John Stauch - Chief Financial Officer and Executive Vice President Randall Hogan - Chairman, Chief Executive Officer and Member of International Committee Sara Zawoyski - Vice President of Investor Relations

Chip Moore - Canaccord Genuity Michael Cox - Piper Jaffray Companies Joshua Pokrzywinski - MKM Partners LLC David Rose - Wedbush Securities Inc. Robert Barry - UBS Investment Bank Michael Halloran - Robert W. Baird & Co. Incorporated Mark Barbalato R. Scott Graham - Jefferies & Company, Inc. Garik Shmois - Longbow Research LLC Christopher Parkinson - Crédit Suisse AG Christopher Glynn - Oppenheimer & Co. Inc. Deane Dray - Citigroup Inc

Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pentair Second Quarter 2011 Earnings Conference Call. [Operator Instructions] Thank you. Ms. Zawoyski, you may begin your conference, ma'am.

Thanks, Julie, and welcome to Pentair's Q2 2011 Earnings Conference Call. We're glad you can join us. I'm Sara Zawoyski, Head of Investor Relations. With me today is Randy Hogan, our Chairman and Chief Executive Officer; and John Stauch, our Chief Financial Officer. On today's call, we will provide details on our Q2 2011 performance, as well as our updated full year outlook, as outlined in this morning's release. Before we begin, let me remind you that any statements made about the company's anticipated financial results are forward-looking statements subject to future risks and uncertainties, such as the risks outlined in Pentair's 10-K as of December 31, 2010, and today's release. Forward-looking statements included herein are made as of today, 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. Today's webcast is accompanied by a presentation, which can be found in the Financial Information section of Pentair's website at www.pentair.com. We will reference these slides throughout our prepared remarks. Any references to non-GAAP financials are reconciled in the appendix of the presentation. I would also like to point out that all financial results and references to year-over-year numbers in today's call and presentation are on a continuing operations basis, and comparative with adjusted figures, unless otherwise noted or highlighted. We will reserve Q&A time for investors and analysts after our prepared remarks. We'd ask representatives from the media joining us today to please reach out to our media contact, so that we can be helpful in answering your questions. With that, I'll hand the call over to Randy.

Thanks, Sara, and welcome, everyone. Let me begin with Q2 results as shown on Slide 2. Pentair delivered a strong second quarter, with sales up 14%, margin expansion of 70 basis points, and EPS growth of 23%. Underpinning these results are successful investments, a growing international presence and strong execution across the board. First, investments in more energy-efficient sustainable product offerings and added global sales coverage continued to yield positive topline results, as evidenced in our Q2 performance. Water sales were up 15% or up 7%, adjusting to exclude Clean Process Technologies, or CPT, and the 2010 Gulf Intracoastal Waterway or GIWW project sales. At the same time, Technical Products grew 13% on top of prior year's 19% growth in Q2. Second, fast-growth regions are meaningfully contributing to Pentair's growth, approaching 20% of our total sales mix in 2011 compared to less than 15% just 1 year ago. In the quarter, fast growth region sales were up 26%, excluding the benefit from the CPT acquisition, and 55% including CPT. Third, we continue to drive meaningful margin expansion through continuous cost structure improvements and strong execution of lean deployment across Pentair, with margins up 70 basis points. And finally, CPT is off to a great start with good top line momentum and plenty of growth opportunities for the combined businesses. On earnings, we delivered adjusted EPS of $0.75 compared to $0.61 in Q2 last year. The margin performance of both Water and Technical Products, along with lower taxes from a more favorable geographic mix, drove adjusted EPS $0.03 above the high end of the guidance we provided in April. As a result, we're raising the full year outlook to reflect the Q2 beat, and some added CPT benefits we see in the second half, which John will cover in more detail later. On free cash flow, we generated nearly $180 million in the quarter, putting us on track to deliver more than $250 million for the full year. Overall, we had a solid quarter and a very good first half. We believe we are well positioned to deliver record-adjusted earnings in 2011, all without a notable U.S. residential recovery. Now let's turn to Slide 3 for a review of our Water business. Water revenues grew 15% in the quarter with good growth across most of the businesses and regions. Global expansion, distribution gains and innovation led to higher recurring volumes, which were up 4%. Pricing is solid across all of Water, up over 100 basis points. Largely, though masked by timing of growth rebates. Currency and the CPT acquisition contributed the remaining 13 points of growth. We continue to make excellent progress on fast-growth region expansion, with sales up 26% in the quarter excluding CPT. Like Global Business Unit or GBU, residential flow sales were up 7% in the quarter, including 4 points of FX benefit. U.S. residential sales grew slightly, helped by greater penetration related to new products and improved service delivery and quality, all evidence of lean enterprise progress. Pump sales in Europe were up double digits, benefiting from a stronger flood season, as well as expanded distribution. Our agricultural vertical sales, including irrigation pumps and cross-spray product was up 14%. Residential Filtration sales grew 12% in the quarter, with FX contributing 4 points. We continue to roll out a more efficient water softeners that will boost from OEM sales, enabled by improved lead times in service, helped offset what continues to be a relatively flat U.S. market. Fast growth regions in Residential Filtration continue to grow at a rapid pace, up over 45%. China grew an impressive 44% in the quarter as we leverage the innovative in-country for-country product offerings like Pentair Fresh, along with increased distribution coverage. Continuing at this pace, we expect over half of the sales from this GBU to come from outside the U.S. by year end. Pool GBU sales were up 7% on top of the 31% growth in the prior year. While pool permits increased modestly off of a very low base, we continue to attract new dealers through leading innovation around energy efficiency and sustainability. This continues to be supported by a growing number of utility-funded rebate programs across the U.S. including a new one, a $600 utility rebate in Florida. With less than a 10% penetration, the opportunity for Pentair's IntelliFlo variable speed pump is enormous as we move beyond traditional replacements and new pool of construction demands. With a lot of tailwinds, this business continues to post excellent sales growth. The Engineered Flow GBU sales decreased 7% in the quarter. Excluding the $7 million of GIWW sales that we had in this quarter in 2010, revenue grew a modest 1%. Robust commercial and industrial sales helped offset a decline in larger new municipal project sales in the quarter. In commercial, we're encouraged with the progress we're making to grow the HVAC and fire pump verticals outside the U.S., with good gains in the Middle East in particular. Within Industrial, demand remains strong for reciprocating and centrifugal pumps in the oil and gas sector. The U.S. municipal remains sluggish though and in the near term, based on funding concerns. But longer term, we believe municipalities will have to resume repairing and upgrading their water infrastructure, given the stresses in the U.S. The Filtration Solutions sales were up 7% x CPT, including 2 points of currency, reflecting broad-based strength across key markets including Foodservice and Desalination. We continue to be encouraged by the positive movements in desal, and resulting CodeLine demand. In Foodservice, we continue to grow our presence outside of the U.S., with sales up 60% in China. We also grew in the Industrial, Medical and Energy verticals. Filtration Solutions continue to fire at all cylinders, and CPT is the right catalyst for even greater growth. The right half of the page shows Q2 Water operating profits and margin. Water operating margins were 14.2% in the quarter. This reflects an outstanding base margin performance of over the 15%, offset slightly by CPT, adding to a 40 basis point improvement year-over-year. Price material came in as we expected. We're making meaningful progress on lean enterprise in Water, and it is reading out in numbers with lower cost of quality and improved on-time delivery across our GBUs. CPT margin pressures are seasonal and temporary, with sequential margin improvement expected as we drive volume leverage and productivity. Overall, I'm very pleased with our Water performance this quarter, and excited about its future. Now let's move to Slide 4 for a review of Technical Products. Technical Products sales were up 13% and up 9% excluding currency, reflecting broad-based growth across most end markets we serve. Industrial, General Electronics and Energy all posted strong double-digit growth. Communications is down in the quarter, a trend we expect to continue in the second half based on lumpiness of some of the telecom programs we serve. Infrastructure, a growing part of Technical Products portfolio, was up 10%. And notably, we recently won a $4 million order to provide cabinets for another charging station project in the emerging electric vehicle charging market. Technical Products grew a solid 29% in fast-growth regions led by China, up 33% and Eastern Europe, up over 50% in the quarter. We're investing to drive this growth, building our distributor base and adding selling and marketing resources in more key markets like Russia, the Middle East and Mexico. I'm particularly pleased with Technical Products' operating margin performance, posting another quarter of 17-plus percent margins, while investing in growth initiatives. Through every cycle, Technical Products' earnings power has increased. And 2011 is no different, as we expect to advance margins in another roughly 170 basis points to 17% for the full year. We expect the breadth and depth of our product portfolio, brand, strength and global capabilities to enable us to capture more and more growth opportunities as we move forward in Technical Products. Please turn to Slide 5, as I cover the market trends and key assumptions for the balance of the year. Clearly, we had a strong start with first half sales up 13%, segment margin expansion of 170 basis points, and over 30% earnings growth, putting us in a good position as we enter the second half. On the top line, CPT is tracking slightly ahead of expectations, with an additional $190 million in sales expected in the second half. Of course, the $47 million in second half 2010 revenue related to the GIWW project provides a difficult comparison. Adjusting to exclude both CPT and GIWW, we expect our recurring base business sales to grow in the 8% to 10% range for the full year. We expect those things that helped us in the first half to continue like global capital spending tailwinds, strength in fast-growth regions and investments in innovation and expanded distribution. In Technical Products, however, we do anticipate industrial growth rates to moderate, reflecting more normal tech product growth in the second half of this year. For our market view in Water, we see no near-term improvement in U.S. residential markets. Still, we have a significant install base to serve with over 80% of residential revenues generated from repair, replacement and upgrade. And we continue to capitalize on the secular trends around energy efficiency and sustainability. We expect municipal spending to remain under pressure, negatively impacting our large pump project business. As a result, Engineered Flow is expected to be down roughly 25% in the back half, reflecting a difficult GIWW lap, and down around 5% x GIWW because of U.S. municipal weakness. Outside the U.S. and across both segments, we expect a mixed Europe with some growth in Germany and Eastern Europe, offset by smaller pockets of weakness in other parts of Western Europe. In fast-growth regions like China, Brazil and India, we anticipate continued robust growth. On the margin line, price and productivity should still offset inflation. Despite the back half of the year with incremental deal integration costs and amortization, along with increased investments, we continue to expect margin expansion of roughly 100 basis points for the full year, which should be quite an achievement. So despite all of the headlines, our view of served markets and the opportunities there remains unchanged since our last update with you in April. We believe we're well on track to deliver greater than 20% earnings growth on record sales of nearly $3.5 billion. Beyond the numbers, we continue to rapidly advance our strategy to expand globally, innovate and drive PIMS across our business, as outlined on Slide 6. In fast-growth regions, sales were up 20% year-to-date and with this growing, comes scale to drive better operating leverage. We're just beginning, we believe, to see the benefits of our investments we've made over the past several years. We've added manufacturing capabilities, global lean enterprise deployment, local engineering and channel development in key markets like China, Latin America and India. These investments are beginning to pay dividends in the form of top line growth and margin improvements. We have now turned our focus to drive added distribution, penetration and coverage. In the quarter, we had a strong Pentair presence, including CPT at the Aquatech show in Shanghai. And we're looking forward to the upcoming show in Amsterdam in November. We also opened up our first flagship showroom in Shanghai in partnership with a large distributor, another means to increase brand awareness with consumers in China. And we're relentless in our pursuit of in-country for-country products with a new wall-mounted RO filtration system called Pentair Zero [ph] as an example that was designed and manufactured in India, specifically for the Indian market. Turning to innovation. Our investments in sustainability, energy efficiency, automation and safety are driving demand for our products. In the quarter, for example, our energy-efficient Eco-Select product suite contributed nearly 40% of our Q2 pool sales compared to just around 30% last year. In addition, we launched our new standardized global RO systems platform for low brackish water, won the Best Green Product Award for Pentair's Rain Switch in Malaysia, and continue to be a key player in providing protective enclosures and cooling solutions for recharging stations in the emerging electric vehicle market, just to name a few. Another growth accelerator is our Pentair Integrated Management System or PIMS. We continue to serve our global customers better every day by improving product quality, on-time delivery, workplace safety and delivering cost and cash to boot, as evidenced by our year-to-date gross margin improvement of 120 basis points with strong cash flow generation. And on the strength of excellent on-time delivery rates and rapid sales growth, Pentair was recently recognized as True Value's 2010 Partner of the Year, a title that is awarded to only one of its 1,800 vendors across all categories annually. We're very excited about the new CPT acquisition, which advances our strategy in every aspect. We expect CPT will add over $140 million in annual revenues in fast-growth markets, add leading innovative and a highly valued filtration technologies including ultra filtration, nano filtration and membrane bioreactors, and provides us an opportunity to leverage lean enterprise to drive greater profit. CPT is a clear fit and high-impact acquisition that we believe creates a stronger, more global growth profile company in Pentair. In sum, we are committed to our long-term growth agenda and continue to make good progress. Now let's turn to Slide 7 for a more in-depth update on the recent CPT acquisition. The business is performing exceptionally well as CPT grew sales double digits and won nearly $20 million in new systems and projects just since we closed. This growing installed system space will help support compelling and recurring revenues going forward from replacement components and services. And we continue to leverage our strong technologies portfolio, now extending it into anaerobic membrane bioreactor systems, for example, to improve excellent [ph] Lower discharge cost and raise biogas yields to not only provide water reuse, but also an energy source for a number of different industries. This all uses our proprietary side stream ultra filtration solution, which is simplist to maintain. The integration work is on track and going well. We're in the process of providing product offerings across all verticals, especially Desalination and beverage. We're also developing plans for a more optimal combined go-to-market approach in key regions, with the goal of selling more together. A good example of that is the CPT team just recently secured a CodeLine sale with a customer in Brazil that prior to this, we have never made sales to. That's the kind of thing we expect to happen more and more as we work together. All critical ongoing activities are successfully complete and trained to consolidating financials. We're rapidly moving forward in the application of lean enterprise and rollout of the PIMS toolkit, with early in sourcing and combined global procurement opportunities already identified. Simply put, CPT is off to a great start. Now let's turn to Slide 8. For our standard work, details of free cash flow are on the left of the slide, and a summary of our debt levels, including the recent $500 million acquisition related public debt. Free cash flow is strong in the quarter, reflecting a solid Q2 performance. Year-to-date, we've generated $117 million of free cash flow, and we believe we're on track to deliver greater than $250 million for the year. We returned approximately $20 million to shareholders through dividends in the quarter, with an annual dividend of $0.80 per share. Our ROIC, which is shown in the bottom right section of the slide, we continue to make progress on this important commitment, adding another 90 basis points for a return on invested capital of 9%. Our goal continues to be to drive ROIC into double digits. With that, let me turn it over to John to review in greater detail the Q2 performance and 2011 guidance. John?

Thank you, Randy. Let me begin on Slide 9, titled Q2 Performance Excluding CPT. We acknowledge that the inclusion of CPT in your models takes some work. So I wanted to show you what Q2 numbers look like excluding the impact of CPT. The base business, excluding CPT, had a very solid quarter. Revenue was up 8%, 9% excluding the impact of GIWW, which was around $7 million in Q2 of 2010. Operating income growth of 18% was driven by strong margin expansion in both Water and Technical Products related to volume, productivity and solid execution of managing the price material cost deflation. Overall, Pentair margins reached 13.8% for Q2 2011, which were up 120 basis points year-over-year. Overall, Water grew 5% organically, 7% excluding the impact of GIWW. ROS expanded 130 basis points to 15.1% due to volume leverage, price material cost management and lean improvements. CPT results for the approximately 7 weeks of ownership were $54 million in sales, and roughly $3 million in operating income inclusive of typical integration cost. This was in line with expectations. Overall, a very solid performance for the base business, plus a good start for CPT. This gives us confidence that CPT will enhance our overall business outlook, and be additive to our previous Pentair longer-term expectations. Please turn to Slide #10, updated 2011 CPT. The combined Pentair and CPT teams have put forth a tremendous effort over the last 7 weeks to review the business drivers, R&D pipeline and backlog, connect with the functional and country leaders, and understand the global sales channels. And we are more excited than ever about the synergy opportunities, particularly revenue in the next several years. We have completed our purchase accounting work, and wanted to give you the final impact of this analysis and effort. We now expect 2011 revenue for CPT to be around $240 million, about $10 million higher than our previous estimate, driven primarily by more robust backlog and the benefit of fast-growth markets. EBITDA is still on track to be at 15% for the year. So the base CPT business and 2011 contribution is actually stronger than we anticipated. ROS, inclusive of amortization and depreciation, however, is now expected to be close to 8% of sales as the value of technology came in a little bit higher than anticipated, causing a slightly higher amortization rate. Since the amortization of the fixed amount, we fully anticipate the margin of CPT to accelerate quickly from the 8% starting point to our anticipated ROS margin target of 15% by 2014, consistent with our previous expectations. On an annual basis, D&A will be about $24 million, and we expect ongoing incremental annualized interest related to the CPT acquisition will be around $30 million. Our ongoing tax rate, inclusive of CPT, is now anticipated to be 30.5% for the rest of 2011, reflecting a more favorable global mix and tax structure. Q2 benefited about $0.02 from the year-to-date true-up to an ongoing lower rate and a one-time tax adjustment related to a change in Wisconsin tax law. All in, and reflective of the stronger CPT base business, we have lifted our 2011 outlook to approximately $0.05 accretion versus the original $0.03 of accretion. We have also included on the lower left an easy way to depict the expected accretion of CPT, given all of its geography impacts on operating income, interest and taxes, with the inclusion of it in our results. Simply, the operating income is taxed at a blended CPT rate of around 27%, and the $30 million of incremental interest is comprised of roughly $120 million of European float, taxed at a Dutch rate, plus the $500 million of bonds taxed at both the U.S. and Dutch rate, around $13 million of after-tax interest on an annual basis, reflecting approximately 8 months of 2011 ownership this nets to the $0.05 accretion we are now anticipating. We have also included an update on the adjustments related to deal cost, inventory step up and customer backlog. I will give you a better view of this by quarter in a few slides. Please turn to Slide #11 titled, Updated 2011 Adjusted EPS Outlook. Our guidance for Q2 2011 was $0.68 to $0.72 per share. We delivered 75% excluding the CPT acquisition-related cost. This is better than the low end of that range of $0.07, and better than the high end of the range of $0.03, and was up $0.05 versus the midpoint of the range. We have added those deltas to our previous full year guidance of $2.33 to $2.45 per share, which puts us at $2.40 to $2.48 per share for the year. Adding in our current expectation for the CPT business, we are at our new guidance expectation of $2.42 to $2.50 per share on an adjusted basis, up 21% to 25% versus 2010. This means that we expect the second half of 2011 for the base business to be in line with our previous expectations. While the growth rates maybe moderating slowly -- slightly, we still feel comfortable that our price material cost estimates are in line. And our base productivity expectations are reading out. While North American residential and municipal markets remained constrained, we still see good industrial growth and accelerating fast market penetration. All in all, we still feel that the second half is in line with previous expectations. Please turn to my next slide, Slide 12, labeled Q3 2011 adjusted EPS guidance. We want to remind you that GIWW was a very prominent component of the Q3 2010 results. The project added $31 million of revenue last year at high teens ROS or roughly $0.05 of EPS. While CPT results are encouraging and accelerating versus Q2 2011, we are also accelerating some integration activities within the quarter. These consist of migrating IT networks, PCs, updating software platforms, continued sales office combinations and training, as well as other activities that will impact us by about of $0.01. CPT's seasonal strength is in its fourth quarter, led by higher project activity, annual service contracts and aftermarket component sales. The base recurring sales in Q3 are still expected to be up high single digits, and we anticipate a 12% to 18% EPS growth on our core business for Q3. Overall, we are anticipating another solid quarter in Q3, with high single-digit growth plus CPT revenue and continued productivity in the quarter, plus the benefit of accelerating CPT margin expansion. Please turn to the next slide labeled, Q3 2011 Pentair Forecast. For Q3, we anticipate revenue to be between $865 million and $885 million, inclusive of CPT. This is an overall growth rate of roughly 12% to 14% with organic, meaning x acquisition growth of approximately 3% to 4% or roughly 7%, excluding the headwind from 2010 GIWW shipments. This compares to an organic growth rate of 12% in Q1 and just over 8% in Q2. So only modestly lower on a comparable basis. We expect Water to be up roughly 16% to 18%, and approximately 7% to 9% on a recurring organic basis excluding CPT and GIWW impact. Technical Products should be up around 5% to 7% as year-over-year comparisons get a little tougher, but global opportunities around infrastructure and electronics are still encouraging and abundant. Overall operating margins should be around 11.5% at the mid-point inclusive of CPT, and about 12% excluding the impact of CPT as we continue to integrate the business into Pentair. We expect adjusted Q3 EPS to be about $0.55 to $0.58, and the year-over-year growth rate is negatively affected by the benefit in 2010 of the GIWW shipments. Overall interest is anticipated to be around $17 million, and the tax rate should be about 30.5% as previously discussed. In summary, Q3 may be a little optically challenging, but will still be a solid quarter and should set us up for delivering a very solid second half of 2011. Please turn to Slide #14 labeled, Full Year Outlook. For the full year, we expect revenue to be about $3.5 billion, inclusive of CPT, or up 14% to 16% versus 2010. We expect adjusted operating income to be between $410 million and $420 million, and operating margins around 12%. As previously stated, we now anticipate full year adjusted EPS to be between $2.42 to $2.50 or up 21% to 25% versus 2010. Full year adjusted operating income at the mid-point should be up around 24%. And we now expect free cash flow to exceed $250 million, and our ROIC to be around 9%, inclusive of CPT. For the full year, we expect interest to come in around $57 million to $58 million, and the full year tax rate to be slightly north of 30%, which reflects the ongoing rate of 30.5% plus the one-time benefit in Q2. Overall, we are encouraged with the first half performance, excited about the potential of CPT and confident in our cost actions, which we believe will drive a record year for Pentair. Please turn to my last slide, Slide #15, labeled, Adjusted to Reported EPS Forecast. Before I hand it back to Randy, I just want to make sure that you have the adjustments by quarter for modeling purposes, which are limited to 3 categories: fuel costs, which have all been booked in quarters 1 and 2 in SG&A; customer backlog adjustments, which started in Q2 and will be complete by the end of 2011; and the inventory step-up impact, which started in Q2, and will be complete by the end of Q3, both reflected in cost of goods sold. In addition, we are considering some modest repositioning actions, focused on optimizing the combined Pentair and CPT sales organizations and go-to-market approach. We would anticipate that if these actions are taken, they should help accelerate the earnings potentials of CPT. But they have not been contemplated in our reported EPS forecast at the current time. I will now turn it back to Randy, who will give us a quick summary before he turn it over to you for questions. Randy?

Thanks, John. 2011 is shaping up to be a record year for Pentair with solid top line performance, excellent margin expansion in the base business and our new CPT acquisition firmly in the fold. And while the macro environment is mixed, we believe our strategies to invest in global growth and innovation while leveraging PIMS will deliver sustainable profitable growth as our first half results demonstrate. As we turn the page to Slide 17, again, we would like to remind everyone that we will be hosting our Annual Analyst Day on September 14 in New York, and we hope to see you there. Thank you for your time. Now let's turn it over for questions to the operator. Operator?

[Operator Instructions] Your first question comes from the line of Robert Barry with UBS. Robert Barry - UBS Investment Bank: I wanted to ask about the price inflation dynamic in the quarter. I think last quarter, you expected to get about 150 to 200 basis points of price this year. And I think to offset inflation, I was curious what your latest views were on that.

We still feel that we'll be in that 150 to 200 basis points range. Water was impacted slightly in Q2 by some sales rebates in our Pool business, which -- those come in as we forecast what the business is going to do for the full season. And that was a few million dollars in the quarter. That won't impact the full year with the timing issue between Q2 and Q3. Robert Barry - UBS Investment Bank: Okay. A question on pool actually. Did you continue to add dealers in the quarter?

Yes.

Yes, we did. Robert Barry - UBS Investment Bank: What was the kind of same-store sales basis growth rate in Pool?

I don't have that right now, I'm so sorry.

Pool grew around 6%, 7% in the quarter,7% as Randy mentioned. We probably got a point of share from adding dealers. Now we do have a retail component in there that we're building out pretty aggressively, and that was a piece of it as well. Robert Barry - UBS Investment Bank: Okay. And then just a question on Slide 11, which was very helpful, related to the tax, how much is the lower tax rate adding to the EPS guidance?

Yes, it's -- what we've done is our previous guidance around 32% for the year, did not reflect the impact that CPT has on the overall tax rate. So as we look at our full year estimates of both the base business and CPT, the ongoing tax rate now is around 30.5%. That is inclusive of the double taxing of the bonds, as I shared in my comments.

I'd add that we anticipated some of the tax benefits when we gave the $0.03 incremental CPT and some of the additional $0.02 is also tax...

Yes. So I mean the difference between the 3 and 5 reflect a little bit better performance in the business, and maybe a $0.01 extra in tax. Robert Barry - UBS Investment Bank: Okay. Because I guess if I just look at mid to mid, and maybe I'm not thinking about it right, $2.39 to $2.46 is $0.07 higher, $0.02 of that is the change in CPT, $0.05 is second quarter. And then if I go to my model and lower the tax rate, it's going to add another $0.05. And probably it's a headwind, but is there some double accounting there? Is some of that $0.05 embedded in the...

Yes, geography is. I mean, the interest is going up substantially, right? And then the tax rate is getting better. That's why we were sharing with you the little chart on slide. Well, we did a little waterfall graph on Page 10, because that's the way to do CPT. And that will help as you look at the geography, and then you think of the impact of CPT. Robert Barry - UBS Investment Bank: Okay. So then bottom line is and maybe you even touched on this in one of the later slides, in the current update versus last quarter, there's no incremental headwind that you're seeing in the back half?

Nothing that we didn't already anticipate like more moderating growth in Industrial. So really, the business outlook is STET, and is a little bit better with CPT.

Your next question comes from the line of Hamzah Mazari with Crédit Suisse. Christopher Parkinson - Crédit Suisse AG: This is Chris Parkinson, on behalf of Hamzah. Can you just give us a quick update on basically any cross-selling initiatives following the CPT acquisition? In your views, are there any areas of particular focus given the company's end market distribution?

Yes, I gave you the one example in Brazil, which literally was something that was -- it hasn't shipped yet. It wasn't in the second quarter. It's an order we just booked. But that's the kind of example where they -- the CPT team has a different reach globally than our business did and much deeper into municipal, globally much deeper into industrials. The case example I gave you where the CPT team sold some CodeLine product was actually to an energy company in Brazil, which we've never made a sale to before. So what we're doing is we're filling out the product line, and making it available to the CPT team. Then there's some straightforward cross-selling, for instance, in their systems business. They didn't use our enclosures. They didn't use our tanks. They didn't use our housing, and that's getting all changed right away, as you can imagine. We call that the in-sourcing opportunity, and so we've got a good handle on all of that. And I'm really encouraged by the -- it's more than receptivity, the welcomeness the CPT team has to do that because it's a real win-win. So 2 efforts, one is the in-sourcing into their systems business in particular, as well as in-sourcing their membrane, the ultra filtration membrane into some of our innovation platforms on, for instance, residential side. And then, it's the filling out the product line and leveraging their, frankly, higher touch deeper relationships with some very attractive customers outside the U.S. And the last piece will be to leverage our position in the U.S. to help them grow particularly in the beverage area and Water in the U.S. Christopher Parkinson - Crédit Suisse AG: Perfect. And then just a quick question, can you give us a real quick update on the muni pipelines? Is this still basically maintenance oriented, or do you believe there's going to be any inflection over the -- let's say, the intermediate or longer term, where do you see that?

Right now, I'm just talking about, leaving aside for a minute the Filtration side, the Filtration Solutions business, which is certainly desal and globally. Our large pump business is in municipals, largely U.S. So we don't get the benefit of some of the spending. We don't have much exposure to that outside the U.S. So I'm just talking about the U.S. market. We saw the quote activity rate fall drop down, so our backlog is at a low point right now. Quote activity is picking up. That's encouraging. But until it turns into funded orders, I'm not going to hold my breath. And that's why we said what we said about the second half x GIWW being down 5% for that business despite the fact that commercial and industrial sales will be up globally. And that, we anticipated that. I wish it wasn't true, but that's the reality we're seeing right now. And I think it will still remain break and fix. Something has to change there. I mean, the opportunity we believe is actually going to be different when it comes back. It's going to be water reuse, which is attractive for us with CPT, and our other opportunities on the backside of wastewater. And they're going to have to find new creative ways to pay for it because municipalities are going to remain constrained for a while even though they have pricing capability in water. So it's going to be an interesting debate as to how that gets solved but it has to get solved, particularly where there is heavy drought.

Your next question comes from the line of Deane Dray with Citi Investments. Deane Dray - Citigroup Inc: We've had a lot of focus on the upside coming out of CPT from the Water perspective. I'd be interested in hearing a little bit more color on the other part of the business, the Foodservice. I know you called out some pretty heavy growth coming out of China. So will you just take us through what the opportunity is, how do you go to market? So we're very comfortable in -- you know the water sector, you know all the water customers. You do some business in Foodservice today, but how much of this is new territory for you or selling additional CPT products to existing customers?

Sure. Great question. And let me differentiate between Foodservice. We use Foodservice to describe what we do with Starbucks and McDonald's, and Darden restaurants and the like. So that the -- in restaurants or in hospitality versus food and beverage, which is, if you will, at the factory level which is the focus of the CPT. They're the world leader in the beer business, in Beer Membrane Fil, MBRs -- actually, BMR -- BMFs, Beer Membrane Filters. And we've had a number of very encouraging discussions with the highest level, with the leading manufacturers of beer. And they actually view CPT as part of the Pentair fold as giving additional opportunities for us to expand what we offer in those areas. So that's one of those areas where we're filling out, if you will, the product portfolio, to leverage their very, very strong coverage in the beer business. Similarly, they have leading positions in a number -- they had some really great reference installations in the soft drink area. So again, because of our region and our depth, we're having very encouraging discussions to try to grow that. Because their market share is leading everywhere in the world in beer. It is spotty in soft drinks. So we see an opportunity to fill out market share globally. And then in the dairy business, in particular, their share is low in North America, which is the largest dairy market. So we see real opportunities for them to grow here. Leveraging the MBRs, in particular, not just on the product side, but in the waste side, it varies. I mean, I mentioned the anaerobic membrane bioreactor application. That's basically taking the waste in huge diaries and turning it into one, a water reuse opportunity and two, into biogas that they can use to fund their facilities. So it's a big focus area for us. Their positions with what they call the signal [ph], the market leading positions in, I'd say, is the highest quality, highest value valving. And valving manifolds are used in beverage, as well as Haffmans, which is CO2 removal and CO2 reuse, which is both a green activity. That's also a nice cost savings for the businesses. So we -- a lot of our -- the water investments are easier to think about. The beverage, the food and beverage ones are very exciting as well. Deane Dray - Citigroup Inc: Is there a big margin differential between the Water and food market?

Yes. Food and beverage is higher and in some cases, meaningfully so. But when you take a look at the life cycle on the water side, it's good margins too. Deane Dray - Citigroup Inc: That's good to hear. And over in Technical Products, as you were clicking through the end markets, what kind of jumped out to us was the comment about the opportunities in charging stations for electric vehicles. And this is kind of reminiscent of the opportunity you all had in the wireless base stations, a couple of cycles ago. So what is the opportunity? What's the content for Technical Products, and how do you see this growing from here?

Well, I mentioned the one project that's at over $4 million in content for us in that 1 project. And that is just to place maybe 1,000 units out in the field, and what we're doing is we're doing basically the housings, pedestals, wall mounts, a bunch of different pieces in both the power source and then the individual charging stations. And we -- I'm not going to give you a number, because I've seen some spectacular numbers for the opportunity, but I'd like our team to come up with our own sense of what that opportunity is. As you know, we've done integration in a very high level. And a number of the companies we're talking about are really more technology companies. And they're not really manufacturing companies. So we're very excited about the opportunity, but I can't give you a number now. But I think that's a fair thing for us to mention, and we'll give you that September 14. Deane Dray - Citigroup Inc: Is there an opportunity in thermal, India's charging stations? Will they be outdoors?

Yes, a lot of them will be outdoors. Generally, at the power source itself, at the transformer, there may be some cooling opportunities. But it will probably be air to air. It won't be fully air conditioned, I wouldn't think, but I'm getting out of my league here.

Your next question comes from the line of Michael Cox with Piper. Michael Cox - Piper Jaffray Companies: My first question is on the capacity expansion you've done in China and India. Where do you sit today in utilizing that? And I guess, what sort of runway for growth do you have in the facilities you've already built out?

Well, as many of you have seen, you've been through the facility. We've doubled the facility in Suzhou. We now have -- in Wuxi, we have a pump manufacturing capability, and we still have big opportunities. I would say we're 60, plus or minus, 5% utilization right now, and filling rapidly since we -- particular, with the focus on this in-country for-country. We talked about Pentair Fresh. We talked about a number of other things. We now make CodeLine in China, which lets us get underneath, inside, if you will, the duty that made us uncompetitive in China with our CodeLine. And so we're gaining rapid market share there. And so we still have a lot of room for growth with the space we built. And we have fantastic leadership there. Michael Cox - Piper Jaffray Companies: Will you anticipate a similar type of program in Brazil at some point?

Well, we have. We made the acquisition in residential filtration, Hidro Filtros. And in fact, John and I are going down there as soon as we get cleared with a few things in Brazil. And we think Brazil offers that kind of opportunity. Whether we'll build that out in a similar fashion or not, I think it remains to be seen that it is clearly investable. It's an exciting opportunity for all of our products and the ones we talked about for CPT. That's why CPT has a better position there than we do on the industrial, municipal. And we can leverage that. Yes, we think we have at least that much of an opportunity in Brazil. Michael Cox - Piper Jaffray Companies: My last question on the GIWW, what sort of headwinds does that leave in the fourth quarter? If I remember correctly, most of that was pulled into the third quarter last year but...

Correct, it was mostly third quarter.

It's going to be $16 million of revenue roughly in the fourth quarter and $31 million in Q3.

Your next question comes from the line of Christopher Glynn with Oppenheimer. Christopher Glynn - Oppenheimer & Co. Inc.: I like the slide that showed the Water x CPT there, John. It looks like it did high 30s incremental margins again. So I just want to ask for an update, how you see the fundamental state of all incremental margins for the base business. And then once we get at year end, maybe with CPT, how you think those revenue leverage compare...

It's a great question. If we take CPT and GIWW out of the equation, because we're looking at this ourselves, our incremental margins at this segment line were over 35%, and expected to be 35% for the full year. We obviously have slightly higher corporate cost as we're still continuing to invest in marketing and our sales offices globally. And it's north of 30% at the overall Pentair level. Clearly, for CPT, we're in the process of figuring out what those incremental margins should look like. For CPT, I think we're expecting more of the 20% type of incremental. And we would still be targeting our base business to be north of 30%, and we got to figure out what the mix is. And the difference is they're project-based business, did not go out at the type of incremental margins that a component-based business would be. And there are some exciting opportunities, as Randy mentioned, where we continue to build out reference sites but at the same time, starting to place more projects into some key vertical markets. So I'd say right now, between the component mix and the project mix, 20% incremental for CPT is the more credible number right now. Christopher Parkinson - Crédit Suisse AG: Okay. That's really helpful. And then since you mentioned the general corporate, I didn't catch it if you talked about it earlier. But with the acquisition now and you're talking about some of the investments, what should we think about for a run rate in the back half next year for the general corporate?

Yes, for Q3 and Q4, in our corporate guidance, we have between $15 million and $16 million a quarter. It usually runs a little higher in the beginning of the year. We have the accelerated accruals and the stock options and those types of things. And the variability in corporate flops around between the medical expenses. But I mean, we're not seeing anything unusual at the moment. So I'd say between 15% to 16% in both Q3 and Q4 is the general run rate of corporate. Christopher Glynn - Oppenheimer & Co. Inc.: Okay. And then last one, the expanded distribution in Europe in the resi flow side, can you talk about where you are in that strategy and what the opportunity is?

Well, we -- our focus has been in Eastern Europe in particular, but we made progress in France and the U.K. as well. We haven't reached that much in Italy and Spain. There's not a lot of action in those countries right now. But Eastern Europe is the biggest opportunity, and we made good progress there.

Your next question comes from the line of Garik Schmois with Longbow Research. Garik Shmois - Longbow Research LLC: First question is just on the sequential movement for your EPS guidance from 3Q to 4Q. If you look back, I think, historically, 3Q tends to be a stronger earnings number than 4Q. Just if you could walk us through sequentially what you're expecting, is it some seasonality in CPT or something else there?

Yes, I mean, for us, just to set the basis, and we didn't have a Q3 earnings guidance out there. We had a back half. And historically, for us, Q3 and Q4 are relatively flat with each other with the difference being that we have less of a pool season in Q3, more of pool season in Q4 is the early buy. And then some of the residential businesses are stronger in Q3 and fall off in Q4. That's just the normal trend. But Q3 and Q4 tend to be generally the same. What's happening in the dynamic is last year was helped by GIWW in Q3. And that's why I think that distribution was set off. And overall, we've learned a lot more about CPT. And we realized that they have annual service contracts, which for the most part, the profit is flat in Q4. The way that their aftermarket of the membranes and the component ship out is more skewed to Q4 due to maintenance cycles of those businesses. And then their projects tend to be booked earlier in the year, and also shipped into Q4. So a lot more skewing to the Q4 in CPT. I think we've had some original estimates that suggested that. But I think in the firming up, we now know that. And so we're going to see CPT more skewed to the back half of the year on a go-forward basis. Garik Shmois - Longbow Research LLC: And I guess, just one more question on CPT, you mentioned a 15% return on sales longer-term target. What kind of annualized revenues would you need to get to that 15% view?

It's actually a little inverse of the thought, right? I mean, the higher the revenue, the more likely the higher the project. And therefore, the more squeeze on the overall operating margins. There is enormous opportunity and a lot of demand for most of the products and all of the projects that CPT is participating in. And the challenge for Randy and myself and Mike Schrock will be working with our business leaders to determine the right profitable projects by country and by verticals. And we expect north of double-digit for sure of growth on an ongoing basis, and that's what our view of 150 basis points a year margin expansion is based upon.

If I could on that, our goal is to get to 15%. That's our goal for the whole company. And we know structurally, this business can make it. But as John said, we view CPT as a great opportunity that also, gives us a platform to build a strategic position that's frankly unmatched. What informed that view is our view when you look at the pressures on the world, and you take a look at the pressures on not just from population but wealth growth, which frankly drives pressure on energy and food and water, even more strongly than population growth itself. And you take a look at the stress that the world is under in water both in terms of water directly and water use in energy and food. There's 2 undeniable technologies that are going to be put to play. One is desalination, if you're near the ocean, and the second is water reuse wherever you are. And so when John talked about those systems and putting in those and making those bids, we are -- I think we have a leading position in terms of the reference sites today. And we intend to continue to lead in building out those reference sites, because we are going to be number one in those businesses. That's our goal.

Your next question comes from the line of Scott Graham with Jefferies. R. Scott Graham - Jefferies & Company, Inc.: Kind of the same question but looked at a little bit differently. The third quarter guidance versus the fourth quarter guidance relative to the organic growth, you guys have a stated goal of 8% top line growth, which is certainly admirable. And you've been achieving that recently but more because of the comparisons being easier this quarter or organic growth was about 4, and maybe add a point or 2 for the GIWW. Third quarter of your organic growth, if my math is right here, looks about flat to plus 2 kind of thing. And then the fourth quarter organic growth probably looks more closer to your target. Is there anything in the third quarter other than what you've mentioned in your bridges, GIWW shifts? And any other shifts in other businesses, particularly residential that we are kind of pushing out from the third quarter to the fourth quarter?

Yes. You're right. Our long-term goal is 5% to 8% organic on a sustained basis. And we're actually better than that if we actually had U.S. residential growing at all, which it isn't, with the exception of pools did grow. But the other U.S. residential businesses, as we mentioned, we don't expect growth in the second half. So in the third quarter, more of a normal pool. And then Pool actually stronger in the fourth quarter than the third quarter. So that's -- that may be the whole difference...

Yes, and there is a point of growth related to an end of life program around telecom and Technical Products that's negatively impacting Q3 results more and a little bit in Q4, and that is the program that's end of life-ing, that we've been shipping the light speed program. So other than that, no, we're growing, as Randy said, around 5% a quarter, 6% a quarter for the year, absent those programs. And we're doing it without the market help that we anticipated on North America and our country [ph]. R. Scott Graham - Jefferies & Company, Inc.: So if I could just summarize what you're saying here, just to make sure. The fourth quarter organic will be a lot better than the third quarter organic for the reasons that you've put in here in the slides plus what you've just said? Certainly, the third quarter of Q2 '10 was your most difficult comparison of the year. I get that as well. But you're fully believing that what we don't have in 3Q, we will have in 4Q, and will be in that 5% to 8% range again in the fourth quarter. And that, in fact, even though residential has weakened sequentially, you're not changing your residential thinking on your sales growth. It's just all of these sundry items?

That's absolutely correct.

Your next question comes from the line of Joshua Pokrzywinski with MKM Partners. Joshua Pokrzywinski - MKM Partners LLC: Just want to go back to the third quarter of last year and make sure I'm remembering the comp correctly. Wasn't there a pretty decent destocking in the -- in some of the wholesale channel, particularly on residential flow? It seems like we should be bumping up against that now? Is there anything we should keep in mind as far as an easier comp there? That doesn't only seem to be flowing through the numbers, I guess, and maybe a partial offset to GIWW? And then maybe just secondly, kind of an update on the distributor at large, has access to credit, curtailed inventory buys, or is there any change of tone there?

Yes, if anything, our performance and execution on delivery has improved so much that actually, we -- despite all the flooding talk in the U.S., there is actually, there was more inventory in the channel than the floods needed. So actually, I said that there's -- we don't have a good comp coming. We have ample inventory in the channel. And a big part of that in residential flow in the U.S. is retail, as well as through the Pro channel. I'd say, in retail, they're not constrained by financing at all, but they are cautious. And none of these headlines about uncertainty and Washington's craziness and all these, it doesn't help any of these guys invest. Our distributors have credit available. In fact, if you take a look at lending in general, there's credit available for people who are worthy of getting credit if they want it. And they're not drawing it. But I'd say they're keeping, they're counting on us and other manufacturers, continuing to execute at a high delivery level and with shorter lead times and running at lower inventories. And I don't think that's going to change anytime soon, so until there's a broad-based belief that the U.S. economy is going to grow. Joshua Pokrzywinski - MKM Partners LLC: I guess what I'm saying or what I'm asking is, is there a risk of another round of destocking from some of these headline issues, or have we already kind of hit bottom on inventory and they're now relying on your lead time?

We had not assumed that there would be a significant destocking because the inventory levels right now are not all that large. I'm not going to predict what will happen if U.S. defaults on their debt, and the borrowings -- no, I can't get there. But I mean, right now, we're pretty much at the low inventory levels. People are buying what they're selling. We've seen a flow through, and our sell through rate is consistent with the inventory. So the 2 issues related in Q3 are just nothing more than we've got that end-of-life program, otherwise our core volume will be up 5, and this is not a whine or excuse. But for us, foreign exchange, we look at as part of organic because we sell in euros in Europe. And so when we have a North American-based business and euro-based business, when that dollar gets weaker, we'll see more sales being shipped out of U.S. And there's some arbitrage there. And so overall, our core volumes are still running in the organic growth range of 5% to 7%, and that's with any bounce back with residential.

Your next question comes from the line of John Quealy with Canaccord. Chip Moore - Canaccord Genuity: It's Chip Moore for John. If you look at your base business, it look like sales came in slightly below the range you guys were projecting, excluding CPT. And was there anything -- that was a little more challenging in there than you thought, or is that more of just a timing issue?

North American residential flow was slightly lower, and then we did have a desal project business in our CodeLine [indiscernible] business that got pushed into Q3 and Q4. Chip Moore - Canaccord Genuity: Okay. And then if you look at the strength in desal that you mentioned, do you view that more as a potential restart to that market, or is this more of a kind of one quarter phenomenon?

No. We think it's a -- the financial crisis really stalled a lot of big projects. I mean, the financing, everything just sort of ground to a halt, and we view this as a secular growth coming back. So we believe we're on the uptrend on that.

And we're seeing those projects turn into quotes, and wins and backlogs, and a lot different rates than we're seeing in the North American muni market.

Your next question comes from the line of Ajay Kejriwal with FBR. [Technical Difficulty]

Your next question comes from the line of Mark Barbalato with Vertical Research.

So you guys have been performing pretty well despite a weak residential and housing market. And obviously, you guys said earlier that you're not looking for much contribution in the second half. Do you have a view on those markets recovering or an outlook on 2012?

We'll give you our thoughts on that on September 14, but our focus in both Residential Filtration and Residential Flow, our 2 biggest businesses that are suffering from that flatness, is to grow aggressively outside the U.S. And that's what they're innovation has been focused on, and that's what we've been driving. So that's where I have them focused. The U.S. residential market, there's no down side [ph]. It has to come back eventually. It will be driven by housing sales. Housing sales will give us a lift even before housing starts. But I don't really have an outlook. We haven't really developed an outlook for our plan base for 2012. And I think we can share that instead. We'll develop it by the 14th and have it...

Well then, I'll wait for the 14th.

Your next question comes from the line of Jim Lucas with Janney Capital Markets. [Technical Difficulty]

Your next question comes from the line of Mike Halloran with Robert W. Baird. Michael Halloran - Robert W. Baird & Co. Incorporated: So just a couple of quick sequential questions. Just want to make sure I understand the normal seasonality, Q2 to Q3. If you were to adjust for all the year-over-year impact, specifically, GIWW and back out the CPT acquisition, when you think about your guidance, do you think it reflects pretty normal seasonal trends, 2Q to 3Q?

Yes. I mean, we, as a course of action, I mean, we see a big drop in the Pool business from Q2 to Q3. And that's really what happened seasonally from Q2 to Q3. And as Pool has more normal first half, let's call it, in their cycle that the most difference with taking out CPT from Q2 to Q3 is that one business. Michael Halloran - Robert W. Baird & Co. Incorporated: Okay. That makes sense. And then on the Technical Products side, as I think about the back half of the year, I know you pointed out maybe a little bit more conservative trends, slowing trends in the back part of the year. When you think about the seasonality there, it implies maybe flattish to down Q3 sales sequentially. Are you actually seeing those signs of weakness beyond just the comparisons being tough and seeing really good performance in that unit...

Well, the second to third in Tech Products, you usually see a little bit of a step down because of the European holidays, European markets are important to us, particularly in Germany. But generally, no, it's -- they've had about 8 or 7 good quarters in a row of great growth. And so we're just saying moderate down to that 5% to 7% kind of growth in the second half. Michael Halloran - Robert W. Baird & Co. Incorporated: So it's a comps issue more than anything else?

Yes, I mean, that's also inclusive of that project, end of life, I mentioned. So they're still growing at high single digits excluding that. And right now, the trends, the macro trends that we talked about on Water, all benefit Technical Products. And the industrial production cycle is pretty strong right now, and we're seeing that capital and cash being less as it drives productivity in the factories. So it's a pretty good backdrop for Technical Products right now.

Your next question comes from the line of David Rose with Wedbush Securities. David Rose - Wedbush Securities Inc.: I just want to finish up on the CPT and then the final question on the fourth quarter. Can you kind of clarify a little bit more the margin impact from system sales on CPT? I mean you had 20-plus million dollars in system sales. I'm assuming that pushed down margins a bit more than what you would've liked or what I would have expected. Is there an impact that we see from that? And going forward, how does that change going forward...

Yes, let me take the first part of it. And then I'll let Randy quickly address some of the market strategic -- I mean, the reason that you pursue the system in CPT, both on the beverage and the Water side is twofold. Your installing a system, which is going to protect and secure the installed base, because you have a proprietary technology that will be replaced with your membranes and/or your aseptic valves. The second piece of it is we're gaining service contracts. Those service contracts allow us to go in and work on the maintenance and get a long-term maintenance contract. So the initial sale of the system doesn't provide what looks like a significant margin benefit, but the life cycle of the system or the project is a very substantial margin. And for the right vertical markets, we want to pursue those aggressively. What we don't want to do is dilute the capacity utilization and/or the resources to chase markets that are not what we would call our core vertical markets strategically.

The $20 million I mentioned was ordered. We haven't actually shipped those yet. And so they aren't impacting margins in the near term. As John described how the systems business works, one of the opportunities for us to improve the systems margin is -- now that includes a lot of bought through [ph] Equipment. If you look at the embedded margin on the product that this business makes, it's still 50% plus, so they get a lot of pass through. There's going to be -- we're going to be in-sourcing a lot. We're going to be in-sourcing the pumps, the enclosures, the housing, the tanks, more valves. So we believe we can be competitive on the systems business, and actually raise the margin as we raise the manufacturing content. David Rose - Wedbush Securities Inc.: Yes and I appreciate the value add, and going forward on the system sales as one of your competitors appreciates as well. The big question is, is how long does that take? Because if your mix continues to be weighted towards the system sales, I'm assuming then the margins will be compressed at least for the rest of this year, and then you start to see the shift next year?

The compression in the margin, really, is -- I want to remind everyone, we started at 15% EBITDA. So when you rebuy a business, you restate the fair market value, all of the assets, and then continue the growth on this business at the growth rate that they're delivering now and that we expect to happen. We'll leverage that D&A up relatively quickly. And there's a fair amount of capacity. And I mean, it's not inexpensive to build a membrane facility, and that's volume dependent as well. So we're pretty confident that we can grow the systems, grow our installed base, and continue to raise margins. David Rose - Wedbush Securities Inc.: Okay. And lastly on the revenue side, clearly, there's a level of comfort that you've had in the fourth quarter for the meaningful step up, and you've walked through the different nuances. I was wondering on the CPT side, if you can give us a little bit more clarity on what percentage of that business do you feel has effectively booked or contracted versus what you expect to sell through other new orders or bid activity that you're working on?

We've been generally conservative with our CPT revenue forecast as we get to know the business. So the revenue that we're projecting is primarily all booked. David Rose - Wedbush Securities Inc.: Okay. And so there is upside to that number?

Possibly. David Rose - Wedbush Securities Inc.: And lastly, if I can, Aurora Pumps, it seems like you have some weakness on that side, is there any particular reason?

Well, Aurora was focused on -- it's mostly commercial, HVAC and fire. They're mostly in the U.S., and the commercial market was creamed. Actually, they're up a little bit because of -- in the Aurora area because of export sales and again, I mentioned in the script in the Middle East in particular. So Aurora decline was going on for the last 10, 12, months anyway.

Presenters, your last question have been withdrawn, you may proceed with any closing remarks.

All right. Thank you all again. I look forward to seeing you at the investor conference in September. Thank you.

And Julie, can you please just restate the replay number?

Certainly. Thank you for participating in today's Pentair Second Quarter 2011 Earnings Conference Call. This call will be available for replay beginning at 2:30 Eastern Time today through 11:59 P.M. Eastern Standard Time August 26, 2011. The conference ID number for the replay is 80384045. The number to dial for the replay is 1 (800) 642-1687 or 1 (706) 645-9291.