Pentair (PNR) 10-K risk factor changes: FY2015 vs FY2014

While we attempt to minimize our exposure to economic or market fluctuations by serving a balanced mix of end markets and geographic regions, any of the above factors, individually or in the aggregate, or a significant or sustained downturn in a specific end market or geographic region could [removed: materially and adversely affect] [added: reduce demand for] our [removed: business, financial condition, results of operations] [added: products] and [removed: cash flows.][added: services.]

[added: If we are unable to continue to differentiate our products, services and] solutions, or if we are forced to cut prices or to incur additional costs to remain competitive, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Our business strategy includes acquiring [removed: companies] [added: businesses] and making investments that complement our existing businesses.

[removed: These] [added: We may not be able to identify, finance and complete suitable] acquisitions and [added: investments, and any completed acquisitions and] investments could be unsuccessful or consume significant resources, which could adversely affect our operating results.

We continue to analyze and evaluate the acquisition of strategic businesses or product lines with the potential to strengthen our industry position or enhance our existing set of product and [removed: services] [added: service] offerings.

[removed: There can be no] [added: We cannot provide any] assurance that we will [added: be able to] identify [added: suitable acquisition candidates, obtain financing] or [added: have sufficient cash necessary for acquisitions or] successfully complete [removed: transactions with suitable acquisition candidates] [added: acquisitions] in the future or that completed acquisitions will be successful.

Acquisitions and investments may involve significant cash expenditures, debt [removed: incurrence,] [added: incurrences, equity issuances,] operating losses and expenses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

| • | inability to obtain required regulatory [removed: approvals and/or required financing on favorable terms;] [added: approvals;] |

Sales outside of the U.S. for the year ended December 31, [removed: 2014] [added: 2015] accounted for [removed: 50] [added: 52] percent of our net sales.

We test goodwill and indefinite-lived intangible assets for impairment on [added: at least] an annual basis, [added: and more frequently if circumstances warrant,] by comparing the estimated fair value of each of our reporting units to their respective carrying values on their balance sheets.

As of December 31, [removed: 2014] [added: 2015] our goodwill and intangible assets were [removed: $6,350.0] [added: $7,745.5] million and represented [removed: 60%] [added: 65%] of our total assets.

As of December 31, [removed: 2014,] [added: 2015,] approximately [removed: 10,000] [added: 10,200] of our employees were covered by collective bargaining agreements or works councils.

We experience seasonal demand in a number of markets within [removed: Process Technologies,] Flow [removed: Technologies] [added: & Filtration Solutions, Water Quality Systems] and Technical Solutions.

In [removed: Process Technologies,] [added: Water Quality Systems,] end-user demand for pool equipment in our primary markets follows warm weather trends and is at seasonal highs from April to August.

In Flow [removed: Technologies,] [added: & Filtration Solutions,] demand for residential water supply products, infrastructure and agricultural products follows warm weather trends and is at seasonal highs from April to August.

The magnitude of the sales increase in both [removed: Process Technologies and] Flow [removed: Technologies] [added: & Filtration Solutions and Water Quality Systems] is partially mitigated by employing some advance sale or [removed: “early buy”] [added: "early buy"] programs (generally including extended payment terms and/or additional discounts).

Technical Solutions generally experiences increased demand for thermal protection products and services during the fall and winter months in the Northern [added: Hemisphere and increased demand for electrical fastening products during the spring and summer months in the Northern] Hemisphere.

As of December 31, [removed: 2014,] [added: 2015,] there were approximately [removed: 3,400] [added: 4,100] claims pending against our subsidiaries.

[removed: We believe it is possible that the] cost of asbestos claims filed beyond our estimation period, net of expected recoveries, could have a material adverse effect on our financial condition, results of operations and cash flows.

As a result of discussions with the DOJ and SEC aimed at resolving these matters, on September 24, 2012, Tyco entered into a settlement with the SEC and a non-prosecution agreement with the [removed: DOJ, pursuant to which the Flow Control business is for a three year period subject to yearly reporting to the DOJ concerning its continuing compliance efforts.][added: DOJ.]

[added: Any improper actions could subject us to civil or criminal] penalties, including material monetary fines, or other adverse actions including denial of import or export privileges, and could damage our reputation and business prospects.

[removed: We have disposed of a number of businesses in recent years and in certain] cases, we have retained responsibility and potential liability for certain environmental obligations.

The issuer must then prepare and file with the SEC [added: annually] a report regarding its diligence efforts, which we [removed: did on June 2, 2014.][added: have done since the SEC's reporting requirements became effective.]

As a result, we have experienced, and expect to continue to experience, ongoing significant difficulty in determining the country of origin or the source and chain of custody for all [removed: “conflict minerals”] [added: "conflict minerals"] used in our products and disclosing that our products are [removed: “conflict free.”] [added: "conflict free."] We may face reputational challenges if we are unable to verify the country of origin or the source and chain of custody for all [removed: “conflict minerals”] [added: "conflict minerals"] used in our products or if we continue to be unable to disclose that our products are [removed: “conflict free.”] [added: "conflict free."] The ongoing implementation of these rules may also affect the sourcing and availability of some minerals necessary to the manufacture of our products and may affect the availability and price of [removed: “conflict minerals”] [added: "conflict minerals"] capable of certification as [removed: “conflict free.”] [added: "conflict free."] Accordingly, we have [added: incurred, and expect to continue to incur, significant costs as a consequence of these rules, which may adversely affect our business, financial condition or results of operations.]

[removed: These actions could also increase costs associated with] our operations, including costs for raw materials and transportation.

In connection with the Distribution, we entered into a tax sharing agreement (the [removed: “2012] [added: "2012] Tax Sharing [removed: Agreement”)] [added: Agreement")] with Tyco and The ADT Corporation [removed: (“ADT”),] [added: ("ADT"),] which governs the rights and obligations of ADT, Tyco and us for certain pre-Distribution tax liabilities, including Tyco’s obligations under a separate tax sharing agreement (the [removed: “2007] [added: "2007] Tax Sharing [removed: Agreement”)] [added: Agreement")] entered into by Tyco, Covidien Ltd. [removed: (“Covidien”)] [added: (now known as Medtronic plc, "Medtronic")] and TE Connectivity Ltd. [removed: (“TE Connectivity”)] [added: ("TE Connectivity")] in connection with the 2007 distributions of [removed: Covidien] [added: Medtronic] and TE Connectivity by Tyco (the [removed: “2007 Separation”).][added: "2007 Separation").]

The 2007 Tax Sharing Agreement governs the rights and obligations of Tyco, [removed: Covidien] [added: Medtronic] and TE Connectivity with respect to certain pre-2007 Separation tax liabilities and certain tax liabilities arising in connection with the 2007 Separation.

More specifically, Tyco, [removed: Covidien] [added: Medtronic] and TE Connectivity share 27%, 42% and 31%, respectively, of income tax liabilities that arise from adjustments made by tax authorities to Tyco’s, [removed: Covidien’s] [added: Medtronic’s] and TE Connectivity’s U.S. and certain non-U.S. 2007 and prior income tax returns.

In addition, in the event that the 2007 Separation or certain related transactions are determined to be taxable as a result of actions taken after the 2007 Separation by Tyco, [removed: Covidien] [added: Medtronic] or TE Connectivity, the party responsible for such failure would be responsible for all taxes imposed on Tyco, [removed: Covidien] [added: Medtronic] or TE Connectivity as a result thereof.

If none of the companies is responsible for such failure, then Tyco, [removed: Covidien] [added: Medtronic] and TE Connectivity would be responsible for such taxes, in the same manner and in the same proportions as other shared tax liabilities under the 2007 Tax Sharing Agreement.

As of December 31, [removed: 2014,] [added: 2015,] Tyco has paid [removed: $52.0] [added: $63.0] million of Shared Tax Liabilities.

[removed: With respect to years prior to and including the 2007 Separation, tax authorities have raised] [added: The] issues and proposed [removed: tax] adjustments [removed: that] are generally subject to the sharing provisions of the 2007 Tax Sharing Agreement [removed: and] which may require Tyco to make a payment to a taxing authority, [removed: Covidien] [added: Medtronic] or TE Connectivity.

[removed: The] [added: As described below, Tyco has entered into a settlement with the IRS intended to resolve the intercompany debt issues for Tyco’s 1997 - 2000 audit cycle; however, the] ultimate resolution of these matters is uncertain and could result in Tyco being responsible for a greater amount than it expects under the 2007 Tax Sharing Agreement.

On July 1, 2013, Tyco announced that the [removed: Internal Revenue Service (“IRS”)] [added: IRS] issued Notices of Deficiency [removed: (“Tyco] [added: ("Tyco] IRS [removed: Notices”)] [added: Notices")] to Tyco asserting that several of Tyco’s former U.S. subsidiaries collectively owe additional taxes [removed: in the aggregate amount] of $883.3 million plus penalties of $154 million based on audits of the 1997 through 2000 tax years of Tyco and its subsidiaries as they existed at that time.

These amounts exclude interest and do not reflect the impact on subsequent periods if the IRS [removed: challenge to Tyco’s tax filings as] [added: position] described below is ultimately successful.

Tyco has filed petitions with the U.S. Tax Court [removed: to contest] [added: contesting] the IRS [removed: assessments.][added: proposed adjustments and a trial date has been set for October 2016.]

[removed: As we have previously disclosed, in] [added: In] connection with U.S. federal tax [removed: audits of Tyco and its subsidiaries,] [added: audits,] the IRS has [removed: previously] raised [added: a number of] issues and proposed [removed: tax] adjustments for periods beginning with the 1997 tax year.

The IRS [removed: has] asserted in the Tyco IRS Notices that substantially all of [removed: the] [added: Tyco’s] intercompany debt originated during the 1997 - 2000 period should not be treated as debt for U.S. federal income tax purposes, and has [removed: therefore] disallowed interest and related deductions recognized [removed: associated with that intercompany debt] on [removed: the] U.S. income tax returns for those periods totaling approximately $2.9 billion.

In addition, Tyco received a legal opinion confirming the tax-free status of the Distribution for U.S. federal income tax purposes and Tyco and Pentair, Inc. received legal opinions to the effect that the Merger will qualify as a reorganization under section 368(a) of the Code and that Section 367(a)(1) of the Code will not cause the Merger to be taxable to Pentair, Inc. shareholders (except for a U.S. shareholder who is or will be a [removed: “five-percent] [added: "five-percent] transferee [removed: shareholder”] [added: shareholder"] within the meaning of applicable Treasury [removed: Regulations but who does not enter into a “gain recognition agreement” with the IRS).]

As a condition to closing of the Merger, Tyco obtained rulings from the Swiss Federal Tax Administration confirming: (i) that the Merger will be a transaction that is generally tax-free for Swiss federal, cantonal, and communal tax purposes (including with respect to Swiss stamp tax and Swiss withholding tax); (ii) the relevant Swiss tax base of an acquisition subsidiary of ours [added: for Swiss tax (including federal and cantonal and communal) purposes; (iii) the relevant amount of capital contribution reserves (Kapitaleinlageprinzip) which will be exempt from Swiss withholding tax in the event of a distribution to our shareholders after the Merger; and (iv) that no Swiss stamp tax will be levied on certain post-Merger restructuring transactions.]

We have experienced, and expect to continue to experience, fluctuations in revenues and operating results due to economic and business cycles.

In particular, products sold by Valves & Controls to energy-related businesses are cyclical in nature as the worldwide demand for oil and gas fluctuates.

Lower worldwide demand for oil and gas impacts the economics of oil and gas capital project investments, reducing the demand for our products.

Therefore, results of operations for any particular period are not necessarily indicative of the results of operations for any future period.

Prices for oil and gas are subject to fluctuations in response to changes in the supply of, and demand for, oil and gas, market uncertainty and a variety of other economic factors that are beyond our control.

Since the latter half of 2014, the price of oil has dropped dramatically.

A sustained depression of oil prices may result in the reduction or deferral of major capital projects, including significant maintenance projects and upgrades.

Lower levels of oil and gas maintenance spend and major capital project activity may result in a corresponding decline in the demand for our products and services that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

During 2015, foreign currency translations had a 6.6 percent negative impact on our results of operations.

Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against the Euro, could continue to adversely affect our reported revenue in future periods.

In addition, currency variations can adversely affect margins on sales of our products in countries outside of the U.S. and margins on sales of products that include components obtained from suppliers located outside of the U.S.

We may not realize the anticipated benefits of the acquisition of ERICO Global Company and any benefit may take longer to realize than we expect.

On September 18, 2015, we acquired all of the outstanding shares of capital stock of ERICO for approximately $1.8 billion.

The ERICO Acquisition involves the integration of ERICO’s operations with our existing operations, and there are uncertainties inherent in such an integration.

We will be required to devote significant management attention and resources to integrating ERICO’s operations.

Delays or unexpected difficulties in the integration process could adversely affect our business, financial results and financial condition.

Even if we are able to integrate ERICO’s operations successfully, this integration may not result in the realization of the full benefits of revenue synergies, cost savings and operational efficiencies that we expect or the achievement of these benefits within a reasonable period of time.

In addition, we may not have identified all liabilities and other factors regarding ERICO that could produce unintended and unexpected consequences for us.

Undiscovered factors could result in us incurring financial liabilities, which could be material, and in us not achieving the expected benefits from the ERICO Acquisition within our desired time frames, if at all.

We may not achieve some or all of the expected benefits of our business initiatives.

During 2015, 2014 and 2013, we initiated and continued execution of certain business initiatives aimed at reducing our fixed cost structure and realigning our business.

As a result, we have incurred substantial expense, including restructuring charges.

We may not be able to achieve the operating efficiencies to reduce costs or realize benefits that were initially anticipated in connection with these initiatives.

If we are unable to execute these initiatives as planned, we may not realize all or any of the anticipated benefits, which could adversely affect our business and results of operations.

Sales outside of the U.S. for the year ended December 31, 2015 accounted for 52 percent of our net sales.

For example, we recognized a pre-tax, non-cash impairment charge of $554.7 million for the year ended December 31, 2015 related to goodwill and trade name intangible assets in Valves & Controls.

We believe it is possible that the

We have disposed of a number of businesses in recent years and in certain

These actions could also increase costs associated with

Tax authorities, including the Internal Revenue Service ("IRS"), have raised issues and proposed tax adjustments, in particular with respect to tax years preceding the 2007 Separation, in connection with examinations of Tyco’s and its subsidiaries’ income tax returns.

Although Tyco has resolve substantially all of the issues and adjustments proposed by the IRS for tax years through 2007, it has not been able to resolve matters related to the treatment of certain intercompany debt transactions during the period.

On January 19, 2016, Tyco announced that it had entered into Stipulations of Settled Issues with the IRS intended to resolve all disputes related to the intercompany debt issues for Tyco’s 1997 - 2000 audit cycle currently before the U.S. Tax Court.

The Stipulations of Settled Issues are contingent upon the IRS Appeals Division applying the same settlement to all intercompany debt issues on appeal for subsequent audit cycles (2001 - 2007) and, if applicable, review by the U.S. Congress Joint Committee on Taxation.

Tyco further disclosed that if finalized, the tentative resolution would cover all aspects of the controversy described above and before the Appeals Division of the IRS, and would result in a total cash payment to the IRS in the range of $475 million to $525 million, which includes all interest and penalties, and that this payment would be subject to the sharing formulas described above in the 2007 and 2012 Tax Sharing Agreements with Pentair not being responsible for any payment related to this amount.

However, we cannot provide any assurance that the conditions precedent to this settlement will be met, that the intercompany debt dispute is settled with the IRS or that the IRS will consistently apply the terms of the settlement to all of Tyco’s U.S. income tax returns filed subsequent to 2000.

Regulations but who does not enter into a "gain recognition agreement" with the IRS).

Our credit agreements and indentures contain customary financial covenants, including those that limit the amount of our debt, which may restrict the operations of our business and our ability to incur additional debt to finance acquisitions.

rate.

Many of our businesses have experienced periodic economic downturns.

During such economic downturns, customers in these industries historically have tended to delay major capital projects, including expensive maintenance projects and upgrades.

Additionally, demand for our products and services may be affected by volatility in energy and commodity prices and fluctuating demand forecasts, as our customers may be more conservative in their capital planning, which may reduce demand for our products and services.

If we are unable to continue to differentiate our products, services and

Changes in the relative values of currencies occur regularly and in some instances, may have a significant effect on our financial condition, results of operations and cash flows.

During 2014, we recognized an impairment charge related to allocated amounts of goodwill, intangible assets, property, plant & equipment and other non-current assets totaling $380.1 million, net of a $12.3 million tax benefit, representing our estimated loss on disposal of the Water Transport business in Australia.

The impairment charge is included in Loss from sale / impairment of discontinued operations, net of tax in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Any improper actions could subject us to civil or criminal

incurred, and expect to continue to incur, significant costs as a consequence of these rules, which may adversely affect our business, financial condition or results of operations.

With respect to adjustments raised by the IRS, although Tyco has resolved a substantial number of these adjustments, a few significant items remain open with respect to the audit of the 1997 through 2004 years.

As of the date hereof, Tyco has not been able to resolve certain open items, which primarily involve the treatment of certain intercompany debt issued during the period, through the IRS appeals process.

The adjustments now asserted by the IRS under the Tyco IRS Notices primarily relate to the treatment of certain intercompany debt transactions.

As mentioned above, Tyco has filed petitions with the U.S. Tax Court to contest the IRS assessments.

for Swiss tax (including federal and cantonal and communal) purposes; (iii) the relevant amount of capital contribution reserves (Kapitaleinlageprinzip) which will be exempt from Swiss withholding tax in the event of a distribution to our shareholders after the Merger; and (iv) that no Swiss stamp tax will be levied on certain post-Merger restructuring transactions.

Our credit agreements and indentures contain customary financial covenants.

interest on our indebtedness.

In other

These factors include [added: overall global economic and business conditions, including worldwide demand for oil and gas;] the ability to [removed: successfully complete] [added: achieve] the [removed: disposition] [added: benefits] of our [removed: Water Transport business on anticipated terms] [added: restructuring plans; the ability to successfully identify, finance, complete] and [removed: timetable; overall global economic] [added: integrate acquisitions, including the ability to successfully integrate] and [removed: business conditions;] [added: achieve the expected benefits of the acquisition of ERICO Global Company;] competition and pricing pressures in the markets we serve; the strength of housing and related markets; volatility in currency exchange rates and commodity prices; inability to generate savings from excellence in operations initiatives consisting of lean enterprise, supply management and cash flow practices; increased risks associated with operating foreign businesses; the ability to deliver backlog and win future project work; failure of markets to accept new product introductions and enhancements; the [removed: ability to successfully identify, complete and integrate acquisitions; the] impact of changes in laws and regulations, including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and the ability to achieve our long-term strategic operating goals.

Pentair plc is a focused diversified industrial manufacturing company comprising four reporting segments: Valves & Controls, [removed: Process Technologies,] Flow [removed: Technologies] [added: & Filtration Solutions, Water Quality Systems] and Technical Solutions.

For the year ended December 31, [removed: 2014,] [added: 2015,] Valves & Controls, [removed: Process Technologies,] Flow [removed: Technologies] [added: & Filtration Solutions, Water Quality Systems] and Technical Solutions accounted for [removed: 34] [added: 29] percent, [removed: 25] [added: 22] percent, [removed: 16] [added: 21] percent and [removed: 25] [added: 28] percent of total revenues, respectively.

Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the "U.K.") and therefore have our tax residency in the U.K. [removed: We expect that having our publicly-traded parent company incorporated in Ireland and tax resident in the U.K. will provide us the following benefits:]

[added: Our former parent company, Pentair Ltd.,] took its form on September 28, 2012 as a result of a reverse acquisition (the "Merger") involving Pentair, Inc. and an indirect, wholly-owned subsidiary of Flow Control (defined below), with Pentair, Inc. surviving as an indirect, wholly-owned subsidiary of Pentair Ltd. "Flow Control" refers to Pentair Ltd. prior the Merger.

On September 28, 2012 prior to the Merger, Tyco effected a spin-off of Flow Control through [added: the pro-rata distribution of 100% of the outstanding ordinary shares of Flow Control to Tyco’s shareholders (the "Distribution"), resulting in the distribution of approximately 110.9 million of our ordinary shares to Tyco’s shareholders.]

On January 30, 2014, we acquired, as part of [removed: Process Technologies,] [added: Water Quality Systems,] the remaining 19.9 percent ownership interest in two entities, a U.S. entity and an international entity (collectively, Pentair Residential Filtration or [removed: “PRF”),] [added: "PRF"),] from GE Water & Process Technologies (a unit of General Electric Company) [removed: (“GE”)] [added: ("GE")] for $134.3 million in cash.

The sale of [removed: a portion of] the Water Transport business was completed in [removed: January] 2015.

The following trends and uncertainties affected our financial performance in [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and will likely impact our results in the future:

| • | We [added: have] identified specific [added: product and geographic] market opportunities that we find attractive and continue to pursue, both within and outside the United States. We are reinforcing our businesses to more effectively address these opportunities through research and development and additional sales and marketing resources. Unless we successfully penetrate these [removed: product and geographic] markets, our [removed: organic] [added: core sales] growth [removed: would] [added: will] likely be [removed: limited.] [added: limited or may decline.] |

| • | Despite the [removed: overall strength of] [added: favorable long-term outlook for] our end-markets, we experience differing levels of volatility depending on the end-market and may continue to do so over the medium and longer term. While we believe the general trends are favorable, factors specific to each of our major end-markets may negatively affect the capital spending plans of our customers and lead to lower sales volumes for us. |

| • | Through [removed: 2013] [added: 2014] and [removed: 2014,] [added: into 2015,] we experienced material and other cost inflation. We strive for productivity improvements, and we implement increases in selling prices to help mitigate this inflation. We expect the current economic environment will result in continuing price volatility for many of our raw materials. Commodity prices have [removed: begun to moderate,] [added: declined,] but we are uncertain as to the timing and impact of these market changes. |

In [removed: 2015,] [added: 2016,] our operating objectives include the following:

| • | Focusing on developing global talent in light of our increased global [removed: presence;] [added: presence.] |

| • | Driving operating excellence through lean enterprise initiatives, with specific focus on sourcing and supply management, cash flow management and lean [removed: operations.] [added: operations;] |

See [added: discussion in] ITEM [added: 1 and ITEM] 8, Note [removed: 17] [added: 1] of the Notes to Consolidated Financial Statements [removed: for additional information.][added: — Insurance subsidiary.]

| In millions | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | | [removed: 2012] [added: 2013] | | | | [removed: 2014] [added: 2015] vs. [removed: 2013] [added: 2014] | | [removed: 2013] [added: 2014] vs. [removed: 2012] [added: 2013] | |

| Net sales | $ | [removed: 7,039.0] [added: 6,449.0] | | $ | [removed: 6,999.7] [added: 7,039.0] | | $ | [removed: 4,306.8] [added: 6,999.7] | | | [removed: 0.6] [added: (8.4] | [removed: %] [added: )%] | [removed: 62.5] [added: 0.6] | % |

| Cost of goods sold | [removed: 4,576.0] [added: 4,263.2] | | | [removed: 4,629.6] [added: 4,576.0] | | | [removed: 3,040.9] [added: 4,629.6] | | | | [removed: (1.2] [added: (6.8] | )% | [removed: 52.2] [added: (1.2] | [removed: %] [added: )%] |

| Gross profit | [removed: 2,463.0] [added: 2,185.8] | | | [removed: 2,370.1] [added: 2,463.0] | | | [removed: 1,265.9] [added: 2,370.1] | | | | [removed: 3.9] [added: (11.3] | [removed: %] [added: )%] | [removed: 87.2] [added: 3.9] | % |

| % of net sales | [removed: 35.0] [added: 33.9] | | % | [removed: 33.9] [added: 35.0] | | % | [removed: 29.4] [added: 33.9] | | % | | [removed: 1.1] [added: (1.1] | [added: )] | [removed: 4.5] [added: 1.1] | |

| Selling, general and administrative | [removed: 1,493.8] [added: 1,334.3] | | | [removed: 1,493.7] [added: 1,493.8] | | | [removed: 1,117.7] [added: 1,493.7] | | | | [removed: —] [added: (10.7] | [removed: %] [added: )%] | [removed: 33.6] [added: —] | % |

| % of net sales | [removed: 21.3] [added: 20.8] | | % | 21.3 | | % | [removed: 26.0] [added: 21.3] | | % | | [removed: —] [added: (0.5] | [added: )] | [removed: (4.7] [added: —] | [removed: )] |

| Research and development | [added: 119.6 | | |] 117.3 | | | 122.8 | | | [removed: 92.3] | [removed: |] [added: 2.0] | [added: %] | (4.5 | )% | [removed: 33.0 | % |]

| % of net sales | [removed: 1.7] [added: 1.9] | | % | [removed: 1.8] [added: 1.7] | | % | [removed: 2.1] [added: 1.8] | | % | | [removed: (0.1] [added: 0.2] | [removed: )] | [removed: (0.3] [added: (0.1] | ) |

| Impairment of [added: goodwill and] trade names | [removed: —] [added: 554.7] | | | [removed: 11.0] [added: —] | | | [removed: 60.7] [added: 11.0] | | | | [removed: (100.0] [added: N.M.] | [removed: )%] | [removed: (81.9] [added: (100.0] | )% |

| % of net sales | [removed: —] [added: 8.6] | | % | [removed: 0.2] [added: —] | | % | [removed: 1.4] [added: 0.2] | | % | | [removed: (0.2] [added: 8.6] | [removed: )] | [removed: (1.2] [added: (0.2] | ) |

| Operating income [removed: (loss)] | [added: 177.2 | | |] 851.9 | | | 742.6 | | | [removed: (4.8] | [removed: | )] [added: (79.2] | [added: )%] | 14.7 | % | [removed: N.M. | |]

| % of net sales | [removed: 12.1] [added: 2.7] | | % | [removed: 10.6] [added: 12.1] | | % | [removed: (0.1] [added: 10.6] | | [removed: )%] [added: %] | | [removed: 1.5] [added: (9.4] | [added: )] | [removed: 10.7] [added: 1.5] | |

| Loss (gain) on sale of businesses, net | [added: 3.2 | | |] 0.2 | | | (20.8 | | ) | [removed: —] | [removed: |] [added: N.M.] | | (101.0 | )% | [removed: N.M. | |]

| Net interest expense | [added: 102.7 | | |] 68.6 | | | 70.9 | | | [removed: 68.2] | [removed: |] [added: 49.7] | [added: %] | (3.2 | )% | [removed: 4.0 | % |]

| [removed: Net income (loss)] [added: Income] from continuing operations before income taxes and noncontrolling interest | [added: 74.1 | | |] 784.3 | | | 694.5 | | | [removed: (146.1] | [removed: | )] [added: (90.6] | [added: )%] | 12.9 | % | [removed: N.M. | |]

| Provision [removed: (benefit)] for income taxes | [added: 139.1 | | |] 177.3 | | | 177.0 | | | [removed: (67.2] | [removed: | )] [added: (21.5] | [added: )%] | 0.2 | % | [removed: N.M. | |]

| Effective tax rate | [removed: 22.6] [added: 187.7] | | % | [removed: 25.5] [added: 22.6] | | % | [removed: 46.0] [added: 25.5] | | % | | [removed: (2.9] [added: 165.1] | [removed: )] | [removed: (20.5] [added: (2.9] | ) |

| | [removed: 2014] [added: 2015] vs. [removed: 2013] [added: 2014] | | | [removed: 2013] [added: 2014] vs. [removed: 2012] [added: 2013] | |

| Volume | [removed: 1.0] [added: (4.3] | [removed: %] [added: )%] | | [removed: 7.3] [added: 1.0] | % |

| Price | [removed: 0.9] [added: 0.4] | | | [removed: 1.4] [added: 0.9] | |

| Core growth [added: (decline)] | [removed: 1.9] [added: (3.9] | [added: )] | | [removed: 8.7] [added: 1.9] | |

| Acquisition (divestiture) | [removed: (0.2] [added: 2.1] | [removed: )] | | [removed: 55.2] [added: (0.2] | [added: )] |

| Currency | [removed: (1.1] [added: (6.6] | ) | | [removed: (1.4] [added: (1.1] | ) |

On September 18, 2015, we acquired, as part of Technical Solutions, all of the outstanding shares of capital stock of ERICO Global Company ("ERICO") for approximately $1.8 billion (the "ERICO Acquisition").

ERICO is a leading global manufacturer and marketer of engineered electrical and fastening products for electrical, mechanical and civil applications.

ERICO has employees in 30 countries across the world with recognized brands including CADDY fixing, fastening and support products; ERICO electrical grounding, bonding and connectivity products and LENTON engineered systems.

During the latter part of the fourth quarter of 2015, the oil and gas industry continued to deteriorate, leading management to reconsider its estimates for future profitability of Valves & Controls.

As a result, for the year ended December 31, 2015, we recognized a pre-tax, non-cash impairment charge of $554.7 million related to goodwill and trade name intangible assets in Valves & Controls.

| • | In late 2014 and continuing through 2015, our results were negatively impacted due to the strengthening of the U.S. dollar against most key global currencies. We expect this trend to continue into 2016. |

| • | In 2015, we experienced declines in project orders, particularly within the energy and industrial businesses. We expect headwinds in the energy and industrial business to continue and oil prices to remain depressed throughout 2016. |

| • | In the last three quarters of 2015, we initiated further restructuring actions to offset the negative earnings impact of foreign exchange and core revenue decline. We expect to continue these actions into 2016 and these actions will contribute to margin growth in 2016. |

| • | Reducing long-term debt and overall leverage through improved cash flow performance; |

| • | Achieving differentiated revenue growth through new products and global and market expansion; |

| • | a slowdown in industrial capital spending, particularly in the oil & gas and energy-related businesses, driving core sales declines in Valves & Controls; |

| • | slowing economic activity in China, Brazil and other developing markets; and |

| • | core sales growth in Water Quality Systems and Technical Solutions, primarily as the result of increased volume in the United States and Canada; |

| • | sales of $147.0 million in 2015 as a result of the ERICO Acquisition; |

| • | core sales growth in our food & beverage and residential & commercial businesses; and |

| • | lower core sales volumes, which resulted in decreased leverage on fixed expenses included in cost of goods sold; |

| • | an increase in cost of goods sold of $35.7 million in 2015 compared to 2014 as a result of inventory fair value step-up recorded as part of the Technical Solutions acquisitions in 2015, which did not occur in 2014; and |

The 0.5 percentage point decrease in SG&A expense as a percentage of sales in 2015 from 2014 and was driven by:

| • | restructuring costs of $117.8 million in 2015, compared to $88.3 million in 2014; |

| • | deal related costs and expenses of $14.3 million for 2015; and |

| • | lower sales volume and the resulting loss of leverage on fixed operating expenses. |

Impairment of goodwill and trade names

During the fourth quarter of 2015, we recognized a pre-tax, non-cash impairment charge of $554.7 million related to goodwill and trade name intangible assets in Valves & Controls.

An impairment charge of $11.0 million was recorded in the fourth quarter of 2013 related to a trade name in Technical Solutions.

| • | the amortization of $10.8 million of debt issuance costs during 2015 related to financing commitments for a senior unsecured bridge loan facility established (and subsequently terminated upon issuance of the September 2015 issuance of senior notes discussed in Liquidity and Capital Resources below) in connection with the ERICO Acquisition; |

| • | the impact of higher debt levels during 2015, compared to 2014, primarily as the result of the September 2015 issuance of senior notes; and |

| • | higher interest rates on commercial paper. |

| • | a goodwill impairment charge of $515.2 million, which was not tax deductible; |

| • | restructuring costs in jurisdictions with low tax benefits; |

| • | an increase in valuation allowances during 2015; and |

| • | the unfavorable tax impact of transaction costs related to the ERICO Acquisition. |

| • | non-recurring withholding taxes during 2014 which did not recur in 2015. |

During the third quarter of 2015, we revised our definition of segment income to exclude intangible amortization to better reflect how management assesses performance of the business.

| In millions | 2015 | | | 2014 | | | 2013 | | | | 2015 vs. 2014 | | 2014 vs. 2013 | |

| Net sales | $ | 1,840.1 | | $ | 2,377.3 | | $ | 2,451.7 | | | (22.6 | )% | (3.0 | )% |

| Segment income | 223.0 | | | 398.5 | | | 349.3 | | | | (44.0 | )% | 14.1 | % |

| % of net sales | 12.1 | | % | 16.8 | | % | 14.2 | | % | | (4.7 | ) | 2.6 | |

| | 2015 vs. 2014 | | | 2014 vs. 2013 | |

| • | lower shipments and orders within the oil & gas and industrial businesses and broad-based slowing of global capital spending; |

| • | continued sales decline in the mining industry; and |

| • | Incorporation of our publicly-traded parent company in Ireland enables us to benefit by being subject to a legal and regulatory structure in a jurisdiction with a well-developed legal system and corporate law with established standards of corporate governance. |

| • | The U.K. has a developed, stable and internationally competitive tax system. |

| • | The legal requirements we are now subject to as a company incorporated in Ireland, listed on the NYSE and subject to U.S. Securities and Exchange Commission ("SEC") disclosure and shareholder voting requirements strike the right balance between robust external governance oversight and regulation of our executive and director pay practices and the ability of our compensation committee consisting of independent directors to determine executive compensation to provide incentives to our executive management and to offer competitive salaries and benefits. |

Our former parent company, Pentair Ltd,.

the pro-rata distribution of 100% of the outstanding ordinary shares of Flow Control to Tyco’s shareholders (the “Distribution”), resulting in the distribution of approximately 110.9 million of our ordinary shares to Tyco’s shareholders.

The remaining portions are expected to be disposed of by mid-2015.

| • | In 2014, our results were negatively impacted by changes in foreign exchange rates, most significantly related to fluctuations in the Euro, and we expect this trend to continue in 2015. |

| • | We have a long-term goal to consistently generate free cash flow that equals or exceeds 100 percent of our net income. We define free cash flow as cash flow from operating activities of continuing operations less capital expenditures plus proceeds from sale of property and equipment. Our free cash flow for the full year 2014 was $888.5 million, exceeding our goal of 100 percent net income conversion. We expect to generate free cash flow that exceeds 100 percent of our net income from continuing operations in 2015. We are continuing to target reductions in working capital and particularly inventory as a percentage of sales. See the discussion of “Other financial measures” under “Liquidity and Capital Resources—Other financial measures” in this report for a reconciliation of our free cash flow. |

| • | Increasing our presence in both fast growth and developed regions and vertical focus to grow in those markets in which we have competitive advantages; |

We may seek to meet our objectives of expanding our geographic reach internationally and expanding our presence in our various channels to market by acquiring technologies and products to broaden our businesses’ capabilities to serve additional markets and through acquisitions.

We may also consider the divestiture of discrete business units to further focus our businesses on our most attractive markets.

Change in Warranty Reserve

Subsequent to our February 3, 2015 earnings announcement for the quarter and year ended December 31, 2014, we became aware of a potential warranty issue related to certain product sold by Process Technologies.

As a result, we recorded a $13.0 million charge to Cost of goods sold and adjusted the fourth quarter and full year 2014 financial results from Net income from continuing operations before noncontrolling interest of $137.8 million and $615.0 million, respectively, and Diluted earnings per share from continuing operations of $0.74 and $3.18, respectively, to Net income from continuing operations before noncontrolling interest of $129.8 million and $607.0 million, respectively, and to Diluted earnings per share from continuing operations of $0.70 and $3.14, respectively.

| Loss on early extinguishment of debt | — | | | — | | | 75.4 | | | | — | % | (100.0 | )% |

| • | selective increases in selling prices to mitigate inflationary cost increases. |

| • | sales volume of the Flow Control businesses of $3,244.1 million in 2013, compared to $771.1 million in 2012; |

| • | organic sales growth in Process Technologies and Flow Technologies due to higher sales of certain pool products serving North American residential housing and increased demand for global food & beverage solutions; |

| • | growth in developed regions led by strength in the United States and Western Europe; |

| • | growth in emerging regions of the Middle East, Africa and Eastern Europe; and |

| • | selective increases in selling prices across all business segments to mitigate inflationary cost increases. |

| • | lower cost of goods sold as a result of inventory fair value step-up and customer backlog recorded as part of the Merger purchase accounting, which decreased from $157.7 million in 2012 to $86.6 million in 2013; |

| • | costs associated with the Merger in 2012 that did not reoccur in 2013, including $23.2 million in transaction advisory fees, $21.8 million of change of control costs and $34.1 million of other transaction costs; |

| • | restructuring costs of $103.2 million in 2013, compared to $48.7 million in 2012; |

| • | intangible asset amortization associated with the Merger. |

Loss on early extinguishment of debt

In October 2012, we redeemed the remaining outstanding aggregate principal of our 5.65% fixed rate senior notes due 2013\-2017 totaling $400.0 million and our 1.05% floating rate senior notes due 2013 totaling $100.0 million (the “Fixed/Floating Rate Notes”).

The redemptions included make-whole premiums of $65.8 million.

Concurrent with the redemption of the Fixed/Floating Rate Notes, we terminated a related interest rate swap that was designated as a cash flow hedge, which resulted in the reclassification of $3.4 million of previously unrecognized variable to fixed swap losses from Accumulated Other Comprehensive Income (Loss) ("AOCI") to earnings in October 2012.

All costs associated with the redemption were recorded as a Loss on the early extinguishment of debt including $0.6 million of unamortized deferred financing costs.

In December 2012, Pentair Finance S.A. (“PFSA”), completed an exchange offer pursuant to which it exchanged $373.0 million in aggregate principal amount of 5.00% Senior Notes due 2021 of Pentair, Inc. a wholly-owned, indirect subsidiary of the Company for a like amount of new 5.00% Senior Notes due 2021 of PFSA, plus $5.6 million in transaction-related costs which were recorded as a Loss on the early extinguishment of debt.

| • | the impact of higher debt levels following the Merger; and |

| • | additional interest expense of $2.1 million in the second quarter of 2013 for the working capital and net indebtedness adjustment related to the Merger. |

| • | reduced overall interest rates in effect on our outstanding debt in 2013 compared to 2012; and |

| • | the impact of higher cash balances following the Merger. |

| • | the decrease in non-deductible transaction costs during 2013 compared to 2012. |

| • | the favorable tax impact related to the 2012 exchange offer that did not occur in 2013; and |

| • | the favorable resolution of U.S. federal and state tax audits in 2012 that did not occur in 2013. |

During the first quarter of 2015, we reorganized our business segments to reflect a new operating structure and management of our GBUs, which will result in a change to our reporting segments in 2015.

| Net sales | $ | 2,394.8 | | $ | 2,469.2 | | $ | 548.6 | | | (3.0 | )% | 350.1 | % |

Our debt portfolio as of December 31, [removed: 2014,] [added: 2015,] was comprised of debt predominantly denominated in U.S. dollars.

This debt portfolio is comprised of [removed: 67%] [added: 71%] fixed-rate debt and [removed: 33%] [added: 29%] variable-rate debt.

Based on the fixed-rate debt included in our debt portfolio, as of December 31, [removed: 2014,] [added: 2015,] a 100 basis point increase or decrease in interest rates would result in a [removed: $92.5] [added: $144.3] million decrease or a [removed: $98.7] [added: $152.1] million increase in fair value, respectively.

Based on the variable-rate debt included in our debt portfolio as of December 31, [removed: 2014,] [added: 2015,] a 100 basis point increase [added: or decrease] in interest rates would result in a [removed: $10.0] [added: $13.6] million increase [added: or decrease] in interest incurred.

The functional currencies of our foreign operating locations are [added: generally] the local currency in the country of domicile.

At December 31, 2015 and 2014, we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of $331.5 million and $250.8 million, respectively.

In September 2015, we designated the €500.0 million 2.45% Senior Notes due 2019 (the "2019 Euro Notes") as a net investment hedge of our investments in certain international subsidiaries that use the Euro as their functional currency.

The hedge is intended to reduce, but will not eliminate, the impact on our financial results of changes in the exchange rate between the Euro and the U.S. dollar.

The currency risk related to the net investment hedge is measured by estimating the potential impact of a 10% change in the value of the U.S. dollar relative to the Euro.

The rates used to perform this analysis were based on the market exchange rates in effect on December 31, 2015.

A 10% appreciation of the U.S. dollar relative to the Euro would result in a $49.9 million net increase in Other comprehensive income.

Conversely, a 10% depreciation of the U.S. dollar relative to the Euro would result in a $60.9 million net decrease in Other comprehensive income.

However, these increases and decreases in Other comprehensive income would be offset by decreases or increases in the hedged net investments on our balance sheet due to currency translation.

A decrease in our interest rates on our variable-rate debt of 68.6 basis points (to zero) would result in a decrease in interest incurred of $6.8 million.

Pentair plc is a focused diversified industrial manufacturing company comprising four reporting segments: Valves & Controls, [removed: Process Technologies,] Flow [removed: Technologies] [added: & Filtration Solutions, Water Quality Systems] and Technical Solutions.

[removed: Process Technologies] [added: Water Quality Systems] designs, manufactures, markets and services innovative water system products and solutions to meet [removed: filtration, separation] [added: filtration] and fluid [removed: process] management challenges in food and beverage, water, [removed: wastewater,] swimming pools and aquaculture applications.

Technical Solutions designs, manufactures, markets and services products that guard and protect some of the world’s most sensitive [removed: electronics] [added: electrical] and electronic equipment, as well as heat management solutions designed to provide thermal protection to temperature sensitive fluid [added: applications and engineered electrical and fastening products for electrical, mechanical and civil] applications.

Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the "U.K.") and therefore have our tax residency in the U.K. [removed: We expect that having our publicly-traded parent company incorporated in Ireland and tax resident in the U.K. will provide us the following benefits:]

"Flow Control" refers to Pentair Ltd. prior [added: to] the Merger.

Our management office in the United States ("U.S.") is located at 5500 Wayzata Boulevard, Suite [removed: 800,] [added: 600,] Minneapolis, Minnesota.

The Valves & Controls segment designs, manufactures, markets and services valves, fittings, automation and controls and actuators for the energy and industrial [removed: verticals and operates as a stand-alone Global Business Unit ("GBU").][added: verticals.]

Valves & Controls products are used in many applications including [removed: chemical, petrochemical,] oil and gas, [removed: power generation, mining, food] [added: power, chemical] and [removed: beverage, pulp] [added: pharmaceutical, mining, marine] and [removed: paper] [added: food] and [removed: wastewater.][added: beverage.]

The product line is sold under many trade names, including [removed: Biffi, Keystone, Vanessa,] Anderson [removed: Greenwood and] [added: Greenwood, Biffi,] Crosby, [added: Keystone and Vanessa,] globally via its internal sales force and in some cases through independent distributors.

The [removed: Process Technologies] [added: Water Quality Systems] segment designs, manufactures, markets and services innovative water system products and solutions to meet [removed: filtration, separation] [added: filtration] and fluid [removed: process] management challenges in food and beverage, water, [removed: wastewater,] swimming pools and aquaculture applications.

Brand names for [removed: Process Technologies] [added: Water Quality Systems] include [removed: Pentair,] Everpure, [removed: Sta-Rite, X-Flow, Haffmans] [added: Pentair] and [removed: Südmo.][added: Sta-Rite.]

[removed: Process Technologies] [added: Flow & Filtration Solutions] customers include businesses engaged in wholesale [added: distribution] and retail [removed: distribution in] [added: across] the [removed: residential &] [added: residential,] commercial, [removed: food & beverage,] industrial, [removed: infrastructure and] [added: infrastructure,] energy [added: and food and beverage] verticals.

We experience seasonal demand with several end customers and end-users within [removed: Process Technologies.][added: Water Quality Systems.]

[removed: Process Technologies] [added: Flow & Filtration Solutions] faces numerous domestic and international competitors, some of which have substantially greater resources directed to the verticals in which we compete.

[removed: For our Water Quality Systems GBU, competition] [added: Competition] focuses on brand names, product performance (including energy-efficient offerings), quality and price.

The Flow [removed: Technologies] [added: & Filtration Solutions] segment designs, [removed: manufactures and] [added: manufactures,] markets [removed: products] and services [removed: designed] [added: solutions] for the [removed: transfer and] [added: toughest filtration, separation,] flow [removed: of clean water, wastewater] and [added: fluid management challenges in agriculture, food and beverage processing, water supply and disposal and] a variety of industrial applications.

From product selection to installation, maintenance and servicing, Flow [removed: Technologies] [added: & Filtration Solutions] supports a broad range of products and services specifically tailored to address customers' needs for reliable and efficient movement and control of fluids.

Brand names for Flow [removed: Technologies] [added: & Filtration Solutions] products include Aurora, Berkeley, Fairbanks-Nijhuis, [removed: Hydromatic Hypro] [added: Haffmans, Hydromatic, Hypro, Sta-Rite, Südmo] and [removed: Sta-Rite.][added: X-Flow.]

[removed: Flow Technologies] [added: Water Quality Systems] customers include businesses engaged in wholesale and retail distribution in the residential & commercial, [removed: infrastructure,] food & [removed: beverage, industrial] [added: beverage] and [removed: energy] [added: infrastructure] verticals.

[removed: Flow Technologies] [added: Water Quality Systems] faces numerous domestic and international competitors, some of which have substantially greater resources directed to the verticals in which we compete.

Competition in Flow [removed: Technologies] [added: & Filtration Solutions] focuses on brand names, product performance (including energy-efficient offerings and required specifications), quality, service and price.

The Technical Solutions segment designs, manufactures, markets and services products that guard and protect some of the world’s most sensitive [removed: electronics] [added: electrical] and electronic equipment, as well as heat management solutions designed to provide thermal protection to temperature sensitive fluid [added: applications and engineered electrical and fastening products for electrical, mechanical and civil] applications.

Technical Solutions products include mild steel, stainless steel, aluminum and non-metallic enclosures, cabinets, cases, subracks, [removed: backplanes] [added: backplanes, engineered fastening solutions across a wide range of industries] and [added: verticals and] thermal management systems including heat tracing, [added: floor heating, fire-rated and specialty wiring, sensing, and] snow [removed: melting/de-icing] [added: melting] and [removed: temperature management equipment.][added: de-icing solutions for industrial, commercial and residential use.]

Brand names for Technical Solutions offerings include [added: CADDY, ERICO,] Hoffman, [removed: Schroff, Raychem] [added: LENTON, Raychem, Schroff] and Tracer.

Technical Solutions generally experiences increased demand for thermal protection products and services during the fall and winter months in the Northern [added: Hemisphere and increased demand for electrical fastening products during the spring and summer months in the Northern] Hemisphere.

[removed: | Flow] [added: FLOW] & [removed: Filtration Solutions | 1,603.1 | | | 1,651.8 | | | 1,451.5 | | |][added: FILTRATION SOLUTIONS]

[removed: | Water Quality Systems | 1,356.4 | | | 1,269.3 | | | 1,108.1 | | |][added: WATER QUALITY SYSTEMS]

| In millions | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | | $ change | | | % change | |

Backlog from [removed: Process Technologies,] Flow [removed: Technologies] [added: & Filtration Solutions, Water Quality Systems] and Technical Solutions typically has a shorter manufacturing cycle and products generally ship within 90 days of the date on which a customer places an order.

We expect the majority of our backlog from all segments at December 31, [removed: 2014] [added: 2015] will be filled in [removed: 2015.][added: 2016.]

Research and development expenditures during [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] were [removed: $117.3] [added: $119.6] million, [removed: $122.8] [added: $117.3] million and [removed: $92.3] [added: $122.8] million, respectively.

As of December 31, [removed: 2014,] [added: 2015,] we employed [removed: 28,400] [added: 27,600] people worldwide, of which [removed: 9,200] [added: 9,600] were in the U.S. and [removed: 10,000] [added: 10,200] were covered by collective bargaining agreements or works councils.

We make available free of charge (other than an investor’s own Internet access charges) through our Internet website (http://www.pentair.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the [removed: SEC.][added: U.S. Securities and Exchange Commission ("SEC").]

Flow & Filtration Solutions designs, manufactures, markets and services solutions for the toughest filtration, separation, flow and fluid management challenges in agriculture, food and beverage processing, water supply and disposal and a variety of industrial applications.

On September 18, 2015, we acquired, as part of Technical Solutions, all of the outstanding shares of capital stock of ERICO Global Company ("ERICO") for approximately $1.8 billion (the "ERICO Acquisition").

ERICO is a leading global manufacturer and marketer of engineered electrical and fastening products for electrical, mechanical and civil applications.

ERICO has employees in 30 countries across the world with recognized brands including CADDY fixing, fastening and support products; ERICO electrical grounding, bonding and connectivity products and LENTON engineered systems.

Flow & Filtration Solutions is involved in the entire fluid management system, from advanced filtration, desalination and water supply to water disposal, process and control.

Solutions include light duty diaphragm pumps and pressure boosters, high-flow turbine pumps and solid handling pumps, as well as advanced filtration, oil & gas separation, membrane technology, energy recovery and quality control and instrumentation.

Applications for Flow and Filtration Solutions’ products include precision agriculture, water supply and disposal, fire applications and food and beverage processing.

Customers also include end-users as well as engineering procurement contractors, original equipment manufacturers and residential retail consumers.

Water Quality Systems offers a comprehensive product suite that includes a full range of recreational water treatment equipment including energy-efficient pumps, point-of-entry / point-of-use filtration for residential and commercial applications including foodservice, valves, UV sanitization and automation controls.

We offer design and consulting services and our advanced water technologies are used across a wide number of industries including industrial, residential, commercial, municipal, foodservice, aquaculture, aquaponics, aquatic life support systems, irrigation and flood control, wastewater and more.

Our equipment and solutions are found in swimming pools and spas, aquaculture farms, laboratories, water purification and sanitation systems, foodservice operations, and in other applications across the globe.

| Valves & Controls | $ | 1,127.6 | | $ | 1,233.7 | | $ | (106.1 | ) | (8.6 | )% |

| Flow & Filtration Solutions | 289.6 | | | 361.2 | | | (71.6 | | ) | (19.8 | ) |

| Water Quality Systems | 141.4 | | | 121.0 | | | 20.4 | | | 16.9 | |

| Technical Solutions | 319.0 | | | 281.0 | | | 38.0 | | | 13.5 | |

| Total | $ | 1,877.6 | | $ | 1,996.9 | | $ | (119.3 | ) | (6.0 | )% |

Flow Technologies designs, manufactures and markets products and services designed for the transfer and flow of clean water, wastewater and a variety of industrial applications.

| | |

| --- | --- |

| • | Incorporation of our publicly-traded parent company in Ireland enables us to benefit by being subject to a legal and regulatory structure in a jurisdiction with a well-developed legal system and corporate law with established standards of corporate governance. |

| • | The U.K. has a developed, stable and internationally competitive tax system. |

| • | The legal requirements we are now subject to as a company incorporated in Ireland, listed on the NYSE and subject to U.S. Securities and Exchange Commission ("SEC") disclosure and shareholder voting requirements strike the right balance between robust external governance oversight and regulation of our executive and director pay practices and the ability of our compensation committee consisting of independent directors to determine executive compensation to provide incentives to our executive management and to offer competitive salaries and benefits. |

On July 28, 2014, our Board of Directors approved a decision to exit our Water Transport business in Australia, previously part of our Flow Technologies reporting segment.

We expect to dispose of the Water Transport business by mid-2015.

PROCESS TECHNOLOGIES

The Filtration & Process and Water Quality Systems GBUs comprise this segment.

Process Technologies offers a comprehensive product suite that ranges from energy-efficient pumps and point-of-use filtration to automated controls and CO2 recovery systems.

Process Technologies primarily sells water systems, consisting of pumps, valves and filters used in the manufacturing of water softeners, filtration and deionization systems and commercial and residential water filtration applications.

Process Technologies also produces a broad line of leading edge equipment, accessories and water technology solutions, including pumps, filtration equipment, thermal products, automated controls, lights, automatic cleaners, water purification and treatment technology and water features.

Applications for Process Technologies’ products include oil and gas, residential, power generation, chemical, food and beverage, pharmaceutical, foodservice, medical and municipal and industrial desalination, water and wastewater treatment.

Competition in our Filtration & Process GBU focuses on product performance and design, quality, delivery and price.

FLOW TECHNOLOGIES

The Flow Technologies segment operates as a stand-alone GBU.

Flow Technologies is involved in the entire fluid system from transmission and distribution, process and control, to pumps, fittings and couplings.

Applications for Flow Technologies’ products include agriculture, along with pumps for residential and municipal wells, flood control, water treatment, wastewater solids handling, pressure boosting, engine cooling, fluid delivery, circulation and transfer and energy.

Customers also include end-users and consumers in the residential & commercial vertical.

The Technical Solutions segment operates as a stand-alone GBU.

Technical Solutions products are produced globally.

NEW SEGMENTATION

During the first quarter of 2015, we reorganized our business segments to reflect a new operating structure and management of our GBUs, resulting in a change to our reporting segments in 2015.

As part of this reorganization, the legacy Filtration & Process GBU was combined with the legacy Flow Technologies GBU to form the Flow & Filtration Solutions reporting segment and now operates as a stand-alone GBU and the Water Quality Systems reporting segment now operates as a stand-alone GBU.

All segment information presented throughout this Annual Report on Form 10-K, with the exception of the table below, was prepared based on the reporting segments in place during 2014.

The below table presents sales and segment income under the revised reporting segments (Valves & Controls, Technical Solutions, Flow & Filtration Solutions and Water Quality Systems) for the years ended December 31, 2014, 2013 and 2012.

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | December 31 | | | | | | | | |

| In millions | 2014 | | | 2013 | | | 2012 | | |

| Net sales | | | | | | | | | |

| Valves & Controls | $ | 2,377.3 | | $ | 2,451.7 | | $ | 540.3 | |

| Technical Solutions | 1,728.1 | | | 1,663.4 | | | 1,233.9 | | |

| Other | (25.9 | | ) | (36.5 | | ) | (27.0 | | ) |

| Consolidated | $ | 7,039.0 | | $ | 6,999.7 | | $ | 4,306.8 | |

| Segment income (loss) | | | | | | | | | |

| Valves & Controls | $ | 345.1 | | $ | 297.5 | | $ | 40.7 | |

| Flow & Filtration Solutions | 169.2 | | | 170.7 | | | 113.4 | | |

| Water Quality Systems | 242.9 | | | 220.1 | | | 174.8 | | |

While we believe that a material impact on our consolidated financial position, results of operations or cash flows from any such future claims or potential claims is unlikely, given the inherent uncertainty of litigation, a remote possibility exists that a future adverse ruling or unfavorable development could result in future charges that could have a material [added: adverse] impact.

These cases typically involve product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were attached to or used with [removed: asbestos-][added: asbestos-containing components manufactured by third-parties.]

As of December 31, [removed: 2014,] [added: 2015,] there were approximately [removed: 3,400] [added: 4,100] claims outstanding against our subsidiaries.

Our estimated liability for asbestos-related claims was [removed: $249.1] [added: $237.9] million and [removed: $254.7] [added: $249.1] million as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively, and was recorded in Other non-current liabilities in the Consolidated Balance Sheets for pending and future claims and related defense costs.

Our estimated receivable for insurance recoveries was [removed: $115.8] [added: $111.0] million and [removed: $119.6] [added: $115.8] million at December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] all of which was acquired in the Merger, and was recorded in Other non-current assets in the Consolidated Balance Sheets.

Based upon our experience, current information regarding known contingencies and applicable laws, we have recorded reserves for these environmental matters of [removed: $31.4] [added: $22.8] million and [removed: $34.8] [added: $31.4] million as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively.

As a result of discussions with the DOJ and SEC aimed at resolving these matters, on September 24, 2012, Tyco entered into a settlement with the SEC and a non-prosecution agreement with the [removed: DOJ, pursuant to which the Flow Control business is for a three year period subject to yearly reporting to the DOJ concerning its continuing compliance efforts.][added: DOJ.]

containing components manufactured by third-parties.

10-K 1 [removed: pnr-20141231x10k.htm] [added: pnr-20151231x10k.htm] FORM 10-K

For the Fiscal Year Ended December 31, [removed: 2014][added: 2015]

Aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of [removed: $72.76] [added: $63.75] per share as reported on the New York Stock Exchange on June [removed: 27, 2014] [added: 26, 2015] (the last business day of Registrant’s most recently completed second quarter): [removed: $13,741,728,602][added: $11,256,593,708]

The number of shares outstanding of Registrant’s only class of common stock on December 31, [removed: 2014] [added: 2015] was [removed: 182,442,197.][added: 180,455,693.]

Parts of the Registrant’s definitive proxy statement for its annual meeting to be held on May [removed: 5, 2015,] [added: 10, 2016,] are incorporated by reference in this Form 10-K in response to Part III, ITEM 10, 11, 12, 13 and 14.

For the Year Ended December 31, [removed: 2014][added: 2015]

| ITEM 1. | | [removed: [Business](#s93D90FCA9EBE937A30923EDDD8E18BB0)] [added: [Business](#s55885F7D4A965B819E5C964BDDCA44DC)] | | [removed: [1](#s93D90FCA9EBE937A30923EDDD8E18BB0)] [added: [1](#s55885F7D4A965B819E5C964BDDCA44DC)] |

| ITEM 1A. | | [Risk [removed: Factors](#s8C5E1FEFDC8640EB5EA53EDDD90397DD)] [added: Factors](#sF9F6E662660B5614B3D8A966DFB90506)] | | [removed: [6](#s8C5E1FEFDC8640EB5EA53EDDD90397DD)] [added: [5](#sF9F6E662660B5614B3D8A966DFB90506)] |

| ITEM 1B. | | [Unresolved Staff [removed: Comments](#sE52006DF0D70BFE9473D3EDDD935C9B8)] [added: Comments](#s1ABB26996F065D86BF1F10102CAE971A)] | | [removed: [18](#sE52006DF0D70BFE9473D3EDDD935C9B8)] [added: [18](#s1ABB26996F065D86BF1F10102CAE971A)] |

| ITEM 2. | | [removed: [Properties](#s50C34F51752FBC2A57C13EDDD956BAF3)] [added: [Properties](#s289F0F05407E5CC4B5B3C078E07374D3)] | | [removed: [18](#s50C34F51752FBC2A57C13EDDD956BAF3)] [added: [18](#s289F0F05407E5CC4B5B3C078E07374D3)] |

| ITEM 3. | | [Legal [removed: Proceedings](#sA8B31AEC4122C193E8F13EDDD988C8BC)] [added: Proceedings](#s03A7597A64E3584D9EAA0E09ADD10E79)] | | [removed: [18](#sA8B31AEC4122C193E8F13EDDD988C8BC)] [added: [18](#s03A7597A64E3584D9EAA0E09ADD10E79)] |

| ITEM 4. | | [Mine Safety [removed: Disclosures](#sBC268FC72B2BFB16F96C3EDDD9DCB539)] [added: Disclosures](#s5B1B768FD7B553FBAA0B20BE37590CBB)] | | [removed: [20](#s5FF36EA8E10DB574D2643EDDD9ABC39A)] [added: [19](#s8CA30833220A5B4AB4585B5CD4009AE1)] |

| ITEM 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sE0FC91D8DE1CDBA458F63EDD635E3A81)] [added: Securities](#s9A9F1D35DF7B554787164C7593FEB371)] | | [removed: [22](#sE0FC91D8DE1CDBA458F63EDD635E3A81)] [added: [21](#s9A9F1D35DF7B554787164C7593FEB371)] |

| ITEM 6. | | [Selected Financial [removed: Data](#s0394FE5256CBFBB024023EDD6A3DA184)] [added: Data](#s2A2E225B85635A0388726BCCD72981C1)] | | [removed: [25](#s0394FE5256CBFBB024023EDD6A3DA184)] [added: [24](#s2A2E225B85635A0388726BCCD72981C1)] |

| ITEM 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s7E6A79CFD2E167C9122E3EDDDA849A6A)] [added: Operations](#s02F607295BCC502D94A3BF87F338630D)] | | [removed: [26](#s7E6A79CFD2E167C9122E3EDDDA849A6A)] [added: [25](#s02F607295BCC502D94A3BF87F338630D)] |

| ITEM 7A. | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#sF6DAA4FEB24F3B9B81283EDDDB7DD0FE)] [added: Risk](#sEFA6A0E31BEC586ABA1C44C167852AC1)] | | [removed: [47](#sF6DAA4FEB24F3B9B81283EDDDB7DD0FE)] [added: [45](#sEFA6A0E31BEC586ABA1C44C167852AC1)] |

| ITEM 8. | | [Financial Statements and Supplementary [removed: Data](#s9E94D00EAC80DFEC95973EDDDB9EF5D1)] [added: Data](#s2C3F0385C333537C88D1D22CCC61B39A)] | | [removed: [48](#s9E94D00EAC80DFEC95973EDDDB9EF5D1)] [added: [47](#s2C3F0385C333537C88D1D22CCC61B39A)] |

| ITEM 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sFD089D6CA983DC8D8A7B3EDDE1CE80F2)] [added: Disclosure](#sF1B9B5CC86525EDFA5C6698327794205)] | | [removed: [100](#sFD089D6CA983DC8D8A7B3EDDE1CE80F2)] [added: [98](#sF1B9B5CC86525EDFA5C6698327794205)] |

| ITEM 9A. | | [Controls and [removed: Procedures](#s97617ED5B601163C4B1D3EDDE2009FDC)] [added: Procedures](#s427E92357DDE5621A59D8B9203E9D0A4)] | | [removed: [100](#s97617ED5B601163C4B1D3EDDE2009FDC)] [added: [98](#s427E92357DDE5621A59D8B9203E9D0A4)] |

| ITEM 9B. | | [Other [removed: Information](#s32B2A40D09D2D607C0A03EDDE221E539)] [added: Information](#s85DC47728BFA549693A250CB62567B46)] | | [removed: [100](#s32B2A40D09D2D607C0A03EDDE221E539)] [added: [98](#s85DC47728BFA549693A250CB62567B46)] |

| ITEM 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#s675701AA65A30C1FF8C83EDDE275FA3E)] [added: Governance](#s7002FEFDC7AC5D079F40BAE7FD1C3699)] | | [removed: [101](#s675701AA65A30C1FF8C83EDDE275FA3E)] [added: [99](#s7002FEFDC7AC5D079F40BAE7FD1C3699)] |

| ITEM 11. | | [Executive [removed: Compensation](#sA8F14E788A3F5C1DDB473EDDE2A61BCD)] [added: Compensation](#sF8A18EDB2C1A55AD877DD5ADDBED9F58)] | | [removed: [101](#sA8F14E788A3F5C1DDB473EDDE2A61BCD)] [added: [99](#sF8A18EDB2C1A55AD877DD5ADDBED9F58)] |

| ITEM 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s6B7652BF225A192DC0023EDDE2C8D92E)] [added: Matters](#s06999584F99A503C9C3990272828A5D5)] | | [removed: [102](#s6B7652BF225A192DC0023EDDE2C8D92E)] [added: [100](#s06999584F99A503C9C3990272828A5D5)] |

| ITEM 13. | | [Certain Relationships and Related Transactions and Director [removed: Independence](#s36E21208A0EED275C2E83EDDE2FB2570)] [added: Independence](#s2A96AC8648DF5547951156FD1779F9ED)] | | [removed: [102](#s36E21208A0EED275C2E83EDDE2FB2570)] [added: [100](#s2A96AC8648DF5547951156FD1779F9ED)] |

| ITEM 14. | | [Principal Accounting Fees and [removed: Services](#s314944885F6F9338B0123EDDE31BDB49)] [added: Services](#sCE3CB1797ED15EF9884133E8033CBF33)] | | [removed: [102](#s314944885F6F9338B0123EDDE31BDB49)] [added: [100](#sCE3CB1797ED15EF9884133E8033CBF33)] |

| ITEM 15. | | [Exhibits, Financial Statement [removed: Schedules](#s7C064954E63BF9163E7F3EDDE34D1978)] [added: Schedules](#sCF093644FB225097AEB32AB0871699B8)] | | [removed: [103](#s7C064954E63BF9163E7F3EDDE34D1978)] [added: [101](#sCF093644FB225097AEB32AB0871699B8)] |

| | | [Signatures](#sCB5110C65C4F5174B18F33DE64CFCD50) | | [102](#sCB5110C65C4F5174B18F33DE64CFCD50) |

| | | [Signatures](#sE202C64D39E4A8F2E6143EDDE36E3446) | | [104](#sE202C64D39E4A8F2E6143EDDE36E3446) |

We carry out our Valves & Controls manufacturing operations at 8 plants located throughout the United States and at [removed: 37] [added: 32] plants located in 16 other countries.

In addition, Valves & Controls has [removed: 27] [added: 23] distribution facilities, [removed: 58] [added: 56] sales offices and [removed: 52] [added: 51] service centers located in numerous countries throughout the world.

We carry out our [removed: Process Technologies] [added: Technical Solutions] manufacturing operations at [removed: 17] [added: 10] plants located throughout the United States and at [removed: 14] [added: 15] plants located in [removed: 9] [added: 11] other countries.

In addition, [removed: Process Technologies] [added: Technical Solutions] has [removed: 21] [added: 11] distribution facilities, [removed: 24] [added: 52] sales offices and [removed: 2] [added: 3] service centers located in numerous countries throughout the world.

We carry out our Flow [removed: Technologies] [added: & Filtration Solutions] manufacturing operations at [removed: 6] [added: 7] plants located throughout the United States and at [removed: 5] [added: 12] plants located in [removed: 5] [added: 8] other countries.

In addition, Flow [removed: Technologies] [added: & Filtration Solutions] has [removed: 13] [added: 22] distribution facilities, [removed: 7] [added: 18] sales offices and [removed: 12] [added: 10] service centers located in numerous countries throughout the world.

We carry out our [removed: Technical Solutions] [added: Water Quality Systems] manufacturing operations at [removed: 7] [added: 13] plants located throughout the United States and at 10 plants located in [removed: 8] [added: 6] other countries.

In addition, [removed: Technical Solutions] [added: Water Quality Systems] has [removed: 12] [added: 15] distribution facilities, [removed: 48] [added: 11] sales offices and [removed: 3] [added: 2] service centers located in numerous countries throughout the world.

| Randall J. Hogan | | [removed: 59] [added: 60] | | | Chief Executive Officer since 2001 and Chairman of the Board since 2002; President and Chief Operating Officer, 1999 — 2000; Executive Vice President and President of Pentair’s Electrical and Electronic Enclosures Group, 1998 — 1999; United Technologies Carrier Transicold President, 1995 — 1997; Pratt & Whitney Industrial Turbines Vice President and General Manager, 1994 — 1995; General Electric various executive positions, 1988 — 1994; McKinsey & Company consultant, 1981 — 1987. |

| John L. Stauch | | [removed: 50] [added: 51] | | | Executive Vice President and Chief Financial Officer since 2007; Chief Financial Officer of the Automation and Control Systems unit of Honeywell International Inc., 2005 — 2007; Vice President, Finance and Chief Financial Officer of the Sensing and Controls unit of Honeywell International Inc., 2004 — 2005; Vice President, Finance and Chief Financial Officer of the Automation & Control Products unit of Honeywell International Inc., 2002 — 2004; Chief Financial Officer and IT Director of PerkinElmer Optoelectronics, a unit of PerkinElmer, Inc., 2000 — 2002; Various executive, investor relations and managerial finance positions with Honeywell International Inc. and its predecessor AlliedSignal Inc., 1994 — 2000. |

| Angela D. [removed: Lageson] [added: Jilek] | | [removed: 46] [added: 47] | | | Senior Vice President, General Counsel and Secretary since 2010; Assistant General Counsel, 2002 — 2010; Shareholder and Officer of the law firm of Henson & Efron, P.A., 2000 — 2002; Associate Attorney in the law firm of Henson & Efron, P.A. 1996 — 2000 and in the law firm of Felhaber Larson Fenlon & Vogt, P.A., 1992 — 1996. |

| Mark C. Borin | | [removed: 47] [added: 48] | | | Chief Accounting Officer since 2008 and Treasurer since 2015; Partner in the audit practice of the public accounting firm KPMG LLP, 2000 — 2008; Various positions in the audit practice of KPMG LLP, 1989 — 2000. |

| Karl R. Frykman | | [removed: 54] [added: 55] | | | President, Water Quality Systems Global Business Unit since 2007; President of Aquatic Systems' National Pool Tile group, 1998— 2007; Vice President of Operations for American Products, 1995— 1998; Vice President of Anthony Pools, 1990 — 1995; Vice President of Poolsaver, 1988 — 1990. |

| Alok Maskara | | [removed: 43] [added: 44] | | | President, Technical Solutions Global Business Unit since 2014; President, Thermal Management business, 2012 — 2014; President, Water Purification business, 2011 — 2012; President, Residential Filtration business, 2008 — 2011; General Manager of the Residential & Commercial water business at General Electric Corporation, 2006 — 2008; Manager Corporate Initiatives, General Electric Corporation, 2004 — 2006; Various executive positions with McKinsey & Company, 2000 — 2004. |

| Beth A. Wozniak | | 51 | | | President, Flow & Filtration Solutions Global Business Unit since 2015; President of Environmental and Combustion Controls unit of Honeywell International Inc., 2011 — 2015; President of Sensing and Controls unit of Honeywell International Inc., 2006 — 2011; Various leadership positions at Honeywell International Inc. and its predecessor AlliedSignal Inc., 1990 — 2006. |

| Frederick S. Koury | | 54 | | | Senior Vice President, Human Resources since 2003; Vice President of Human Resources at Limited Brands, 2000 — 2003; PepsiCo, Inc., various executive positions, 1985 — 2000. |

| Phil Pejovich | | 49 | | | President, Flow & Filtration Solutions Global Business Unit since 2015; President, Flow Technologies Global Business Unit, 2014; President, Equipment Protection business, 2010 - 2014; Various executive positions within Whirlpool Corporation, including Business Strategy, North America Refrigeration, President, Whirlpool Greater China, 1999 — 2010; Various executive positions at TRW, Inc., Electrospace, and E-Systems, (divisions of Raytheon Company) 1987 — 1999. |

| Christopher Stevens | | 47 | | | President, Valves & Controls Global Business Unit since 2014; Vice President of Product Management & Marketing, Valves & Controls business, 2012 — 2014; General Manager of Global Mining for Tyco International's Flow Control business, 2009 — 2012; Vice President of Strategy & Global Marketing for Tyco International's Flow Control business, 2007 — 2009; Director, Strategy & Business Planning, Tyco Engineered Products & Services, 2005 — 2006; Vice President of Worldwide Strategic Sourcing at Fisher Scientific International, 2002 — 2005; Various business positions with McKinsey & Company, CSC Index and Westinghouse Electric, 1990 — 2002. |

Our ordinary shares are listed for trading on the New York Stock Exchange and trade under the symbol [removed: “PNR.”] [added: "PNR."] As of December 31, [removed: 2014,] [added: 2015,] there were [removed: 21,273] [added: 19,990] shareholders of record.

The high, low and closing sales price for our ordinary shares and the dividends paid for each of the quarterly periods for [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] were as follows:

| Dividends paid | [removed: 0.25] [added: 0.32] | | | [removed: 0.25] [added: 0.32] | | | [removed: 0.30] [added: 0.32] | | | [removed: 0.30] [added: 0.32] | | | | [removed: 0.23] [added: 0.25] | | | [removed: 0.23] [added: 0.25] | | | [removed: 0.25] [added: 0.30] | | | [removed: 0.25] [added: 0.30] | | |

Pentair has paid [removed: 156] [added: 160] consecutive quarterly dividends.

The Board of Directors has approved a plan to increase the dividend for [removed: the remainder of 2015,] [added: 2016,] which will mark the [removed: 39th] [added: 40th] consecutive year we have increased dividends.

On July 29, 2014, following the approval of the Irish High Court, we made the required filing of Pentair plc's initial accounts with the Irish Companies Registration Office, which completed the process to allow us to pay future cash dividends and redeem and repurchase shares out of Pentair plc's "distributable reserves." [removed: As of December 31, 2014, our] [added: Our] distributable reserve balance was [added: $9.6 billion and] $12.1 [removed: billion.][added: billion as of December 31, 2015 and 2014, respectively.]

The following graph sets forth the cumulative total shareholder return on our ordinary shares for the last five years, assuming the investment of $100 on December 31, [removed: 2009] [added: 2010] and the reinvestment of all dividends since that date to December 31, [removed: 2014.][added: 2015.]

[removed: ][added: ]

| | Base Period December [removed: 2009] [added: 2010] | | INDEXED RETURNS Years ended December 31 | | | | | | | | | |

| Company / Index | [removed: 2010 | |] 2011 | | 2012 | | 2013 | | 2014 | | [added: 2015] | | [added: | |]

The following table provides information with respect to purchases we made of our ordinary shares during the fourth quarter of [removed: 2014:][added: 2015:]

| (a) | The purchases in this column include [removed: 27,310] [added: 85,640] shares for the period September [removed: 28] [added: 27] – October [removed: 25, 2014, 111] [added: 24, 2015, 388] shares for the period October [removed: 26] [added: 25] – November [removed: 22, 2014,] [added: 21, 2015,] and [removed: 4,463] [added: 1,523] shares for the period November [removed: 23] [added: 22] – December 31, [removed: 2014] [added: 2015] deemed surrendered to us by participants in our 2012 Stock and Incentive Plan (the [removed: “2012 Plan”)] [added: "2012 Plan")] and earlier stock incentive plans that are now outstanding under the 2012 Plan (collectively the [removed: “Plans”)] [added: "Plans")] to satisfy the exercise price or withholding of tax obligations related to the exercise of stock options and vesting of restricted shares. |

| (d) | In December [removed: 2013, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $1.0 billion. There was no remaining availability under this authorization as of December 31, 2014. In December] 2014, our Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $1.0 billion. This authorization expires on December 31, [removed: 2019 and is in addition to the 2013 share repurchase authorization.] [added: 2019.] |

| | 2015 | | | | | | | | | | | | | 2014 | | | | | | | | | | | |

| High | $ | 68.24 | | $ | 66.52 | | $ | 69.65 | | $ | 59.69 | | | $ | 83.37 | | $ | 81.04 | | $ | 73.36 | | $ | 69.37 | |

| Low | 60.73 | | | 59.92 | | | 49.44 | | | 48.14 | | | | 71.29 | | | 71.96 | | | 62.91 | | | 59.09 | | |

| Close | 62.39 | | | 63.75 | | | 51.98 | | | 49.53 | | | | 77.66 | | | 72.76 | | | 67.41 | | | 66.42 | | |

| Pentair plc | 100 | | 93.13 | | 140.52 | | 225.80 | | 196.08 | | 149.39 | |

| S&P 500 Index | 100 | | 102.11 | | 118.45 | | 156.82 | | 178.28 | | 180.75 | |

| S&P 500 Industrials Index | 100 | | 99.41 | | 114.67 | | 161.31 | | 177.16 | | 172.67 | |

| September 27 – October 24, 2015 | 85,640 | | $ | 51.80 | | — | | $ | 800,000,049 | |

| October 25 – November 21, 2015 | 388 | | 55.11 | | | — | | 800,000,049 | | |

| November 22 – December 31, 2015 | 1,523 | | 54.67 | | | — | | 800,000,049 | | |

| Total | 87,551 | | | | | — | | | | |

| | 2014 | | | | | | | | | | | | | 2013 | | | | | | | | | | | |

| High | $ | 83.37 | | $ | 81.04 | | $ | 73.36 | | $ | 69.37 | | | $ | 54.20 | | $ | 60.14 | | $ | 66.49 | | $ | 77.97 | |

| Low | 71.29 | | | 71.96 | | | 62.91 | | | 59.09 | | | | 49.39 | | | 49.67 | | | 57.38 | | | 62.80 | | |

| Close | 77.66 | | | 72.76 | | | 67.41 | | | 66.42 | | | | 52.75 | | | 57.69 | | | 65.52 | | | 77.67 | | |

| Pentair plc | 100 | | 115.62 | | 107.67 | | 162.46 | | 261.07 | | 226.71 | |

| S&P 500 Index | 100 | | 115.06 | | 117.49 | | 136.30 | | 180.44 | | 205.14 | |

| S&P 500 Industrials Index | 100 | | 126.73 | | 125.98 | | 145.32 | | 204.43 | | 224.51 | |

| September 28 – October 25, 2014 | 4,510,220 | | $ | 64.06 | | 4,482,910 | | $ | 13,823,462 | |

| October 26 – November 22, 2014 | 208,644 | | 66.48 | | | 208,533 | | 104 | | |

| November 23 – December 31, 2014 | 4,463 | | 62.78 | | | — | | 1,000,000,104 | | |

| Total | 4,723,327 | | | | | 4,691,443 | | | | |

The following table sets forth our selected historical financial data for the five years ended December 31, [removed: 2014.][added: 2015.]

| In millions, except per-share data | [added: 2015 | | |] 2014 | | | 2013 | | | 2012 | | | 2011 | | | [removed: 2010 | | |]

| Net sales | $ | [removed: 7,039.0] [added: 6,449.0] | | $ | [removed: 6,999.7] [added: 7,039.0] | | $ | [removed: 4,306.8] [added: 6,999.7] | | $ | [removed: 3,456.7] [added: 4,306.8] | | $ | [removed: 3,030.8] [added: 3,456.7] | |

| Operating income (loss) | [added: 177.2 | | |] 851.9 | | | 742.6 | | | (4.8 | | ) | 100.2 | | | [removed: 313.0 | | |]

| Net income (loss) from continuing operations attributable to Pentair plc | [added: (65.0 | | ) |] 607.0 | | | 511.7 | | | (81.5 | | ) | (7.5 | | ) | [removed: 185.5 | | |]

| Earnings (loss) per ordinary share from continuing operations attributable to Pentair plc | $ | [added: (0.36 | ) | $ |] 3.19 | | $ | 2.54 | | $ | (0.64 | ) | $ | (0.08 | ) | [removed: $ | 1.89 | |]

| Weighted average shares | [added: 180.3 | | |] 190.6 | | | 201.1 | | | 127.4 | | | 98.2 | | | [removed: 98.0 | | |]

| Earnings (loss) per ordinary share from continuing operations attributable to Pentair plc | $ | [added: (0.36 | ) | $ |] 3.14 | | $ | 2.50 | | $ | (0.64 | ) | $ | (0.08 | ) | [removed: $ | 1.87 | |]

| Weighted average shares | [added: 182.6 | | |] 193.7 | | | 204.6 | | | 127.4 | | | 98.2 | | | [removed: 99.3 | | |]

| Cash dividends declared and paid per ordinary share | $ | [removed: 1.10] [added: 1.28] | | $ | [removed: 0.96] [added: 1.10] | | $ | [removed: 0.88] [added: 0.96] | | $ | [removed: 0.80] [added: 0.88] | | $ | [removed: 0.76] [added: 0.80] | |

| Cash dividends declared and unpaid per ordinary share | [removed: 0.64] [added: 0.33] | | | [removed: 0.50] [added: 0.64] | | | [removed: 0.46] [added: 0.50] | | | [removed: —] [added: 0.46] | | | — | | |

| Total assets | $ | [removed: 10,655.2] [added: 11,857.0] | | $ | [removed: 11,743.3] [added: 10,655.2] | | $ | [removed: 11,882.7] [added: 11,743.3] | | $ | [removed: 4,586.3] [added: 11,882.7] | | $ | [removed: 3,973.5] [added: 4,586.3] | |

| Total debt | [added: 4,710.0 | | |] 3,004.1 | | | 2,550.4 | | | 2,451.6 | | | 1,309.1 | | | [removed: 707.5 | | |]

| Total equity | [added: 4,008.8 | | |] 4,663.8 | | | 6,217.7 | | | 6,487.5 | | | 2,047.4 | | | [removed: 2,205.0 | | |]

In May 2011, we acquired as part of [removed: Process Technologies,] [added: Flow & Filtration Solutions,] the Clean Process Technologies division of privately held Norit Holding B.V. In the fourth quarter of 2011, we recorded a pre-tax non-cash goodwill impairment charge of $200.5 million.

In the fourth quarter of 2015, we recorded a pre-tax, non-cash goodwill and trade name impairment charge of $554.7 million.

All periods presented have been revised, as applicable, to present the results of the Water Transport business as discontinued operations and to reclassify the assets and liabilities of the Water Transport business as held for sale.

See ITEM 8, Note 3 of the Notes to Consolidated Financial Statements for additional information.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2014.][added: 2015.]

Based on this assessment, management believes that, as of December 31, [removed: 2014,] [added: 2015,] the Company’s internal control over financial reporting was effective based on those criteria.

Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, [removed: 2014.][added: 2015.]

We have audited the internal control over financial reporting of Pentair plc and subsidiaries (the [removed: “Company”)] [added: "Company")] as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule listed in the Index at Item 15 as of and for the year ended December 31, [removed: 2014] [added: 2015] of the Company and our report dated February [removed: 24, 2015] [added: 26, 2016] expressed an unqualified opinion on those financial statements and financial statement schedule.

We have audited the accompanying consolidated balance sheets of Pentair plc and subsidiaries (the [removed: “Company”)] [added: "Company")] as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, [removed: 2014.][added: 2015.]

Our audits also included the [added: consolidated] financial statement schedule listed in the Index at Item 15.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Pentair plc and subsidiaries [removed: at] [added: as of] December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2014,] [added: 2015,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, such [added: consolidated] financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 24, 2015] [added: 26, 2016] expressed an unqualified opinion on the Company’s internal control over financial reporting.

| In millions, except per-share data | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | | [removed: 2012] [added: 2013] | | |

| Net sales | $ | [removed: 7,039.0] [added: 6,449.0] | | $ | [removed: 6,999.7] [added: 7,039.0] | | $ | [removed: 4,306.8] [added: 6,999.7] | |

| Cost of goods sold | [removed: 4,576.0] [added: 4,263.2] | | | [removed: 4,629.6] [added: 4,576.0] | | | [removed: 3,040.9] [added: 4,629.6] | | |

| Gross profit | [removed: 2,463.0] [added: 2,185.8] | | | [removed: 2,370.1] [added: 2,463.0] | | | [removed: 1,265.9] [added: 2,370.1] | | |

| Selling, general and administrative | [removed: 1,493.8] [added: 1,334.3] | | | [removed: 1,493.7] [added: 1,493.8] | | | [removed: 1,117.7] [added: 1,493.7] | | |

| Research and development | [removed: 117.3] [added: 119.6] | | | [removed: 122.8] [added: 117.3] | | | [removed: 92.3] [added: 122.8] | | |

| Impairment of [added: goodwill and] trade names | [removed: —] [added: 554.7] | | | [removed: 11.0] [added: —] | | | [removed: 60.7] [added: 11.0] | | |

| Operating income [removed: (loss)] | [removed: 851.9] [added: 177.2] | | | [removed: 742.6] [added: 851.9] | | | [removed: (4.8] [added: 742.6] | | [removed: )] |

| Loss (gain) on sale of businesses, net | [removed: 0.2] [added: 3.2] | | | [removed: (20.8] [added: 0.2] | | [removed: )] | [removed: —] [added: (20.8] | | [added: )] |

| Equity income of unconsolidated subsidiaries | [removed: (1.2] [added: (2.8] | | ) | [removed: (2.0] [added: (1.2] | | ) | [removed: (2.3] [added: (2.0] | | ) |

| Interest income | [removed: (3.7] [added: (6.0] | | ) | [removed: (4.4] [added: (3.7] | | ) | [removed: (2.0] [added: (4.4] | | ) |

| Interest expense | [removed: 72.3] [added: 108.7] | | | [removed: 75.3] [added: 72.3] | | | [removed: 70.2] [added: 75.3] | | |

| Income [removed: (loss)] from continuing operations before income taxes and noncontrolling interest | [removed: 784.3] [added: 74.1] | | | [removed: 694.5] [added: 784.3] | | | [removed: (146.1] [added: 694.5] | | [removed: )] |

| Provision [removed: (benefit)] for income taxes | [removed: 177.3] [added: 139.1] | | | [removed: 177.0] [added: 177.3] | | | [removed: (67.2] [added: 177.0] | | [removed: )] |

| Net income (loss) from continuing operations before noncontrolling interest | [removed: 607.0] [added: (65.0] | | [added: )] | [removed: 517.5] [added: 607.0] | | | [removed: (78.9] [added: 517.5] | | [removed: )] |

| Income (loss) from discontinued operations, net of tax | [removed: (6.4] [added: (4.7] | | ) | [removed: 25.9] [added: (6.4] | | [added: )] | [removed: (25.7] [added: 25.9] | | [removed: )] |

| Loss from sale / impairment of discontinued operations, net of tax | [removed: (385.7] [added: (6.7] | | ) | [removed: (0.8] [added: (385.7] | | ) | [removed: —] [added: (0.8] | | [added: )] |

| Net income (loss) before noncontrolling interest | [removed: 214.9] [added: (76.4] | | [added: )] | [removed: 542.6] [added: 214.9] | | | [removed: (104.6] [added: 542.6] | | [removed: )] |

| Noncontrolling interest | — | | | [removed: 5.8] [added: —] | | | [removed: 2.6] [added: 5.8] | | |

| Net income (loss) attributable to Pentair plc | $ | [removed: 214.9] [added: (76.4] | [added: )] | $ | [removed: 536.8] [added: 214.9] | | $ | [removed: (107.2] [added: 536.8] | [removed: )] |

| Net income (loss) from continuing operations attributable to Pentair plc | $ | [removed: 607.0] [added: (65.0] | [added: )] | $ | [removed: 511.7] [added: 607.0] | | $ | [removed: (81.5] [added: 511.7] | [removed: )] |

| Net income (loss) before noncontrolling interest | $ | [removed: 214.9] [added: (76.4] | [added: )] | $ | [removed: 542.6] [added: 214.9] | | $ | [removed: (104.6] [added: 542.6] | [removed: )] |

| Changes in cumulative translation adjustment | [removed: (336.3] [added: (264.9] | | ) | [removed: (29.1] [added: (336.3] | | ) | [removed: 31.4] [added: (29.1] | | [added: )] |

| Amortization of pension and other post-retirement prior service cost, net of $0, [removed: $0.2] [added: $0] and $0.2 tax, respectively | — | | | [removed: (0.4] [added: —] | | [removed: )] | [removed: (0.3] [added: (0.4] | | ) |

| Changes in market value of derivative financial instruments, net of [removed: $1.1, $0.7] [added: $0.5, $1.1] and [removed: $3.7] [added: $0.7] tax, respectively | [removed: (0.4] [added: 0.2] | | [removed: )] | [removed: (0.3] [added: (0.4] | | ) | [removed: (3.6] [added: (0.3] | | ) |

| Total comprehensive income (loss) | [removed: (121.8] [added: (341.1] | | ) | [removed: 512.8] [added: (121.8] | | [added: )] | [removed: (77.1] [added: 512.8] | | [removed: )] |

| Less: Comprehensive income attributable to noncontrolling interest | — | | | [removed: 8.0] [added: —] | | | [removed: 4.0] [added: 8.0] | | |

| Comprehensive income (loss) attributable to Pentair plc | $ | [removed: (121.8] [added: (341.1] | ) | $ | [removed: 504.8] [added: (121.8] | [added: )] | $ | [removed: (81.1] [added: 504.8] | [removed: )] |

| Continuing operations | $ | [removed: 3.19] [added: (0.36] | [added: )] | $ | [removed: 2.54] [added: 3.19] | | $ | [removed: (0.64] [added: 2.54] | [removed: )] |

Management has excluded from its assessment the internal control over financial reporting at ERICO Global Company, which was acquired on September 18, 2015 and whose financial statements constitute approximately 19 percent of total assets and 2 percent of total revenues in the consolidated financial statements as of and for the year ended December 31, 2015.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at ERICO Global Company ("ERICO"), which was acquired on September 18, 2015 and whose financial statements constitute approximately 19 percent of total assets and 2 percent of total revenues in the consolidated financial statements as of and for the year ended December 31, 2015.

Accordingly, our audit did not include the internal control over financial reporting at ERICO.

February 26, 2016

February 26, 2016

| Equity income of unconsolidated subsidiaries | (2.8 | | ) | (1.2 | | ) | (2.0 | | ) |

| Loss (gain) on sale of businesses, net | 3.2 | | | 0.2 | | | (20.8 | | ) |

| Impairment of goodwill and trade names | 554.7 | | | — | | | 11.0 | | |

| Amortization of bridge financing debt issuance costs | 10.8 | | | — | | | — | | |

| Net cash provided by (used for) investing activities of continuing operations | (2,024.5 | | ) | (128.3 | | ) | (211.2 | | ) |

| Dividends declared | — | | — | | | | — | | — | | | 1.5 | | | (175.9 | | ) | — | | | (174.4 | | ) | — | | | (174.4 | | ) |

| Share repurchase | (3.1 | ) | — | | | | — | | — | | | (200.0 | | ) | — | | | — | | | (200.0 | | ) | — | | | (200.0 | | ) |

| Cancellation of treasury shares | (19.1 | ) | (0.2 | | ) | | 19.1 | | 1,210.9 | | | (1,210.7 | | ) | — | | | — | | | — | | | — | | | — | | |

| Balance - December 31, 2015 | 180.5 | | $ | 1.8 | | | — | | $ | — | | $ | 2,860.3 | | $ | 1,791.7 | | $ | (645.0 | ) | $ | 4,008.8 | | $ | — | | $ | 4,008.8 | |

"Flow Control" refers to Pentair Ltd. prior to the Merger.

Beginning in 2016, we will report our interim quarterly periods on a calendar quarter basis.

During the latter part of the fourth quarter of 2015, the oil and gas industry continued to deteriorate, leading management to reconsider its estimates for future profitability of the Valves & Controls reporting unit and thereby increasing the likelihood that the associated goodwill could be impaired.

As such, we concluded that a triggering event occurred during the fourth quarter of 2015 requiring that we test Valves & Controls goodwill for impairment.

As a result, we reperformed our step one analysis as of December 31, 2015.

The results of our step one goodwill impairment testing as of December 31, 2015 indicated that the fair value of Valves & Controls was below its carrying value.

Accordingly, we performed the step two test and concluded the goodwill of Valves & Controls was impaired.

As a result, we recorded a non-cash goodwill impairment charge of $515.2 million for the year ended December 31, 2015.

The impairment is included in Impairment of goodwill and trade names in our Consolidated Statements of Operations and Comprehensive Income (Loss).

The non-recurring fair value measurement is a "Level 3" measurement under the fair value hierarchy described below.

As noted above, during the latter part of the fourth quarter of 2015, the oil and gas industry continued to deteriorate, leading management to reconsider its estimates for future profitability of the Valves & Controls and thereby increasing the likelihood that the associated intangible assets could be impaired.

As such, we concluded that a triggering event occurred during the fourth quarter of 2015 requiring that we test Valves & Controls trade names for impairment.

As a result of this test, an impairment charge of $39.5 million was recorded in 2015 related to trade names in Valves & Controls.

There was no impairment charge recorded in 2014 for identifiable intangible assets.

An impairment charge of $11.0 million was recorded in 2013 related to a trade name in Technical Solutions as the result of a rebranding strategy implemented in the fourth quarter of 2013.

These trade name impairment charges were recorded in Impairment of goodwill and trade names in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Certain of these liabilities are subject to insurance coverage and we recognize receivables for asbestos-related insurance recoveries only when realization of the claim is deemed probable.

liabilities) and $58.1 million ($13.2 million included in Other current liabilities and $44.9 million included in Other non-current liabilities), respectively.

Gains and losses on net investment hedges are included in AOCI as a separate component of equity in the Consolidated Balance Sheets.

In November 2015, the Financial Accounting Standards Board (the "FASB") issued a new accounting standard which clarifies and simplifies the balance sheet classification of deferred tax assets and liabilities.

Under the new standard, all deferred tax assets and liabilities are required to be classified as non-current in a classified balance sheet.

The new standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period, and early adoption is permitted.

We have not yet determined the impact this standard will have on our financial condition.

In September 2015, the FASB issued a new accounting standard related to the accounting for measurement period adjustments recognized in a business combination.

Under the previous standard, when adjustments were made to amounts previously reported as part of a business combination during the measurement period, entities were required to revise comparative information for prior periods.

Under the new standard, entities must recognize these adjustments in the reporting period in which the amounts are determined rather than retrospectively.

February 24, 2015

Pentair plc and Subsidiaries

| Loss on early extinguishment of debt | — | | | — | | | 75.4 | | |

| Shareholders’ equity attributable to Pentair plc | 4,663.8 | | | 6,095.3 | | |

| Loss (gain) on sale of assets | (1.5 | | ) | 3.9 | | | (2.4 | | ) |

| Balance - December 31, 2011 | 98.6 | | $ | 47.5 | | | — | | $ | — | | $ | 457.8 | | $ | 1,465.8 | | $ | (37.7 | ) | $ | 1,933.4 | | $ | 114.0 | | $ | 2,047.4 | |

| Dividends declared | — | | — | | | | — | | — | | | (141.1 | | ) | (66.3 | | ) | — | | | (207.4 | | ) | — | | | (207.4 | | ) |

| Distribution to noncontrolling interest | — | | — | | | | — | | — | | | — | | | — | | | — | | | — | | | (1.6 | | ) | (1.6 | | ) |

| Issuance of shares related to the Merger | 113.6 | | 65.5 | | | | (2.7 | ) | (119.6 | | ) | 4,985.8 | | | — | | | — | | | 4,931.7 | | | — | | | 4,931.7 | | |

| Share repurchase | — | | — | | | | (7.3 | ) | (334.2 | | ) | — | | | — | | | — | | | (334.2 | | ) | — | | | (334.2 | | ) |

Notes to consolidated financial statements

Amounts included in Other current assets related to these contracts were $103.5 million and $91.6 million at December 31, 2014 and 2013, respectively.

Amounts included in Other current liabilities related to these contracts were $41.4 million and $35.4 million at December 31, 2014 and 2013, respectively.

There were no material impairment charges recorded related to long-lived assets in 2012.

These groups of comparable companies are used to develop

Accordingly, step two of the impairment analysis was not required for 2014, 2013 or 2012.

The impairment charges recorded in 2013 and 2012 were the result of rebranding strategies implemented in the fourth quarters of 2013 and 2012, respectively.

At December 31, 2014 our goodwill and intangible assets were $6,350.0 million and represented 60% of our total assets.

If we experience future declines in sales and operating profit or do not meet our operating forecasts, we may be subject to future impairments.

Additionally, changes in assumptions regarding the future performance of our businesses, increases in the discount rate used to determine the discounted cash flows of our businesses or significant declines in our share price or the market as a whole could result in additional impairment indicators.

Because of the significance of our goodwill and intangible assets, any future impairment of these assets could have a material adverse effect on our financial results.

Certain of these liabilities are subject to insurance coverage.

The Merger was accounted for as a reverse acquisition under the purchase method of accounting with Pentair, Inc. treated as the acquirer.

Pro forma results of material acquisitions

| | | | |

| --- | --- | --- | --- |

The 2012 unaudited pro forma net income excludes the impact of $57.3 million of transaction related costs, $21.8 million of change of control costs and $156.2 million of non-recurring items related to acquisition date fair value adjustments to inventory and customer backlog associated with the Merger.

On October 4, 2012, we acquired, as part of Valves & Controls, the remaining 25 percent equity interest in Pentair Middle East Holding S.a.r.l.

(“KEF”), a privately held company, for $100.0 million in cash.

Prior to the acquisition, we held a 75 percent equity interest in KEF, a vertically integrated valve manufacturer in the Middle East.

There was no pro forma impact from this acquisition as the results of KEF were consolidated into Flow Control’s financial statements prior to acquiring the remaining 25 percent interest in KEF.

Additionally, during the year ended December 31, 2012, we completed other small acquisitions as part of Process Technologies with purchase prices totaling $121.2 million in cash, net of cash acquired.

Total transaction costs related to acquisition activities in 2013 and 2012 were $8.2 million and $57.3 million, respectively, and were expensed as incurred and recorded in Selling, general and administrative in our Consolidated Statements of Operations and Comprehensive Income (Loss).

The sale of a portion of the Water Transport business was completed in January 2015.

The remaining portions are expected to be disposed of by mid-2015.

| Goodwill | — | | | 273.5 | | |

| Process Technologies | 18.6 | | | 9.4 | | | 25.2 | | |

| Flow Technologies | 10.6 | | | 13.4 | | | 5.7 | | |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the year ended December 31, [removed: 2014,] [added: 2015,] pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 [removed: (“the] [added: ("the] Exchange [removed: Act”).][added: Act").]

Based upon their evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the year ended December 31, [removed: 2014] [added: 2015] to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.

There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2014] [added: 2015] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Information required under this item with respect to directors is contained in our Proxy Statement for our [removed: 2015] [added: 2016] annual general meeting of shareholders under the captions [removed: “Corporate] [added: "Corporate] Governance [removed: Matters,” “Proposal] [added: Matters," "Proposal] 1 Re-elect Eleven Director [removed: Nominees”] [added: Nominees"] and [removed: “Section] [added: "Section] 16(a) Beneficial Ownership Reporting [removed: Compliance”] [added: Compliance"] and is incorporated herein by reference.

Information required under this item is contained in our Proxy Statement for our [removed: 2015] [added: 2016] annual general meeting of shareholders under the captions [removed: “Corporate] [added: "Corporate] Governance Matters — Committees of the Board — Compensation [removed: Committee,” “Corporate] [added: Committee," "Corporate] Governance Matters — Compensation Committee Interlocks and Insider [removed: Participation,” “Compensation] [added: Participation," "Compensation] Discussion and [removed: Analysis,” “Compensation] [added: Analysis," "Compensation] Committee [removed: Report,” “Executive Compensation”] [added: Report," "Executive Compensation"] and [removed: “Director Compensation”] [added: "Director Compensation"] and is incorporated herein by reference.

Information required under this item with respect to security ownership is contained in our Proxy Statement for our [removed: 2015] [added: 2016] annual general meeting of shareholders under the caption [removed: “Security Ownership”] [added: "Security Ownership"] and is incorporated herein by reference.

The following table summarizes, as of December 31, [removed: 2014,] [added: 2015,] information about compensation plans under which our equity securities are authorized for issuance:

| 2008 Omnibus Stock Incentive Plan | [removed: 2,659,574] [added: 2,341,053] | | (4) | [removed: 32.82] [added: 32.78] | | | (2) | — | | (5) |

| 2004 Omnibus Stock Incentive Plan | [removed: 1,223,592] [added: 994,661] | | | [removed: 32.99] [added: 32.74] | | | | — | | (5) |

| Outside Directors Non-qualified Stock Option Plan | [removed: 200,000] [added: 140,000] | | | [removed: 35.36] [added: 33.63] | | | | — | | (5) |

| [removed: (1)] [added: (4)] | Consists of [removed: 1,845,959] [added: 2,297,754] shares subject to stock options and [removed: 958,930] [added: 43,299] shares subject to restricted stock units. |

| [removed: (4)] [added: (1)] | Consists of [removed: 2,529,593] [added: 2,186,653] shares subject to stock options and [removed: 129,981] [added: 819,128] shares subject to restricted stock units. |

| 2012 Stock and Incentive Plan | 3,005,781 | | (1) | $ | 58.47 | | (2) | 6,493,423 | | (3) |

| Total | 6,481,495 | | | $ | 42.79 | | (2) | 6,493,423 | | |

| 2012 Stock and Incentive Plan | 2,804,889 | | (1) | $ | 52.63 | | (2) | 7,236,778 | | (3) |

| Total | 6,888,055 | | | $ | 40.99 | | (2) | 7,236,778 | | |

Information required under this item is contained in our Proxy Statement for our [removed: 2015] [added: 2016] annual general meeting of shareholders under the captions [removed: “Corporate] [added: "Corporate] Governance Matters — Board [removed: Governance,” “Corporate] [added: Governance," "Corporate] Governance Matters — Independent [removed: Directors,”] [added: Directors,"] and [removed: “Corporate] [added: "Corporate] Governance Matters — Policies and Procedures Regarding Related Person [removed: Transactions”] [added: Transactions"] and is incorporated herein by reference.

Information required under this item is contained in our Proxy Statement for our [removed: 2015] [added: 2016] annual general meeting of shareholders under the caption [removed: “Proposal] [added: "Proposal] 3 Ratify, by Non-Binding Advisory Vote, the Appointment of Deloitte & Touche LLP as the Independent Auditors of Pentair plc and Authorize, by Binding Vote, the Audit and Finance Committee to Set the Auditors [removed: Remuneration”] [added: Remuneration"] and is incorporated herein by reference.

Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

Consolidated Balance Sheets as of December 31, [removed: 2014] [added: 2015] and [removed: 2013][added: 2014]

Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]