WHITE PLAINS, N.Y.--(BUSINESS WIRE)--Xylem Inc. (NYSE: XYL) today reported fourth quarter revenue of $1.0 billion, up 7 percent from the fourth quarter 2010, and net income of $52 million or $0.28 per share. Xylem, a leading global water technology company focused on solving the world’s most challenging water issues, was spun off from ITT Corporation on October 31, 2011. Excluding the impact of one-time separation costs and other special items, adjusted net income was $74 million or $0.40 per share, up 2 cents or 5 percent from the normalized earnings in the fourth quarter 2010.
"We drove solid business performance in 2011. We delivered revenue and earnings growth that reflected the strength of our core water and wastewater portfolio, as well as increased activity in the emerging markets, and solid returns from investments in our analytical instrumentation and dewatering businesses,” said Gretchen McClain, president and chief executive officer of Xylem. "All of this was accomplished as we worked through the successful launch of our new company. It is a testament to the dedication of our 12,500 employees who focus on solving our customers’ water challenges.”
For the fourth quarter, Xylem achieved adjusted operating margin of 12.0 percent, including incremental stand-alone costs of $5 million, which reduced margin by 50 basis points. Operating margin in the fourth quarter of 2010 was 11.9 percent.
For the full year 2011, Xylem revenue was $3.8 billion, up 19 percent over 2010. Excluding the impact of acquisitions and positive foreign currency translation, full-year organic revenue growth was 7 percent. Adjusted operating margin was 12.7 percent, up 60 basis points compared to 2010. The $5 million of incremental stand-alone cost incurred in the fourth quarter reduced full-year operating margin by 10 basis points. Full-year reported net income was $279 million, or $1.50 per share. Adjusted net income, excluding the impact of the spinoff and other special items, was $358 million or $1.93 per share, up 45 cents or 30 percent from the normalized earnings in 2010. Strong performance from acquired businesses and working capital improvements helped generate $388 million of free cash flow during the year, which excludes $65 million of cash paid for spinoff-related costs. This represents a 111 percent conversion of adjusted net income.
*The 2010 normalized earnings per share reflect adjustments (including interest expense, stand-alone costs, and special tax items) to our GAAP results to better illustrate year-over-year performance. The normalized earnings are intended to give a representation of our performance had Xylem been a stand-alone company in 2010.
Fourth Quarter and Full-Year 2011 Segment Results
Water Infrastructure
Xylem’s Water Infrastructure businesses provide equipment and services to water and wastewater transport and treatment, dewatering and analytical instrumentation markets.
- Fourth quarter 2011 revenue was $679 million, an increase of 9 percent compared with the fourth quarter 2010, up 6 percent organically. This reflects solid growth in dewatering and the emerging markets, particularly in treatment and analytical instrumentation.
- Orders for the quarter increased 15 percent, 10 percent organically, to $589 million from the comparable period in 2010.
- Fourth quarter segment operating income, which included $6 million of spinoff-related costs, was $98 million. Adjusted operating income for the period, excluding the impact of the spinoff costs, was $104 million, up $3 million relative to the same period in 2010.
- Full-year segment revenue was $2.42 billion, up 25 percent over the prior year. Full-year reported segment operating income was $343 million. Full-year adjusted operating income for the Water Infrastructure segment was $359 million, an increase of 30 percent or $83 million over the full year 2010.
Applied Water
Xylem’s Applied Water businesses provide equipment and services in the residential and commercial building services, industrial and agricultural markets.
- Fourth quarter 2011 Applied Water segment revenue was $336 million, up 3 percent compared with the fourth quarter 2010, with growth in sales of energy-efficient solutions like the e-SV pump used in a wide range of applications, more than offsetting relative weakness in building services in the developed markets.
- Orders of $330 million were essentially flat vs. the comparable period in 2010.
- Fourth quarter segment operating income, which included $4 million of spinoff-related expenses, was $27 million. Excluding the impact of these special items, segment operating income was $31 million, up 15 percent or $4 million relative to the same period in 2010.
- Full-year segment revenue was $1.44 billion, up 9 percent over the prior year. Full-year reported segment operating income was $160 million, including $13 million of spinoff- related expenses. Full-year adjusted segment operating income was $173 million, an increase of 9 percent or $15 million over 2010.
Full-year 2012 Outlook
Xylem forecasts full-year 2012 revenue in the range of $3.9 billion – $4.0 billion, representing year-over-year organic growth of 4 percent to 6 percent. Operating margins are anticipated to be in the range of 12.7 to 13.3 percent, excluding spinoff-related costs, but including incremental stand-alone costs of $25 to $30 million as Xylem completes its first full year as an independent company. These stand-alone costs will offset operating margin by 60 to 80 basis points. Full-year 2012 adjusted net income is forecast to be $334 million to $362 million, for adjusted earnings per share of $1.80 to $1.95 for the full year 2012, which reflects expected growth of 8 to 17 percent over normalized 2011. Reported net income, which includes one-time separation costs, is anticipated to range from $319 million to $350 million, or $1.72 to $1.89.
“We’ve begun 2012 in a strong competitive and financial position,” McClain said. “We remain mindful of the pockets of weak economic activity in Europe, and less rapid growth in some of the emerging markets. With our applications expertise, customer focus, market-leading brands, large installed base and superior distribution in more than 150 countries, our portfolio is fundamentally well-positioned to continue growing at a rate faster than the global market. Further, we will continue investing in attractive opportunities, deploying resources to continue growing our core businesses through new product development and innovative applications, while maintaining our ability to make attractive acquisitions.”
More detail available
Supplemental information on Xylem’s fourth quarter and full-year 2011 earnings, including reconciliations for certain non-GAAP items, is posted at investors.xyleminc.com.
About Xylem
Xylem (XYL) is a leading global water technology provider, enabling customers to transport, treat, test and efficiently use water in public utility, residential and commercial building services, industrial and agricultural settings. The company does business in more than 150 countries through a number of market-leading product brands, and its people bring broad applications expertise with a strong focus on finding local solutions to the world’s most challenging water and wastewater problems. Launched in 2011 from the spinoff of the water-related businesses of ITT Corporation, Xylem is headquartered in White Plains, N.Y., with 2011 annual revenues of $3.8 billion and 12,500 employees worldwide.
The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all -- that which occurs in nature. For more information, please visit us at www.xyleminc.com.
Forward-Looking Statements
This document contains information that may constitute “forward-looking statements.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
These forward-looking statements include, but are not limited to, statements about the separation of Xylem Inc. (the “Company”) from ITT Corporation, the terms and the effect of the separation, the nature and impact of the separation, capitalization of the Company, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to orders, sales, operating margins and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements.
Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those set forth in our Registration Statement on Form 10, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission.
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XYLEM INC. AND SUBSIDIARIES CONSOLIDATED AND COMBINED INCOME STATEMENTS (In Millions, except per share data) |
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| Year Ended December 31, | 2011 | 2010 | 2009 | |||||||||||||
| Revenue | $ | 3,803 | $ | 3,202 | $ | 2,849 | ||||||||||
| Cost of revenue |
2,342 |
1,988 | 1,812 | |||||||||||||
| Gross profit | 1,461 | 1,214 | 1,037 | |||||||||||||
| Selling, general and administrative expenses | 877 | 737 | 667 | |||||||||||||
| Research and development expenses | 100 | 74 | 63 | |||||||||||||
| Separation costs | 87 | ─ | ─ | |||||||||||||
| Restructuring and asset impairments charges, net | 2 | 15 | 31 | |||||||||||||
| Operating income | 395 | 388 | 276 | |||||||||||||
| Interest expense | 17 | ─ | ─ | |||||||||||||
| Other non-operating income, net | 5 | ─ | 1 | |||||||||||||
| Income before taxes | 383 | 388 | 277 | |||||||||||||
| Income tax expense | 104 | 59 | 14 | |||||||||||||
| Net income | $ | 279 | $ | 329 | $ | 263 | ||||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 1.51 | $ | 1.78 | $ | 1.42 | ||||||||||
| Diluted | $ | 1.50 | $ | 1.78 | $ | 1.42 | ||||||||||
| Weighted average number of shares – Basic | 185.1 | 184.6 | 184.6 | |||||||||||||
| Weighted average number of shares – Diluted | 185.3 | 184.6 | 184.6 | |||||||||||||
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XYLEM INC. AND SUBSIDIARIES CONSOLIDATED AND COMBINED BALANCE SHEETS (In Millions, except per share amounts) |
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| December 31, | 2011 | 2010 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 318 | $ | 131 | |||||||
|
Receivable, less allowances for discounts and doubtful accounts of $37 and $32 in 2011 and 2010, respectively |
756 |
690 |
|||||||||
| Inventories, net | 426 | 389 | |||||||||
| Prepaid assets | 97 | 79 | |||||||||
| Deferred income tax assets | 45 | 47 | |||||||||
| Total current assets | 1,642 | 1,336 | |||||||||
| Property, plant and equipment, net | 463 | 454 | |||||||||
| Goodwill | 1,610 | 1,437 | |||||||||
| Other intangible assets, net | 505 | 416 | |||||||||
| Other non-current assets | 173 | 92 | |||||||||
| Total assets | $ | 4,393 | $ | 3,735 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 322 | $ | 309 | |||||||
| Accrued and other current liabilities | 490 | 340 | |||||||||
| Short-term borrowings and current maturities of long-term debt | 5 | ─ | |||||||||
| Total current liabilities | 817 | 649 | |||||||||
| Long-term debt | 1,201 | 4 | |||||||||
| Accrued postretirement benefits | 316 | 163 | |||||||||
| Deferred income tax liabilities | 165 | 99 | |||||||||
| Other non-current accrued liabilities | 67 | 101 | |||||||||
| Total liabilities | 2,566 | 1,016 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
| Common Stock - par value $0.01 per share: | |||||||||||
| Authorized 750.0 shares, issued 184.6 shares | 2 | ─ | |||||||||
| Capital in excess of par value | 1,663 | ─ | |||||||||
| Retained earnings | 40 | ─ | |||||||||
| Parent company investment | ─ | 2,682 | |||||||||
| Accumulated other comprehensive income | 122 | 37 | |||||||||
| Total stockholders’ equity | 1,827 | 2,719 | |||||||||
| Total liabilities and stockholders’ equity | $ | 4,393 | $ | 3,735 | |||||||
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XYLEM INC. AND SUBSIDIARIES CONSOLIDATED AND COMBINED CASH FLOWS (In Millions) |
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| Year Ended December 31, | 2011 | 2010 | 2009 | ||||||||||||||||
| Operating Activities | |||||||||||||||||||
| Net income | $ | 279 | $ | 329 | $ | 263 | |||||||||||||
| Adjustments to reconcile net income to net cash provided | |||||||||||||||||||
| by operating activities: | |||||||||||||||||||
| Depreciation and amortization | 137 | 92 | 70 | ||||||||||||||||
| Deferred income taxes | 8 | (31 | ) | (36 | ) | ||||||||||||||
| Share-based compensation | 13 | 9 | 9 | ||||||||||||||||
| Non-cash separation costs | 10 | — | — | ||||||||||||||||
| Restructuring charges, net | 2 | 15 | 31 | ||||||||||||||||
| Payments of restructuring | (7 | ) | (22 | ) | (40 | ) | |||||||||||||
| Changes in assets and liabilities (net of acquisitions): | |||||||||||||||||||
| Changes in receivables | (61 | ) | (45 | ) | 45 | ||||||||||||||
| Changes in inventories | (18 | ) | 7 | 62 | |||||||||||||||
| Changes in accounts payable | (9 | ) | 41 | (38 | ) | ||||||||||||||
| Changes in accrued liabilities | 53 | 12 | (11 | ) | |||||||||||||||
| Changes in accrued taxes | 56 | (17 | ) | (1 | ) | ||||||||||||||
| Net changes in other assets and liabilities | (14 | ) | 5 | 16 | |||||||||||||||
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Net Cash - Operating activities |
449 | 395 | 370 | ||||||||||||||||
| Investing Activities | |||||||||||||||||||
| Capital expenditures | (126 | ) | (94 | ) | (62 | ) | |||||||||||||
| Proceeds from the sale of property, plant and equipment | 11 | 4 | 11 | ||||||||||||||||
| Acquisitions of businesses and assets, net of cash acquired | (309 | ) | (1,004 | ) | (33 | ) | |||||||||||||
| Other, net | 1 | 1 | — | ||||||||||||||||
| Net Cash - Investing activities | (423 | ) | (1,093 | ) | (84 | ) | |||||||||||||
| Financing Activities | |||||||||||||||||||
| Net transfer (to)/from parent | (995 | ) | 745 | (292 | ) | ||||||||||||||
| Issuance of short-term debt | 5 | — | — | ||||||||||||||||
| Issuance of senior notes, net of discount | 1,198 | — | — | ||||||||||||||||
| Principal payments of debt and capital lease obligations | (8 | ) | — | — | |||||||||||||||
| Proceeds from exercise of employee stock options | 1 | — | — | ||||||||||||||||
| Payments of debt issuance costs | (10 | ) | — | — | |||||||||||||||
| Dividends paid | (19 | ) | — | — | |||||||||||||||
| Net Cash - Financing activities | 172 | 745 | (292 | ) | |||||||||||||||
| Effect of exchange rate changes on cash | (11 | ) | 3 | 6 | |||||||||||||||
| Net change in cash and cash equivalents | 187 | 50 | — | ||||||||||||||||
| Cash and cash equivalents at beginning of year | 131 | 81 | 81 | ||||||||||||||||
| Cash and cash equivalents at end of year | $ | 318 | $ | 131 | $ | 81 | |||||||||||||
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Supplemental disclosure of cash flow information: Cash paid during the year for: |
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| Income taxes (net of refunds received) | $ | 64 | $ | 110 | $ | 52 | |||||||||||||
| Xylem Inc. Non-GAAP Measures |
| Management views key performance indicators including revenue, segment operating income and margins, orders growth, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluating our operating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenues, operating income, net income or net cash from continuing operations as determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators: |
| “Organic revenue" and "Organic orders” defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations, intercompany transactions, and contributions from acquisitions and divestitures. Divestitures include sales of portions of our business that did not meet the criteria for classification as a discontinued operation or insignificant portions of our business that we did not classify as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period. |
| “EBITDA” defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude for one-time separation costs associated with the Xylem spin-off from ITT Corporation. |
| “Operating Income * ” and “Adjusted EPS” defined as operating income and earnings per share, adjusted to exclude one-time separation costs associated with the Xylem spin-off from ITT Corporation and tax-related special items. |
| “Normalized EPS” defined as earnings per share, adjusted to exclude one-time separation costs associated with the Xylem spin-off from ITT Corporation and tax-related special items, as well to reflect the incremental current period amount of interest expense and stand alone costs in the prior comparable period. |
| “Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures and other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flows does not consider non-discretionary cash payments, such as debt. |
| Xylem Inc. Non-GAAP Reconciliation | |||||||||||||||||||||||||
| Reported vs. Organic Order Growth | |||||||||||||||||||||||||
| ($ Millions) | |||||||||||||||||||||||||
| (As Reported - GAAP) | (As Adjusted - Organic) | ||||||||||||||||||||||||
| (A) | (B) | (C) | (D) | (E) | (F) = B+C+D+E | (G) = F/A | |||||||||||||||||||
| Orders | Orders |
Change 2011 v. 2010 |
% Change 2011 v. 2010 |
Acquisitions / Divestitures |
FX Contribution | Eliminations |
Change Adj. 2011 v. 2010 |
% Change Adj. 2011 v. 2010 |
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| 2011 | 2010 | ||||||||||||||||||||||||
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Year Ended December 31, 2011 |
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| Xylem Inc. | 3,847 | 3,237 | 610 | 18.8 | % | (272 | ) | (120 | ) | - | 218 | 6.7 | % | ||||||||||||
| Water infrastructure | 2,454 | 1,941 | 513 | 26.4 | % | (272 | ) | (96 | ) | 1 | 146 | 7.5 | % | ||||||||||||
| Applied Water | 1,452 | 1,352 | 100 | 7.4 | % | - | (27 | ) | (1 | ) | 72 | 5.3 | % | ||||||||||||
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Quarter Ended December 31, 2011 |
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| Xylem Inc. | 905 | 836 | 69 | 8.3 | % | (24 | ) | 5 | - | 50 | 6.0 | % | |||||||||||||
| Water infrastructure | 589 | 514 | 75 | 14.6 | % | (24 | ) | 4 | (5 | ) | 50 | 9.7 | % | ||||||||||||
| Applied Water | 330 | 331 | (1 | ) | -0.3 | % | - | 1 | (1 | ) | (1 | ) | -0.3 | % | |||||||||||
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Quarter Ended September 30, 2011 |
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| Xylem Inc. | 966 | 810 | 156 | 19.3 | % | (41 | ) | (42 | ) | - | 73 | 9.0 | % | ||||||||||||
| Water infrastructure | 621 | 504 | 117 | 23.2 | % | (41 | ) | (33 | ) | 5 | 48 | 9.5 | % | ||||||||||||
| Applied Water | 358 | 322 | 36 | 11.2 | % | - | (10 | ) | - | 26 | 8.1 | % | |||||||||||||
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Quarter Ended June 30, 2011 |
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| Xylem Inc. | 998 | 822 | 176 | 21.4 | % | (91 | ) | (70 | ) | - | 15 | 1.8 | % | ||||||||||||
| Water infrastructure | 632 | 498 | 134 | 26.9 | % | (91 | ) | (55 | ) | 2 | (10 | ) | -2.0 | % | |||||||||||
| Applied Water | 383 | 341 | 42 | 12.3 | % | - | (17 | ) | 1 | 26 | 7.6 | % | |||||||||||||
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Quarter Ended March 31, 2011 |
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| Xylem Inc. | 978 | 769 | 209 | 27.2 | % | (116 | ) | (13 | ) | - | 80 | 10.4 | % | ||||||||||||
| Water infrastructure | 612 | 425 | 187 | 44.0 | % | (116 | ) | (12 | ) | (1 | ) | 58 | 13.6 | % | |||||||||||
| Applied Water | 381 | 358 | 23 | 6.4 | % | - | (1 | ) | (1 | ) | 21 | 5.9 | % | ||||||||||||
| Xylem Inc. Non-GAAP Reconciliation | |||||||||||||||||||||||
| Reported vs. Organic Revenue | |||||||||||||||||||||||
| ($ Millions) | |||||||||||||||||||||||
| (As Reported - GAAP) | (As Adjusted - Organic) | ||||||||||||||||||||||
| (A) | (B) | (C) | (D) | (E) | (F) = B+C+D+E | (G) = F/A | |||||||||||||||||
| Revenue | Revenue |
Change 2011 v. 2010 |
% Change 2011 v. 2010 |
Acquisitions / Divestitures |
FX Contribution | Eliminations |
Change Adj. 2011 v. 2010 |
% Change Adj. 2011 v. 2010 |
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| 2011 | 2010 | ||||||||||||||||||||||
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Year Ended December 31, 2011 |
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| Xylem Inc. | 3,803 | 3,202 | 601 | 18.8 | % | (264 | ) | (111 | ) | - | 226 | 7.1 | % | ||||||||||
| Water infrastructure | 2,416 | 1,930 | 486 | 25.2 | % | (264 | ) | (87 | ) | 2 | 137 | 7.1 | % | ||||||||||
| Applied Water | 1,444 | 1,327 | 117 | 8.8 | % | - | (28 | ) | (1 | ) | 88 | 6.6 | % | ||||||||||
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Quarter Ended December 31, 2011 |
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| Xylem Inc. | 1,003 | 935 | 68 | 7.3 | % | (27 | ) | 6 | - | 47 | 5.0 | % | |||||||||||
| Water Infrastructure | 679 | 622 | 57 | 9.2 | % | (27 | ) | 5 | 1 | 36 | 5.8 | % | |||||||||||
| Applied Water | 336 | 327 | 9 | 2.8 | % | - | 1 | (1 | ) | 9 | 2.8 | % | |||||||||||
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Quarter Ended September 30, 2011 |
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| Xylem Inc. | 939 | 806 | 133 | 16.5 | % | (42 | ) | (39 | ) | - | 52 | 6.5 | % | ||||||||||
| Water infrastructure | 584 | 488 | 96 | 19.7 | % | (42 | ) | (30 | ) | 1 | 25 | 5.1 | % | ||||||||||
| Applied Water | 368 | 331 | 37 | 11.2 | % | - | (10 | ) | 1 | 28 | 8.5 | % | |||||||||||
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Quarter Ended June 30, 2011 |
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| Xylem Inc. | 971 | 775 | 196 | 25.3 | % | (85 | ) | (65 | ) | - | 46 | 5.9 | % | ||||||||||
| Water infrastructure | 602 | 443 | 159 | 35.9 | % | (85 | ) | (50 | ) | 1 | 25 | 5.6 | % | ||||||||||
| Applied Water | 385 | 346 | 39 | 11.3 | % | - | (18 | ) | - | 21 | 6.1 | % | |||||||||||
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Quarter Ended March 31, 2011 |
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| Xylem Inc. | 890 | 686 | 204 | 29.7 | % | (110 | ) | (13 | ) | - | 81 | 11.8 | % | ||||||||||
| Water infrastructure | 551 | 377 | 174 | 46.2 | % | (110 | ) | (12 | ) | (1 | ) | 51 | 13.5 | % | |||||||||
| Applied Water | 355 | 323 | 32 | 9.9 | % | - | (1 | ) | (1 | ) | 30 | 9.3 | % | ||||||||||
| Xylem Inc. Non-GAAP Reconciliation | ||||||||||||||||||||||||||||
| Normalized and Adjusted Operating Income and Earnings Per Share (EPS) | ||||||||||||||||||||||||||||
| ($ Millions, except per share amounts) | ||||||||||||||||||||||||||||
| Q4 '10 | Q4 '11 | |||||||||||||||||||||||||||
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As Reported |
Adjustments |
Normalized |
As Reported |
Adjustments |
Adjusted |
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| Total Revenue | 935 | 935 | 1,003 | 1,003 | ||||||||||||||||||||||||
| Operating Income | 111 | (5 | ) | a | 106 | 100 | 20 | g | 120 | |||||||||||||||||||
| Operating Margin | 11.9 | % | b | 11.4 | % | 9.9 | % | 11.9 | % | |||||||||||||||||||
| Interest Income (Expense) | - | (14 | ) | (14 | ) | (13 | ) | (13 | ) | |||||||||||||||||||
| Other Income (Expense) | - | - | (1 | ) | (1 | ) | ||||||||||||||||||||||
| Income before Taxes | 111 | (19 | ) | 92 | 85 | 20 | 105 | |||||||||||||||||||||
| Provision for Income Taxes | (14 | ) | (9 | ) | f | (23 | ) | (33 | ) | 2 | h | (31 | ) | |||||||||||||||
| Net Income | 97 | (28 | ) | 69 | 52 | 22 | 74 | |||||||||||||||||||||
| Diluted Shares | 184.6 | 184.6 | 185.3 | 185.3 | ||||||||||||||||||||||||
| Diluted EPS | $ | 0.53 | $ | (0.15 | ) | $ | 0.38 | $ | 0.28 | $ | 0.12 | $ | 0.40 | |||||||||||||||
| FY '10 | FY '11 | |||||||||||||||||||||||||||
|
As Reported |
Adjustments |
Normalized |
As Reported |
Adjustments |
Adjusted |
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| 3,202 | 3,202 | 3,803 | 3,803 | |||||||||||||||||||||||||
| Operating Income | 388 | (5 | ) | a | 383 | 395 | 87 | d | 482 | |||||||||||||||||||
| 12.1 | % | b | 11.9 | % | 10.4 | % | 12.7 | % | ||||||||||||||||||||
| Interest Income (Expense) | - | (14 | ) | (14 | ) | (17 | ) | (17 | ) | |||||||||||||||||||
| Other Income (Expense) | - | - | 5 | 5 | ||||||||||||||||||||||||
| Income before Taxes | 388 | (19 | ) | 369 | 383 | 87 | 470 | |||||||||||||||||||||
| Provision for Income Taxes | (59 | ) | (37 | ) | c | (96 | ) | (104 | ) | (7 | ) | e | (111 | ) | ||||||||||||||
| Net Income | 329 | (56 | ) | 273 | 279 | 80 | 359 | |||||||||||||||||||||
| Diluted Shares | 184.6 | 184.6 | 185.3 | 185.3 | ||||||||||||||||||||||||
| Diluted EPS | $ | 1.78 | $ | (0.30 | ) | $ | 1.48 | $ | 1.50 | $ | 0.43 | $ | 1.93 | |||||||||||||||
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a Equals incremental stand alone costs incurred in 2011 of $5M |
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b Represents incremental interest expense on long-term debt that was incurred in 2011 |
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c Represents net tax impact of above items, less 2010 special tax items of $43M |
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d Represents one-time separation costs incurred in 2011 |
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e Represents the tax benefit on one time separation costs of $15M, less special tax items of $7M |
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f Represents net tax impact on stand alone and interest expenses, less Q4 2010 special tax items of $15M |
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g One time separation costs incurred in Q4 2010 |
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h Represents net tax impact of one time separation costs |
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| Xylem Inc. Non-GAAP Reconciliation | ||||||||||||||||||||
| Adjusted Diluted EPS | ||||||||||||||||||||
| 2011 and 2010 | ||||||||||||||||||||
| ($ Millions, except per share amounts) | ||||||||||||||||||||
|
Q1 2011 |
Q2 2011 |
Q3 2011 |
Q4 2011 |
FY 2011 |
||||||||||||||||
| Net Income | 78 | 72 | 77 | 52 | 279 | |||||||||||||||
| Separation costs, net of tax | 2 | 27 | 25 | 18 | 72 | |||||||||||||||
| Adjusted Net Income before Special Tax Items | 80 | 99 | 102 | 70 | 351 | |||||||||||||||
| Special Tax Items | 4 | (1 | ) | 4 | 7 | |||||||||||||||
| Adjusted Net Income | 80 | 103 | 101 | 74 | 358 | |||||||||||||||
| Diluted Earnings per Share | $ | 0.42 | $ | 0.39 | $ | 0.42 | $ | 0.28 | $ | 1.50 | ||||||||||
| Separation costs per Share | $ | 0.01 | $ | 0.15 | $ | 0.13 | $ | 0.10 | $ | 0.39 | ||||||||||
| Adjusted diluted EPS before Special Tax Items | $ | 0.43 | $ | 0.54 | $ | 0.55 | $ | 0.38 | $ | 1.89 | ||||||||||
| Special Tax Items per Share | $ | 0.00 | $ | 0.02 | ($0.01 | ) | $ | 0.02 | $ | 0.04 | ||||||||||
| Adjusted diluted EPS | $ | 0.43 | $ | 0.56 | $ | 0.54 | $ | 0.40 | $ | 1.93 | ||||||||||
|
Q1 2010 |
Q2 2010 |
Q3 2010 |
Q4 2010 |
FY 2010 |
||||||||||||||||
| Net Income | 56 | 85 | 91 | 97 | 329 | |||||||||||||||
| Separation costs, net of tax | - | - | - | - | - | |||||||||||||||
| Adjusted Net Income before Special Tax Items | 56 | 85 | 91 | 97 | 329 | |||||||||||||||
| Special Tax Items | (6 | ) | (11 | ) | (11 | ) | (15 | ) | (43 | ) | ||||||||||
| Adjusted Net Income | 50 | 74 | 80 | 82 | 286 | |||||||||||||||
| Diluted Earnings per Share | $ | 0.30 | $ | 0.46 | $ | 0.49 | $ | 0.53 | $ | 1.78 | ||||||||||
| Adjusted diluted EPS before Special Tax Items | $ | 0.30 | $ | 0.46 | $ | 0.49 | $ | 0.53 | $ | 1.78 | ||||||||||
| Special Tax Items per Share | ($0.03 | ) | ($0.06 | ) | ($0.05 | ) | ($0.09 | ) | ($0.23 | ) | ||||||||||
| Adjusted diluted EPS | $ | 0.27 | $ | 0.40 | $ | 0.44 | $ | 0.44 | $ | 1.55 | ||||||||||
| Xylem Inc. Non-GAAP Reconciliation | ||||||||||||||||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||||||||||||
| ($ Millions) | ||||||||||||||||||||||||||||||
| Adjusted Segment Operating Income | ||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||||||
|
'11 |
'10 |
'11 |
'10 |
'11 |
'10 |
'11 |
'10 |
'11 |
'10 |
|||||||||||||||||||||
| Total Revenue | ||||||||||||||||||||||||||||||
| • Water Infrastructue | 551 | 377 | 602 | 443 | 584 | 488 | 679 | 622 | 2,416 | 1,930 | ||||||||||||||||||||
| • Applied Water | 355 | 323 | 385 | 346 | 368 | 331 | 336 | 327 | 1,444 | 1,327 | ||||||||||||||||||||
| Operating Income | ||||||||||||||||||||||||||||||
| • Water Infrastructue | 64 | 45 | 94 | 57 | 87 | 73 | 98 | 101 | 343 | 276 | ||||||||||||||||||||
| • Applied Water | 46 | 40 | 50 | 51 | 37 | 40 | 27 | 27 | 160 | 158 | ||||||||||||||||||||
| Separation Costs | ||||||||||||||||||||||||||||||
| • Water Infrastructue | - | - | 2 | - | 8 | - | 6 | - | 16 | - | ||||||||||||||||||||
| • Applied Water | - | - | - | - | 9 | - | 4 | - | 13 | - | ||||||||||||||||||||
| Adjusted Operating Income* | ||||||||||||||||||||||||||||||
| • Water Infrastructue | 64 | 45 | 96 | 57 | 95 | 73 | 104 | 101 | 359 | 276 | ||||||||||||||||||||
| • Applied Water | 46 | 40 | 50 | 51 | 46 | 40 | 31 | 27 | 173 | 158 | ||||||||||||||||||||
| Operating Margin | ||||||||||||||||||||||||||||||
| • Water Infrastructue | 11.6 | % | 11.9 | % | 15.6 | % | 12.9 | % | 14.9 | % | 14.9 | % | 14.4 | % | 16.2 | % | 14.2 | % | 14.3 | % | ||||||||||
| • Applied Water | 13.0 | % | 12.4 | % | 13.0 | % | 14.7 | % | 10.0 | % | 12.0 | % | 8.0 | % | 8.3 | % | 11.1 | % | 11.9 | % | ||||||||||
| Adjusted Operating Margin* | ||||||||||||||||||||||||||||||
| • Water Infrastructue | 11.6 | % | 11.9 | % | 15.9 | % | 12.9 | % | 16.3 | % | 14.9 | % | 15.3 | % | 16.2 | % | 14.9 | % | 14.3 | % | ||||||||||
| • Applied Water | 13.0 | % | 12.4 | % | 13.0 | % | 14.7 | % | 12.5 | % | 12.0 | % | 9.2 | % | 8.3 | % | 12.0 | % | 11.9 | % | ||||||||||
| *Adjusted Operating Income excludes non-recurring separation costs | ||||||||||||||||||||||||||||||
| Xylem Inc. Non-GAAP Reconciliation | ||||||
| Net Cash - Operating Activities vs. Free Cash Flow | ||||||
| Years ended 2011 & 2010 | ||||||
| ($ Millions) | ||||||
| Year Ended | ||||||
| 2011 | 2010 | |||||
| Net Cash - Operating Activities | 449 | 395 | ||||
| Capital Expenditures | (126 | ) | (94 | ) | ||
| Free Cash Flow, including separation costs | 323 | 301 | ||||
| Separation Costs (Cash Paid incl. Capex) | 65 | - | ||||
| Free Cash Flow, excluding separation costs | 388 | 301 | ||||
| Net Income | 279 | 329 | ||||
| Separation Costs, net of tax | 72 | - | ||||
| Adjusted Net Income | 351 | 329 | ||||
| Free Cash Flow Conversion | 111 | % | 91 | % | ||
| Xylem Inc. Non-GAAP Reconciliation | ||||||||||||||||||||||||||||||||||
| Guidance | ||||||||||||||||||||||||||||||||||
| ($ Millions, except per share amounts) | ||||||||||||||||||||||||||||||||||
| Illustration of Mid Point Guidance | ||||||||||||||||||||||||||||||||||
| 2012 Guidance | ||||||||||||||||||||||||||||||||||
| FY '11 | FY '12 | |||||||||||||||||||||||||||||||||
|
As Reported |
Adjustments |
Adjusted |
Adjustments |
Normalized |
As Reported |
Adjustments |
Adjusted |
|||||||||||||||||||||||||||
| Total Revenue | 3,803 | 3,803 | 3,803 | 3,950 | 3,950 | |||||||||||||||||||||||||||||
| Segment Operating Income | 503 | 29 | a | 532 | (8 | ) | d | 524 | 577 | 8 | h | 585 | ||||||||||||||||||||||
| Segment Operating Margin | 13.2 | % | 14.0 | % | 13.8 | % | 14.6 | % | 14.8 | % | ||||||||||||||||||||||||
| Corporate Expense | 108 | (58 | ) | b | 50 | 20 | e | 70 | 81 | (10 | ) | h | 71 | |||||||||||||||||||||
| Operating Income | 395 | 87 | 482 | (28 | ) | 454 | 496 | 18 | 514 | |||||||||||||||||||||||||
| Operating Margin | 10.4 | % | 12.7 | % | 11.9 | % | 12.6 | % | 13.0 | % | ||||||||||||||||||||||||
| Interest Expense | (17 | ) | (17 | ) | (39 | ) | f | (56 | ) | (51 | ) | (51 | ) | |||||||||||||||||||||
| Other Non-Operating Income (Expense) | 5 | 5 | 5 | - | - | |||||||||||||||||||||||||||||
| Income before Taxes | 383 | 87 | 470 | (67 | ) | 403 | 445 | 18 | 463 | |||||||||||||||||||||||||
| Provision for Income Taxes | (104 | ) | (7 | ) | c | (111 | ) | 16 | g | (95 | ) | (111 | ) | (5 | ) | i | (116 | ) | ||||||||||||||||
| Net Income | 279 | 80 | 359 | (51 | ) | 308 | 334 | 13 | 347 | |||||||||||||||||||||||||
| Diluted Shares | 185.3 | 185.3 | 185.8 | 185.8 | ||||||||||||||||||||||||||||||
| Diluted EPS | $ | 1.50 | $ | 0.43 | $ | 1.93 | $ | (0.27 | ) | 1.66 | 1.80 | 0.07 | 1.87 | |||||||||||||||||||||
|
a One time separation costs incurred at the segment level |
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|
b One time separation costs incurred at the corporate level |
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|
c Net tax impact of above items, plus the addition of 2011 special tax items |
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|
d Incremental stand alone costs to be incurred in 2012 at the segment level ($8M) |
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|
e Incremental stand alone costs to be incurred in 2012 at the corporate level ($20M) |
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|
f Incremental interest expense on long-term debt to be incurred in 2012 |
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|
g Tax impact of incremental interest expense and stand alone costs to be incurred in 2012 |
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|
h Expected one time separation costs of $8M and $10M to be incurred at the segments and headquarters, respectively. |
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|
i Tax impact of one time separation costs expected to be incurred in 2012. |
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