Supply Chain Management

Responsible supply chain management practices are vital to the continued success of our company and have a positive effect on our shareowners, customers, employees and other stakeholders. In 2007, Pentair purchased approximately $1.4 billion worth of products and services from our suppliers.

Compliance with all laws and a commitment to the highest standards of ethical business conduct are central to our supplier agreements. Pentair expects partner companies to meet these same standards. We make a concerted effort to build long-term, mutually beneficial relationships with our suppliers. We award business based on the value provided to us and our customers, considering elements such as quality, price, delivery, technical support and service. Along with these considerations, we expect that our suppliers and contracted service providers around the world to comply with all standards outlined in our code of conduct and ethics and the newly launched Pentair Supplier Code of Conduct. These are mandatory for our employees, and we expect similar conduct from the partners and suppliers with whom we conduct business.

We expect our suppliers to:

• Abide by all pertinent laws and our code of conduct
• Provide high quality goods or services
• Deliver goods or services at a competitive price
• Stand behind the goods or services offered

Our supply organizations evaluate potential suppliers using the criteria above and awards contracts through a competitive bidding process. Because we are a supplier to businesses ourselves, we understand the importance of delivering the highest quality products at the best possible value. We also understand the need to maintain the high standards outlined in our code of conduct and ethics.

We constantly monitor supplier performance and have a number of processes in place to ensure all problems are resolved in a timely fashion.

Through PIMS Lean Enterprise, our materials management process helps the company reduce and eliminate waste, increase efficiencies throughout our global supply chain, and maximize the use of natural resources. This includes the raw materials used in the manufacturing of our products, such as steel, resins, copper, aluminum, as well as water and energy in our global operations. Our PIMS Lean Enterprise productivity approach and embedded safety programs ensure that the health and well-being of our employees and others working in our supply chain is our highest priority.

Pentair is committed to continuous improvement in both our internal operations and extended supply chain, selecting and partnering with suppliers who commit to the same high standards.