Certification, making it the second major league ballpark in the U.S. to attain that status. With water scarcity being a leading global environmental issue, Pentair has taken a significant role in addressing the issue, specifically in the professional sports arena. A Cup of Tea Bolstered by its experience serving the coffeehouse industry, Pentair’s Everpure filtration brand has tapped into a similar niche market—tearooms. In order to keep the taste consistent with each cup of tea, Everpure-filtered water is even more critical than in coffeehouses because flaws or inconsistencies in water quality are more noticeable in tea. While tearooms are largely a niche market in the U.S., with roughly 2,400 locations, mainstream retailers are moving fast to serve a growing consumer tea audience. Globally, tearooms represent a large opportunity, which Pentair’s Everpure is keen to address. P e n t a i r A n n u a l R e p o r t 2 0 1 0 | 7 “Green” Parking Stations Pentair is among a leading consortium of companies developing a solution that helps ensure the mobility of tomorrow by making fundamental changes today. The project is EnergieParken, a new modular product platform designed to enhance environmentally-friendly mobility. It allows vehicles with electric drives to be recharged during parking, serving as both a charging station and parking meter in one central system while showing a serious commitment to “green” mobility. Pentair’s Technical Products business is responsible for the meter housing, or cabinet, and leading the integration of the system. EnergieParken will be initially rolled out in Germany and then throughout Europe, with opportunities for global expansion. INCREASE IN RESEARCH AND NEW PRODUCT DEVELOPMENT SPENDING COMPARED TO 2005, DRIVING DIFFERENTIATION IN T HE MAR KETPLACE THROUGH INNOVATIVE AN D ENER GY EFFICIENT SOLUTIONS FOR OUR C USTO MERS AROUND THE WORLD. Our “Greenest” Our Eco Select brand identifies our “greenest” and most efficient pool equipment choices. These products save energy, conserve water, reduce noise and contribute to more environmentally responsible equipment solutions—and are helped by over 25 utility rebate programs in the U.S. The IntelliFlo pump, for example, features an exclusive blend of technology innovations that enables you to slash pump-related utility costs, using exclusive, advanced motor technology with onboard intelligence and variable speed capability. The result of these combined innovations is a pump that often uses just a fraction of the horsepower of standard pumps, reducing energy use dramatically. This tremendous improvement in efficiency translates directly into impressive savings. Check out your potential savings at www.pentairpool.com. 8 Strengthening Capabilities | 0 1 0 2 t r o p e R l a u n n A r i a t n e P The Pentair Integrated Management System (PIMS) is not something we do—it’s the vehicle by which all things are done to deliver value to our customers every day. PIMS drives performance improvement and accelerates growth through systematic processes and capabilities. Core to Pentair’s principles and PIMS is Lean Enterprise — where we eliminate waste from all processes to drive continuous improvement, greater efficiency and greater value for our customers. Our customer-first strategy is vital to every aspect of our business. While we still have opportunity to expand and deepen Lean Enterprise across our global organization, we can leverage these capabilities to help fuel growth. Our new Rapid Growth Process helps us innovate, test, and implement winning initiatives to fuel more meaningful value creation and differentiated growth. We have made excellent progress in our operational initiatives, beginning with the 13 percent net reduction in square footage through 2009 and early 2010, with still ample capacity to grow. In fact, we have added capability where we see high growth in markets like China, India and Brazil. Today, our production in China is nearly five times more than 2005 levels. Also, we continue to implement sustainable practices in operations that are good for the environment, and also good for business. We are expanding PIMS every day, building and driving these systematic capabilities as we move forward. Lean in Action Our Lean Enterprise capabilities are global, as shown here in our Suzhou, China water manufacturing facility. As we expand our manufacturing footprint to serve the growing demand in fast growth markets, we are applying the Pentair Integrated Management System and Lean Enterprise capabilities we have established in our more developed markets. This creates more value for our customers and an advantage compared to our competitors. By every measure, we improved in 2010. We strengthened our already world class safety records by 3 percent and reduced warranty costs as a percentage of sales across Pentair. We made meaningful progress in boosting on-time and accurate customer deliveries and expanded gross margins greater than 100 basis points in 2010. Additionally, we reduced our inventory days on hand by 9 percent, using a 13 month rolling average. P e n t a i r A n n u a l R e p o r t 2 0 1 0 | 9 A Sustainable Future Sustainability is at the cornerstone of Pentair’s strategic vision, which is why we have been conscious of producing environmentally friendly products and importantly, seeking opportunities to limit our impact on the environment at our facilities. Pentair has active programs and a track record of improving sustainability through the reduction of water, energy, waste and emissions. Programs that have been recently implemented include: creating bottled water free facilities across the company; becoming a “Zero Landfill” generating site at our largest plant in Anoka, Minnesota; producing virtually all of our energy consumed through a solar panel roof in our Pisa, Italy plant pictured above (by mid 2011); and installing wind energy generation equipment at our largest water plant, located in Reynosa, Mexico. Pentair’s goal is to have 50 percent of manufacturing capacity “landfill free” by the end of 2014. OUR PENTAIR INTEGRATED MANAGEMENT SYSTEM HELPED DRIVE OPERATING MARGIN EXPANSION THROUGH STRENGTHENED CUSTOMER SATISFACTION, GREATER OPERATIONAL EFFICIENCIES AND MEANINGFUL COST REDUCTIONS. Rapid Growth We believe that there is an abundance of global growth opportunities for Pentair, which makes prioritization key. We are putting in place a growth system—tools, processes and a way of thinking differently—that helps to ensure we flow resources to the best ideas. With the same rigor, passion and discipline as Lean Enterprise, we are working to institutionalize growth processes to deliver sustainable, profitable growth with the compounding effect of which we know we are capable. In 2010, the pan-business and cross-functional Growth Council was formed and over 300 of our global leaders have been trained in our new growth system. Pentair Leadership Team 0 1 | 0 1 0 2 t r o p e R l a u n n A r i a t n e P Board Members Ronald L. Merriman Chair of the Audit Committee; Retired Vice Chair of KPMG; Director since 2004 William T. Monahan Lead Director; Retired Chairman and CEO of Imation Corporation; Director since 2001 Jerry W. Burris President of Precision Components of Barnes Group, Inc.; Director since 2007 Leslie Abi-Karam Executive Vice President and President of Mailing Solutions Management of Pitney Bowes, Inc.; Director since 2008 David A. Jones Chair of the International and Compensation Committees; Senior Advisor to Oak Hill Capital Partners; Director since 2003 Charles A. Haggerty Chief Executive Officer of LeConte Associates, LLC; Director since 1994 Randall J. Hogan Board Chairman and Chief Executive Officer; Director since 1999 T. Michael Glenn Executive Vice President of Market Development and Corporate Communications of FedEx Corporation; Director since 2007 David H. Y. Ho Chairman, Kiina Investment; Director since 2007 Glynis A. Bryan Chair of the Governance Committee; Chief Financial Officer of Insight Enterprises, Inc.; Director since 2003 Management Randall J. Hogan Chairman and Chief Executive Officer Michael V. Schrock President and Chief Operating Officer John L. Stauch Executive Vice President and Chief Financial Officer Frederick S. Koury Senior Vice President, Human Resources Angela D. Lageson Senior Vice President, General Counsel and Secretary Mark C. Borin Corporate Controller and Chief Accounting Officer Michael G. Meyer Vice President, Treasury and Tax Karl R. Frykman President, Pool Equipment Netha N. Johnson, Jr. President, Filtration Solutions Alok Maskara President, Residential Filtration Philip Pejovich President, Technical Products David B. Roland President, Engineered Flow Technologies Gary S. Witt President, Residential Flow Technologies Our Vision Investor Information TO BE A DIVERSIFIED INDUSTRIAL GROWTH COMPANY, GLOBAL ENTERPRISE AND RESPONSIBLE CITIzEN kNOWN FOR OPERATIONAL EXCELLENCE, INNOVATION, TOP TALENT AND GROWING BY SERVING CUSTOMERS WELL TO DELIVER SUPERIOR LONG-TERM SHAREHOLDER VALUE. 2010 Sales BY GEOGRAPHY US | 66% EMEA | 18% APAC ROW* | | 8% 8% *Rest of World Pentair Water 2010 Sales B Y DIVISIO N technical products 33% residential flow pool engineered flow residential filtration filtration solutions | | | | | | 21% 15% 12% 11% 8% Pentair Technical Products At $2 billion in sales, a global leader in providing A global leader in the enclosures and thermal innovative solutions used worldwide in the movement, management systems designed to house and protect storage, treatment and enjoyment of water. With a sensitive electronics and electrical components broad offering of water pumps, filters, systems and with $1 billion in sales. With a broad product portfolio solutions, Pentair helps to efficiently provide clean, safe and global scale, Pentair provides solutions to water in every aspect of the water cycle and serves a customers—how, where and when they need it—and diverse group of end-markets, including residential, serves a diverse group of end-markets, including industrial, commercial, municipal and agriculture. industrial, communications and energy. 2010 Sales BY MARK ET FOR WAT ER 2010 Sales BY MA RKE T F OR T EC H P RO DUC TS residential | 56% industrial | 14% commercial | 13% municipal | 12% agricultural | 5% US | 66% EMEA | 17% APAC | ROW | 9% 8% industrial | 34% communications | 24% energy | 10% general electronics | 10% commercial | infrastructure | security & defense | medical | 7% 6% 6% 3% US | 67% EMEA | 18% ROW | APAC | 9% 6% 2010 Sales BY REGION WITHIN WAT ER 2010 Sales BY RE GIO N WIT HIN T EC H P RO DUC TS Independent Registered Public Accounting Firm Deloitte & Touche LLP, Minneapolis, Minnesota 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 the magnitude, timing and scope of recovery from the global economic downturn; the strength of housing and related markets; the risk that expected benefits from our recent restructuring and other cost reduction plans may not be fully realized, or may take longer to realize than expected; foreign currency effects; material inflation outpacing our productivity and pricing actions; retail, commercial and industrial demand; product introductions; pricing and other competitive pressures; and the company’s ability to achieve its long-term strategic operating goals, 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. Annual Meeting The Annual Meeting of Pentair shareholders will take place on Thursday, April 28, 2011 at 10:00 a.m. Central in the auditorium of Thrivent Financial (625 Fourth Avenue South, Minneapolis, Minnesota). Investor Information Shareholders seeking more information about the Company can access news releases describing significant Company events and earnings results for each quarter and the fiscal year as well as Form 10-K and other Securities and Exchange filings at www.pentair.com. Information may also be obtained by request from the Pentair Investor Relations Department, 5500 Wayzata Boulevard, Suite 800, Minneapolis, Minnesota 55416. Stock Exchange Listing New York Stock Exchange (symbol: PNR) Dividends Dividends are currently paid $0.20 per share quarterly, in February, May, August and November. Pentair has paid 140 consecutive quarterly dividends. Dividend Reinvestment Pentair offers a Dividend Reinvestment Plan which enables shareholders of record the opportunity to automatically reinvest Pentair dividends and to invest up to an additional $3,000 per calendar quarter in Pentair common stock, with any costs of purchasing the shares paid by the Company. Plan and enrollment information are available from the Company or Wells Fargo Bank, N.A. Registrar, Stock Transfer and Paying Agent Wells Fargo Bank, N.A., P.O. Box 64854 St. Paul, Minnesota 55164-0854 Tel. 877-536-3554 Website: www.wellsfargo.com/com/shareowner_services Environmental Savings* The front portion of this report was printed on paper made from 100% post-consumer recycled fiber. The 10K was printed on 10% post-consumer recycled paper, because we believe in being part of the solution. Using post-consumer recycled paper saves: 26,789 LBS OF WOOD, or the total of 86 TREES that supplies enough OXYGEN FOR 43 PEOPLE annually 39,119 GALLONS OF WATER, or enough water to take 2,274 EIGHT-MINUTE SHOWERS 27 MLN BTUS ENERGY, or enough energy to power an average American household for 109 DAYS 8,122 LBS EMISSIONS, or carbon sequestered by 94 tree seedlings grown over 10 YEARS 2,375 LBS OF SOLID WASTE, or trash thrown away by 516 PEOPLE in a single day Producing the front portion with 100% renewable energy saves: 10,212 LBS CO 2, SO 2, AND NOX, or 666 HOURS OF TOTAL CONTINUOUS ELECTRICITY USED by a single-family home 3,108 LBS OF WASTE RECYCLED instead of landfilled *Sources: Environmental impact estimates for savings pertaining to the use of post consumer recycled fiber share the same common reference data as the Environmental Defense Fund paper calculator v2.0, which is based on research done by the Paper Task Force, a peer-reviewed study of the lifecycle environmental impacts of paper production and disposal. Environmental impact estimates for savings pertaining to the use of papers made with renewable energy are based on the U.S. EPA Power Profiler. SERVING CRITICAL NEEDS CUSTOMER FIRST STRATEGY EXPANDING GLOBALLY IMPROVING EVERY DAY OUR SUSTAINABLE FUTURE 10K pe012011ar 5500 Wayzata Blvd, Suite 800 Minneapolis, MN 55416–1261 763.545.1730 www.pentair.com ANNUAL REPORT 2010