Good morning. My name is Sasha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pentair Q3 2012 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to our host, Mr. Jim Lucas, Vice President, Investor Relations. Sir, you may go ahead.

Thanks, Sasha, and welcome to Pentair's Third Quarter 2012 Earnings Conference Call. We're glad you could join us. I'm Jim Lucas, Vice President 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 third quarter 2012 performance, as well as some color on the early days of our merger with Tyco's Flow Control business that closed on September 28, 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 for the year ended December 31, 2011, 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 Investors section of Pentair's website. We will reference these slides throughout our prepared remarks. All references today will be on an adjusted basis, unless otherwise indicated, for which the non-GAAP financials are reconciled in the appendix of the presentation. We will be sure to reserve time for questions and answers after our prepared remarks. I will now turn the call over to Randy.

Thanks, Jim. And good morning, everyone. Before we discuss our third quarter results, I want to extend our thoughts and prayers to those who have been affected by the devastation from Hurricane Sandy. We know that a large portion of those participating in the call have been directly impacted by Sandy, and we hope for a quick recovery for each of you and everyone else affected. On Slide 3, let me begin the Pentair discussion by sharing some thoughts following the successful closing at the end of the third quarter of our merger with Tyco's Flow Control business. 4 weeks ago, we successfully completed the first step in an exciting new journey for Pentair. By combining Pentair and Tyco's Flow Control businesses, we've strengthened our leadership positions in the markets we serve. And by all accounts, Day 1 of the new Pentair was a great success, with all businesses and functions reporting smooth transitions. Consistent with our initial discussions around the deal, we begun $400 million in share repurchases and have authorization for the other $800 million in place already. We also announced the increase in our first quarter 2013 dividend, and as a result, 2013 will mark our 37th consecutive year of increasing our dividend. We continue to spend a significant amount of time visiting employees around the world. We visited over 30 of the Flow Control sites and seen approximately 25% of our new employees. I'm extremely impressed with the tremendous talent we have and are now 30,000 person-strong organization. Together, we have even more capabilities to go after expanded growth opportunities and aggressively pursue efficiencies. Integration activities, which led to the success of Day 1, were exciting. But they were just the beginning. The real work has just started. Let me share with you how we're moving…

Thank you, Randy. Please turn to Slide #9, labeled Q4 2012 Legacy Pentair Outlook. We want to share with you what we anticipate our fourth quarter results were going to be in the base Pentair business, so that you have an indication of how we feel we'll be exiting 2012, and how we are setting ourselves up in the base to deliver within our legacy portfolio. We expect sales of approximately $890 million, or up about 2% to 3% versus 2011, inclusive of currency, and up 4% to 5%, excluding the impact of currency. Water & Fluid sales are expected to be up around 3% to 4%, driven by accelerating CPT performance and easier year-over-year comparisons regarding foreign exchange and distributor stocks in our water purification business. Excluding the impact of FX, sales are expected to be up 5% to 6%. Trends in Technical Solutions are expected to remain consistent with third quarter results, reflecting lower capital spending and cautiousness in the channels regarding uncertainties related to fiscal cliff and the overall economy. Sales in Technical Solutions are expected to be down 3% with FX, having less of a headwind year-over-year versus Q3 results. Excluding FX, Technical Solutions revenue is expected to be roughly flat with last year in the fourth quarter. Legacy operating income is expected to be around $106 million or up around 11% to 13% versus the fourth quarter of last year. Adjusted operating margins are expected to be around 12% for all of legacy Pentair, up 90 basis points year-over-year. Operating margins for Water & Fluid Solutions should approximate 12.5%, and Technical Solutions margins should be around 17%. Price and productivity continue to be the theme, and execution utilizing our Pentair Integrated Management System continues to build momentum and deliver consistent operating results. Adjusted EPS for…

Thank you, John. Please turn to Slide #13, labeled Summary. To close, it was a very busy quarter for Pentair. But just as important, it is a quarter that marked the beginning of the latest chapter in our company's history. Our third quarter base performance met our expectations, as we continue to navigate through a challenging top line environment and highlighted the price and productivity, are truly hallmarks of Pentair's operational discipline. Day 1 execution went smoother than expected, and that has allowed us to accelerate some of the integration and standardization efforts. We've already completed our corporate staffing, we've identified over half of our sourcing target, and our teams are making progress in changing signs, websites, brand transitions, to name just a few. We continue to get more excited about the potential for revenue synergies, based on some early reads we have seen. Pentair has been on the journey with PIMS for well over a decade, and we're excited about expanding PIMS to the new Flow Control GBUs. We have already trained 10% of the Flow Control employees in Lean Enterprise. And that's a good beginning. We remain on track to deliver legacy Pentair 2012 results. We're also starting to see some market tailwinds emerge, particularly in the North American residential market where it appears we are no longer just bouncing along the bottom, but are now rebounding albeit at a moderate pace. We begun to see signs of a similar rebound in commercial markets. Municipal has grown its backlog, and we continue to see strength in Energy and Agriculture. We'll be hosting our 2012 Investor and Analyst Day on November 27 in New York, at which time, we will look forward to sharing our optimism regarding synergies, in addition to providing more detailed guidance for 2013, for the new Pentair. Operator, we can take questions now.

[Operator Instructions] Your first question comes from the line of Steven Winoker [ph].

I actually want to start, on behalf of everybody, all the families that were affected by Sandy, including my own, a thank you guys for postponing the earnings call for a couple of days. It definitely helps and I appreciate it. Let's see, first question, just if you guys can give us some color on, again, on the Tyco Flow Control portion in terms of your thoughts for fourth quarter. You're talking about $900 million, and I think you were referring to the fourth quarter. And if that's true, it's certainly a little bit lower than I thought, orders. The last time I was looking at orders, you were leading us to believe, for the fourth quarter. So can you talk a little bit about the front log or -- and the backlog, which I know the backlog is up a bit and I'm not sure if that's order-driven or just shipment deferral or what, maybe a little more color around that would be really helpful.

Yes, Steve, a couple of things. This is John. First of all, yes, I mean, I think you know that revenue guidance is our view of kind of where the business is going. We haven't had the opportunity, but we will be, in the next 30 days, just scrubbing the backlog, understanding all those order takes, and be able to be very confident in what we see. Relying on what was provided though, and this was a company responsible for providing the same types of guidelines and the same types of systems we do, it is a near record backlog in Valves & Controls. It continues to build orders, at probably the mid single-digit rate growth, and we're very optimistic that we're getting to set a pretty good time in the Energy cycle. Also in the Q4 numbers, we've put in, as I mentioned in my script, about $25 million of transition costs associated with the things that Randy and I were mentioning. We want to accelerate and start in January 1, with great momentum on what we're going to do with the new Pentair. And there's also about $8 million to $10 million of costs in the base numbers of Flow Control related to the segment costs, which will go into the GBU, coming to corporate will be eliminated. So I think when you take that out and you put the share count and tax rate back to where we had -- where we think it'll be at the start of next year, you'll get close basically neutral to what would have been the Pentair guidance. There's a lot of moving pieces in Q4. We don't know what purchase accounting in final is, we don't know what the amortization is, and we've got a lot of things and a lot of work left in the next 30 days.

But we will soon.

But we will soon.

The other thing that's going on, they were on a September fiscal, and we're shifting the Flow Control over to the calendar fiscal that Pentair has been on traditionally. So this is kind of a stub quarter. And so I don't think that there's -- there's certainly nothing in the outlook that shows any kind of discontinuous change in their sales rate.

Okay. And so the op income comment on Page 12, that talked about the New D&A, Corp, IST, those are all showing up in reported op income, but you'll back them out of adjusted, correct?

Well, those are actually all in adjusted, Steve. Some of those reflect what the full year run rates would be on an ongoing basis. And obviously, we're ramping up to those numbers.

And I think, just to be clear, the things that were in the script, John's script, those are ongoing, the 5 and the -- the $5 million of corporate add, the $5 million of IST, but what isn't is, is the $35 million or so, right, of additional costs that is just sort of transitional-related. Taken down, we're changing all the signs and some of this one-off intense training that's going on around LEAN, et cetera. That will -- that is not sustaining.

Actually, those are hitting adjusted results.

Okay. So the fourth quarter impact of those items, can you tell us what that is, then?

Roughly $35 million in aggregate.

Okay, great. And then -- and maybe just a quick comment. I'll leave it to others for the other things, but just Sandy, just what's the sort of net -- what are you expecting for an impact on the company?

Our focus right now is to chip everything that everyone asks for and it impacts our residential pump business. That's where we see the impact the most. And as we said, through the first 3 quarters, we had no weather-related sales. So we will see what it is. But I mean, our focus is on shipping right now and that with expediting and all, we haven't really tried to quantify a financial impact yet.

But Randy, could you talk about like with -- it's part of a business that's X% of the company?

Well, there's probably -- there's probably $10 million of extra sales that are going to happen, and maybe more, and what -- I just don't know what the profit will be on that because we're expedite -- we spooled [ph] up our plants and we're shipping out all the inventory we have, so our focus is on getting the pumps there and we're in a position to do it. So...

The good news, Steve, is we do ramp-up for the anticipated weather seasons. We had a lot of inventory to be able to ship and the downside is it's a 20%-ish margin and you're dividing by 200 million shares, so I mean...

And we're expediting shipment because we're trying to get them there.

Your next question comes from the line of Hamzah Mazari. Hamzah Mazari - Crédit Suisse AG, Research Division: The first question is just on pricing. You guys are doing a good job pushing that through. Maybe speak about your confidence level and continuing to push price given the demand environment you're seeing out there. You spoke of pricing discipline, maybe you ought to speak to how much of your product is less commoditized where you can really get pricing through?

Well, one of the reasons that we have good pricing disciplines is we sell a lot on the Pentair side, and about 80% of what we sold, we sold through distribution. And most distribution is priced in a virtuous way. And so we expect that to continue. There's some of that on the Flow Control side, but there's also a lot of premium products and a lot of specification activity on that side. So we'd like to bring some of those pricing disciplines over to Flow Control. And it's one of the training activities that we have going on. But the ability to get price to stick is a function of market discipline. So we think we're in good businesses. So that's -- those are the kind of businesses where you can get price. And John, you want to add anything?

No, I agree with Randy. I think we got to remember, there's $1.5 billion installed base on the Flow Control side, with, as Randy mentioned, premium products. That's where the biggest opportunity in the short run would be, is making sure that we're pricing those effectively and we're not entering into discussions with customers, packaged between the installed base and the new opportunities. And I think we break that out, and think about its installed base, and treating that more like what we do in the Pentair side.

Project service.

Right, project service, and then looking at the original equipment or the brand new orders, differently, I think that's the biggest opportunity. Hamzah Mazari - Crédit Suisse AG, Research Division: Got you. And then just a question on the Water business. How much of that business right now for you, just that segment, is replacement or consumables? And then maybe just speak about your leverage to the U.S. housing market recovery. It seems like you're beginning to see that in your numbers. Do you think there's a lag that needs to happen, or we're just coming off of a small base here, and yours already seeing some of that?

Well, in -- for the whole new Pentair, residential is still 20% of our sales, and the U.S. is probably 12% out of the total, right? So it's over 50% of the -- a little higher, 15 -- okay, 15% of -- between 12% and 15% of total new Pentair sales. So we still have a substantial exposure to that market. There is always a lag -- and where we're seeing the residential improvement is things -- for instance, we talked about the flood-related SKUs that are getting shipped now, those we didn't see anything. The place we saw them was in the pumps that are related to building out subdivisions and those -- or in the water softener area we mentioned. Those are the places we're beginning to see the signs of stabilization, or return to normal. But we do see a lag on that, particularly on, well, really on the pump side and on the filtration side. It is going to be 6 months to a year. Hamzah Mazari - Crédit Suisse AG, Research Division: Got you. And just last question for me. On the Tyco merger, you talked about some of the revenue synergies that you're beginning to see already. When do you think you'll be in a position to sort of give an order of magnitude of what you think that number could look like or maybe more detail? Is that on the analyst day or is that more on next year?

Yes, our intent is to talk in more detail just about -- not just about the idea of synergies, but give you some specific examples of ones that are being worked. What we did in the pre -- the reason -- what we've done prior to close is we had a Clean team looking at revenue, we had a Clean team looking sourcing. And so we've been able -- we've hit the ground running as we look at some of those. And we'll -- we have to get permission to use as a case study, the one that I referenced in my -- we don't have permission from the customer yet to talk about it, so -- but we intend to on this 27th. And so we'll give you specific examples and then also how we'll go after it.

Your next question comes from the line of Robert Barry.

I actually wanted to circle back to the discussion about the 4Q EBIT for the Flow business. If you start in your buildup with what I think is about $105 million even before considering amortization or corporate cost bias, et cetera, the $105 million on the $910 million that I think you're expecting for revenue is about 11.5% operating margin, which seems kind of low versus where the business has been tracking. I think Tyco is even guiding to a 14% margin in this current quarter. And so I'm just wondering is that conservatism, some seasonality or [indiscernible] seasonal stronger quarter?

I think if you take a look at the $900 million and you average somewhere around a 13%-ish margin, that's where we see it coming in on prior. And as Randy mentioned, we are doing a lot of things in those businesses to accelerate getting to January 1 in a very clean position as the new Pentair. So I think you're seeing a red hit really on those businesses.

The other thing is we're shifting it to talk about it on the basis that we talk about it. And it's probably about 100 basis point difference between corporate cost, and we push more cost down, I think, than Tyco did. I'm not sure about that but...

Does that answer your question, Rob?

Yes. So okay, the $105 million where you started your buildup is your segment disclosure basis, which is different from the way Tyco was disclosing at the segment level and maybe that delta is worth about 100 basis points of margin?

That's correct. Yes, yes.

Okay. Yes, perfect. No, that's very helpful. I was wondering also if you could just dig a little bit into the Flow business and give a little color on, I think the 2 main pieces in there are your legacy Resi Flow and Engineered Flow. So was the Engineered Flow business kind of down a fair amount this quarter and the Resi Flow up? Any color directionally there would be helpful.

Well, the Resi Flow was actually down because there was no weather-related activities in the third quarter. But there's good trends in the Residential Flow. And there's actually good trends in the Engineered Flow side. I referenced in my script that customer service has improved and that's why we think we're getting higher wins. Frankly, I'm not sure it's the market. I think we're correcting some -- now that we've combined them, we frankly are having better focus on execution. And our deliveries have improved, our overdue backlog is down and as a result, I think we're winning more. So that's what's helping in the Engineered Flow side.

Got you. So in the quarter though, both were down maybe a little bit? Is that fair?

Yes, yes.

So -- and when you' talk about them, your backlog building, I mean, we've been having very easy comps here for a while with -- off a low base. I mean, would you expect to see some pretty substantial growth then when that backlog starts converting to revenue just even the -- in a base off of which we're starting?

Yes. I mean, I think we're feeling good about plus 15% to 19-ish percent growth in backlog. And as we start to ship that, as you mentioned, we get some pretty easy comparisons. So I think the tailwinds for Flow are set nicely as we head into 2013.

Yes. Is that what your expectation would be for that flight, is kind of mid- to high teens growth off those easy comps?

Well, I mean in that section of the business, I think your mid-single-digits growth for Flow is the way we probably look at next year.

Got you. And then just finally on the Technical Products business or Technical Solutions business, I know you talked a little bit about mix. I assume that's in that product price bar. I was wondering, are you actually kind of on an apples-to-apples basis raising price or is a lot of that kind of productivity priced tailwind coming from the mix? I know I think the telecom stuff is lower margin.

We are getting price increases. That's one big piece of the component that Randy mentioned. And the other one is as we're challenged in the Datacom and telecom, that was fairly low-margin business. And what's still growing is in the North American Industrial segment, which is very high margins. So we're getting a margin lift from losing the revenue in the areas that are low and gaining it in the areas that are high.

Next question comes from the line of Mike Wherley.

Could you talk a little bit about the sourcing where you said you already found like 1/2 of the target? And I was just wondering if that's on track, with what you were thinking you'd see already or if that's ahead of pace?

It's ahead. I think we felt that we gave a reasonable estimate out there with about $60 million. And just to remind everyone, that was about $40 million of indirect and $20 million of direct. Just from experiences, previously, it takes a while to get to direct because you got to turn the existing inventory levels, you got to re-quote everything, got to redesign some things. So when we take a look at where we're at now, we're slightly ahead of schedule and feeling good about the incremental pipeline that we have. I think if you think about the nature of these businesses, there's some natural purchasing points where if you think about the valves purchases overall and the benefit that, that can have to Pentair, and you think what we do on the Pentair side, the benefit it can have over the Valves & Controls and the thermal side. So we feel very good about where we're at and we're building the commodity organizations to make sure we go after and get it.

Okay. And then on the North American rebound, I mean, obviously, you're being pretty cautious about that rebound. But how do you feel differently about that versus 3 months ago? Like what have you seen to sort of reinforce your thinking there?

We love the data. I think all of the indications of the data mirror up to what we're feeling and hearing as optimism in the channel. I think each of our thirds of the business that we play in the North America residential, and as Randy mentioned, we have a Flow component, we have a Water Purification component and we have a Pool component, all 3 play into the industry different. And now I'm going to have Randy add some color, but I think what we need is in each of those elements, obviously, warm weather build certainly helps the Pool business. Urban sales are delayed and when we see the Water Purifications go in, and that's where a lot of the new housing starts have been more in the urban centers. And when we get more rural builds, we get both Flow products, which are bringing the water to the homes, and we also get the Purification plays. Randy, on the rural?

Yes, I mean, the more rural, the greater the Flow intensity. A rural home would have 5 pumps in it, a multifamily would have less than 1 per unit. So it really depends on how it comes forward. As John said, the data is very promising. The orders are slow in coming. But we look at housing sales because as money goes into houses, that's when people fix their water softeners. That's when people add filtration systems. That's really good for the Filtration business. And then on the pump side, it's either break or fix or it's new homes. That basically drives that. And then Pool is, well, Pool's been growing despite the fact that new pools aren't being built. So there -- as Sun Belt housing picks up again, the Pool business will pick up again. And we don't think that, that we'll diminish at all the greater content and the sustainable trend going to a variable speed and higher levels of control and elimination of chlorine, et cetera. All these trends that we're -- that our business are leaders in.

But we clearly think that this is a high single digit growth over the next several years. And we believe that if you take the drought-related SKUs out of 2012, and obviously, some of that will level off with the shipments that Randy mentioned in Q4, we're going to be at that level this year.

All right. That's very helpful. If you could just give a little bit of commentary on what you're seeing in China, that would be -- that's my last question.

It's interesting. In China, that hurt both Tech products and our Water Purification business the most, Water Purification, where we've enjoyed a lot of growth in our Residential Filtration business as we serve China. As you know, what's happened with China housing, that slowed down. So that's pretty much flat. And some of the telecom and Datacom downturn is actually in China. So....

We did grow high single digits in Q3 in China, which is the first quarter this year that we saw that type of growth.

But that's not -- that's coming from process and industry as opposed to a hit.

Okay?

The next question comes from the line of Christopher Glynn. Christopher Glynn - Oppenheimer & Co. Inc., Research Division: Just as pertains to the legacy Pentair, what's the level of restructuring you're anticipating in the fourth quarter?

Legacy Pentair? I think I don't have the exact number on that, Chris. I can tell you that we're looking at taking a fairly sizable cost out action as we head into 2013, and we're looking at somewhere around $60 million to $75 million of cost out that we want and that's consistent with what we said. We're looking at those actions, about 50% on the Pentair side and 50% on the new Flow Control businesses. So that's our targets right now and working to the actual details, but that kind of helps quantify it. And we look at $0.50 on the dollar from a cost perspective. That's a reasonable estimate at the moment. Christopher Glynn - Oppenheimer & Co. Inc., Research Division: Okay. And what you do on each side kind of takes into consideration the other side and how they fit together, I take it?

Yes, there's obviously areas will come together like fast-growth markets, where we look to have one common -- face the market on a Pentair and there's obviously some back-office consolidation opportunities there. That would be a kind of a cross company view. Clearly, some of the systems that we put in across the entire enterprise would be a cross company view. And then it's really about the standardization opportunity in each GBU or each business. And those are just as abundant on the Water & Fluid side at Pentair as it is on the valves and control side of Flow Control. And obviously, we're looking to maximize payback here Chris so... Christopher Glynn - Oppenheimer & Co. Inc., Research Division: Right. Right. And then just on the food and -- or the beverage sale synergy that you already got, maybe as an anecdotal, it could be used to -- so we can get a complexion on the revenue synergy opportunity. And do you look at that as a life of program type of win? Because the customers, it's a long-term relationship or annualized. Could you add some -- just complexion on this particular one?

Well, I mean, in this particular case, we're talking about a $2 million win becoming a $4 million win. It was double that and it's relationships that should go beyond the project. But it'll still be, as they build out, it will become a standard approach, we would hope. Not that they won't compete big projects every time, but...

It was a great space for the customer as far as going forward and offering the different valves between the 2 different units, which we're allowed to capture more of the share, right? So we make, on the CPT side, some very high-end valves. But we sometimes pass it up, some of the other...

No, we -- yes, we don't even make some of it. So...

We don't even make the...

And vice versa, the Valves & Controls valve, they don't -- they didn't qualify with this customer, so...

Right. It was a nice complementary, our product set we're able to offer the customer.

That's the equipment ones. The equipment ones are the Pentair one.

Your next question comes from the line of Deane Dray.

I saw some good news coming from Pentair this morning here and it takes me to the first question is, you set some ambitious goals back in March about cost synergies, revenue synergies, the $5 dollar earnings power in 2015, $0.40 cents of accretion in 2013. And here we are today, you got the deal closed and you're reaffirming what a lot of people thought were very ambitious targets, especially considering the macro has worsened. So maybe, Randy, I know we're going to wait until November 27 to get some more details, but just if you could take some broadbrush commentary, macro top line was weaker but sounds like you're a lot more enthusiastic about your cost synergies. But if you could just step us through those issues, that would be helpful.

As we -- and it's a great question because the reason we affirm what we said is because we -- the macro is worse, and we'll talk about this on a lot more detail. But you can expect us to come back with a more moderate outlook for what the markets are going to do for us. But we feel better about the synergies that we can drive and bring home. And it's really that. It's really the fact that we believe more strongly that the synergies are going to read out. We have more insights into them. So even though the top line in the -- is going to be lower, the bottom line should be still a reasonable goal for us to deliver to shareholders. And it's -- the revenue synergies are becoming more real. As we get belly-to-belly, I mean, this job we talked about, not just impressive that the client sought this out, but the fact that these 2 teams came together the first time they met and made it happen. Pretty -- it was something that we're very proud of. And then -- so it's really those things. Yes, remember, when we set those goals, it was basically top-to-top dialogue between 6 people on their side and 6 people on our side. So there was a, I would say, a proper scaling of how it would all come together then. And now, while the pieces will be different, we still think the objectives are good.

And one of the surprises from us was, and we heard John speak about this at our Citi Industrial Conference, is the complexity that Tyco arrived with. And maybe just a comment about the ERP systems. Originally -- I thought the number was 37?

Yes, I mean, actually, we -- as I mentioned, we've been out to see 30 -- we've been out to 30 of the facilities, the Flow Control facilities. And these are high-quality facilities. These are operating people and we're having a really good time getting to know the businesses. But the investments and -- Tyco knew this. I mean, a lot of the investments, if you will, hadn't been gotten to a lot of the investments required to eliminate some of the complexity. When I go around the Valves & Controls, it feels like walking around Enclosures 14 years ago to me. It -- all that promise and too much complexity. They have 43 factories, 37 ERPs, incredibly strong brands, great quality, people that are embracing PIMS faster than -- not just in Valves & Controls, but I was in Redwood City last week and touring that. It's a Raychem facility, that's in Thermal Management. And there were folks from our Pool. They're LEAN rangers from our Moorpark Pool facility, were up there working with them, doing 5S [ph] Kaizens. It's just really exciting to see these kind of -- the way the teams come together. Yes, it's honeymoon and I'm a CEO and all CEOs are optimists, so -- but nevertheless, I look at Valves & Controls and I'd say that there -- whatever there, 12%, 13%, Enclosures was at 9% in 1998, a profitability of 9%. Now it's 20%. And it won't take us 14 years for this. We know how to do it now. Well, I mean that's kind of why I'm optimistic. Not kind of -- that is why I'm optimistic.

That's good to hear and we'll hear more color on the 27th. And I know we're running to the top of the hour here. Just a couple other questions on the hurricane cleanup with -- you commented that it was mostly where you're shipping the sump pumps, that's the Residential side. And this is, obviously, not a Katrina event with New Orleans and a lot of the bigger pumps that were involved there. But is there anything beyond on the dewatering side beyond the residential pumps that...

We -- yes, we have -- they have combined sewer and rainwater systems over there. And I think we're in about -- of the main 18 or 19 stations in New York City, I think we have the pumps in 16 or 17 of them. So we expect those pumps are working away right now to help pump out the city. And ultimately, what that would mean in terms of follow-on service, or parts, I don't know. The -- and I'm sure we have other pumps that are flown through our distribution side as the larger pumps, split case pumps, whatever, going into service right now. I don't have as good a window on that right now.

And then just last one on the buybacks, John, can you just give us some color about the amount -- I know that was the as planned, but just in terms of how active you expect to be in the market?

Yes, the first 400 million was placed in and we're obviously subject to rules around average trading volumes or whatever, so you can assume that, that's being done on some type of average basis over the first 4 months, which would be October through January. As it pertains to the remaining 800 million on approval, I'm obviously will be in a position to share more of that with you later. But obviously, we would like to get the capital structure in line as rapidly as our debt levels allow us to.

So I think we have 7 more, so we'll do our best to be brief with the answers. But I'd like to get through all the 7 questions if we could.

Your next question comes from the line of Brian Konigsberg.

Just kind of a follow-up on the first question from Deane. This might be a small nuance, but you were saying that you're still confident in $5 by 2015. Before, you were saying $5 plus. Is there anything to read into that or is that really just kind of...

No. That's a nuance beyond my intent. No.

The goal is to hit $5 and hopefully, things will allow us to do better.

Okay. Great. And just on -- most of my questions have been answered, but just on the municipal side. So it sounds like the break and fix component is really kind of driving the opportunity going forward. But maybe just talk about the capital project side. It sounds like that might still be pretty weak in the near term, but I'm curious of your expectation as far as some bigger projects that may be building up in the pipeline [indiscernible]?

We continue to invest in gaining position in the infrastructure space outside of -- outside the United States and we have a decent position in process technologies in that. We've seen some slowdowns in projects there. But we'd like to grow our share in pumps. And we think one of the opportunities synergistically between -- in the new Pentair is larger pumps in Australia, which is a nice market; large pumps in the Middle East, which is a nice market. So we -- we're -- that's one of the synergies that we are exploring right now. But the U.S. still remains -- it -- I submit until the U.S. government and local governments are able to put more money into water, it's a break and fix world. And it's been that way for 40 years and it's going to be that way until something changes. And I don't think that is going to happen anytime soon.

Okay. I do have a lot -- more questions here. I just want -- if I could sneak one last in. Just on the North American Resi, is it your expectation that the Pool business will be the last to benefit from an increase in residential activity and maybe changing buying patterns from consumers? Maybe just a quick comment on that would be good.

No, actually, I think that's the one we're probably the most confident in because we've done a lot new product content in there, drive energy efficiency. And what we've said constantly is the pool builder or the pool owner today tends to be on the higher end or more affluent buyer. And most of those pools are purchased more cash base. And you're looking at about a 10% new pool permits to the housing starts number because just the way the patterns get built. So I actually think that's the one we're most confident in. The ones that we have to do a little bit more work with, which we're still confident in, are the rural versus urban builds and how that impacts our particular sales into those housing.

Your next question comes from the line of Josh Pokrzywinski.

Just I don't know if you guys went over this already, but I wanted to make sure what you guys were specifically looking for on an organic basis. So inclusive -- I'm sorry, exclusive of currency or Tyco in the fourth quarter, just so we're on the same page.

Josh, I did everything not to give you that number and I don't feel comfortable giving you that number right now, and I will give you that on November 27 because there are things like acquisitions, divestitures, those types of components that I would need to do a full reconciliation on to share that with you. I think you can look at organic order trend rates and sort of where we were in prior quarters and get a pretty good indication that we don't see things are slowing.

Your next question comes from the line of Brian Drab. Brian Drab - William Blair & Company L.L.C., Research Division: This is Brian Drab. So just one question for you. Can you -- you raised the guidance for the operating margin for 2012 and you talked about some of those issues, but can you kind of rank order the things that are impacting that? Obviously, better performance than expected in the third quarter on margins, but product mix, steel cost and other commodities coming down, productivity initiatives, which is most important to talk about...

You're talking about legacy Pentair business. Brian Drab - William Blair & Company L.L.C., Research Division: In the legacy Pentair business, yes.

We really have a seasonality that's fairly predictable and normal, and it kind of falls around the fact that you take a look at equipment protection or Technical Solutions, there's a couple less weeks of buying due to the Christmas holiday and kind of how the season unfolds. So it's just a little bit less contribution on top of the fact that this is the only reason that, that margin really turns downward. In the legacy Water -- and Fluid businesses, it's more of just where the contribution is coming from in terms of the seasonality. And we do really well in the North American residential side. And that season begins to end throughout Q3. It's a little trend, so I think you see in the margin expansion year-over-year, it's generally in line. Brian Drab - William Blair & Company L.L.C., Research Division: Okay. And then your forecast for revenue growth, you gave the overall number. Can you give me what you're expecting for organic in the fourth quarter for the legacy Pentair business?

Legacy Pentair business, I think we've shared that but I'll be read it here. It's... Brian Drab - William Blair & Company L.L.C., Research Division: I just see on the slide, you have 3% for legacy Pentair.

Correct. Brian Drab - William Blair & Company L.L.C., Research Division: And I may have missed it if you gave the breakdown between FX and organic.

FX is a couple of points.

Your next question comes from the line of Scott Graham. R. Scott Graham - Jefferies & Company, Inc., Research Division: This is a really well-done earnings presentation, the handout. So everything is very clear. A couple of things though. I just have sort of just a couple of these little items here in the operating income on Page 12. Could you tell us what the incremental amortization of intangibles is for the fourth quarter? For the [indiscernible] of the deal?

Yes, it's -- that's $23 million that you see on the -- under the op income. The majority of that is the incremental amortization. R. Scott Graham - Jefferies & Company, Inc., Research Division: Okay. So like $18 million to $20 million or...

No, no, no. That's like $22 million to $23 million. R. Scott Graham - Jefferies & Company, Inc., Research Division: $22 million, really? Okay.

Yes. Well, the depreciation remains in the business because most of those -- most of the depreciation isn't really adjusted because of the timing. Yes, and what happens is all of the other...

And within their base, that's the incremental.

This is incremental. All the other assets get revalued and that becomes the incremental amortization. R. Scott Graham - Jefferies & Company, Inc., Research Division: All right, all right. Yes, that makes sense. Okay. And then the $10 million of New Corp and IST, are you saying that, that's Tyco Flow corporate expenditures that we should expect in the fourth quarter?

No, we would expect to add -- yes. On an ongoing rate next year, we would expect $20 million incremental IST cost and roughly $20 million of incremental Corp cost that would come into Pentair primarily around tax, treasury and the addition of other functions to support the new Swiss structure. And so that's a full run rate is what that's expecting. And then there is some segment cost, which I mentioned is still in that contribution from Flow Control, which should be part of the business unit operation synergies over time. R. Scott Graham - Jefferies & Company, Inc., Research Division: Right. But that's going to be rolled up into the segments, right?

That's correct. R. Scott Graham - Jefferies & Company, Inc., Research Division: Yes, I'm talking about just the corporate piece of Tyco Flow. That's what this number is, right, the $10 million?

Yes, yes.

The way to think about it is, it's incremental to Pentair corporate. R. Scott Graham - Jefferies & Company, Inc., Research Division: Yes, exactly, exactly. So last question is this. If you would take a step back and look at the Pentair legacy business with the talk that you have on the muni, the Resi and how well the Technical Products business is holding up, plus your typical margin expansion initiatives, it seems to suggest that 2013 Pentair's legacy earnings would rise based on where we stand today. Would you agree with that statement?

I agree it would rise. I know where you're going with this, Scott. I'm not -- I don't know what the legacy EPS guidance for next year would be, but I think we would expect some growth, absolutely.

Your next question comes from the line of Brett Linzey.

Could you just touch on the 4Q tax rate of 30%? You suggest in the release, it doesn't reflect some of the tax saving synergies and the strategies. I mean, is this just more timing or have expectations changed from your initial expectations there?

It's totally timing right now. The biggest piece of the reduction will come in the form of a debt pushdown structure. And once we choose that interest rate to push down at, we are locking in for a long term on that interest rate. And obviously, we want to choose that carefully. So we will have it in place, we'll be ready to fully go, but we're trying to get to the right answer for the ongoing Pentair.

Okay. And we should expect by 1Q, that should be pushed down and it should normalize to that kind of 25% rate?

That's correct.

By January 1. By January 1.

Sure, January 1. Okay. And then, I guess, the last question. Just on the cost synergies, you pointed to $40 million you've been able to achieve thus far. I mean, were you able to parse that out into different buckets? And then, I guess, how does that compare to your initial expectations?

I mean just to remind you, the corporate cost that we were receiving in Tyco Flow was more of a $2 billion standalone. And we were able to do this deal before most of those people were put in place, which is good news for the people and good news for us. So we're really adding to the Pentair corporate cost, and you'll see those there as about $40 million of incremental cost that we expect to put in.

Versus the $85 million to the $100 million that they were going to add.

So we really realized the entire corporate synergy, if you will, already.

Next question comes from the line of David Rose.

The last 2 questions hit on line, but maybe we can clarify a little bit on the $40 million integration corporate investments. We're talking about $5 million each per quarter for corporate and ITS. You also have the $25 million piece. So the $10 million per quarter accounts for the $40 million. But was the $25 million onetime branding cost part of your $40 million integration corporate investment that you've outlined in the earlier presentations? Or is that something relatively new?

I wouldn't say it's new. I think it was something that normally would've been done over time. We're trying to get as much as possible behind us before we hit the ground on January 1. So we're taking a look at every single one of those decisions in the context of the IST and saying, how do we feel about this brand, how do we feel about the investments, how do we feel about the marketing, what we're doing, and accelerating those decisions as quickly as possible.

Now part of the $40 million includes in the ITS and over time, I would imagine that declines after the first year or 2. Is that fair?

Yes. The way we've thought about it is sort of it will fall off after maybe a couple of years, start falling off by the end of '15. It should be pretty much integrated into other things, I would think.

Okay, fair. And then lastly, on the tax issue, you put out in the slide presentation, day 1 savings, 24% to 26%. I understand that there are some debt pushdown that you have to do. Is there anything else that could potentially change the tax rate guidance that might delay things a bit or increase the taxes?

The tax is based upon what is the ongoing rate of Tyco Flow, and the rate that we're experiencing is slightly higher than what we would have anticipated. At the same time, the synergies, the tax synergies that we're going after at this point exceed what we originally thought. So at this particular point in time, I am pretty confident with the 25%. And we're also confident that long term, we can get closer to 20% or below 20% like most Swiss-based companies. And those things will require from the 25% on down, incremental strategic actions beyond the debt pushdown. And we're prioritizing those right now because a lot of those align perfectly with what the business wants to do anyway around driving functional excellence or headquartering in certain locations. So I feel right now, we're on pace to do what we said.

Okay. And the debt pushdown, are we talking about additional legal costs associated with this?

No, no, no.

No, It's just choose and go.

Yes, the interest rate is lower than what we would've anticipated. And we want to make sure whatever interest rate we choose and put in, we can live with for the next 10 years.

Last question.

And your last question comes from the line of Garik Shmois.

Just my question is on Western Europe, just real quick. It's been soft here for quite some time, but I believe you said that it's stabilizing. I know that you started to see declines on a year-over-year basis last year. So are we -- should we think about Western Europe as stabilizing off of this lower base or is it truly stabilizing?

Well, I think it's stabilizing off our lower base.

Yes, it's not recovering.

We, on a volume basis, were down low single digits in Q3. And that compares to being down double digits in Q1 and Q2. So we're starting to anniversary some of the easier comparisons and we're not expecting it to get much better. I mean, we're flattish in Q4. But we saw a pretty steady correction or pretty sharp correction, I should say, last Q4, primarily in Water Purification. And right now, we're not feeling that level of distributor destocking that we saw last year. And that's why we feel fairly comfortable to say it's stabilizing. I don't think it's recovering. I don't think we're trying to...

Well, and the things where, really, we saw a decline was Germany. In our Technical Products and our Flow Technologies business, Germany is a really important market. And so Germany went late into this decline, but they're in it. So -- and I'm not sure Germany has bottomed yet.

Okay. And you've done a good job getting pricing. Can you talk about pricing in Western Europe, Germany, if you saw incremental pressure here over the last quarter?

Nothing material. I mean, I think, keep in mind that these are fairly local purchases with pretty steady channels. And I don't think people are chasing volume right now. So I think you're seeing the pricing in line with what we've seen prior, in line with expectations.

Okay. And then just a last question on that. Just as you look at the new Pentair, what does Western Europe make up as a total?

20% to 25% of new Pentair.

All right. Thank you, all. And operator, begin the replay. Thanks for your attention.

Ladies and gentlemen, this does conclude today's conference call, and you may now disconnect.