Pentair (PNR) 10-K risk factor changes: FY2018 vs FY2017

[removed: Any] [added: The occurrence] of [added: any of] these [removed: factors] [added: events] could have a material adverse effect on our [added: reputation,] business, financial condition, results of [removed: operations, cash flows] [added: operations] and [removed: trading prices.][added: cash flows.]

Although we believe that [removed: separating our Electrical business from our Water business by means of] the spin-off [added: of nVent Electric plc] will provide financial, operational, managerial and other benefits to us and our shareholders, the spin-off may not provide the results on the scope or on the scale we anticipate, and we may not realize any or all of the intended benefits.

In addition, we [added: have and] will [added: continue to] incur one-time costs and ongoing costs in connection with, or as a result of, the spin-off, including costs of operating as independent, publicly-traded companies that the two businesses [removed: will] [added: are] no longer [removed: be] able to share.

The [removed: proposed] spin-off transaction could result in substantial tax liability to us and our [removed: shareholders.][added: shareholders if the spin-off does not qualify as a tax-free transaction.]

The spin-off [removed: is] [added: was] conditioned on our receipt of opinions of tax [removed: counsel] [added: advisors] and tax rulings from taxing authorities.

Accordingly, taxing authorities or the courts may reach conclusions with respect to the spin-off that are different from the conclusions reached in [removed: the opinions of counsel.][added: such opinions.]

Moreover, [removed: the] [added: such] opinions [removed: of counsel will be] [added: were] based on certain statements and representations made by us, which, if incomplete or inaccurate in any material respect, could invalidate the [removed: opinion of counsel.][added: opinions.]

In addition, if the spin-off were taxable, each holder of our ordinary shares who [removed: receives] [added: received] shares of [removed: the Electrical business] [added: nVent Electric plc] in the spin-off would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares received.

Among these, the most significant are global [removed: industrial markets] [added: industrial, commercial,] and residential markets.

Important factors for our businesses and the businesses of our customers include the overall strength of the economy and our [removed: customers'] [added: customers’] confidence in the economy, industrial and governmental capital spending, the strength of the residential and commercial real estate markets, [added: the residential housing market, the commercial business climate,] unemployment rates, availability of consumer and commercial financing, interest rates, and energy and commodity prices.

We compete based on technical expertise, [added: intellectual property,] reputation for quality and reliability, timeliness of delivery, previous installation history, contractual [removed: terms] [added: terms, service offerings, customer experience] and [added: service, and] price.

Sales outside of the U.S. for the year ended December 31, [removed: 2017] [added: 2018] accounted for [removed: 40%] [added: 37%] of our net sales.

We may not be able to identify suitable acquisition candidates, obtain financing or have sufficient cash necessary for acquisitions or successfully complete acquisitions in the [removed: future or that completed acquisitions will be successful.][added: future.]

It may be difficult for us to [removed: complete transactions quickly and to] integrate acquired [removed: operations] [added: operations, including those from our recent acquisitions of Aquion, Inc. and Pelican Water Systems,] efficiently into our business operations.

During [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] we initiated and continued execution of certain business initiatives aimed at reducing our fixed cost structure and realigning our business.

We are exposed to political, regulatory, [removed: economic] [added: economic, trade,] and other risks that arise from operating a multinational business.

Accordingly, our business is subject to the political, regulatory, [removed: economic] [added: economic, trade,] and other risks that are inherent in operating in numerous countries.

We cannot assure [removed: you] that these and other factors will not have a material adverse effect on our international operations or on our business as a whole.

We strive for productivity improvements and implement increases in selling prices to help mitigate cost increases in raw materials (especially metals and resins), energy and other costs [removed: such as] [added: including wages,] pension, health care and insurance.

We may need to spend significant resources [removed: monitoring] [added: monitoring, enforcing and defending] our intellectual property rights and we may or may not be able to detect infringement by third parties.

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

As of December 31, [removed: 2017] [added: 2018] our goodwill and intangible assets were [removed: $5,909.5] [added: $2,349] million and represented [removed: 68%] [added: 62%] of our total assets.

[removed: Long-term declines] [added: Declines] in [removed: projected future cash flows] [added: fair market value] could result in future goodwill and intangible asset impairment charges.

If operations at any of our manufacturing facilities were to be disrupted as a result of significant equipment failures, natural disasters, earthquakes, power outages, fires, explosions, terrorism, adverse weather conditions, labor disputes or other reasons, we may be unable to fill customer orders and otherwise meet customer demand for our products, which could have a material adverse effect [added: on] our business, financial condition, results of operations and cash flows.

[removed: However, any recovery under our insurance policies may not offset the lost sales or increased costs that may be experienced] during the disruption of operations, which could have a material adverse effect [added: on] our business, financial condition, results of operations and cash flows.

We experience seasonal demand [removed: in a number of markets] [added: with end-customers and end-users] within [removed: both] [added: each] of our business segments.

[removed: In Water, demand] [added: Demand] for [added: pool equipment in the Aquatic Systems segment, water filtration products in the Filtration Solutions segment, and] residential water [removed: supply products, infrastructure,] [added: supply, infrastructure and] agricultural products [removed: and end-user demand for pool equipment] in [removed: our primary markets follow] [added: the Flow Technologies segment follows] warm weather trends and [removed: are] [added: is] at seasonal highs from April to August.

[removed: The] [added: While we attempt to mitigate the] magnitude of the sales [removed: increase] [added: spike] in [removed: Water is partially mitigated] [added: the Aquatic Systems and Flow Technologies segments] by employing some advance sale [removed: or "early buy"] [added: “early buy”] programs (generally including extended payment terms and/or additional [removed: discounts).][added: discounts), we cannot provide any assurance that such programs will be successful.]

[removed: Seasonal] [added: In addition, seasonal] effects [added: in the Flow Technologies segment] may vary from year to year and [removed: are] [added: be] impacted by weather patterns, particularly by [removed: temperatures,] [added: temperature,] heavy flooding and droughts.

| • | changes in earnings estimates [added: or guidance] by us or securities analysts or our ability to meet those [removed: estimates;] [added: estimates or guidance;] |

| • | natural or other environmental [removed: disasters that investors believe may affect us;] [added: disasters;] |

| • | results from any material litigation, [removed: including asbestos claims,] government investigations or environmental liabilities; |

Changes in U.S. [added: or foreign government] administrative policy, including changes to existing trade agreements, could have a material adverse effect on us.

As a result of changes to U.S. [added: or foreign government] administrative policy, there may be changes to existing trade agreements, like the North American Free Trade [removed: Agreement,] [added: Agreement (“NAFTA”) and its anticipated successor agreement, the U.S.-Mexico-Canada Agreement (“USMCA”) which is still subject to approval by the U.S., Mexico and Canada,] greater restrictions on free trade generally, [added: and] significant increases in tariffs on goods imported into the [removed: U.S.] [added: U.S.,] particularly tariffs on products manufactured in Mexico, [added: China, or other U.S. trading countries where we have operations or manufacture or sell products,] among other possible changes.

[removed: Changes] [added: A trade war, other governmental action related to tariffs or international trade agreements, including NAFTA and USMCA, changes] in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently manufacture and sell products, and any resulting negative sentiments towards the U.S. as a result of such changes, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our subsidiaries, along with numerous other companies, are named as defendants in a substantial number of lawsuits based on alleged exposure to asbestos-containing [removed: materials.][added: materials, substantially all of which relate to our discontinued operations.]

Each case typically names between [removed: dozens] [added: several dozen] to [removed: hundreds of] [added: more than a hundred] corporate defendants.

As of December 31, [removed: 2017,] [added: 2018,] there were approximately 600 claims pending against our [removed: subsidiaries.][added: subsidiaries, substantially all of which relate to our discontinued operations.]

Based on these findings, the EPA has implemented regulations that require reporting of GHG emissions, or [removed: that limit emissions of GHGs from certain mobile or stationary sources.]

To the extent our customers, particularly our energy and industrial [removed: customers ,] [added: customers,] are subject to any of these or other similar proposed or newly enacted laws and regulations, we are exposed to risks that the additional costs by customers to comply with such laws and regulations could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services.

Any acquisitions that we complete may not be successful.

Sales outside of the U.S. for the year ended December 31, 2018 accounted for 37% of our net sales.

In 2016, the United Kingdom voted in a referendum to exit the European Union (“Brexit”), which resulted in significant currency exchange rate fluctuations and volatility.

Negotiations continue to determine the terms of Brexit.

Given the lack of comparable precedent and the status of the negotiations, the implications of Brexit, or how such implications might affect our company, continue to remain unclear at this time.

Brexit could, among other impacts, disrupt trade and the movement of goods, services and people between the United Kingdom and the European Union or other countries as well as create legal and global economic uncertainty.

If the USMCA is ratified by all three countries, many of its provisions will not take effect until 2020.

While the USMCA is somewhat similar to NAFTA, it contains several new compliance obligations addressing such issues as rules of origin, labor standard, certificate of origin documentation and de minimis thresholds, as well as new policies on labor and environmental standards, intellectual property protections and some digital trade provisions.

We are currently analyzing the expected impact of the USMCA.

While certain aspects of the USMCA are expected to be positive, others, including potentially higher regulatory compliance costs, may have an adverse impact on our business.

It remains unclear what the U.S.

administration or foreign governments, including China, will or will not do with respect to tariffs, NAFTA, USMCA or other international trade agreements and policies.

A loss of, or material cancellation, reduction, or delay in purchases by, one or more of our largest customers could harm our business.

Our net sales to our largest customer represented approximately 15% of our consolidated net sales in 2018.

While we do not have any other customers that accounted for 10% or more of our consolidated net sales in 2018, we have other customers that are key to the success of our business.

Our concentration of sales to a relatively small number of larger customers makes our relationship with each of these customers important to our business.

Our success is dependent on retaining these customers, which requires us to successfully manage relationships and anticipate the needs of our customers in the channels in which we sell our products.

Our customers also may be impacted by economic conditions in the industries of those customers, which could result in reduced demand for our products.

We cannot provide assurance that we will be able to retain our largest customers.

In addition, some of our customers may shift their purchases to our competitors in the future.

The loss of one or more of our largest customers, any material cancellation, reduction, or delay in purchases by these customers, or our inability to successfully develop relationships with additional customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.

However, any recovery under our insurance policies may not offset the lost sales or increased costs that may be experienced

Unfavorable changes in the ratings that rating agencies assign to our debt may ultimately negatively impact our access to the debt capital markets and increase the costs we incur to borrow funds.

If ratings for our debt fall below investment grade, our access to the debt capital markets may become restricted.

Additionally, our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded.

increased costs of debt financing or difficulties in obtaining debt financing.

that limit emissions of GHGs from certain mobile or stationary sources.

Changes in data privacy laws and our ability to comply with them could have a material adverse effect on us.

A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal and other data.

Many foreign data privacy regulations, including the General Data Protection Regulation (“GDPR”), which became effective in the European Union in 2018, are more stringent than those in the United States.

These laws and regulations are rapidly evolving and changing, and could have an adverse effect on our operations.

Companies’ obligations and requirements under these laws and regulations are subject to uncertainty in how they may be interpreted by government authorities.

The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may increase our operational costs, and/or result in interruptions or delays in the availability of systems.

In the case of non-compliance these laws, including the GDPR, regulators have the authority to levy significant fines.

In addition, if there is a breach of privacy, we may be required to make notifications under data privacy regulations.

We are currently, and may in the future, become subject to litigation and other claims.

These legal proceedings are typically claims that relate to the conduct of our business and include, without limitation, claims relating to commercial or contractual disputes with suppliers, customers or parties to acquisitions and divestitures, intellectual property matters, environmental, safety and health matters, product liability, the use or installation of our products, consumer matters, and employment and labor matters.

The outcome of such legal proceedings cannot be predicted with certainty and some may be disposed of unfavorably to us.

We also may not have insurance that covers such claims.

Further, some of our business involves the sale of our products to customers that are constructing large and complex systems, facilities or other capital projects and while we generally try to limit our exposure liquidated damages,

Risks Relating to Our Proposed Separation of Our Water Business and Electrical Business by Spin-off

The proposed separation of our Water business and Electrical business is contingent upon the satisfaction of a number of conditions, may require significant time and attention of our management and may have an adverse effect on us whether or not it is completed.

On May 9, 2017, we announced that our Board of Directors approved a plan to separate our Water business and Electrical business into two independent, publicly-traded companies through a spin-off.

Completion of the spin-off will be contingent upon customary conditions, including obtaining final approval from our Board of Directors, receipt of tax opinions and rulings and effectiveness of appropriate filings with the SEC.

In addition, the proposed spin-off is complex in nature and may be affected by unanticipated developments or changes in market conditions.

For these and other reasons, the spin-off may not be completed on April 30, 2018, as we are targeting, if at all.

Whether or not we complete the spin-off, our ongoing businesses may be adversely affected and we may be subject to certain risks and consequences as a result of pursuing the spin-off, including the following:

| | |

| --- | --- |

| • | execution of the proposed spin-off will require significant time and attention from management, which may distract management from the operation of our businesses and the execution of other initiatives that may have been beneficial to us; |

| • | our employees may also be distracted due to uncertainty about their future roles with each of the separate companies pending the completion of the spin-off; |

| • | some of our suppliers or customers may delay or defer decisions or may end their relationships with us; |

| • | we will be required to pay certain costs and expenses relating to the spin-off, such as legal, accounting and other professional fees, whether or not it is completed; and |

| • | we may experience negative reactions from the financial markets if we fail to complete the spin-off or fail to complete it on a timely basis. |

If the proposed spin-off of our Electrical business is completed, the trading price of our ordinary shares will likely decline and may experience greater volatility.

We expect the trading price of our ordinary shares immediately following the spin-off to be significantly lower than immediately prior to the spin-off because the trading price for our shares will no longer reflect the value of our Electrical business.

In addition, until the market has fully analyzed our value without our Electrical business, the price of our shares may experience greater volatility.

If the proposed spin-off is completed, our shares may not match some holders' investment strategies or meet minimum criteria for inclusion in stock market indices or portfolios, which could cause investors to sell their shares.

Excessive selling pressure could cause the market price of our shares to decrease further following the completion of the proposed spin-off.

Following the spin-off, the value of our ordinary shares and the ordinary shares of the Electrical business that is spun off may collectively trade at an aggregate price less than that at which the Company's ordinary shares might trade had the spin-off not occurred.

For a number of reasons, our ordinary shares and the ordinary shares of the Electrical business that is spun off that you may hold following the spin-off may collectively trade at a value less than the price at which our ordinary shares might have traded had the spin-off not occurred and we continued to own the Electrical business.

These reasons include the future performance of either us or the Electrical business as separate, independent companies and the future shareholder base and market for our ordinary shares and the ordinary shares of the Electrical business and the prices at which these shares individually trade.

Additionally, certain internal restructuring transactions necessary to accomplish the spin-off may result in adverse tax consequences to us.

Electrical generally experiences increased demand for thermal protection products and services during the fall and winter months in the Northern Hemisphere and increased demand for electrical fastening products during the spring and summer months in the Northern Hemisphere.

Seasonality and weather conditions could have a material adverse effect on our results of operations.

We have experienced an increase in the number of asbestos-related lawsuits over the past several years, including lawsuits by plaintiffs

with mesothelioma-related claims.

A large percentage of these suits have not presented viable legal claims and, as a result, have been dismissed or withdrawn.

Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats.

Our businesses expose us to potential litigation, such as product liability claims relating to the design, manufacture and sale of our products.

We share responsibility for certain income tax liabilities for tax periods prior to and including the date of the Distribution.

In connection with the Distribution, we entered into a tax sharing agreement (the "2012 Tax Sharing Agreement") with Tyco (now known as Johnson Controls International plc, "Johnson Controls") and The ADT Corporation ("ADT"), which governs the rights and obligations of ADT, Johnson Controls and us for certain pre-Distribution tax liabilities, including Johnson Controls' obligations under a separate tax sharing agreement (the "2007 Tax Sharing Agreement") entered into by Johnson Controls, Covidien Ltd. (now known as Medtronic plc, "Medtronic") and TE Connectivity Ltd. ("TE Connectivity") in connection with the 2007 distributions of Medtronic and TE Connectivity by Johnson Controls.

The 2012 Tax Sharing Agreement provides that we, Johnson Controls and ADT will share (i) certain pre-Distribution income tax liabilities that arise from adjustments made by tax authorities to our, Johnson Controls' and ADT's U.S. income tax returns, including withholding tax, income tax, or other tax liabilities that could arise if the Merger, Distribution or certain internal transactions undertaken in anticipation of the Distribution are determined to be taxable for U.S. federal or Swiss tax purposes, and (ii) payments required to be made by Johnson Controls with respect to the 2007 Tax Sharing Agreement (the liabilities in clauses (i) and (ii) collectively, "Shared Tax Liabilities").

Johnson Controls is responsible for the first $500 million of Shared Tax Liabilities.

As of December 31, 2017, Johnson Controls has paid $210.0 million of Shared Tax Liabilities.

We and ADT will share 42% and 58%, respectively, of the next $225 million of Shared Tax Liabilities.

We, ADT and Johnson Controls will share 20%, 27.5% and 52.5%, respectively, of Shared Tax Liabilities above $725 million.

Costs and expenses associated with the management of Shared Tax Liabilities will generally be shared 20% by us, 27.5% by ADT and 52.5% by Johnson Controls.

The ultimate resolution of these matters, and the impact of that resolution, are uncertain.

To the extent we are responsible for any liability under the 2012 Tax Sharing Agreement, and indirectly the 2007 Tax Sharing Agreement, there could be a material adverse impact on our financial condition, results of operations, cash flows or our effective tax rate in future reporting periods.

These factors include [removed: the ability to satisfy the necessary conditions to consummate the Proposed Separation (as defined below) on a timely basis or at all; the ability to successfully separate the Water and Electrical businesses and realize the anticipated benefits from the Proposed Separation; adverse effects on the Water and Electrical business operations or financial results and the market price of our shares as a result of the announcement or consummation of the Proposed Separation; unanticipated transaction expenses, such as litigation or legal settlement expenses; failure to obtain tax rulings or changes in tax laws; changes in capital market conditions; the impact of the Proposed Separation on our employees, customers and suppliers;] overall global economic and business conditions impacting [removed: the Water and Electrical businesses; future opportunities that] our [removed: board may determine present greater potential to increase shareholder value; the ability of the Water and Electrical businesses to operate independently following the Proposed Separation; the ability to achieve] [added: business, including] the [removed: benefits] [added: strength] of [removed: our restructuring plans; the ability to successfully identify, finance, complete] [added: housing] and [removed: integrate acquisitions;] [added: related markets;] competition and pricing pressures in the markets we serve; [removed: the strength of housing and related markets;] volatility in currency exchange [removed: rates] [added: rates; failure of markets to accept new product introductions] and [removed: commodity prices; inability] [added: enhancements; the ability] to [removed: generate savings from excellence in operations initiatives consisting] [added: successfully identify, finance, complete and integrate acquisitions, including the Aquion, Inc. (“Aquion”) and Pelican Water Systems (“Pelican”) acquisitions; the ability to achieve the benefits] of [removed: lean enterprise, supply management] [added: our restructuring plans] and [removed: cash flow practices; increased] [added: cost reduction initiatives;] risks associated with operating foreign businesses; the [removed: ability to deliver backlog and win future project work; failure] [added: impact] of [removed: markets] [added: material cost and other inflation; our ability] to [removed: accept new product introductions] [added: comply with laws] and [removed: enhancements;] [added: regulations;] the impact of changes in [removed: laws] [added: laws, regulations] and [removed: regulations,] [added: administrative policy,] including those that limit U.S. tax [removed: benefits;] [added: benefits or impact trade agreements and tariffs;] the outcome of litigation and governmental proceedings; [added: the ability to realize the anticipated benefits from the Separation (as defined below);] and the ability to achieve our long-term strategic operating goals.

Pentair [removed: plc] assumes no obligation, and disclaims any obligation, to update the information contained in this report.

On April 28, [removed: 2017] [added: 2017,] we completed the sale of the Valves & Controls business to Emerson Electric Co. for $3.15 [removed: billion in cash.][added: billion.]

The results of the Valves & Controls business have been presented as discontinued operations [removed: and the related assets and liabilities have been reclassified as held] for [removed: sale for] all periods presented.

The following trends and uncertainties affected our financial performance in [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and will likely impact our results in the future:

| • | During [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure [removed: and, during 2017, began realigning] [added: and realigned] our business in contemplation of the [removed: Proposed Separation.] [added: Separation and Distribution of nVent.] We expect [removed: that] these actions will contribute to margin growth in [removed: 2018.] [added: 2019.] |

| • | We have identified specific product and geographic market opportunities that we find attractive and continue to pursue, both within and outside the [removed: United States.] [added: U.S.] 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 markets, our core sales growth will likely be limited or may decline. |

In [removed: 2018,] [added: 2019,] our operating objectives include the following:

| • | Optimizing our technological capabilities to increasingly generate innovative new [removed: products;] [added: products] and [added: advance digital transformation; and] |

| In millions | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | | [removed: 2017] [added: 2018] vs [removed: 2016] [added: 2017] | | [removed: 2016] [added: 2017] vs [removed: 2015] [added: 2016] | |

| % of net sales | [removed: 2.3] [added: 35.3] | | % | [removed: 2.3] [added: 34.7] | | % | [removed: 2.1] [added: 34.5] | | % | | [removed: —] [added: 0.6] | [added: pts] | 0.2 | pts |

| Loss on sale of businesses | [removed: 4.2] [added: 7.3] | | | [removed: 3.9] [added: 4.2] | | | [removed: 3.2] [added: 3.9] | | | | [removed: 7.7] [added: N.M.] | [removed: %] | [removed: 21.9] [added: 7.7] | % |

| Loss on early extinguishment of debt | [removed: 101.4] [added: 17.1] | | | [removed: —] [added: 101.4] | | | — | | | | N.M. | | [removed: N.M.] [added: N.M] | |

| Net interest expense | [removed: 87.3] [added: 32.6] | | | [removed: 140.1] [added: 87.3] | | | [removed: 101.9] [added: 140.1] | | | | [removed: (37.7] [added: (62.7] | )% | [removed: 37.5] [added: (37.7] | [removed: %] [added: )%] |

| | [removed: 2017] [added: 2018] vs [removed: 2016] [added: 2017] | | | [removed: 2016] [added: 2017] vs [removed: 2015] [added: 2016] | |

| Price | 0.5 | | | [removed: 0.3] [added: 0.4] | |

| Acquisition [added: (divestiture)] | [removed: 0.9] [added: (0.9] | [added: )] | | [removed: 8.1] [added: 2.9] | |

| Currency | 0.6 | | | [removed: (0.8] [added: 0.4] | [removed: )] |

| Total | 1.0 | % | | [removed: 5.9] [added: 1.5] | % |

The [removed: 1.0] [added: 2.3] percent increase in consolidated net sales in 2017 from 2016 was primarily the result of:

| • | increased sales [removed: volume] in our industrial [removed: business] [added: and residential & commercial businesses] primarily in the U.S.; |

The [removed: 5.9] [added: 4.2] percent increase in consolidated net sales in [removed: 2016] [added: 2018] from [removed: 2015] [added: 2017] was primarily the result of:

| • | [removed: continued slowdown in capital spending, driving core] sales declines in our industrial [added: business due to customer delays in capital spending;] and [removed: energy businesses;] |

The [removed: 0.4] [added: 0.2] percentage point increase in gross profit as a percentage of sales in 2017 from 2016 was primarily the result of:

| • | higher contribution margin as a result of savings generated from our [removed: Pentair Integrated Management System ("PIMS") initiatives] [added: PIMS initiatives,] including lean and supply management practices. |

| • | inflationary increases related to raw materials and labor [removed: costs; and] [added: costs.] |

The [removed: 2.1] [added: 0.6] percentage point increase in gross profit as a percentage of sales in [removed: 2016] [added: 2018] from [removed: 2015] [added: 2017] was primarily the result of:

| • | higher [added: core] sales [removed: volumes,] [added: in our commercial and specialty businesses,] which resulted in increased leverage on fixed [removed: expenses included in cost of goods sold;] [added: operating expenses;] |

| • | higher contribution margin as a result of savings generated from our [removed: Pentair Integrated Management System ("PIMS")] [added: PIMS] initiatives including lean and supply management [removed: practices; and] [added: practices.] |

The [removed: 0.9] [added: 0.3] percentage point [removed: increase] [added: decrease] in SG&A expense as a percentage of sales in 2017 from 2016 and was driven [removed: by:][added: by the following:]

| • | restructuring costs of [removed: $30.7] [added: $28.2] million in 2017, compared to [removed: $20.6] [added: $12.2] million in 2016; |

| • | non-cash charges of [removed: $32.0] [added: $15.6] million [added: in 2017] related to trade [removed: name] [added: names] and other impairments; and |

| • | increased [removed: investment] [added: investments] in sales and marketing to drive growth. |

| • | savings generated from [removed: back-office consolidation, reduction in personnel] [added: restructuring] and other lean initiatives; [added: and] |

| • | a benefit from the reversal of a $13.3 million indemnification liability in [removed: 2017 related to our 2012 transaction with Tyco (now known as Johnson Controls International plc);] [added: 2017;] and |

The [removed: 0.9] [added: 0.8] percentage point [removed: increase] [added: decrease] in SG&A expense as a percentage of sales in [removed: 2016] [added: 2018] from [removed: 2015] [added: 2017] and was driven [removed: by the following:][added: by:]

| • | increased overall interest rates in effect on our [added: variable rate] outstanding debt during 2017 compared to 2016. |

The [removed: 37.5] [added: 62.7] percent [removed: increase] [added: decrease] in net interest expense in [removed: 2016] [added: 2018] from [removed: 2015] [added: 2017] was primarily the result of:

| • | increased overall interest rates in effect on our outstanding [removed: debt.] [added: variable rate debt during 2018 compared to 2017.] |

The [removed: 17.6] [added: 18.7] percentage point decrease in the effective tax rate in [removed: 2017] [added: 2018] from [removed: 2016] [added: 2017] was primarily due to:

Pentair plc and its consolidated subsidiaries (“we,” “us,” “our,” “Pentair” or the “Company”) is a pure play water industrial manufacturing company comprised of three reporting segments: Aquatic Systems, Filtration Solutions and Flow Technologies.

For the year ended December 31, 2018, the Aquatic Systems, Filtration Solutions and Flow Technologies segments represented approximately 35%, 34% and 31% of total revenues, respectively.

On April 30, 2018, we completed the separation of our Electrical business from the rest of Pentair (the “Separation”) by means of a dividend in specie of the Electrical business, which was effected by the transfer of the Electrical business from Pentair to nVent and the issuance by nVent of nVent ordinary shares directly to Pentair shareholders (the “Distribution”).

We did not retain an equity interest in nVent.

The results of the Electrical business have been presented as discontinued operations for all periods presented.

The Electrical business was previously disclosed as a stand-alone reporting segment.

| • | Proposed regulations as part of the Tax Cuts and Jobs Act, enacted in the U.S. in December 2017, may place limitations on the deductibility of certain interest expense for U.S. tax purposes. These proposed regulations could materially adversely affect our financial condition, results of operations, cash flows or our effective tax rate in future reporting periods when enacted. |

| • | Accelerating PIMS, with specific focus on the area of commercial excellence and acquisition integrations; |

| • | Delivering our growth priorities through new products and global and market expansion, specifically in the areas of pool and residential and commercial water treatment especially through acquisitions and focus on China and Southeast Asia; |

| • | Building a growth culture and delivering on our commitments while living our Win Right values. |

In January 2019, as part of Filtration Solutions, we entered into definitive agreements to acquire Aquion and Pelican for $160.0 million and $120.0 million in cash, respectively, and subject to certain customary adjustments.

We completed the Aquion acquisition on February 13, 2019 and the Pelican acquisition on February 12, 2019.

Aquion offers a diverse line of water conditioners, water filters, drinking-water purifiers, ozone and ultraviolet disinfection systems, reverse osmosis systems and acid neutralizers for the residential and commercial water treatment industry.

Pelican provides residential whole home water treatment systems.

| Net sales | $ | 2,965.1 | | $ | 2,845.7 | | $ | 2,780.6 | | | 4.2 | % | 2.3 | % |

| Cost of goods sold | 1,917.4 | | | 1,858.2 | | | 1,821.5 | | | | 3.2 | % | 2.0 | % |

| Gross profit | 1,047.7 | | | 987.5 | | | 959.1 | | | | 6.1 | % | 3.0 | % |

| Selling, general and administrative | 534.3 | | | 536.0 | | | 531.4 | | | | (0.3 | )% | 0.9 | % |

| % of net sales | 18.0 | | % | 18.8 | | % | 19.1 | | % | | (0.8 | ) pts | (0.3 | ) pts |

| Research and development | 76.7 | | | 73.2 | | | 73.3 | | | | 4.8 | % | (0.1 | )% |

| % of net sales | 2.6 | | % | 2.6 | | % | 2.6 | | % | | — | | — | |

| Operating income | 436.7 | | | 378.3 | | | 354.4 | | | | 15.4 | % | 6.7 | % |

| % of net sales | 14.7 | | % | 13.3 | | % | 12.7 | | % | | 1.4 | pts | 0.6 | pts |

| Other (income) expense | (0.1 | | ) | 12.6 | | | (10.5 | | ) | | N.M. | | N.M | |

| Income from continuing operations before income taxes | 379.8 | | | 172.8 | | | 220.9 | | | | N.M. | | (21.8 | )% |

| Provision for income taxes | 58.1 | | | 58.7 | | | 42.7 | | | | (1.0 | )% | 37.5 | % |

| Effective tax rate | 15.3 | | % | 34.0 | | % | 19.3 | | % | | (18.7 | ) pts | 14.7 | pts |

| Volume | 3.6 | % | | — | % |

| Total | 4.2 | % | | 2.3 | % |

| • | core sales increases across all three reportable segments, primarily driven by increased sales in the residential and commercial businesses; |

| • | favorable foreign currency effects during the year ended December 31, 2018. |

This increase was partially offset by:

| • | sales declines due to the sale of certain businesses during the year ended December 31, 2018. |

This increase was partially offset by:

| • | selective increases in selling prices across all three reportable segments to mitigate inflationary cost increases; |

| • | favorable mix in the Filtration Solutions segment; and |

This increase was partially offset by:

This increase was partially offset by:

| • | higher sales resulting in increased leverage. |

| • | restructuring costs of $40.6 million in 2018, compared to $28.2 million in 2017; |

Pentair plc is a focused diversified industrial manufacturing company comprising two reporting segments: Water and Electrical.

For the year ended December 31, 2017, Water and Electrical accounted for 58% and 42% of total revenues, respectively.

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

On May 9, 2017, we announced that our Board of Directors approved a plan to separate our Water business and Electrical business into two independent, publicly-traded companies (the "Proposed Separation").

The Proposed Separation is expected to occur through a tax-free spin-off of the Electrical business to Pentair shareholders.

Completion of the Proposed Separation is subject to certain customary conditions, including, among other things, final approval of the transaction by Pentair's Board of Directors, receipt of tax opinions and rulings and effectiveness of appropriate filings with the SEC.

Upon completion of the Proposed Separation, it is anticipated that Electrical's jurisdiction of organization will be Ireland, but that it will manage its affairs so that it will be centrally managed and controlled in the U.K. and therefore will have its tax residency in the U.K.

We are targeting April 30, 2018 for the completion of the Proposed Separation; however, there can be no assurance regarding the ultimate timing of the Proposed Separation or that the Proposed Separation will be completed.

| • | Complete the execution of the Proposed Separation to create two industry-leading pure-play companies in Water and Electrical. |

| • | Driving operating excellence through PIMS, with specific focus on sourcing and supply management, cash flow management and lean operations; |

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

| • | Focusing on developing global talent in light of our global presence. |

| Net sales | $ | 4,936.5 | | $ | 4,890.0 | | $ | 4,616.4 | | | 1.0 | % | 5.9 | % |

| Cost of goods sold | 3,107.4 | | | 3,095.9 | | | 3,017.6 | | | | 0.4 | % | 2.6 | % |

| Gross profit | 1,829.1 | | | 1,794.1 | | | 1,598.8 | | | | 2.0 | % | 12.2 | % |

| % of net sales | 37.1 | | % | 36.7 | | % | 34.6 | | % | | 0.4 | pts | 2.1 | pts |

| Selling, general and administrative | 1,032.5 | | | 979.3 | | | 884.0 | | | | 5.4 | % | 10.8 | % |

| % of net sales | 20.9 | | % | 20.0 | | % | 19.1 | | % | | 0.9 | pts | 0.9 | pts |

| Research and development | 115.8 | | | 114.1 | | | 98.7 | | | | 1.5 | % | 15.6 | % |

| Operating income | 680.8 | | | 700.7 | | | 616.1 | | | | (2.8 | )% | 13.7 | % |

| % of net sales | 13.8 | | % | 14.3 | | % | 13.3 | | % | | (0.5 | ) pts | 1.0 | pts |

| Other (income) expense | | | | | | | | | | | | | | |

| Income from continuing operations before income taxes | 489.2 | | | 561.0 | | | 512.5 | | | | (12.8 | )% | 9.5 | % |

| Provision for income taxes | 9.2 | | | 109.4 | | | 115.4 | | | | (91.6 | )% | (5.2 | ) % |

| Effective tax rate | 1.9 | | % | 19.5 | | % | 22.5 | | % | | (17.6 | ) pts | (3.0 | ) pts |

| Volume | (1.0 | )% | | (1.7 | )% |

| Core growth | (0.5 | ) | | (1.4 | ) |

These increases were partially offset by:

| • | continued lower project sales volume particularly in the energy and industrial businesses; |

| • | sales of $516.1 million in 2016 as a result of the ERICO Acquisition, compared to sales of $147.0 million in 2015; and |

| • | increased volume driving core sales growth in our North America pool business. |

| • | slowing economic activity in certain developing regions, including China and Brazil; and |

| • | a strong U.S. dollar causing unfavorable foreign currency effects. |

| • | favorable mix as a result of the decline in lower margin project sales and growth in higher margin product sales; and |

| • | large job adjustments negatively impacting gross profit by $16.4 million in 2017. |

| • | a decrease in cost of goods sold of $35.7 million in 2016 compared to 2015 as a result of inventory fair value step-up recorded as part of the Electrical acquisitions in 2015. |

| • | costs incurred in anticipation of the Proposed Separation of $53.1 million in 2017; |

| • | "mark-to-market" actuarial losses related to pension and other post-retirement benefit plans of $1.6 million in 2017, compared to $4.2 million in 2016. |

Periodically, we use derivative financial instruments to manage or reduce the impact of changes in interest [added: rates and foreign currency] rates.

Our debt portfolio as of December 31, [removed: 2017,] [added: 2018,] was comprised of debt predominantly denominated in U.S. dollars.

This debt portfolio is comprised of [removed: 96%] [added: 88%] fixed-rate debt and [removed: 4%] [added: 12%] variable-rate debt.

Based on the fixed-rate debt included in our debt portfolio, as of December 31, [removed: 2017,] [added: 2018,] a 100 basis point increase or decrease in interest rates would result in [removed: a $28.6] [added: an $11.6] million decrease or a [removed: $29.3] [added: $12.0] million increase in fair value, respectively.

Based on the variable-rate debt included in our debt portfolio as of December 31, [removed: 2017,] [added: 2018,] a 100 basis point increase or decrease in interest rates would result in a [removed: $0.6] [added: $1.0] million increase or decrease in interest incurred.

At December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of [removed: $481.4] [added: $331.4] million and [removed: $475.6] [added: $481.4] million, respectively.

Gains and losses related to a hedge are deferred and recorded in the Consolidated Balance Sheets as a component of [removed: AOCI] [added: Accumulated other comprehensive loss] and subsequently recognized in the Consolidated Statements of Operations and Comprehensive Income [removed: (Loss)] when the hedged item affects earnings.

[removed: In September 2015,] [added: At December 31, 2018,] we [removed: designated the €500.0] [added: had €136.6] million 2.45% Senior Notes due 2019 (the [removed: "2019] [added: “2019] Euro [removed: Notes")] [added: Notes”) designated] as a net investment hedge of our investments in certain international subsidiaries that use the Euro as their functional currency.

The rates used to perform this analysis were based on the market exchange rates in effect on December 31, [removed: 2017.][added: 2018.]

A 10% appreciation of the U.S. dollar relative to the Euro would result in a [removed: $54.0] [added: $14.1] million net increase in [removed: Other] [added: Accumulated other] comprehensive [removed: income.][added: loss.]

Conversely, a 10% depreciation of the U.S. dollar relative to the Euro would result in a [removed: $66.0] [added: $17.2] million net decrease in [removed: Other] [added: Accumulated other] comprehensive [removed: income.][added: loss.]

[removed: 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.

However,

[removed: Water] [added: The Filtration Solutions segment] designs, manufactures, markets and services innovative [removed: products and] [added: water] solutions to meet [removed: filtration, separation, flow] [added: filtration] and [removed: water management] [added: separation] challenges [removed: in agriculture, aquaculture, foodservice,] [added: across residential, commercial,] food [removed: and] [added: &] beverage [removed: processing, swimming pools, water supply] and [removed: disposal and a variety of] industrial applications.

| • | [removed: building operational excellence through] [added: Grounded in Win Right values and utilizing] the Pentair Integrated Management System [removed: ("PIMS")] [added: (“PIMS”)] consisting of lean enterprise, growth and talent [removed: management;] [added: management to drive sustained and consistent performance.] |

On April 28, [removed: 2017] [added: 2017,] we completed the sale of the Valves & Controls business to Emerson Electric Co. for $3.15 billion in cash.

The results of the Valves & Controls business have been presented as discontinued [removed: operations and the related assets and liabilities have been reclassified as held for sale for all periods presented.][added: operations.]

Our registered principal office is located at [removed: 43] [added: Regal House, 70] London [removed: Wall,] [added: Road, Twickenham,] London, [removed: EC2M 5TF,] [added: TW13QS] United Kingdom.

Our management office in the United States [removed: ("U.S.")] [added: (“U.S.”)] is located at 5500 Wayzata Boulevard, Suite [removed: 600,] [added: 900,] Minneapolis, Minnesota.

Our equipment and solutions are found in [removed: swimming pools and spas,] water purification and sanitation systems, foodservice operations, food [removed: and] [added: &] beverage processing [removed: plants, wastewater treatment plants, flood control and storm water management facilities] [added: plants] and in other applications across the globe.

Brand names for [removed: Water] [added: Aquatic Systems] include [removed: Aurora, Berkeley, Codeline, Everpure, Fairbanks-Nijhuis,] Kreepy Krauly, [removed: Haffmans, Hydromatic, Hypro,] Pentair, Pentair Aquatic Eco-Systems, [removed: Sta-Rite, Shurflo, Südmo] and [removed: X-Flow.][added: Sta-Rite.]

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

Customers [removed: also include end-user and consumers] in the residential [removed: &] [added: and] commercial vertical [removed: as well as engineering procurement contractors,] [added: also include end-users, consumers] and original equipment manufacturers.

We experience increased demand for residential water [removed: supply and pool equipment products,] [added: supply,] infrastructure and agricultural products following warm weather trends, which are at season highs from April to August.

The magnitude of the sales increase is mitigated by employing some advance sale “early buy” programs (generally including extended payment terms and/or [added: additional discounts).]

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

The portfolio of products serves a range of industries, including use in the commercial, [removed: communications, energy, electronics, industrial, infrastructure, medical,] [added: residential] and [removed: security & defense] [added: industrial] verticals.

We compete by offering a wide variety of innovative and [removed: compatible] [added: high-quality] products, which are competitively priced.

| In millions | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | $ change | | | % change | |

We expect the majority of our backlog at December 31, [removed: 2017] [added: 2018] will be shipped in [removed: 2018.][added: 2019.]

As of December 31, [removed: 2017,] [added: 2018,] we employed [removed: 18,400] [added: approximately 10,000] people worldwide.

We make available free of charge (other than an [removed: investor's] [added: 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: Securities and Exchange Commission (the “SEC”).]

At Pentair plc, we believe the health of our world depends on reliable access to clean water.

We deliver a comprehensive range of smart, sustainable water solutions to homes, business and industry around the world.

Our industry leading and proven portfolio of solutions enables our customers to access clean, safe water.

Whether it’s improving, moving or enjoying water, we help manage the world’s most precious resource.

Smart, Sustainable Water Solutions.

For Life.

Pentair plc is comprised of three reportable business segments: Aquatic Systems, Filtration Solutions and Flow Technologies.

See below for further discussion of each of these segments.

Our vision is to be the leading residential and commercial water treatment company.

As a pure play water company, we are:

| • | Focused on strategies to advance pool growth and accelerate residential and commercial water treatment; |

| • | Accelerated by innovation and digital transformation; and |

On April 30, 2018, Pentair completed the separation of its Electrical business from the rest of Pentair (the “Separation”) by means of a dividend in specie of the Electrical business, which was effected by the transfer of the Electrical business from Pentair to nVent Electric plc (“nVent”) and the issuance by nVent of ordinary shares directly to Pentair shareholders (the “Distribution”).

On May 1, 2018, following the Separation and Distribution, nVent became an independent publicly traded company, trading on the New York Stock Exchange under the symbol “NVT.” The Company did not retain any equity interest in nVent.

nVent’s historical financial results are reflected in the Company’s consolidated financial statements as a discontinued operation.

Refer to Note 2 for further discussion.

In connection with the Distribution of nVent, the Company and nVent entered into several agreements covering administrative and tax matters to provide or obtain services on a transitional basis, as needed, for varying periods after the Distribution.

The administrative agreements cover various services such as information technology, human resources and finance.

The Company expects all services to be substantially complete within one year after the Distribution.

Aquatic Systems

The Aquatic Systems segment manufactures and sells a complete line of energy-efficient residential and commercial pool equipment and accessories including pumps, filters, heaters, lights, automatic controls, automatic cleaners, maintenance equipment and pool accessories.

Applications for our Aquatic Systems products include residential and commercial pool maintenance, pool repair, renovation, service and construction and aquaculture solutions.

Aquatic Systems customers include businesses engaged in wholesale and retail distribution in the residential & commercial verticals.

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

Pentair’s verticals include residential, commercial, and industrial businesses.

One customer of the Aquatic Systems segment, Pool Corporation, represented approximately 15% of our consolidated net sales in 2018.

We experience seasonal demand with several end customers and end-users within Aquatic Systems.

End-user demand for pool equipment follows warm weather trends and is at season highs from April to August.

Filtration Solutions

Filtration Solutions offers a comprehensive product suite of components and systems that ranges from point-of-entry and point-of-use filtration, valves and automated controls for residential and commercial applications as well as advanced filtration, oil & gas separation, membrane technology, and energy recovery for food & beverage and industrial applications.

Brand names for Filtration Solutions offerings include Codeline, Everpure, Haffmans, Südmo and X-Flow.

We experience seasonal demand with several end customers and end-users within Filtration Solutions.

End-user demand for water filtration products generally follows warm weather trends and is at seasonal highs from April to July.

Filtration Solutions faces numerous domestic and international competitors, some of which have substantially greater resources directed to the verticals in which we compete.

Competition focuses on brand names, product performance (including required specification), quality and price.

We believe our distribution channels and reputation for quality also provide us a competitive advantage.

Flow Technologies

The Flow Technologies segment manufactures and sells products ranging from light duty diaphragm pumps to high-flow turbine pumps and solid handling pumps while serving the global residential, commercial and industrial markets.

These pumps are used in a range of applications, including residential and municipal wells, water treatment, wastewater solids handling, pressure boosting, fluid delivery, circulation and transfer, fire suppression, flood control, agricultural irrigation and crop spray.

Brand names for Flow Technologies include Aurora, Berkeley, Fairbanks-Nijhuis, Hydromatic, Hypro, Jung Pumpen, Pentair, Myers, Sta-Rite, and Shurflo.

Pentair plc is a focused diversified industrial manufacturing company comprising two reporting segments: Water and Electrical.

Electrical designs, manufactures, markets, installs and services high performance products and solutions that connect and protect some of the world's most sensitive equipment, buildings and critical processes.

Our strategy is to drive sustainable, profitable growth and return on invested capital improvements through:

| | |

| --- | --- |

| • | driving long-term growth in sales, operating income and cash flows, through growth and productivity initiatives along with acquisitions; |

| • | developing new products and enhancing existing products; |

| • | penetrating attractive growth markets, particularly outside of the United States; |

| • | expanding multi-channel distribution; and |

| • | proactively managing our business portfolio for optimal value creation, including consideration of new business platforms. |

In December 2013, the Company's Board of Directors approved changing the Company's jurisdiction of organization from Switzerland to Ireland.

At an extraordinary meeting of shareholders on May 20, 2014, Pentair Ltd. shareholders voted in favor of a reorganization proposal pursuant to which Pentair Ltd. would merge into Pentair plc and all Pentair Ltd. common shares would be cancelled and all holders of such shares would receive ordinary shares of Pentair plc on a one-to-one basis.

The reorganization transaction was completed on June 3, 2014, at which time Pentair plc replaced Pentair Ltd. as the ultimate parent company (the "Redomicile").

Shares of Pentair plc began trading on the New York Stock Exchange ("NYSE") on June 3, 2014 under the symbol "PNR," the same symbol under which Pentair Ltd. shares were previously traded.

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 ours.

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

Prior to the Merger, Tyco International Ltd. ("Tyco") engaged in an internal restructuring whereby it transferred to Flow Control certain assets related to the flow control business of Tyco, and Flow Control assumed from Tyco certain liabilities related to the flow control business of Tyco.

On September 28, 2012 prior to the Merger, Tyco effected a spin-off of Flow Control through 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 Merger was accounted for as a reverse acquisition under the purchase method of accounting with Pentair, Inc. treated as the acquirer.

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

On May 9, 2017, we announced that our Board of Directors approved a plan to separate our Water business and Electrical business into two independent, publicly-traded companies (the "Proposed Separation").

The Proposed Separation is expected to occur through a tax-free spin-off of the Electrical business to Pentair shareholders.

Completion of the Proposed Separation is subject to certain customary conditions, including, among other things, final approval of the transaction by Pentair's Board of Directors, receipt of tax opinions and rulings and effectiveness of appropriate filings with the U.S. Securities and Exchange Commission (the “SEC").

Upon completion of the Proposed Separation, it is anticipated that Electrical's jurisdiction of organization will be Ireland, but that it will manage its affairs so that it will be centrally managed and controlled in the United Kingdom (the "U.K.") and therefore will have its tax residency in the U.K.

We are targeting April 30, 2018 for the completion of the Proposed Separation; however, there can be no assurance regarding the ultimate timing of the Proposed Separation or that the Proposed Separation will be completed.

Reporting segment and geographical financial information is contained in ITEM 8, Note 16 of the Notes to Consolidated Financial Statements, included in this Form 10-K.

During the first quarter of 2017, we reorganized our business segments to reflect a new operating structure, resulting in a change to our reporting segments.

All prior period amounts related to the segment change have been retrospectively reclassified throughout this Annual Report on Form 10-K to conform to the new presentation.

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

In addition, the legacy Technical Solutions business segment was renamed the Electrical reporting segment.

Water

The Water segment designs, manufactures, markets and services innovative water solutions for the filtration, separation, flow and water management challenges in agriculture, foodservice, food and beverage processing, swimming pools, water supply and disposal and a variety of industrial applications.

Water provides a comprehensive portfolio of products and services to address customers’ needs for reliable and efficient movement and control of water and other fluids.

This includes a full range of water treatment equipment including energy-efficient pumps, point-of-entry/point-of-use filtration, valves, UV sanitization and automation controls for residential and commercial applications, as well as engineered solutions in advanced filtration, desalination, water supply and disposal, process and control for industrial and infrastructure applications.

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

additional discounts).

Electrical

The Electrical segment designs, manufactures, markets, installs and services high performance products and solutions that connect and protect some of the world's most sensitive equipment, buildings and critical processes.

We have [removed: been] [added: been, and in the future may be,] made parties to a number of actions filed or have [removed: been] [added: been, and in the future may be,] given notice of potential claims relating to the conduct of our business, including those [removed: pertaining] [added: relating] to commercial [removed: disputes, product liability, asbestos,] [added: or contractual disputes with suppliers, customers or parties to acquisitions and divestitures, intellectual property matters,] environmental, safety and [removed: health, patent infringement] [added: health matters, product liability, the use or installation of our products, consumer matters,] and employment [added: and labor] matters.

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 [removed: future adverse ruling or unfavorable development could result in future charges that could have a material adverse impact.]

Each case typically names between [removed: dozens] [added: several dozen] to [removed: hundreds of] [added: more than a hundred] corporate defendants.

As of December 31, [removed: 2017,] [added: 2018,] there were approximately 600 claims outstanding against our subsidiaries.

We have been named as defendant, target or a [removed: potentially responsible party ("PRP")] [added: PRP] in a number of environmental clean-ups relating to our current or former business units.

As of December 31, [removed: 2017,] [added: 2018,] our recorded reserves for environmental matters were not material.

future adverse ruling or unfavorable development could result in future charges that could have a material adverse impact.

While we have observed an increase in the number of these lawsuits over the past several years, including lawsuits by plaintiffs with mesothelioma-related claims, a large percentage of these suits have not presented viable legal claims and, as a result, have been dismissed by the courts.

For the Fiscal Year Ended December 31, [removed: 2017][added: 2018]

[removed: Registrant's] [added: Registrant’s] telephone number, including area code: [removed: 44-20-7347-8925][added: 44-74-9421-6154]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit [removed: and post] such files).

See the definitions of [removed: "large] [added: “large] accelerated [removed: filer," "accelerated filer", "smaller] [added: filer,” “accelerated filer”, “smaller] reporting [removed: company"] [added: company”] and [removed: "emerging] [added: “emerging] growth [removed: company"] [added: company”] in Rule 12b-2 of the Exchange [removed: Act.:][added: Act.]

Aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of [removed: $66.54] [added: $42.08] per share as reported on the New York Stock Exchange on June [removed: 30, 2017] [added: 29, 2018] (the last business day of [removed: Registrant's] [added: Registrant’s] most recently completed second quarter): [removed: $10,849,958,298.][added: $6,703,824,353.]

The number of shares outstanding of [removed: Registrant's] [added: Registrant’s] only class of common stock on December 31, [removed: 2017] [added: 2018] was [removed: 180,306,617.][added: 171,363,615.]

Parts of the [removed: Registrant's] [added: Registrant’s] definitive proxy statement for its annual general meeting to be held on May [removed: 8, 2018,] [added: 7, 2019,] 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: 2017][added: 2018]

| ITEM 1. | | [removed: [Business](#s536270D2B945520F86466927C7E53029)] [added: [Business](#s701442EE434D553C86432E033E498738)] | | [removed: [1](#s536270D2B945520F86466927C7E53029)] [added: [1](#s701442EE434D553C86432E033E498738)] |

| ITEM 1A. | | [Risk [removed: Factors](#sB6BD422C4D645B268D650DBD00A76E75)] [added: Factors](#sA22179D0510B5E4885ACA9C4CEE1E5AA)] | | [removed: [5](#sB6BD422C4D645B268D650DBD00A76E75)] [added: [4](#sA22179D0510B5E4885ACA9C4CEE1E5AA)] |

| ITEM 1B. | | [Unresolved Staff [removed: Comments](#s8C8BA1652BE35FF7BD682B3DD92C0915)] [added: Comments](#sE8B688DA6B585495A92816A8F238CC8B)] | | [removed: [14](#s8C8BA1652BE35FF7BD682B3DD92C0915)] [added: [14](#sE8B688DA6B585495A92816A8F238CC8B)] |

| ITEM 2. | | [removed: [Properties](#sDE2579EA40415EDDBDCE78A5E9E71521)] [added: [Properties](#s7443FC466A9C5145B4D2FA4186171FA2)] | | [removed: [15](#sDE2579EA40415EDDBDCE78A5E9E71521)] [added: [14](#s7443FC466A9C5145B4D2FA4186171FA2)] |

| ITEM 3. | | [Legal [removed: Proceedings](#s6B59601AD3AF5D359A27925F76B75F84)] [added: Proceedings](#sEEBE5E0AF62151AF8C349A085F5668CA)] | | [removed: [15](#s6B59601AD3AF5D359A27925F76B75F84)] [added: [14](#sEEBE5E0AF62151AF8C349A085F5668CA)] |

| ITEM 4. | | [Mine Safety [removed: Disclosures](#s9049D0292C895676B919FFEA24535D72)] [added: Disclosures](#s2C3135AA2DB95382806813288CC4ACDA)] | | [removed: [16](#s681D4084E3235BBDB910EA14C31DD1B3)] [added: [15](#s4F279C0BEE64560093DF5BF3EB043C4D)] |

| ITEM 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sEAEFE7C9846E54138241F463E6879401)] [added: Securities](#s72649C67CC9E5545AE3A7D69F712B01D)] | | [removed: [18](#sEAEFE7C9846E54138241F463E6879401)] [added: [17](#s72649C67CC9E5545AE3A7D69F712B01D)] |

| ITEM 6. | | [Selected Financial [removed: Data](#s6AF99F871DDC5481B5CD892054C7C5E1)] [added: Data](#s3D84F933C9CA5916A7881ADFC4FDB189)] | | [removed: [21](#s6AF99F871DDC5481B5CD892054C7C5E1)] [added: [19](#s3D84F933C9CA5916A7881ADFC4FDB189)] |

| ITEM 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sE39224051B675A08A164E5D3FA47ABFB)] [added: Operations](#s775C6B4E0D8351A4A58A60BBA6849C75)] | | [removed: [22](#sE39224051B675A08A164E5D3FA47ABFB)] [added: [20](#s775C6B4E0D8351A4A58A60BBA6849C75)] |

| ITEM 7A. | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s376C02FCEF4B54C79A20DCC368182FD1)] [added: Risk](#s112293E83D4751C38ACDBD818304507B)] | | [removed: [38](#s376C02FCEF4B54C79A20DCC368182FD1)] [added: [36](#s112293E83D4751C38ACDBD818304507B)] |

| ITEM 8. | | [Financial Statements and Supplementary [removed: Data](#sD7B9DEAD4EAF581A9A3815D01E45FF1B)] [added: Data](#s3AA82A76FA0D53159345DF088DA949E1)] | | [removed: [39](#sD7B9DEAD4EAF581A9A3815D01E45FF1B)] [added: [38](#s3AA82A76FA0D53159345DF088DA949E1)] |

| ITEM 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sB6F7401070945664BF198115F772AC2A)] [added: Disclosure](#s1DFE5B2951515205BBAB1DC035CDBE08)] | | [removed: [87](#sB6F7401070945664BF198115F772AC2A)] [added: [86](#s1DFE5B2951515205BBAB1DC035CDBE08)] |

| ITEM 9A. | | [Controls and [removed: Procedures](#sDEE5974CE31351739783D27E3DBB7EDE)] [added: Procedures](#s42A16A8AEAD05C2DBDF4FC6267B3ED76)] | | [removed: [87](#sDEE5974CE31351739783D27E3DBB7EDE)] [added: [86](#s42A16A8AEAD05C2DBDF4FC6267B3ED76)] |

| ITEM 9B. | | [Other [removed: Information](#s9D2169591884563A8D0ECCD475606072)] [added: Information](#sC91BDA43A31753BCAE35F86EE5A9CFE3)] | | [removed: [87](#s9D2169591884563A8D0ECCD475606072)] [added: [86](#sC91BDA43A31753BCAE35F86EE5A9CFE3)] |

| ITEM 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#s9C5531B3E517527C9B54BB024297C007)] [added: Governance](#sF28C710AECE853F19311123BC32A2833)] | | [removed: [88](#s9C5531B3E517527C9B54BB024297C007)] [added: [87](#sF28C710AECE853F19311123BC32A2833)] |

| ITEM 11. | | [Executive [removed: Compensation](#s887C075CF6E2518F998201FCDE490F36)] [added: Compensation](#s05A89B40B90B54D9AD4DC2096AA78D5B)] | | [removed: [88](#s887C075CF6E2518F998201FCDE490F36)] [added: [87](#s05A89B40B90B54D9AD4DC2096AA78D5B)] |

| ITEM 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s4EA9270F345A52E3B9C8E259D40B32A3)] [added: Matters](#s2FDAC66F72005EA083E09730FE29C5FF)] | | [removed: [89](#s4EA9270F345A52E3B9C8E259D40B32A3)] [added: [88](#s2FDAC66F72005EA083E09730FE29C5FF)] |

| ITEM 13. | | [Certain Relationships and Related Transactions and Director [removed: Independence](#s7C6D8E300B3A5DB6B0A72CED128C60FA)] [added: Independence](#s69AE503180AC5AE781C81D04AC3353F5)] | | [removed: [89](#s7C6D8E300B3A5DB6B0A72CED128C60FA)] [added: [88](#s69AE503180AC5AE781C81D04AC3353F5)] |

| ITEM 14. | | [Principal Accounting Fees and [removed: Services](#s8374F1D29419584299C5E126DAA8970A)] [added: Services](#s583F534BCC2F5B81842D2487BABF863C)] | | [removed: [89](#s8374F1D29419584299C5E126DAA8970A)] [added: [88](#s583F534BCC2F5B81842D2487BABF863C)] |

| ITEM 15. | | [Exhibits and Financial Statement [removed: Schedules](#sB8899D9D9212549992653DC0876A153D)] [added: Schedules](#sCA64216BA7115C289177EE09DA38AEBA)] | | [removed: [90](#sB8899D9D9212549992653DC0876A153D)] [added: [89](#sCA64216BA7115C289177EE09DA38AEBA)] |

| ITEM 16. | | [Form 10-K [removed: Summary](#sB8899D9D9212549992653DC0876A153D)] [added: Summary](#sCA64216BA7115C289177EE09DA38AEBA)] | | [removed: [90](#sB8899D9D9212549992653DC0876A153D)] [added: [89](#sCA64216BA7115C289177EE09DA38AEBA)] |

10-K 1 a2018pnr-10k.htm 10-K

| Regal House, 70 London Road, Twickenham, London, TW13QS United Kingdom | | |

Yes ¨ No þ

| | | [Signatures](#s91A5BEB7ACC252A096EA9ED6D263E165) | | [94](#s91A5BEB7ACC252A096EA9ED6D263E165) |

10-K 1 a2017pnr-10k.htm 10-K

| 43 London Wall, London, EC2M 5TF, United Kingdom | | |

| | | | | (Do not check if a smaller reporting company) | | | | |

| | | [Signatures](#s17EEDFD092365279B4D2293E803DBAE6) | | [95](#s17EEDFD092365279B4D2293E803DBAE6) |

Our principal office is located in leased premises in London, [removed: United Kingdom,] [added: U.K.,] and our management office in the [removed: United States] [added: U.S.] is located in leased premises in Minneapolis, Minnesota.

We believe that our production facilities [added: as well as the related machinery and equipment,] are [added: well maintained and] suitable for their purpose and are adequate to support our businesses.

The following is a summary of our principal properties, including manufacturing, distribution, sales offices and service centers:

| | | | | | | | | |

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

| | | | | | | | | |

| | | No. of Facilities | | | | | | |

| | Location | Manufacturing | | Distribution | | Sales and Corporate Offices | Service Centers | |

| Aquatic Systems | 22 U.S. cities and 12 foreign countries | 9 | | 11 | | 13 | 1 | |

| Filtration Solutions | 14 U.S. cities and 40 foreign countries | 19 | | 9 | | 26 | — | |

| Flow Technologies | 15 U.S. cities and 35 foreign countries | 20 | | 12 | | 8 | 10 | |

| Corporate | 3 U.S. cities and 4 foreign countries | — | | — | | 7 | — | |

| Total | | 48 | | 32 | | 54 | 11 | |

We carry out our Water manufacturing operations at 21 plants located throughout the United States and at 27 plants located in 14 other countries.

In addition, Water has 33 distribution facilities, 48 sales offices and 11 service centers located in numerous countries throughout the world.

We carry out our Electrical manufacturing operations at 8 plants located throughout the United States and at 13 plants located in 11 other countries.

In addition, Electrical has 24 distribution facilities, 53 sales offices and 2 service centers located in numerous countries throughout the world.

| John L. Stauch | | [removed: 53] [added: 54] | | | [added: President and Chief] Executive [added: Officer since 2018; Executive] Vice President and Chief Financial Officer [removed: since 2007;] [added: 2007 — 2018;] 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. [removed: It is expected that Mr. Stauch will become the Company’s Chief Executive Officer, effective upon the completion of the Proposed Separation.] |

| John H. Jacko | | [removed: 60] [added: 61] | | | [added: Executive Vice President and Chief Growth Officer since 2018;] Senior Vice President and Chief Marketing Officer [removed: since 2017;] [added: 2017 — 2018;] Vice President and Chief Marketing Officer of Kennametal Corporation, 2007 — 2016; Senior Vice President and Chief Marketing Officer of Flowserve Corporation, 2002 — 2007; Vice President of Marketing and Customer Management of Flowserve Corporation, 2001 — 2002; Various business leadership positions of Honeywell Aerospace, 1995 — 2001. [removed: It is expected that Mr. Jacko will become the Company’s Chief Growth Officer, effective upon the completion of the Proposed Separation.] |

| Mark C. Borin | | [removed: 50] [added: 51] | | | [added: Executive Vice President and Chief Financial Officer since 2018;] Senior Vice President and Chief Accounting Officer [removed: since] 2008 [added: — 2018] and Treasurer [removed: since 2015;] [added: 2015 — 2018;] 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. [removed: It is expected that Mr. Borin will become the Company’s Chief Financial Officer, effective upon the completion of the Proposed Separation.] |

| Karl R. Frykman | | [removed: 57] [added: 58] | | | [added: Executive Vice President and Chief Operating Officer since 2018; Senior Vice President and] President, Water segment [removed: since 2017;] [added: 2017 — 2018;] President, Water Quality Systems Global Business Unit, 2007 — 2016; President of Aquatic [removed: Systems'] [added: 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. [removed: It is expected that Mr. Frykman will become the Company’s Chief Operating Officer, effective upon the completion of the Proposed Separation.] |

| Kelly A. Baker | | 49 | | | Executive Vice President and Chief Human Resources Officer since 2017; Chief Human Resources Officer of Patterson Companies, Inc. 2016 — 2017; Vice President of Human Resources, U.S. Retail Organization and Marketing Function of General Mills 2014 — 2016; Vice President of Human Resources, Corporate & Global Business Solutions of General Mills 2009 — 2014; Vice President of Diversity & Inclusion of General Mills 2005 — 2009; Various Human Resources leadership positions at General Mills 1995 — 2005. |

| Karla C. Robertson | | 48 | | | Executive Vice President, General Counsel and Secretary since 2018; General Counsel, Pentair plc Water segment 2017 — 2018; Executive Vice President, General Counsel and Corporate Secretary of SUPERVALU Inc. 2013 — 2017; Vice President, Employment, Compensation and Benefits Law of SUPERVALU Inc. 2012 — 2013; Director, Employment Law of SUPERVALU Inc. 2011 — 2012; Senior Counsel, Employment Law of SUPERVALU Inc. 2009 — 2011; Senior Employee Relations Counsel of Target Corporation 2006 — 2008; Associate, Faegre & Benson LLP 2000 — 2005; Judicial Clerk, United States District Court for the Southern District of Iowa, 1998 — 2000 |

| Philip M. Rolchigo, Ph.D. | | 57 | | | Executive Vice President and Chief Technology Officer since 2017; Vice President of Engineering and Technology Innovation 2007 — 2017; Business Development Director of GE Global Research Center 2006 — 2007; Director of Technology of GE Water & Process Technologies 2003 — 2006; Chief Technology Officer of Osmonics 2000 — 2003; Vice President of Research & Development of Osmonics 1998 — 2000; Chief Technology Officer of Membrex 1988 — 1998. |

| Randall J. Hogan | | 62 | | | 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. It is expected that Mr. Hogan will retire from his positions as Chairman and Chief Executive Officer of the Company and become the Chairman of nVent Electric plc, effective upon the completion of the Proposed Separation. |

| Angela D. Jilek | | 49 | | | 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. It is expected that Ms. Jilek will retire from the Company effective May 1, 2018. |

| Beth A. Wozniak | | 53 | | | President, Electrical segment since 2017; President, Flow & Filtration Solutions Global Business Unit, 2015 — 2016; 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. It is expected that Ms. Wozniak will resign from her position with the Company and become the Chief Executive Officer of nVent Electric plc, effective upon the completion of the Proposed Separation. |

Our ordinary shares are listed for trading on the New York Stock Exchange [removed: and trade] [added: (“NYSE”)] under the symbol [removed: "PNR."] [added: “PNR.”] As of December 31, [removed: 2017,] [added: 2018,] there were [removed: 16,011] [added: 15,032] shareholders of record.

[removed: The] [added: In addition, the] Board of Directors [removed: has] approved a plan to increase the dividend for [removed: 2018,] [added: 2019,] which will mark the [removed: 42nd] [added: 43rd] consecutive year we have increased [removed: dividends.][added: dividends, as adjusted for the spin-off of nVent.]

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: 2012] [added: 2013] and the reinvestment of all dividends since that date to December 31, [removed: 2017.][added: 2018.]

[removed: ][added: ]

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

| Company / Index | [removed: 2012 |] 2013 | | [added: |] 2014 | | [added: |] 2015 | | [added: |] 2016 | | [added: |] 2017 | | | [added: 2018 | | | |]

The following table provides information with respect to purchases we made of our ordinary shares during the fourth quarter of [removed: 2017:][added: 2018:]

| (a) | The purchases in this column include [removed: 1,146] [added: 632] shares for the period October 1 – October [removed: 28, 2017, 17,792] [added: 27, 184,710] shares for the period October [removed: 29] [added: 28] – November [removed: 25, 2017,] [added: 24,] and [removed: no] [added: 1,106] shares for the period November [removed: 26] [added: 25] – December [removed: 31, 2017] [added: 31] 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. |

| (b) | The average price paid in this column includes shares repurchased as part of our publicly announced plans and shares deemed surrendered to us by participants in the Plans to satisfy the exercise price [added: for the exercise price] of stock options and withholding tax obligations due upon stock option exercises and vesting of restricted [added: and performance] shares. |

| (c) | The number of shares in this column represents the number of shares repurchased as part of our publicly announced plans to repurchase our ordinary shares up to a maximum dollar limit [added: authorized by the Board] of [removed: $1.0 billion.] [added: Directors, discussed below.] |

| (d) | [removed: In December 2014,] [added: On May 8, 2018,] our Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of [removed: $1.0 billion. This] [added: $750.0 million. The 2018] authorization expires on [removed: December] [added: May] 31, [removed: 2019.] [added: 2021.] We have [removed: $600.0] [added: $400.0] million remaining availability for repurchases under the [removed: 2014] [added: 2018] authorization. [added: From time to time, we may enter into a Rule 10b5-1 trading plan for the purpose of repurchasing shares under this authorization.] |

Pentair has paid 172 consecutive quarterly cash dividends, including most recently a dividend of $0.175 per share in the fourth quarter of 2018.

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

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

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

| Pentair plc | $ | 100 | | | $ | 86.84 | | $ | 66.16 | | $ | 76.74 | | $ | 98.74 | | $ | 80.12 | |

| S&P 500 Index | 100 | | | | 113.69 | | | 115.26 | | | 129.05 | | | 157.22 | | | 150.33 | | |

| S&P 500 Industrials Index | 100 | | | | 112.36 | | | 115.62 | | | 127.31 | | | 156.04 | | | 151.29 | | |

| October 1 – October 27 | 632 | | $ | 41.29 | | — | | $ | 500,000,101 | |

| October 28 – November 24 | 809,872 | | 39.90 | | | 625,162 | | 473,603,480 | | |

| November 25 – December 31 | 1,833,155 | | 40.15 | | | 1,832,049 | | 400,000,120 | | |

| Total | 2,643,659 | | | | | 2,457,211 | | | | |

The high, low and closing sales price for our ordinary shares and the dividends paid for each of the quarterly periods for 2017 and 2016 were as follows:

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

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

| | 2017 | | | | | | | | | | | | | 2016 | | | | | | | | | | | |

| | First | | | Second | | | Third | | | Fourth | | | | First | | | Second | | | Third | | | Fourth | | |

| High | $ | 63.45 | | $ | 69.03 | | $ | 68.50 | | $ | 71.76 | | | $ | 54.54 | | $ | 63.39 | | $ | 66.99 | | $ | 64.39 | |

| Low | 56.53 | | | 61.61 | | | 59.13 | | | 67.27 | | | | 41.57 | | | 50.37 | | | 57.20 | | | 53.80 | | |

| Close | 62.78 | | | 66.54 | | | 67.96 | | | 70.62 | | | | 54.26 | | | 58.29 | | | 64.24 | | | 56.07 | | |

| Dividends paid | 0.345 | | | 0.345 | | | 0.345 | | | 0.345 | | | | 0.33 | | | 0.33 | | | 0.34 | | | 0.34 | | |

Pentair has paid 168 consecutive quarterly dividends.

Future dividends on our ordinary shares or reductions of share capital for distribution to shareholders, if any, must be approved by our Board of Directors for payment out of distributable reserves on our statutory balance sheet.

We are not permitted to pay dividends out of share capital, which includes share premiums.

Distributable reserves may be created through the earnings of the Irish parent company and through a reduction in share capital approved by the Irish High Court.

Distributable reserves are not linked to a U.S. generally accepted accounting principles ("GAAP") reported amount (e.g., retained earnings).

On July 22, 2014, the Irish High Court approved Pentair plc's conversion of approximately $14.4 billion of share premium to distributable reserves.

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." Our distributable reserve balance was $9.0 billion and $9.4 billion as of December 31, 2017 and 2016, respectively.

United Kingdom tax considerations

Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the U.K. and therefore have our tax residency in the U.K.

As a result of its U.K. tax status, dividend distributions by Pentair plc to its shareholders are not subject to withholding tax, as the U.K. currently does not levy a withholding tax on dividend distributions.

See the discussion of "Dividends" under "Liquidity and Capital Resources—Financing Activities" in ITEM 7 of this annual report on Form 10-K for additional information required by this item.

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

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

| Pentair plc | 100 | | 160.70 | | 139.55 | | 106.31 | | 123.32 | | 158.68 | |

| S&P 500 Index | 100 | | 132.39 | | 150.51 | | 152.59 | | 170.84 | | 208.14 | |

| S&P 500 Industrials Index | 100 | | 131.64 | | 147.91 | | 152.19 | | 167.59 | | 205.41 | |

| October 1 – October 28, 2017 | 1,146 | | $ | 67.96 | | — | | $ | 700,000,054 | |

| October 29 – November 25, 2017 | 17,792 | | 69.28 | | | — | | 700,000,054 | | |

| November 26 – December 31, 2017 | 1,432,297 | | 69.80 | | | 1,432,297 | | 600,000,119 | | |

| Total | 1,451,235 | | | | | 1,432,297 | | | | |

The following table sets forth our selected historical financial data for the five years ended December 31, [removed: 2017.][added: 2018.]

| In millions, except per-share [removed: data] [added: amounts] | [added: 2018 | | |] 2017 | | | 2016 | | | 2015 | | | 2014 | | | [removed: 2013 | | |]

| Consolidated statements of operations and comprehensive income [removed: data] | | | | | | | | | | | | | | | |

| [removed: Per-share data] [added: Per ordinary share] | | | | | | | | | | | | | | | |

| [removed: Basic:] [added: Basic] | | | | | | | | | | | | | | | |

| Earnings per ordinary share from continuing operations attributable to Pentair [removed: plc] | $ | [removed: 2.64] [added: 1.83] | | $ | [removed: 2.49] [added: 0.63] | | $ | [removed: 2.20] [added: 0.98] | | $ | [removed: 1.87] [added: 0.95] | | $ | [removed: 1.76] [added: 0.64] | |

| Weighted average [added: ordinary] shares | [added: 175.8 | | |] 181.7 | | | 181.3 | | | 180.3 | | | 190.6 | | | [removed: 201.1 | | |]

| [removed: Diluted:] [added: Diluted] | | | | | | | | | | | | | | | |

| Earnings per ordinary share from continuing operations attributable to Pentair [removed: plc] | $ | [removed: 2.61] [added: 1.81] | | $ | [removed: 2.47] [added: 0.62] | | $ | [removed: 2.17] [added: 0.97] | | $ | [removed: 1.84] [added: 0.94] | | $ | [removed: 1.73] [added: 0.63] | |

| Weighted average [added: ordinary] shares | [added: 177.3 | | |] 183.7 | | | 183.1 | | | 182.6 | | | 193.7 | | | [removed: 204.6 | | |]

| Cash dividends declared and paid per ordinary share | $ | [removed: 1.38] [added: 1.05] | | $ | [removed: 1.34] [added: 1.38] | | $ | [removed: 1.28] [added: 1.34] | | $ | [removed: 1.10] [added: 1.28] | | $ | [removed: 0.96] [added: 1.10] | |

| Cash dividends declared and unpaid per ordinary share | [removed: 0.35] [added: 0.18] | | | [removed: 0.345] [added: 0.35] | | | [removed: 0.33] [added: 0.345] | | | [removed: 0.64] [added: 0.33] | | | [removed: 0.50] [added: 0.32] | | |

| Consolidated balance sheets [removed: data] | | | | | | | | | | | | | | | |

| Total assets | $ | [removed: 8,633.7] [added: 3,806.5] | | $ | [removed: 11,534.8] [added: 8,633.7] | | $ | [removed: 11,833.4] [added: 11,534.8] | | $ | [removed: 10,643.8] [added: 11,833.4] | | $ | [removed: 11,732.5] [added: 10,643.8] | |

| Total debt | [added: 787.6 | | |] 1,440.7 | | | 4,279.2 | | | 4,685.8 | | | 2,988.4 | | | [removed: 2,532.6 | | |]

| Total equity | [added: 1,836.1 | | |] 5,037.8 | | | 4,254.4 | | | 4,008.8 | | | 4,663.8 | | | [removed: 6,217.7 | | |]

| Net sales | $ | 2,965.1 | | $ | 2,845.7 | | $ | 2,780.6 | | $ | 2,812.4 | | $ | 2,942.1 | |

| Operating income | 436.7 | | | 378.3 | | | 354.4 | | | 304.7 | | | 226.8 | | |

| Net income from continuing operations attributable to Pentair | 321.7 | | | 114.1 | | | 178.2 | | | 170.9 | | | 122.3 | | |

| Net sales | $ | 4,936.5 | | $ | 4,890.0 | | $ | 4,616.4 | | $ | 4,666.8 | | $ | 4,553.7 | |

| Operating income | 680.8 | | | 700.7 | | | 616.1 | | | 538.5 | | | 529.2 | | |

| Net income from continuing operations attributable to Pentair plc | 480.0 | | | 451.6 | | | 397.1 | | | 356.6 | | | 354.8 | | |

Management assessed the effectiveness of the [removed: Company's] [added: Company’s] internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

Based on this assessment, management believes that, as of December 31, [removed: 2017,] [added: 2018,] the [removed: Company's] [added: 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 [removed: Company's] [added: Company’s] internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

| [removed: Chairman] [added: President] and Chief Executive Officer | | Executive Vice President and Chief Financial Officer |

We have audited the internal control over financial reporting of Pentair plc and subsidiaries (the [removed: "Company")] [added: “Company”)] as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] 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: 2017,] [added: 2018,] of the Company and our report dated February [removed: 27, 2018] [added: 19, 2019] 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: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the related [removed: consolidated statements] [added: Consolidated Statements] of [removed: operations] [added: Operations] and [removed: comprehensive income (loss), changes] [added: Comprehensive Income, Changes] in [removed: equity,] [added: Equity,] and [removed: cash flows] [added: Cash Flows] for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] the related notes, and the schedule listed in the Index at Item 15 (collectively referred to as the [removed: "financial statements").][added: “financial statements”).]

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on 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: 20, 2018] [added: 19, 2019] expressed an unqualified opinion on the Company’s internal control over financial reporting.

Consolidated Statements of Operations and Comprehensive Income [removed: (Loss)]

| In millions, except per-share data | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | |

| Cost of goods sold | [removed: 3,107.4] [added: —] | | | [removed: 3,095.9] [added: —] | | | [removed: 3,017.6] [added: —] | | | [added: 1,917.4 | | | — | | | 1,917.4 | | |]

| Selling, general and administrative | [removed: 1,032.5] [added: 534.3] | | | [removed: 979.3] [added: 536.0] | | | [removed: 884.0] [added: 531.4] | | |

| Research and development | [removed: 115.8] [added: —] | | | [removed: 114.1] [added: —] | | | [removed: 98.7] [added: —] | | | [added: 76.7 | | | — | | | 76.7 | | |]

| Loss on sale of businesses | [removed: 4.2] [added: 7.3] | | | [removed: 3.9] [added: 4.2] | | | [removed: 3.2] [added: 3.9] | | |

| Loss on early extinguishment of debt | [removed: 101.4] [added: 17.1] | | | [removed: —] [added: 101.4] | | | — | | |

| Equity income of unconsolidated subsidiaries | [removed: (1.3] [added: (8.4] | | ) | [removed: (4.3] [added: (1.3] | | ) | [removed: (1.5] [added: (4.3] | | ) |

| Income from continuing operations before income taxes | [removed: 489.2] [added: 379.8] | | | [removed: 561.0] [added: 172.8] | | | [removed: 512.5] [added: 220.9] | | |

| Provision for income taxes | [removed: 9.2] [added: —] | | | [removed: 109.4] [added: 2.4] | | | [removed: 115.4] [added: —] | | |

| Net income from continuing operations | [removed: 480.0] [added: 321.7] | | | [removed: 451.6] [added: 114.1] | | | [removed: 397.1] [added: 178.2] | | |

| Income [removed: (loss)] from discontinued operations, net of tax | [removed: 5.4] [added: —] | | | [removed: 70.0] [added: —] | | | [removed: (466.8] [added: —] | | [removed: )] | [added: 25.7 | | | — | | | 25.7 | | |]

| Gain [removed: (loss)] from sale / impairment of discontinued operations, net of tax | [removed: 181.1] [added: —] | | | [removed: 0.6] [added: 181.1] | | | [removed: (6.7] [added: 0.6] | | [removed: )] |

| Net income [removed: (loss)] | $ | [removed: 666.5] [added: 347.4] | | $ | [removed: 522.2] [added: 666.5] | | $ | [removed: (76.4] [added: 522.2] | [removed: )] |

| Comprehensive [removed: income (loss),] [added: income,] net of tax | | | | | | | | | |

| Changes in cumulative translation adjustment (inclusive of divestiture of business reclassified to gain from sale of $374.2 for the year ended December 31, 2017) | [removed: 497.5] [added: 10.0] | | | [removed: (83.0] [added: 497.5] | | [removed: )] | [removed: (264.9] [added: (83.0] | | ) |

| Changes in market value of derivative financial instruments, net of tax | [removed: (4.6] [added: 4.8] | | [removed: )] | [removed: (8.3] [added: (4.6] | | ) | [removed: 0.2] [added: (8.3] | | [added: )] |

| Comprehensive income [removed: (loss)] | $ | [removed: 1,159.4] [added: 362.2] | | $ | [removed: 430.9] [added: 1,159.4] | | $ | [removed: (341.1] [added: 430.9] | [removed: )] |

| Earnings (loss) per ordinary share [added: (2)] | | | | | | | | | | [added: | | | | | | |]

[removed: |] Discontinued [removed: operations | 1.03 | | | 0.39 | | | (2.62 | | ) |][added: Operations]

| Basic earnings [removed: (loss)] per ordinary share | $ | [removed: 3.67] [added: 1.98] | | $ | [removed: 2.88] [added: 3.67] | | $ | [removed: (0.42] [added: 2.88] | [removed: )] |

| Diluted earnings [removed: (loss)] per ordinary share | $ | [removed: 3.63] [added: 1.96] | | $ | [removed: 2.85] [added: 3.63] | | $ | [removed: (0.42] [added: 2.85] | [removed: )] |

| Basic | [removed: 181.7] [added: 175.8] | | | [removed: 181.3] [added: 181.7] | | | [removed: 180.3] [added: 181.3] | | |

| Diluted | [removed: 183.7] [added: 177.3] | | | [removed: 183.1] [added: 183.7] | | | [removed: 182.6] [added: 183.1] | | |

| | December 31 | | | | | | [added: | | | | | |]

| In millions, except [removed: per-share] [added: per share] data | [added: 2018 | | |] 2017 | | | 2016 | | |

| [removed: Cash] [added: Change in cash] and cash equivalents | [removed: $] [added: (12.0] | [removed: 113.3] | [added: )] | [removed: $] [added: (130.6] | [removed: 238.5] | [added: )] | [added: 113.3 | | |]

| Accounts and notes receivable, net [removed: of allowances of $22.6 and $25.6, respectively] | [removed: 831.6] [added: —] | | | [removed: 764.0] [added: —] | | | [added: — | | | 483.1 | | | — | | | 483.1 | | |]

| Other current assets | [removed: 222.9 | | | 253.4] [added: 108.4] | | |

| Current assets held for sale | — | | | [removed: 891.9] [added: 708.0] | | |

| John L. Stauch | | Mark C. Borin |

February 19, 2019

February 19, 2019

| Net sales | $ | 2,965.1 | | $ | 2,845.7 | | $ | 2,780.6 | |

| Gross profit | 1,047.7 | | | 987.5 | | | 959.1 | | |

| Operating income | 436.7 | | | 378.3 | | | 354.4 | | |

| Other (income) expense | (0.1 | | ) | 12.6 | | | (10.5 | | ) |

| Net income | $ | 347.4 | | $ | 666.5 | | $ | 522.2 | |

| Continuing operations | $ | 1.83 | | $ | 0.63 | | $ | 0.98 | |

| Discontinued operations | 0.15 | | | 3.04 | | | 1.90 | | |

| Continuing operations | $ | 1.81 | | $ | 0.62 | | $ | 0.97 | |

| Discontinued operations | 0.15 | | | 3.01 | | | 1.88 | | |

| Accounts receivable, net of allowances of $14.0 and $14.2, respectively | 488.2 | | | 483.1 | | |

| Inventories | 387.5 | | | 356.9 | | |

| Goodwill | 2,072.7 | | | 2,112.8 | | |

| Net income | $ | 347.4 | | $ | 666.5 | | $ | 522.2 | |

| Depreciation | 49.7 | | | 50.8 | | | 53.0 | | |

| Amortization | 34.9 | | | 36.4 | | | 35.4 | | |

| Deferred income taxes | (4.1 | | ) | (18.0 | | ) | 1.2 | | |

| Accounts receivable | (15.3 | | ) | (13.4 | | ) | 16.6 | | |

| Inventories | (40.1 | | ) | (20.5 | | ) | 33.9 | | |

| Other current assets | 31.2 | | | (13.0 | | ) | 2.1 | | |

| Accounts payable | 58.3 | | | 15.6 | | | 22.8 | | |

| Other current liabilities | (3.3 | | ) | (54.6 | | ) | 90.3 | | |

| Net cash provided by operating activities of continuing operations | 458.1 | | | 278.6 | | | 379.9 | | |

| Capital expenditures | (48.2 | | ) | (39.1 | | ) | (43.3 | | ) |

| Transfer of cash to nVent | (74.2 | | ) | — | | | — | | |

| Distribution of cash from nVent | 993.6 | | | — | | | — | | |

| Other | (2.0 | | ) | (0.8 | | ) | 8.8 | | |

| Change in cash held for sale | 27.0 | | | (5.4 | | ) | 1.1 | | |

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

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

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

| Net income | — | | — | | | — | | | 347.4 | | | — | | | 347.4 | | |

| Cumulative effect of accounting changes | — | | — | | | — | | | (214.0 | | ) | — | | | (214.0 | | ) |

| Distribution to nVent | — | | — | | | (438.2 | | ) | (2,291.0 | | ) | (47.8 | | ) | (2,777.0 | | ) |

| Dividends declared | — | | — | | | — | | | (154.9 | | ) | — | | | (154.9 | | ) |

| Share repurchases | (10.2 | ) | (0.1 | | ) | (499.9 | | ) | — | | | — | | | (500.0 | | ) |

| Balance - December 31, 2018 | 171.4 | | $ | 1.7 | | $ | 1,893.8 | | $ | 169.2 | | $ | (228.6 | ) | $ | 1,836.1 | |

Pentair plc and its consolidated subsidiaries (“we,” “us,” “our,” “Pentair” or the “Company”) is a pure play water company comprised of three reporting segments: Aquatic Systems, Filtration Solutions and Flow Technologies.

| Randall J. Hogan | | John L. Stauch |

February 27, 2018

| Net sales | $ | 4,936.5 | | $ | 4,890.0 | | $ | 4,616.4 | |

| Gross profit | 1,829.1 | | | 1,794.1 | | | 1,598.8 | | |

| Operating income | 680.8 | | | 700.7 | | | 616.1 | | |

| Interest income | (9.9 | | ) | (8.3 | | ) | (4.7 | | ) |

| Interest expense | 97.2 | | | 148.4 | | | 106.6 | | |

| Continuing operations | $ | 2.64 | | $ | 2.49 | | $ | 2.20 | |

| Continuing operations | $ | 2.61 | | $ | 2.47 | | $ | 2.17 | |

| Discontinued operations | 1.02 | | | 0.38 | | | (2.59 | | ) |

| | | | | | | |

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

| Inventories | 581.0 | | | 524.2 | | |

| Goodwill | 4,351.1 | | | 4,217.4 | | |

| Current maturities of long-term debt and short-term borrowings | $ | — | | $ | 0.8 | |

| Depreciation | 85.2 | | | 84.6 | | | 81.2 | | |

| Amortization | 97.7 | | | 96.4 | | | 68.1 | | |

| Deferred income taxes | (159.7 | | ) | (16.1 | | ) | (2.3 | | ) |

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

| Accounts and notes receivable | (30.9 | | ) | 21.3 | | | (6.2 | | ) |

| Inventories | (29.4 | | ) | 34.3 | | | 54.7 | | |

| Other current assets | (5.9 | | ) | (15.8 | | ) | (27.3 | | ) |

| Accounts payable | 32.6 | | | 38.0 | | | 10.6 | | |

| Other current liabilities | (29.3 | | ) | 51.6 | | | (16.6 | | ) |

| Capital expenditures | (70.9 | | ) | (117.8 | | ) | (91.3 | | ) |

| Net receipts (repayments) of short-term borrowings | (0.8 | | ) | 0.8 | | | (2.3 | | ) |

| Proceeds from long-term debt | — | | | — | | | 1,714.8 | | |

| Debt issuance costs | — | | | — | | | (26.8 | | ) |

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

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

| Balance - December 31, 2014 | 202.4 | | $ | 2.0 | | | (19.9 | ) | $ | (1,251.9 | ) | $ | 4,250.0 | | $ | 2,044.0 | | $ | (380.3 | ) | $ | 4,663.8 | |

| Net loss | — | | — | | | | — | | — | | | — | | | (76.4 | | ) | — | | | (76.4 | | ) |

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

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

| Share repurchases | (3.0 | ) | — | | | | — | | — | | | (200.0 | | ) | — | | | — | | | (200.0 | | ) |

| | |

| --- | --- |

Pentair plc and its consolidated subsidiaries (the "Company" or "Pentair") is a focused diversified industrial manufacturing company comprising two reporting segments: Water and Electrical.

Proposed separation

On May 9, 2017, we announced that our Board of Directors approved a plan to separate our Water business and Electrical business into two independent, publicly-traded companies (the "Proposed Separation").

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: 2017,] [added: 2018,] 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: 2017] [added: 2018] 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 [removed: Commission's] [added: 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: 2017] [added: 2018] 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: 2018] [added: 2019] annual general meeting of shareholders under the captions [removed: "Corporate] [added: “Corporate] Governance [removed: Matters," "Proposal] [added: Matters,” “Proposal] 1 Re-elect 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: 2018] [added: 2019] annual general meeting of shareholders under the captions [removed: "Compensation] [added: “Compensation] Discussion and [removed: Analysis," "Compensation] [added: Analysis,” “Compensation] Committee [removed: Report," "Executive] [added: Report,” “Executive] Compensation [removed: Tables"] [added: Tables”] and [removed: "Corporate] [added: “Corporate] Governance Matters - Director [removed: Compensation"] [added: 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: 2018] [added: 2019] 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: 2017,] [added: 2018,] information about compensation plans under which our equity securities are authorized for issuance:

| 2008 Omnibus Stock Incentive Plan | [removed: 1,688,173] [added: 1,017,891] | | (4) | [removed: 32.21] [added: 23.10] | | | (2) | — | | (5) |

| (1) | Consists of [removed: 3,551,120] [added: 2,602,660] shares subject to stock options, [removed: 537,259] [added: 100,028] shares subject to restricted stock units, and [removed: 454,353] [added: 269,353] shares subject to performance share awards. |

| (4) | Consists of [removed: 1,688,173] [added: 1,017,891] shares subject to stock options. |

| (5) | The 2008 Omnibus Stock Incentive Plan was terminated in 2012. [removed: The 2004 Omnibus Plan and the Directors Plan were terminated in 2008. Options previously granted under these plans and restricted] [added: Restricted] stock units [added: previously] granted under the 2008 Omnibus Stock Incentive Plan remain outstanding, but no further options or shares may be granted [removed: or issued] under [removed: either] [added: this] plan. |

| 2012 Stock and Incentive Plan | 2,972,041 | | (1) | $ | 38.84 | | (2) | 4,453,028 | | (3) |

| Total | 3,989,932 | | | $ | 34.41 | | (2) | 4,453,028 | | |

| 2012 Stock and Incentive Plan | 4,542,732 | | (1) | $ | 57.73 | | (2) | 4,166,037 | | (3) |

| 2004 Omnibus Stock Incentive Plan | 6,598 | | | 33.19 | | | | — | | (5) |

| Outside Directors Non-qualified Stock Option Plan | — | | | — | | | | — | | (5) |

| Total | 6,237,503 | | | $ | 49.49 | | (2) | 4,166,037 | | |

Information required under this item is contained in our Proxy Statement for our [removed: 2018] [added: 2019] annual general meeting of shareholders under the captions [removed: "Proposal] [added: “Proposal] 1 Re-elect Director Nominees - Director [removed: Independence"] [added: Independence”] and [removed: "Corporate] [added: “Corporate] Governance Matters - The [removed: Board's] [added: Board’s] Role and Responsibilities - 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: 2018] [added: 2019] 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 [removed: Auditors] [added: Auditor] of Pentair plc and to Authorize, by Binding Vote, the Audit and Finance Committee of the Board of Directors to Set the [removed: Auditors' Remuneration"] [added: Auditor’s Remuneration”] and is incorporated herein by reference.

Consolidated Statements of Operations and Comprehensive Income [removed: (Loss)] for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

Consolidated Balance Sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016][added: 2017]

Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

Consolidated Statements of Changes in Equity for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

| [removed: [2.1](http://www.sec.gov/Archives/edgar/data/77360/000119312515294098/d92608dex21.htm)] [added: [2.1](http://www.sec.gov/Archives/edgar/data/77360/000007736016000088/ex21sharepurchaseagreement.htm)] | | [removed: Agreement and Plan of Merger,] [added: Share Purchase Agreement,] dated August [removed: 14, 2015, among Pentair plc, Pentair Lionel Acquisition Co., Pentair Lionel Merger Sub, Inc.] [added: 18, 2016, by] and [removed: ERICO Global Company] [added: between Emerson Electric Co. and Pentair plc] (Incorporated by reference to Exhibit 2.1 in the [removed: Current] [added: Quarterly] Report on Form [removed: 8-K] [added: 10-Q] of Pentair plc filed with the Commission on [removed: August 18, 2015] [added: October 25, 2016] (File No. 001-11625)). |

| [removed: [2.2](http://www.sec.gov/Archives/edgar/data/77360/000007736016000088/ex21sharepurchaseagreement.htm)] [added: [2.2](http://www.sec.gov/Archives/edgar/data/77360/000007736018000018/exhibit21.htm)] | | [removed: Share Purchase] [added: Separation and Distribution] Agreement, dated [removed: August 18, 2016,] [added: as of April 27, 2018,] by and between [removed: Emerson Electric Co. and] Pentair plc [added: and nVent Electric plc] (Incorporated by reference to Exhibit 2.1 [removed: in] [added: to] the [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q] [added: 8-K] of Pentair plc filed with the Commission on [removed: October 25, 2016] [added: April 30, 2018)] (File No. 001-11625)). |

| [removed: [4.13](http://www.sec.gov/Archives/edgar/data/77360/000007736014000034/ex4120141009.htm)] [added: [4.13](http://www.sec.gov/Archives/edgar/data/77360/000007736018000018/exhibit41.htm)] | | [removed: Amended and Restated] Credit Agreement, dated as of [removed: October 3, 2014] [added: April 25, 2018,] among [removed: Pentair,] [added: Pentair] plc, Pentair Investments Switzerland GmbH, Pentair [removed: Finance, S.A.,] [added: Finance S.à r.l.,] Pentair, Inc. and the lenders and agents party thereto (Incorporated by reference to Exhibit 4.1 [removed: in] [added: to] the Current Report on Form 8-K of [removed: Pentair, plc,] [added: Pentair plc] filed with the Commission on [removed: October 3, 2014] [added: April 30, 2018)] (File No. 001-11625)). |

| [removed: [4.14](http://www.sec.gov/Archives/edgar/data/77360/000119312515311259/d92174dex41.htm)] [added: [4.14](http://www.sec.gov/Archives/edgar/data/77360/000119312515321236/d19886dex41.htm)] | | [removed: First Amendment,] [added: Indenture,] dated as of [removed: August 28,] [added: September 16,] 2015, among [removed: Pentair,] Pentair [removed: Investments Switzerland GmbH, Pentair] Finance S.A. [added: (as Issuer), Pentair plc (as Parent] and [removed: the lenders] [added: Guarantor), Pentair Investments Switzerland GmbH (as Guarantor)] and [removed: agents party thereto] [added: U.S. Bank National Association (as Trustee)] (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Pentair plc filed with the [removed: SEC] [added: Commission] on September [removed: 3,] [added: 16,] 2015 (File No. 001-11625)). |

| [removed: [4.15](http://www.sec.gov/Archives/edgar/data/77360/000119312515311259/d92174dex42.htm)] [added: [4.15](http://www.sec.gov/Archives/edgar/data/77360/000119312515321236/d19886dex43.htm)] | | Second [removed: Amendment,] [added: Supplemental Indenture,] dated as of September [removed: 2,] [added: 16,] 2015, among [removed: Pentair,] Pentair [removed: Investments Switzerland GmbH, Pentair] Finance S.A. [added: (as Issuer), Pentair plc (as Parent] and [removed: the lenders] [added: Guarantor), Pentair Investments Switzerland GmbH (as Guarantor)] and [removed: agents party thereto] [added: U.S. Bank National Association (as Trustee)] (Incorporated by reference to Exhibit [removed: 4.2] [added: 4.3] to the Current Report on Form 8-K of Pentair plc filed with the Commission on September [removed: 3,] [added: 16,] 2015 (File No. 001-11625)). |