Pentair Announces Strong Third Quarter Sales and Record Operating Income

Pentair, Inc. (NYSE: PNR): Reports strong third quarter sales of $838 million, up 8 percent versus the third quarter 2006 Delivers third quarter net earnings per share from continuing operations (EPS) of $0.58 reported and $0.53 on an adjusted basis(a) Generates strong free cash flow of $120 million in the third quarter and $189 million for the first three quarters of 2007, up $96 million year-to-date versus 2006 Updates full year 2007 EPS guidance range of $2.04 to $2.09 reported and $2.03 to $2.07 on an adjusted basis Introduces full year 2008 guidance consisting of sales growth of 4 to 5 percent and net earnings per diluted share from continuing operations of between $2.25 and $2.40 (a) Adjusted 2007 and 2006 EPS exclude the benefit of non-recurring tax items as well as the negative impact associated with restructuring costs and other market related actions in the respective period. Adjusted 2007 and 2006 Operating Income and Margins exclude the negative impact associated with restructuring costs and other market related actions in the respective period (see reconciliation tables attached to this release). Pentair, Inc. (NYSE:PNR) today announced third quarter 2007 net earnings per diluted share from continuing operations (EPS) of $0.58. This represents an increase of 76 percent as compared to the $0.33 of reported EPS from continuing operations in the third quarter last year. Current period results include the favorable impact of $0.11 per share from one-time net tax benefits and a negative $0.06 per share impact from restructuring costs and market related items. Adjusting for these items in both periods, third quarter 2007 EPS from continuing operations was $0.53, up 29 percent compared to adjusted earnings per share of $0.41 in the third quarter of 2006. Total sales increased 8 percent to $838 million as compared with $778 million in the third quarter of 2006. The company delivered operating income for the third quarter of $91 million versus $60 million in the year-earlier quarter. On an adjusted basis, the company delivered operating income of $100 million versus third quarter, 2006 adjusted operating income of $77 million. Overall, operating margins expanded 320 basis points on a reported basis to 10.9 percent. On an adjusted basis, operating margins expanded 210 basis points to 12.0 percent, driven by a positive 530 basis point improvement from volume, price, mix, acquisitions and productivity. The positive impact from these items more than offset a negative 320 basis point impact related to total inflation. Pentair generated free cash flow of $120 million for the quarter, driven primarily by a lower use of working capital year-over-year. Year-to-date the company has generated $189 million of free cash flow, reflecting a $96 million improvement as compared with the first three quarters of 2006. "Our performance in the third quarter was first rate as we leveraged the strength of our business diversity and our growing international presence. Strong sales growth and earnings in our Technical Products business enabled us to exceed the third quarter earnings guidance we provided in July. In our Water businesses, we continue to navigate the challenging North American residential markets, which were as tough as we expected, while growing nicely in our international, industrial, commercial and municipal Water markets,” said Randall J. Hogan, chairman and chief executive officer. "Our earnings per share reflect effective execution against our goals as well as the positive impact from a recent change in the German corporate tax rate. We initiated additional actions in the third quarter to improve our cost structure and to solidify our productivity momentum for 2008. Our EPS of $0.53 on an adjusted basis was up 29 percent year-over-year, a very respectable performance given the challenges in a few of our key markets.” THIRD QUARTER BUSINESS HIGHLIGHTS The Water Group delivered $562 million in sales or 6 percent year-over-year sales growth. Organic sales were down 1 percent excluding acquisitions or down 2 percent excluding foreign exchange. The decline in organic growth reflects continuing softness in the North American residential markets. Internationally, Water sales increased at a double-digit rate. North American pump sales were down 4 percent as growth in commercial and municipal markets as well as new products and pricing actions could not overcome residential market declines. North American filtration sales were up 11 percent or down 1 percent when adjusted for the Porous Media acquisition. Solid sales growth in food service and in other commercial and industrial markets was muted by declines in the residential water treatment markets. North American pool and spa sales were down 5 percent organically as new products and price actions somewhat offset overall declines in the pool and spa markets. Sales in Asia-Pacific grew 34 percent driven by strong growth in Australian sales and continued successful penetration in China. Sales in Europe grew 47 percent or 10 percent excluding the Jung Pump acquisition. Sales growth outpaced the economy with particular strength in the industrial and food service markets. The Water Group’s third quarter operating income totaled $54 million, up 48 percent as compared to $36 million in the same period last year. On an adjusted basis, operating income was $64 million or 25 percent higher than the $51 million in the year-ago period. Adjusted operating margins expanded 170 basis points as the benefit from productivity, acquisitions and positive price more than offset the negative impact from inflation and decreased volumes. Technical Products delivered third quarter 2007 sales of $276 million, an increase of 12 percent versus the year-earlier period. Sales were up approximately 11 percent excluding acquisitions or up 9 percent excluding foreign exchange. Strong sales in international regions, solid gains in the electrical markets, and a recovering electronics market combined to drive expanded growth. Electrical third quarter sales grew approximately 11 percent driven by market share gains year-over-year in the industrial, commercial and networking market segments. New products contributed significantly to this growth, especially in the networking segment. Global electronic sales were up approximately 13 percent. In North America, electronic sales declined approximately 2 percent. Electronic sales grew 15 percent in Europe and 83 percent in Asia Pacific, reflecting continuing penetration of the China market. Technical Products’ third quarter operating income totaled $46 million, up 24 percent as compared to $37 million in the same quarter last year. Operating margins were 16.8 percent, up 180 basis points. On an adjusted basis, margins were 16.5 percent, up 150 basis points versus the year ago period. In the quarter, the benefit from volume, price, productivity and acquisitions more than offset the negative impact from total inflation. "Water and Technical Products performed very well in the quarter and we continue to see numerous opportunities for growth and productivity in both businesses,” Hogan said. "The 6 cents, or $9.7 million, pre-tax charge represents an acceleration of actions initiated in the third quarter in light of the deep and extended downturn in North American residential markets. The benefits associated with these actions - as well as continued productivity actions driven by lean - are included in our 2008 outlook,” he added. OUTLOOK The company introduces fourth quarter 2007 EPS guidance range of $0.42 to $0.47, which includes a negative EPS impact of $0.03 to $0.04 predominantly related to a new Q4 restructuring action associated with the recently announced closure of a North American Electronics facility. On an adjusted basis, the company expects fourth quarter EPS to be $0.46 to $0.50, an increase of 48 to 61 percent year-over-year. "With our fourth quarter guidance we now expect full-year EPS in the range of $2.04 to $2.09 on a reported basis and $2.03 to $2.07 on an adjusted basis. This represents full year adjusted EPS growth of 18 to 20 percent. We continue to generate tremendous free cash flow which gives us confidence to increase our full year 2007 free cash flow range to 230 million to 250 million dollars,” Hogan said. "We expect our positive performance momentum to continue despite North American residential weakness. We anticipate continued softness in the North American residential market, which impacts our Water business, and continued recovery in the electronics markets we serve. "As we look ahead to 2008, we believe the productivity and growth actions we’re taking in 2007 will help ensure another strong year of performance for Pentair. We anticipate total revenue growth of 4 to 5 percent, as our global growth initiatives in international, commercial, industrial and municipal markets should offset the softness of the North American residential market,” said Hogan. "This sales growth, combined with carry-over 2007 productivity actions, more aggressive sourcing efforts, reduction in our manufacturing fixed cost structure, and an emphasis on reducing our general and administrative structure globally should position us to deliver EPS in the range of $2.25 to $2.40 in 2008. Furthermore, we continue to drive working capital performance and expect full year 2008 free cash flow to be at least 100 percent conversion of net income,” he concluded. EARNINGS CONFERENCE CALL Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the Company’s performance and Q4 and 2008 guidance on a two-way conference call with investors at 12:00 p.m. Eastern today. Reconciliation of any non-GAAP financial measures are set forth in the attachments to this third quarter 2007 earnings release and in the third quarter 2007 earning release conference call presentation, both of which can be found at Pentair’s web site (www.pentair.com). Related financial charts and certain other information to be discussed on the conference call will be available on the company’s website shortly before the conference call. The web cast and presentation will be archived at the same site following the conclusion of the conference call. CAUTION CONCERNING FORWARD-LOOKING STATEMENTS Any statements made about the company’s anticipated financial results are forward-looking statements subject to risks and uncertainties such as continued economic growth, including: the strength of housing and related markets; the ability to integrate acquisitions successfully and the risk that expected synergies may not be fully realized or may take longer to realize than expected; the ability to successfully limit any judgment arising out of the Horizon litigation; foreign currency effects; retail and industrial demand; product introductions; and, pricing and other competitive pressures. Forward-looking statements included herein are made as of the date hereof, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. ABOUT PENTAIR, INC. Pentair (www.pentair.com) is a diversified operating company headquartered in Minnesota. Its Water Group is a global leader in providing innovative products and systems used worldwide in the movement, treatment, storage and enjoyment of water. Pentair’s Technical Products Group is a leader in the global enclosures and thermal management markets, designing and manufacturing thermal management products and standard, modified, and custom enclosures that house and protect sensitive electronics and electrical components. With 2006 revenues of $3.15 billion, Pentair employs approximately 15,000 people worldwide. Pentair, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Unaudited)           Three months ended Nine months ended September 29 September 30 September 29 September 30 In thousands, except per-share data   2007   2006   2007   2006 Net sales $ 837,834 $ 778,020 $ 2,568,474 $ 2,411,431 Cost of goods sold     591,667       565,533       1,801,459       1,713,747   Gross profit 246,167 212,487 767,015 697,684 % of net sales 29.4 % 27.3 % 29.8 % 28.9 % Selling, general and administrative 140,745 137,923 436,837 406,843 % of net sales 16.8 % 17.7 % 17.0 % 16.9 % Research and development 14,446 14,271 44,204 44,017 % of net sales     1.7 %     1.9 %     1.7 %     1.8 % Operating income 90,976 60,293 285,974 246,824 % of net sales 10.9 % 7.7 % 11.1 % 10.2 % Gain on sale of investment — 167 — 167 Net interest expense 18,836 13,024 52,841 38,861 % of net sales     2.2 %     1.7 %     2.0 %     1.6 % Income from continuing operations before income taxes 72,140 47,436 233,133 208,130 % of net sales 8.7 % 6.1 % 9.1 % 8.6 % Provision for income taxes 14,096 13,995 70,958 62,985 Effective tax rate     19.5 %     29.5 %     30.4 %     30.3 % Income from continuing operations 58,044 33,441 162,175 145,145 Gain (loss) on disposal of discontinued operations, net of tax     —       1,400       207       (51 ) Net income   $ 58,044     $ 34,841     $ 162,382     $ 145,094     Earnings (loss) per common share Basic Continuing operations $ 0.59 $ 0.34 $ 1.64 $ 1.45 Discontinued operations     —       0.01       —       —   Basic earnings per common share   $ 0.59     $ 0.35     $ 1.64     $ 1.45     Diluted Continuing operations $ 0.58 $ 0.33 $ 1.62 $ 1.42 Discontinued operations     —       0.01       —       —   Diluted earnings per common share   $ 0.58     $ 0.34     $ 1.62     $ 1.42     Weighted average common shares outstanding Basic 98,747 99,419 98,859 100,133 Diluted 100,365 101,062 100,339 101,998   Cash dividends declared per common share $ 0.15 $ 0.14 $ 0.45 $ 0.42 Pentair, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)       September 29 December 31 September 30 In thousands   2007   2006   2006 Assets Current assets Cash and cash equivalents $ 56,555 $ 54,820 $ 45,153 Accounts and notes receivable, net 479,915 422,134 454,255 Inventories 414,302 398,857 397,637 Deferred tax assets 53,057 50,578 46,040 Prepaid expenses and other current assets     48,512       31,239       28,736   Total current assets 1,052,341 957,628 971,821   Property, plant and equipment, net 358,138 330,372 312,295   Other assets Goodwill 2,006,426 1,718,771 1,732,410 Intangibles, net 492,882 287,011 261,261 Other     77,084       71,197       77,386   Total other assets     2,576,392       2,076,979       2,071,057   Total assets   $ 3,986,871     $ 3,364,979     $ 3,355,173     Liabilities and Shareholders' Equity Current liabilities Short-term borrowings $ 4,800 $ 14,563 $ — Current maturities of long-term debt 5,099 7,625 6,912 Accounts payable 208,505 206,286 191,206 Employee compensation and benefits 107,828 88,882 93,431 Current pension and post-retirement benefits 7,918 7,918 — Accrued product claims and warranties 47,719 44,093 44,016 Income taxes 10,439 22,493 — Accrued rebates and sales incentives 37,115 39,419 41,982 Other current liabilities     112,673       90,003       95,122   Total current liabilities 542,096 521,282 472,669   Other liabilities Long-term debt 1,103,023 721,873 788,066 Pension and other retirement compensation 222,098 207,676 171,063 Post-retirement medical and other benefits 46,499 47,842 73,398 Long-term income taxes payable 18,214 — — Deferred tax liabilities 136,886 109,781 124,393 Other non-current liabilities     89,898       86,526       84,783   Total liabilities 2,158,714 1,694,980 1,714,372   Shareholders' equity     1,828,157       1,669,999       1,640,801   Total liabilities and shareholders' equity   $ 3,986,871     $ 3,364,979     $ 3,355,173     Days sales in accounts receivable (13 month moving average) 54 54 54 Days inventory on hand (13 month moving average) 78 76 73 Days in accounts payable (13 month moving average) 54 56 56 Debt/total capital 37.8 % 30.8 % 32.6 % NOTE: The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB No. 109 ("FIN 48") on January 1, 2007.  As a result of adoption of FIN 48, the Company recorded an adjustment to retained earnings of $2.9 million in the first quarter of 2007.  Additionally, the Company has added the line "Long-term income taxes payable" to the Company's Condensed Consolidated Balance Sheets to report its total long-term liability for unrecognized tax benefits. Pentair, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)     Nine months ended September 29 September 30 In thousands   2007   2006 Operating activities Net income $ 162,382 $ 145,094 Adjustments to reconcile net income to net cash provided by operating activities (Gain) loss on disposal of discontinued operations (207 ) 51 Depreciation 45,786 44,762 Amortization 18,665 13,955 Deferred income taxes (18,883 ) (89 ) Stock compensation 17,071 18,058 Excess tax benefits from stock-based compensation (2,706 ) (2,677 ) Gain on sale of assets (2,195 ) (167 ) Changes in assets and liabilities, net of effects of business acquisitions and dispositions Accounts and notes receivable (27,627 ) (23,210 ) Inventories 10,620 (43,360 ) Prepaid expenses and other current assets (8,673 ) (3,671 ) Accounts payable 168 (22,136 ) Employee compensation and benefits 2,835 (7,153 ) Accrued product claims and warranties 3,199 547 Income taxes (4,813 ) (14,800 ) Other current liabilities 16,634 (2,263 ) Pension and post-retirement benefits 7,924 14,365 Other assets and liabilities     9,153       8,546   Net cash provided by continuing operations 229,333 125,852 Net cash provided by operating activities of discontinued operations     —       48   Net cash provided by operating activities 229,333 125,900   Investing activities Capital expenditures (45,163 ) (33,311 ) Proceeds from sale of property and equipment 5,136 497 Acquisitions, net of cash acquired (486,264 ) (22,879 ) Divestitures — (24,007 ) Equity Investments — 167 Other     (4,044 )     (6,823 ) Net cash used for investing activities (530,335 ) (86,356 )   Financing activities Net short-term borrowings (10,378 ) — Proceeds from long-term debt 1,147,132 568,996 Repayment of long-term debt (770,822 ) (526,599 ) Debt issuance costs (1,876 ) — Excess tax benefits from stock-based compensation 2,706 2,677 Proceeds from exercise of stock options 5,512 3,126 Repurchases of common stock (27,119 ) (50,000 ) Dividends paid     (44,986 )     (42,616 ) Net cash provided by (used for) financing activities 300,169 (44,416 )   Effect of exchange rate changes on cash and cash equivalents     2,568       1,525   Change in cash and cash equivalents 1,735 (3,347 ) Cash and cash equivalents, beginning of period     54,820       48,500   Cash and cash equivalents, end of period   $ 56,555     $ 45,153     Free cash flow Net cash provided by operating activities $ 229,333 $ 125,900 Less capital expenditures (45,163 ) (33,311 ) Proceeds from sale of property and equipment     5,136       497   Free cash flow   $ 189,306     $ 93,086   Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable Business Segment (Unaudited)         First Qtr Second Qtr Third Qtr Nine Months In thousands   2007   2007   2007   2007   Net sales to external customers Water $ 555,412 $ 665,495 $ 562,133 $ 1,783,040 Technical Products     252,583       257,150       275,701       785,434   Consolidated   $ 807,995     $ 922,645     $ 837,834     $ 2,568,474     Intersegment sales Water $ 214 $ 46 $ 207 $ 467 Technical Products 896 1,689 1,526 4,111 Other     (1,110 )     (1,735 )     (1,733 )     (4,578 ) Consolidated   $ —     $ —     $ —     $ —     Operating income (loss) Water $ 60,879 $ 90,978 $ 53,685 $ 205,542 Technical Products 31,631 36,140 46,237 114,008 Other     (12,357 )     (12,273 )     (8,946 )     (33,576 ) Consolidated   $ 80,153     $ 114,845     $ 90,976     $ 285,974     Operating income as a percent of net sales Water 11.0 % 13.7 % 9.6 % 11.5 % Technical Products 12.5 % 14.1 % 16.8 % 14.5 % Consolidated 9.9 % 12.4 % 10.9 % 11.1 %       First Qtr Second Qtr Third Qtr Nine Months In thousands     2006       2006       2006       2006     Net sales to external customers Water $ 517,169 $ 605,516 $ 531,703 $ 1,654,388 Technical Products     254,220       256,506       246,317       757,043   Consolidated   $ 771,389     $ 862,022     $ 778,020     $ 2,411,431     Intersegment sales Water $ 50 $ 55 $ 140 $ 245 Technical Products 889 1,312 1,133 3,334 Other     (939 )     (1,367 )     (1,273 )     (3,579 ) Consolidated   $ —     $ —     $ —     $ —     Operating income (loss) Water $ 55,587 $ 84,191 $ 36,226 $ 176,004 Technical Products 37,704 39,678 37,050 114,432 Other     (14,735 )     (15,894 )     (12,983 )     (43,612 ) Consolidated   $ 78,556     $ 107,975     $ 60,293     $ 246,824     Operating income as a percent of net sales Water 10.8 % 13.9 % 6.8 % 10.6 % Technical Products 14.8 % 15.5 % 15.0 % 15.1 % Consolidated 10.2 % 12.5 % 7.7 % 10.2 % Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" year ending December 31, 2007 to the "Adjusted" non-GAAP excluding the effect of 2007 adjustments (Unaudited)             First Quarter Second Quarter Third Quarter Fourth Quarter Year In thousands, except per-share data   2007   2007   2007   2007 forecast   2007 forecast Net sales   $ 807,995     $ 922,645     $ 837,834     $ 795,000 - $820,000   $ 3,375M - $3,400M   Operating income - as reported 80,153 114,845 90,976 83,000 - 90,000 ~370M+ % of net sales 9.9 % 12.4 % 10.9 % 10.4% - 11.0% ~11.0% Adjustments     —       —       9,192     ~5,000   ~15M+ Operating income - as adjusted 80,153 114,845 100,168 88,000 - 95,000 ~385M+ % of net sales 9.9 % 12.4 % 12.0 % 11% - 11.5% ~11.5%   Income from continuing operations - as reported 42,130 62,001 58,044 42,200 - 47,200 205M - 210M Adjustments - tax affected — — 6,246 ~3,200 ~10M Non-recurring tax items     (145 )     (83 )     (11,517 )     —   ~(12M) Income from continuing operations - as adjusted     41,985       61,918       52,773       45,400 - 50,400     203M - 208M   Continuing earnings per common share - diluted Diluted earnings per common share - as reported $ 0.42 $ 0.62 $ 0.58 $ 0.42 - $0.47 $ 2.04 - $2.09 Adjustments     —       —       (0.05 )     0.03 - 0.04     (0.01) - (0.02) Diluted earnings per common share - as adjusted   $ 0.42     $ 0.62     $ 0.53     $ 0.46 - $0.50   $ 2.03 - $2.07     Weighted average common shares outstanding - Diluted 100,271 100,371 100,365 100,400 100,400 Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" year ending December 31, 2006 to the "Adjusted" non-GAAP excluding the effect of 2006 adjustments (Unaudited)             First Quarter Second Quarter Third Quarter Fourth Quarter Year In thousands, except per-share data   2006   2006   2006   2006   2006 Net sales   $ 771,389     $ 862,022     $ 778,020     $ 743,038     $ 3,154,469     Operating income - as reported 78,556 107,975 60,293 60,162 306,986 % of net sales 10.2 % 12.5 % 7.7 % 8.1 % 9.7 % Adjustments     —       —       16,949       —       16,949   Operating income - as adjusted 78,556 107,975 77,242 60,162 323,935 % of net sales 10.2 % 12.5 % 9.9 % 8.1 % 10.3 %   Income from continuing operations - as reported 43,071 68,633 33,441 38,622 183,767 Adjustments - tax affected — — 10,847 — 10,847 Non-recurring tax items     (878 )     (8,023 )     (3,080 )     (8,285 )     (20,266 ) Income from continuing operations - as adjusted     42,193       60,610       41,208       30,337       174,348     Continuing earnings per common share - diluted Diluted earnings per common share - as reported $ 0.42 $ 0.67 $ 0.33 $ 0.39 $ 1.81 Adjustments     (0.01 )     (0.08 )     0.08       (0.08 )     (0.09 ) Diluted earnings per common share - as adjusted   $ 0.41     $ 0.59     $ 0.41     $ 0.31     $ 1.72       Weighted average common shares outstanding - Diluted 102,492 102,429 101,062 100,233 101,371 Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" year ending December 31, 2007 to the "Adjusted" non-GAAP excluding the effect of 2007 adjustments (Unaudited)             First Quarter Second Quarter Third Quarter Fourth Quarter Year In thousands   2007   2007   2007   2007 forecast   2007 forecast Water Net sales   $ 555,412     $ 665,495     $ 562,133     $ 540,000 - $550,000   $ 2,320M - $2,330M   Operating income - as reported 60,879 90,978 53,685 59,000 - 61,000 ~266M+ % of net sales 11.0 % 13.7 % 9.6 % ~11.0% 11.0% - 11.5% Adjustments     —       —       9,843       —   ~10M Operating income - as adjusted 60,879 90,978 63,528 59,000 - 61,000 ~276M+ % of net sales 11.0 % 13.7 % 11.3 % ~ 11.0% ~12.0%     Technical Products Net sales   $ 252,583     $ 257,150     $ 275,701     $ 260,000 - $265,000   $ 1,000M - $1,100M   Operating income - as reported 31,631 36,140 46,237 34,100 - 35,700 ~150M+ % of net sales 12.5 % 14.1 % 16.8 % 13.0% - 13.5% 14.0% - 14.5% Adjustments     —       —       (652 )   ~5,000   ~4.5M Operating income - as adjusted 31,631 36,140 45,585 39,100 - 40,700 ~155M+ % of net sales 12.5 % 14.1 % 16.5 % 15.0% - 15.5% ~14.5% Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" year ending December 31, 2006 to the "Adjusted" non-GAAP excluding the effect of 2006 adjustments (Unaudited)             First Quarter Second Quarter Third Quarter Fourth Quarter Year In thousands   2006   2006   2006   2006   2006 Water Net sales   $ 517,169     $ 605,516     $ 531,703     $ 500,837     $ 2,155,225     Operating income - as reported 55,587 84,191 36,226 36,494 212,498 % of net sales 10.7 % 13.9 % 6.8 % 7.3 % 9.9 % Adjustments     —       —       14,906       —       14,906   Operating income - as adjusted 55,587 84,191 51,132 36,494 227,404 % of net sales 10.7 % 13.9 % 9.6 % 7.3 % 10.6 %       Technical Products Net sales   $ 254,220     $ 256,506     $ 246,317     $ 242,201     $ 999,244     Operating income - as reported 37,704 39,678 37,050 34,473 148,905 % of net sales 14.8 % 15.5 % 15.0 % 14.2 % 14.9 % Adjustments     —       —       —       —       —   Operating income - as adjusted 37,704 39,678 37,050 34,473 148,905 % of net sales 14.8 % 15.5 % 15.0 % 14.2 % 14.9 %