UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2013

XYLEM INC.
(Exact name of registrant as specified in its charter)

 
 	 	 	 	 	
Indiana	 	001-35229	 	45-2080495	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	

1133 Westchester Avenue, Suite N200
White Plains, New York	 	10604	
(Address of principal executive offices)	 	(Zip Code)	
(914) 323-5700
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02	Results of Operations and Financial Condition	
Attached hereto as Exhibit 99.1 and incorporated herein by reference is the news release issued by Xylem Inc. on July 30, 2013, announcing the financial results for the second quarter ended June 30, 2013. This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
 
Item 7.01	Regulation FD Disclosure	
Attached hereto as Exhibit 99.2 and incorporated herein by reference is an earnings presentation posted on Xylem Inc.’s website on July 30, 2013, summarizing Xylem Inc.’s financial results for the second quarter ended June 30, 2013. This information is furnished pursuant to Item 7.01 Regulation FD Disclosure. This information shall not be deemed filed for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01	Financial Statements and Exhibits	
(d) Exhibits.

Exhibit No.	  	Description	
 	 	
99.1	  	News Release issued by Xylem Inc. on July 30, 2013.	
 	 	
99.2	  	Presentation summarizing second quarter financial results posted by Xylem Inc. on July 30, 2013.	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	XYLEM INC.	
 	 	 	
Date: July 30, 2013	 	By:	 	/s/ Michael T. Speetzen	
 	 	 	 	Michael T. Speetzen	
 	 	 	 	Senior Vice President and Chief Financial Officer
(Authorized Officer of Registrant)	

EXHIBIT INDEX

Exhibit No.	  	Description	
 	 	
99.1	  	News Release issued by Xylem Inc. on July 30, 2013.	
 	 	
99.2	  	Presentation summarizing second quarter financial results posted by Xylem Inc. on July 30, 2013.	

Exhibit 99.1

Xylem
1133 Westchester Ave., White Plains, NY 10604
Tel +1.914.323.5700 Fax +1.914.696.2960

Contacts:        	  	Media	  	Investors	
 	  	Tom Glover +1-914-323-5891	  	Phil DeSousa +1-914-323-5930	
 	  	tom.glover@xyleminc.com	  	phil.desousa@xyleminc.com	
Xylem Inc. reports second quarter 2013 results
 
 	•	 	Second quarter 2013 adjusted net income was $66 million or $0.36 per share, down $0.13 from second quarter 2012; GAAP net income was $46 million or $0.25 per share	
 
 	•	 	Second quarter 2013 revenue was $960 million, down 3.4 percent organically from second quarter 2012	
 
 	•	 	Second quarter orders up 4 percent to $1.01 billion	
 
 	•	 	Full-year outlook adjusted to reflect on-going market weakness	
WHITE PLAINS, N.Y., July 30, 2013 – Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported second quarter 2013 net income of $46 million, or $0.25 per share. Adjusted net income was $66 million, or $0.36 per share, excluding the impact of special items that included restructuring and realignment charges, and special tax items. Second quarter revenue was $960 million, down $6 million from the second quarter 2012. Strength in the company’s U.S. residential, commercial and agriculture business was more than offset by continued softness in Europe, as well as in the public utilities and industrial markets. Second quarter 2013 adjusted operating margins were 10.2 percent, excluding the impact of restructuring and realignment costs, down 380 basis points resulting from lower volume and continued investments in growth initiatives, the unfavorable impact of foreign exchange rates, and other items.
“While our second quarter results were lower than expected, we captured important contract wins in June, resulting in record orders of more than $1 billion in the quarter,” said Gretchen McClain, president and chief executive officer of Xylem Inc. “We continue to take strong and decisive actions to position the company for efficient operation and profitable growth. While we’re seeing the initial benefits from our on-going restructuring and organizational realignment, we are accelerating additional short- and long-term actions to further reduce our cost base and drive more efficiencies throughout our business.”
McClain said the company expects to benefit from investments in growth initiatives and from continued efforts to transform the business and improve growth execution.
“We are encouraged by our second quarter order rate and several new products that we launched during the second quarter, including our ‘smart’ dewatering solutions from Flygt and Godwin that are efficient, compact and meet our customers’ needs for

 
more reliable and durable technologies,” McClain said. “These new products and some key contract wins give us confidence in an improved second half of the year and position us for long-term growth.”
Notable business wins in the second quarter include:
 
 	•	 	The company began working with its local partner Visenti in Singapore to monitor and improve that country’s water infrastructure and help preserve its limited water supply;	
 
 	•	 	In China, Xylem was awarded a large contract from the Beijing Drainage Group to improve downtown Beijing water stations’ storage capability by installing its Flygt pumps;	
 
 	•	 	In Spain, the company received its first order for the newly launched open channel ultraviolet disinfection system, WEDECO Duron;	
 
 	•	 	The company won several large orders for industrial fire protection systems with oil and gas giant CNOOC in China; and	
 
 	•	 	Xylem also won a contract for a pre-treatment system to remove harmful microorganisms from seawater prior to desalination in the United Arab Emirates.	
Full-year 2013 Outlook
Xylem’s full-year revenues are now expected to be approximately $3.7 billion, and adjusted net income is expected to be in the range of $260 to $279 million, or $1.40 to $1.50 per share, down from the earlier projection of adjusted net income of $1.79 to $1.89 per share. Full-year GAAP net income is now anticipated to be in the range of $205 to $237 million, or $1.10 to $1.27 per share, which includes $60 to $80 million of restructuring and realignment costs.
Second Quarter Segment Results
Water Infrastructure
Xylem’s Water Infrastructure segment consists of its businesses serving clean water delivery, wastewater transport and treatment, dewatering and analytical instrumentation.
 
 	•	 	Second quarter 2013 revenue was $596 million, down 6 percent organically compared with the second quarter 2012, reflecting U.S. industrial weakness, European economic challenges and decreased treatment project shipments.	
 
 	•	 	Second quarter adjusted segment operating income was $63 million. Adjusted operating margin was 10.6 percent, down 480 basis points from last year reflecting lower volumes, acquisition impacts, continued investments, unfavorable foreign exchange rates, and other items.	

 
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, industrial and agricultural applications.
 
 	•	 	Second quarter 2013 revenue was $381 million, up 1 percent organically compared with the second quarter 2012, reflecting strong growth in U.S. residential, commercial and agricultural end markets, partially offset by weak industrial demand and European economic challenges.	
 
 	•	 	Second quarter adjusted segment operating income was $51 million. Adjusted operating margin was 13.4 percent, down 50 basis points from last year reflecting higher volume more than offset by continued investment and other items.	
Supplemental information on Xylem’s second quarter earnings and reconciliations for certain non-GAAP items are posted at http://investors.xyleminc.com.
About Xylem
Xylem (NYSE: XYL) is a leading global water technology provider, enabling customers to transport, treat, test and efficiently use water in public utility, residential and commercial building services, industrial and agricultural settings. The company does business in more than 150 countries through a number of market-leading product brands, and its people bring broad applications expertise with a strong focus on finding local solutions to the world’s most challenging water and wastewater problems. Xylem is headquartered in White Plains, N.Y., with 2012 annual revenues of $3.8 billion and approximately 12,900 employees worldwide. In 2012, Xylem was named to the Dow Jones Sustainability World Index for advancing sustainable business practices and solutions worldwide.
The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all — that which occurs in nature. For more information, please visit us at www.xyleminc.com .
Forward-Looking Statements
This document contains information that may constitute “forward-looking statements.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
These forward-looking statements include, but are not limited to, statements about the separation of Xylem Inc. (the “Company”) from ITT Corporation in 2011, capitalization of the Company, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to orders, sales, operating margins and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements.

 
Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those set forth in Item 1A in our Annual Report on Form 10-K, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission.
###

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)

 	  	Three Months,	 	 	Six Months,	 	
For the period ended June 30,	  	2013	 	  	2012	 	 	2013	 	 	2012	 	
Revenue	  	$	960	  	  	$	966	  	 	$	1,839	  	 	$	1,891	  	
Cost of revenue	  	 	589	  	  	 	583	  	 	 	1,134	  	 	 	1,145	  	
 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	371	  	  	 	383	  	 	 	705	  	 	 	746	  	
Selling, general and administrative expenses	  	 	252	  	  	 	220	  	 	 	488	  	 	 	451	  	
Research and development expenses	  	 	28	  	  	 	28	  	 	 	54	  	 	 	56	  	
Restructuring charges	  	 	20	  	  	 	—  	  	 	 	25	  	 	 	—  	  	
Separation costs	  	 	1	  	  	 	6	  	 	 	2	  	 	 	11	  	
 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	70	  	  	 	129	  	 	 	136	  	 	 	228	  	
Interest expense	  	 	14	  	  	 	13	  	 	 	27	  	 	 	27	  	
Other non-operating income (expense), net	  	 	1	  	  	 	(1	) 	 	 	(1	) 	 	 	(2	) 	
 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Income before taxes	  	 	57	  	  	 	115	  	 	 	108	  	 	 	199	  	
Income tax expense	  	 	11	  	  	 	26	  	 	 	21	  	 	 	47	  	
 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	46	  	  	$	89	  	 	$	87	  	 	$	152	  	
 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share:	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Basic	  	$	0.25	  	  	$	0.48	  	 	$	0.47	  	 	$	0.82	  	
Diluted	  	$	0.25	  	  	$	0.48	  	 	$	0.47	  	 	$	0.82	  	
Weighted average number of shares:	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Basic	  	 	185.4	  	  	 	185.8	  	 	 	185.6	  	 	 	185.6	  	
Diluted	  	 	186.1	  	  	 	186.2	  	 	 	186.3	  	 	 	186.1	  	
Dividends declared per share	  	$	0.1164	  	  	$	0.1012	  	 	$	0.2328	  	 	$	0.2024	  	

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)

 	  	June 30,
2013	 	 	December 31,
2012	 	
 	  	(Unaudited)	 	 	 	 	
ASSETS	  	 	 	 	 	 	 	 	
Current assets:	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	360	  	 	$	504	  	
Receivables, less allowances for discounts and doubtful accounts of $27 and $34 in 2013 and 2012, respectively	  	 	792	  	 	 	776	  	
Inventories, net	  	 	471	  	 	 	443	  	
Prepaid and other current assets	  	 	113	  	 	 	110	  	
Deferred income tax assets	  	 	43	  	 	 	41	  	
 	  	 	 	 	 	 	 	 	
Total current assets	  	 	1,779	  	 	 	1,874	  	
Property, plant and equipment, net	  	 	470	  	 	 	487	  	
Goodwill	  	 	1,674	  	 	 	1,647	  	
Other intangible assets, net	  	 	498	  	 	 	484	  	
Other non-current assets	  	 	190	  	 	 	187	  	
 	  	 	 	 	 	 	 	 	
Total assets	  	$	4,611	  	 	$	4,679	  	
 	  	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	  	 	 	 	 	 	 	 	
Current liabilities:	  	 	 	 	 	 	 	 	
Accounts payable	  	$	311	  	 	$	332	  	
Accrued and other current liabilities	  	 	420	  	 	 	443	  	
Short-term borrowings and current maturities of long-term debt	  	 	5	  	 	 	6	  	
 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	736	  	 	 	781	  	
Long-term debt	  	 	1,199	  	 	 	1,199	  	
Accrued postretirement benefits	  	 	393	  	 	 	400	  	
Deferred income tax liabilities	  	 	179	  	 	 	173	  	
Other non-current accrued liabilities	  	 	52	  	 	 	52	  	
 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	2,559	  	 	 	2,605	  	
 	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 17)	  	 	 	 	 	 	 	 	
Stockholders’ equity:	  	 	 	 	 	 	 	 	
Common Stock — par value $0.01 per share:	  	 	 	 	 	 	 	 	
Authorized 750.0 shares, issued 186.4 shares and 186.2 shares in 2013 and 2012, respectively	  	 	2	  	 	 	2	  	
Capital in excess of par value	  	 	1,718	  	 	 	1,706	  	
Retained earnings	  	 	308	  	 	 	264	  	
Treasury stock – at cost 1.1 shares and 0.5 shares in 2013 and 2012, respectively	  	 	(31	) 	 	 	(13	) 	
Accumulated other comprehensive income	  	 	55	  	 	 	115	  	
 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	2,052	  	 	 	2,074	  	
 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	4,611	  	 	$	4,679	  	

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)

For the six months ended June 30,	  	2013	 	 	2012	 	
Operating Activities	  	 	 	 	 	 	 	 	
Net income	  	$	87	  	 	$	152	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  	 	 	 	 	 	 	 	
Depreciation	  	 	49	  	 	 	44	  	
Amortization	  	 	25	  	 	 	23	  	
Share-based compensation	  	 	12	  	 	 	10	  	
Restructuring charges	  	 	25	  	 	 	—  	  	
Other, net	  	 	7	  	 	 	(5	) 	
Payments for restructuring	  	 	(11	) 	 	 	—  	  	
Changes in assets and liabilities (net of acquisitions):	  	 	 	 	 	 	 	 	
Changes in receivables	  	 	(31	) 	 	 	(16	) 	
Changes in inventories	  	 	(44	) 	 	 	(44	) 	
Changes in accounts payable	  	 	(4	) 	 	 	12	  	
Other, net	  	 	(53	) 	 	 	(51	) 	
 	  	 	 	 	 	 	 	 	
Net Cash — Operating activities	  	 	62	  	 	 	125	  	
 	  	 	 	 	 	 	 	 	
Investing Activities	  	 	 	 	 	 	 	 	
Capital expenditures	  	 	(60	) 	 	 	(57	) 	
Acquisitions, net of cash acquired	  	 	(81	) 	 	 	—  	  	
Proceeds from the sale of property, plant and equipment	  	 	3	  	 	 	3	  	
Other, net	  	 	—  	  	 	 	1	  	
 	  	 	 	 	 	 	 	 	
Net Cash — Investing activities	  	 	(138	) 	 	 	(53	) 	
 	  	 	 	 	 	 	 	 	
Financing Activities	  	 	 	 	 	 	 	 	
Repurchase of common stock	  	 	(18	) 	 	 	(3	) 	
Proceeds from exercise of employee stock options	  	 	1	  	 	 	16	  	
Dividends paid	  	 	(43	) 	 	 	(39	) 	
Other, net	  	 	—  	  	 	 	(5	) 	
 	  	 	 	 	 	 	 	 	
Net Cash — Financing activities	  	 	(60	) 	 	 	(31	) 	
 	  	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	  	 	(8	) 	 	 	(1	) 	
 	  	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	(144	) 	 	 	40	  	
Cash and cash equivalents at beginning of year	  	 	504	  	 	 	318	  	
 	  	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	360	  	 	$	358	  	
 	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  	 	 	 	 	 	 	 	
Cash paid during the period for:	  	 	 	 	 	 	 	 	
Interest	  	$	26	  	 	$	26	  	
Income taxes (net of refunds received)	  	$	52	  	 	$	54	  	

Xylem Inc. Non-GAAP Measures
Management views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluating our operating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operations as determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:
“Organic revenue” and “Organic orders” defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations, intercompany transactions, and contributions from acquisitions and divestitures. Divestitures include sales of portions of our business that did not meet the criteria for classification as a discontinued operation or insignificant portions of our business that we did not classify as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period.
“Constant currency” defined as financial results adjusted for currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
“EBITDA” defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA”  reflects the adjustment to EBITDA to exclude for non-recurring separation costs associated with the Xylem spin-off from ITT Corporation as well as non-recurring restructuring and realignment costs.
“Adjusted Operating Income,” “Adjusted Segment Operating Income,” and “Adjusted EPS” defined as operating income and earnings per share, adjusted to exclude non-recurring separation costs associated with the Xylem spin-off from ITT Corporation, non-recurring restructuring and realignment costs and tax-related special items.
“Normalized EPS” defined as adjusted earnings per share, as well as adjustments to reflect the incremental current period amount of interest expense and stand-alone costs in the prior comparable period.
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flows does not consider non-discretionary cash payments, such as debt.
“Realignment costs” defined as non-recurring costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, relocation, travel and other costs.

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Order Growth
($ Millions)

 	 	(As Reported - GAAP)	 	 	(As Adjusted - Organic)	 	 	Constant Currency	 	
 	 	 	 	 	(A)	 	 	(B)	 	 	 	 	 	(C)	 	 	(D)	 	 	(E)	 	 	(F) = B+C+D+E	 	 	(G) = F/A	 	 	(H) = (F - C) / A	 	
 	 	Orders	 	 	Orders	 	 	Change
2013 v. 2012	 	 	% Change
2013 v. 2012	 	 	Acquisitions /
Divestitures	 	 	FX Contribution	 	 	Eliminations	 	 	Change
Adj. 2013 v. 2012	 	 	% Change
Adj. 2013 v. 2012	 	 	 	 	
 	 	2013	 	 	2012	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Six Months Ended June 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	1,971	  	 	 	1,974	  	 	 	(3	) 	 	 	0	% 	 	 	(51	) 	 	 	—  	  	 	 	—  	  	 	 	(54	) 	 	 	-3	% 	 	 	0	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water infrastructure	 	 	1,248	  	 	 	1,255	  	 	 	(7	) 	 	 	-1	% 	 	 	(51	) 	 	 	1	  	 	 	—  	  	 	 	(57	) 	 	 	-5	% 	 	 	0	% 	
Applied Water	 	 	756	  	 	 	752	  	 	 	4	  	 	 	1	% 	 	 	—  	  	 	 	(1	) 	 	 	—  	  	 	 	3	  	 	 	0	% 	 	 	0	% 	
 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended June 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	1,009	  	 	 	970	  	 	 	39	  	 	 	4	% 	 	 	(25	) 	 	 	(2	) 	 	 	—  	  	 	 	12	  	 	 	1	% 	 	 	4	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water infrastructure	 	 	647	  	 	 	617	  	 	 	30	  	 	 	5	% 	 	 	(25	) 	 	 	(1	) 	 	 	—  	  	 	 	4	  	 	 	1	% 	 	 	5	% 	
Applied Water	 	 	378	  	 	 	370	  	 	 	8	  	 	 	2	% 	 	 	—  	  	 	 	(1	) 	 	 	1	  	 	 	8	  	 	 	2	% 	 	 	2	% 	
 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended March 31	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	962	  	 	 	1,004	  	 	 	(42	) 	 	 	-4	% 	 	 	(26	) 	 	 	2	  	 	 	—  	  	 	 	(66	) 	 	 	-7	% 	 	 	-4	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water infrastructure	 	 	601	  	 	 	638	  	 	 	(37	) 	 	 	-6	% 	 	 	(26	) 	 	 	2	  	 	 	—  	  	 	 	(61	) 	 	 	-10	% 	 	 	-5	% 	
Applied Water	 	 	378	  	 	 	382	  	 	 	(4	) 	 	 	-1	% 	 	 	—  	  	 	 	—  	  	 	 	(1	) 	 	 	(5	) 	 	 	-1	% 	 	 	-1	% 	
Note: Due to rounding the sum of segment amounts may not agree to Xylem totals.

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Revenue
($ Millions)

 	 	(As Reported - GAAP)	 	 	(As Adjusted - Organic)	 	 	Constant Currency	 	
 	 	 	 	 	(A)	 	 	(B)	 	 	 	 	 	(C)	 	 	(D)	 	 	(E)	 	 	(F) = B+C+D+E	 	 	(G) = F/A	 	 	(H) = (F - C) / A	 	
 	 	Revenue	 	 	Revenue	 	 	Change
2013 v. 2012	 	 	% Change
2013 v. 2012	 	 	Acquisitions /
Divestitures	 	 	FX Contribution	 	 	Eliminations	 	 	Change
Adj. 2013 v. 2012	 	 	% Change
Adj. 2013 v. 2012	 	 	 	 	
 	 	2013	 	 	2012	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Six Months Ended June 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	1,839	  	 	 	1,891	  	 	 	(52	) 	 	 	-3	% 	 	 	(46	) 	 	 	(2	) 	 	 	—  	  	 	 	(100	) 	 	 	-5	% 	 	 	-3	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water infrastructure	 	 	1,147	  	 	 	1,193	  	 	 	(46	) 	 	 	-4	% 	 	 	(46	) 	 	 	(1	) 	 	 	—  	  	 	 	(93	) 	 	 	-8	% 	 	 	-4	% 	
Applied Water	 	 	726	  	 	 	728	  	 	 	(2	) 	 	 	0	% 	 	 	—  	  	 	 	(1	) 	 	 	(4	) 	 	 	(7	) 	 	 	-1	% 	 	 	-1	% 	
 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended June 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	960	  	 	 	966	  	 	 	(6	) 	 	 	-1	% 	 	 	(23	) 	 	 	(4	) 	 	 	—  	  	 	 	(33	) 	 	 	-3	% 	 	 	-1	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water infrastructure	 	 	596	  	 	 	609	  	 	 	(13	) 	 	 	-2	% 	 	 	(23	) 	 	 	(2	) 	 	 	—  	  	 	 	(38	) 	 	 	-6	% 	 	 	-2	% 	
Applied Water	 	 	381	  	 	 	373	  	 	 	8	  	 	 	2	% 	 	 	—  	  	 	 	(1	) 	 	 	(2	) 	 	 	5	  	 	 	1	% 	 	 	1	% 	
 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended March 31	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	879	  	 	 	925	  	 	 	(46	) 	 	 	-5	% 	 	 	(23	) 	 	 	2	  	 	 	—  	  	 	 	(67	) 	 	 	-7	% 	 	 	-5	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water infrastructure	 	 	551	  	 	 	584	  	 	 	(33	) 	 	 	-6	% 	 	 	(23	) 	 	 	1	  	 	 	—  	  	 	 	(55	) 	 	 	-9	% 	 	 	-5	% 	
Applied Water	 	 	345	  	 	 	355	  	 	 	(10	) 	 	 	-3	% 	 	 	—  	  	 	 	—  	  	 	 	(2	) 	 	 	(12	) 	 	 	-3	% 	 	 	-3	% 	
Note: Due to rounding the sum of segment amounts may not agree to Xylem totals.

Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)

 	  	Q2	 	 	Q2 YTD	 	
 	  	‘13	 	 	‘12	 	 	‘13	 	 	‘12	 	
Total Revenue	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	960	  	 	 	966	  	 	 	1,839	  	 	 	1,891	  	
• Water Infrastructure	  	 	596	  	 	 	609	  	 	 	1,147	  	 	 	1,193	  	
• Applied Water	  	 	381	  	 	 	373	  	 	 	726	  	 	 	728	  	
 	 	 	 	 	
Operating Income	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	70	  	 	 	129	  	 	 	136	  	 	 	228	  	
• Water Infrastructure	  	 	41	  	 	 	93	  	 	 	83	  	 	 	167	  	
• Applied Water	  	 	45	  	 	 	52	  	 	 	85	  	 	 	92	  	
 	 	 	 	 	
Operating Margin	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	7.3	% 	 	 	13.4	% 	 	 	7.4	% 	 	 	12.1	% 	
• Water Infrastructure	  	 	6.9	% 	 	 	15.2	% 	 	 	7.2	% 	 	 	14.0	% 	
• Applied Water	  	 	11.8	% 	 	 	13.9	% 	 	 	11.7	% 	 	 	12.6	% 	
 	 	 	 	 	
Separation Costs	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	—  	  	 	 	6	  	 	 	—  	  	 	 	11	  	
• Water Infrastructure	  	 	—  	  	 	 	1	  	 	 	—  	  	 	 	3	  	
• Applied Water	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1	  	
 	 	 	 	 	
Restructuring & Realignment Costs	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	28	  	 	 	—  	  	 	 	40	  	 	 	—  	  	
• Water Infrastructure	  	 	22	  	 	 	—  	  	 	 	32	  	 	 	—  	  	
• Applied Water	  	 	6	  	 	 	—  	  	 	 	8	  	 	 	—  	  	
 	 	 	 	 	
Adjusted Operating Income*	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	98	  	 	 	135	  	 	 	176	  	 	 	239	  	
• Water Infrastructure	  	 	63	  	 	 	94	  	 	 	115	  	 	 	170	  	
• Applied Water	  	 	51	  	 	 	52	  	 	 	93	  	 	 	93	  	
 	 	 	 	 	
Adjusted Operating Margin*	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	10.2	% 	 	 	14.0	% 	 	 	9.6	% 	 	 	12.6	% 	
• Water Infrastructure	  	 	10.6	% 	 	 	15.4	% 	 	 	10.0	% 	 	 	14.2	% 	
• Applied Water	  	 	13.4	% 	 	 	13.9	% 	 	 	12.8	% 	 	 	12.8	% 	
 
*	Adjusted Operating Income excludes restructuring & realignment costs in 2013 and excludes non-recurring separation costs in 2012.	

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)

 	  	Q2 2012	 	 	Q2 2013	 	
 	  	As Reported	 	 	Adjustments	 	 	Adjusted	 	 	As Reported	 	 	Adjustments	 	 	Adjusted	 	
Total Revenue	  	 	966	  	 	 	 	 	 	 	966	  	 	 	960	  	 	 	 	 	 	 	960	  	
Operating Income	  	 	129	  	 	 	6a	  	 	 	135	  	 	 	70	  	 	 	28c	  	 	 	98	  	
Operating Margin	  	 	13.4	% 	 	 	 	 	 	 	14.0	% 	 	 	7.3	% 	 	 	 	 	 	 	10.2	% 	
Interest Expense	  	 	(13	) 	 	 	 	 	 	 	(13	) 	 	 	(14	) 	 	 	 	 	 	 	(14	) 	
Other Non-Operating Income (Expense)	  	 	(1	) 	 	 	 	 	 	 	(1	) 	 	 	1	  	 	 	 	 	 	 	1	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	115	  	 	 	6	  	 	 	121	  	 	 	57	  	 	 	28	  	 	 	85	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(26	) 	 	 	(3	)b 	 	 	(29	) 	 	 	(11	) 	 	 	(8	)d 	 	 	(19	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	89	  	 	 	3	  	 	 	92	  	 	 	46	  	 	 	20	  	 	 	66	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.2	  	 	 	 	 	 	 	186.2	  	 	 	186.1	  	 	 	 	 	 	 	186.1	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	0.48	  	 	$	0.01	  	 	$	0.49	  	 	$	0.25	  	 	$	0.11	  	 	$	0.36	  	
 	 	 	
 	  	Q2 YTD 2012	 	 	Q2 YTD 2013	 	
 	  	As Reported	 	 	Adjustments	 	 	Adjusted	 	 	As Reported	 	 	Adjustments	 	 	Adjusted	 	
Total Revenue	  	 	1,891	  	 	 	 	 	 	 	1,891	  	 	 	1,839	  	 	 	 	 	 	 	1,839	  	
Operating Income	  	 	228	  	 	 	11a	  	 	 	239	  	 	 	136	  	 	 	40c	  	 	 	176	  	
Operating Margin	  	 	12.1	% 	 	 	 	 	 	 	12.6	% 	 	 	7.4	% 	 	 	 	 	 	 	9.6	% 	
Interest Expense	  	 	(27	) 	 	 	 	 	 	 	(27	) 	 	 	(27	) 	 	 	 	 	 	 	(27	) 	
Other Non-Operating Income (Expense)	  	 	(2	) 	 	 	 	 	 	 	(2	) 	 	 	(1	) 	 	 	 	 	 	 	(1	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	199	  	 	 	11	  	 	 	210	  	 	 	108	  	 	 	40	  	 	 	148	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(47	) 	 	 	(4	)b 	 	 	(51	) 	 	 	(21	) 	 	 	(11	)d 	 	 	(32	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	152	  	 	 	7	  	 	 	159	  	 	 	87	  	 	 	29	  	 	 	116	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.1	  	 	 	 	 	 	 	186.1	  	 	 	186.3	  	 	 	 	 	 	 	186.3	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	0.82	  	 	$	0.03	  	 	$	0.85	  	 	$	0.47	  	 	$	0.15	  	 	$	0.62	  	
 
a	One time separation costs	
b	Net tax impact of separation costs and special tax items	
c	Restructuring & realignment costs	
d	Net tax impact of restructuring & realignment costs and special tax items	

Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow
($ Millions)

 	  	Six Months Ended	 	
 	  	2013	 	 	2012	 	
Net Cash - Operating Activities	  	$	62	  	 	$	125	  	
Capital Expenditures	  	 	(60	) 	 	 	(57	) 	
 	  	 	 	 	 	 	 	 	
Free Cash Flow, including separation costs	  	 	2	  	 	 	68	  	
Cash Paid for Separation Costs (incl. Capex)	  	 	—  	  	 	 	18	  	
 	  	 	 	 	 	 	 	 	
Free Cash Flow, excluding separation costs*	  	$	2	  	 	$	86	  	
 	  	 	 	 	 	 	 	 	
Net Income	  	 	87	  	 	 	152	  	
Separation Costs, net of tax (incl. tax friction)	  	 	—  	  	 	 	8	  	
 	  	 	 	 	 	 	 	 	
Net Income, excluding separation costs*	  	$	87	  	 	$	160	  	
 	  	 	 	 	 	 	 	 	
Free Cash Flow Conversion	  	 	2	% 	 	 	54	% 	

*	Separation costs are not excluded in 2013	

Xylem Inc. Non-GAAP Reconciliation
Guidance
($ Millions, except per share amounts)

2013 Guidance	  	 	 	 	 	 	 	 	 	 	Illustration of Mid Point Guidance	 	
 	  	FY ‘12	 	 	FY ‘13	 	
 	  	As Reported	 	 	Adjustments	 	 	Adjusted	 	 	As Projected	 	 	Adjustments	 	 	Adjusted	 	
Total Revenue	  	 	3,791	  	 	 	 	 	 	 	3,791	  	 	 	3,720	  	 	 	 	 	 	 	3,720	  	
Segment Operating Income	  	 	512	  	 	 	30a	  	 	 	542	  	 	 	391	  	 	 	70c	  	 	 	461	  	
Segment Operating Margin	  	 	13.5	% 	 	 	 	 	 	 	14.3	% 	 	 	10.5	% 	 	 	 	 	 	 	12.4	% 	
Corporate Expense	  	 	69	  	 	 	(16	)b 	 	 	53	  	 	 	63	  	 	 	—  	  	 	 	63	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	  	 	443	  	 	 	46	  	 	 	489	  	 	 	328	  	 	 	70	  	 	 	398	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Margin	  	 	11.7	% 	 	 	 	 	 	 	12.9	% 	 	 	8.8	% 	 	 	 	 	 	 	10.7	% 	
Interest Expense	  	 	(55	) 	 	 	 	 	 	 	(55	) 	 	 	(55	) 	 	 	 	 	 	 	(55	) 	
Other Non-Operating Income (Expense)	  	 	—  	  	 	 	 	 	 	 	—  	  	 	 	(2	) 	 	 	 	 	 	 	(2	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	388	  	 	 	46	  	 	 	434	  	 	 	271	  	 	 	70	  	 	 	341	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(91	) 	 	 	(13	)d 	 	 	(104	) 	 	 	(50	) 	 	 	(22	)d 	 	 	(72	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	297	  	 	 	33	  	 	 	330	  	 	 	221	  	 	 	48	  	 	 	269	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.2	  	 	 	 	 	 	 	186.2	  	 	 	186.4	  	 	 	 	 	 	 	186.4	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	1.59	  	 	$	0.18	  	 	$	1.77	  	 	$	1.19	  	 	$	0.27	  	 	$	1.45	  	
 
a	One time separation, restructuring and realignment costs incurred at the segment level	
b	One time separation, restructuring and realignment costs incurred at the corporate level	
c	Restructuring and realignment costs incurred at the segment level	
d	Net tax impact of above items, plus the addition of special tax items	

Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)

 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Mid Point Guidance	 	
 	  	2008	 	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013E	 	
Revenue	  	 	3,291	  	 	 	2,849	  	 	 	3,202	  	 	 	3,803	  	 	 	3,791	  	 	 	3,720	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	  	 	315	  	 	 	276	  	 	 	388	  	 	 	395	  	 	 	443	  	 	 	328	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Margin	  	 	9.6	% 	 	 	9.7	% 	 	 	12.1	% 	 	 	10.4	% 	 	 	11.7	% 	 	 	8.8	% 	
Restructuring & Realignment	  	 	41	  	 	 	31	  	 	 	15	  	 	 	—  	  	 	 	24	  	 	 	70	  	
Separation Costs*	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	87	  	 	 	22	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Income	  	 	356	  	 	 	307	  	 	 	403	  	 	 	482	  	 	 	489	  	 	 	398	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Margin	  	 	10.8	% 	 	 	10.8	% 	 	 	12.6	% 	 	 	12.7	% 	 	 	12.9	% 	 	 	10.7	% 	
Stand-alone Costs	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	5	  	 	 	28	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adj. Operating Income, excl. Stand-alone Costs	  	 	356	  	 	 	307	  	 	 	403	  	 	 	487	  	 	 	517	  	 	 	398	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Margin, excl. Stand-alone Costs	  	 	10.8	% 	 	 	10.8	% 	 	 	12.6	% 	 	 	12.8	% 	 	 	13.6	% 	 	 	10.7	% 	
 
*	2013 separation costs are not excluded from adjusted operating income.	

XYLEM INC.Q2 2013 EARNINGS RELEASEJULY 30, 2013Exhibit 99.2

FORWARD-LOOKING STATEMENTS2Q2 2013 EARNINGS RELEASEThis document contains information that may constitute “forward-looking statements.” Forward-looking statements by theirnature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,”“project,” “intend,” “plan,” “believe,” “target” and similar expressions identify forward-looking statements, which generally arenot historical in nature. However, the absence of these words or similar expressions does not mean that a statement is notforward-looking. These forward-looking statements include, but are not limited to, statements about the separation of Xylem Inc. (the “Company”)from ITT Corporation in 2011, capitalization of the Company, future strategic plans and other statements that describe theCompany’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financialperformance. All statements that address operating performance, events or developments that we expect or anticipate will occurin the future  —  including statements relating to orders, revenues, operating margins and earnings per share growth, andstatements expressing general views about future operating results  —  are forward-looking statements.  Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks,uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, orreasonably inferred from, such statements.  The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition,forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially fromthe Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but arenot limited to, those set forth in Item 1A of our Annual Report on Form 10-K, and those described from time to time insubsequent reports filed with the Securities and Exchange Commission. 

3Q2’13 XYLEM RESULTSQ2 2013 EARNINGS RELEASE* See appendix for non-GAAP reconciliationsWeak Industrial & Public Utility (Capex)Markets, Partially Offset by U.S.Residential & Commercial  BuildingServices, and AgricultureChallenging European Market ConditionsConstantCurrencyBasis *Volume Decline, and Unfavorable ForeignExchange ImpactsPartially Offset by Cost Reduction Initiatives,and Restructuring & Realignment ActionsLower Income, Timing of Tax Payments,Unfavorable Working CapitalBook to Bill 1.05ConstantCurrencyBasis *(Dollars In Millions, Except per Share Data)Orders$1,009+4%Revenue$960-1%Gross Margin38.6%-100 bpsOperating Margin*10.2%-380 bpsEPS *$0.36Free Cash Flow *$2FINANCIAL PERFORMANCE SUMMARYFINANCIAL PERFORMANCE SUMMARY

4Q2 2013 EARNINGS RELEASEXYLEM GUIDANCE UPDATE•Reflects 1H Performance & Current Market Conditions•Negative Foreign Exchange Impacts•Acquisitions In-Line …Includes Pollmann Pumpen•Executing Additional Cost Reduction Plans•On Track to Deliver Restructuring & Realignment Benefits(Dollars In Millions, Except per Share Data)* See appendix for non-GAAP reconciliationsMid-Point Roll-Forward           Revenue            EPS*           NotesPrevious Guidance$3,925$1.84Organic Growth 0% to 1%FX Translation($70)          ($0.09)Stronger USD & SEKOperations($135)          ($0.30)Organic Growth -4% to -3%; -4 pt. RevisionRevised Guidance$3,720           $1.45MANAGING THROUGH A SLOW MARKET RECOVERY …ACCELERATING COST ACTIONS

5BUSINESS UPDATEQ2 2013 EARNINGS RELEASEFOCUSED ON DRIVING LONG-TERM STRATEGY DELIVER CUSTOMER VALUE•Application Expertise Resulting in Key Treatment Project Order Wins •Partnering with Visenti to Provide Energy Audit in SingaporeDRIVE PROFITABLE GROWTH•Advancing Acquisition Strategy … Completed the Acquisition of Pollmann Pumpen •Vitality Index Continues to Improve … Strong Pipeline of New Product Launches –YSI and Ecocirc Products Recognized with Industry Awards •Accelerating Geographic Expansion … Strong Performance in Key Markets IMPROVE BUSINESS SUSTAINABILITY•Accelerating Cost Actions … Strict Cost Control Initiatives In Place•Continuing to Drive Cost Savings Through Lean and Global Sourcing Initiatives•Focused on Business Simplification Initiatives 

Q2’13 XYLEM PERFORMANCEOPERATING INCOME*OPERATING INCOME*(Dollars, In Millions)(Dollars, In Millions)REVENUEREVENUE+Strong U.S. Performance (All End Markets)–Weak European Public Utility & Industrial–Emerging Market Project Delays Coupledwith Mining Slowdown/Disruption–Pricing Pressure–Unfavorable Foreign Exchange=Acquisitions In-line=Restructuring On TrackOI%11.8%-120 bps-30 bps-10 bps10.2%EPS & OP MARGIN%*EPS & OP MARGIN%*-1%-3%OrganicGrowth11.8%10.2%OI%Q2 2013 EARNINGS RELEASE6Vs. InternalExpectations* See appendix for non-GAAP reconciliationsQ2'13ExpectationQ2'13Actual991960Q2'13ExpectationQ2'13Actual11798AdjustedQ2'13ExpectationVolume/PriceFXAdjustedQ2'13Actual$0.05$0.01$0.01$0.43$0.36Other

7Q2’13 XYLEM PERFORMANCEQ2 2013 EARNINGS RELEASEOPERATING INCOME*OPERATING INCOME*Q2 GROWTHQ2 GROWTHOrganic-3%Acquisitions2%ConstantCurrency-1%-1%(Dollars, In Millions)(Dollars, In Millions)-27%ORGANIC PERFORMANCEBy End MarketBy Geography–Industrial–Europe–Public UtilityU.S.Commercial–Emerging MarketsResidentialAgricultureREVENUEREVENUE* See appendix for non-GAAP reconciliationsMODEST U.S. IMPROVEMENT OFFSET BY CONTINUED EUROPEAN MARKET WEAKNESSPrice +0.3%FX -0.9%Euro HQ -0.2%Q2'12Q2'13966960Q2'12Q2'1313598Q2'12Op Margin*Volume, Mix,& OtherCostReductions &PriceMaterial,Labor,& OHFX/AcqQ2'13Op Margin*3.7%2.5%1.2%3.6%14.0%10.2%Inflation–Mining WeaknessChina, Russia–Project Timing/Demand

8Q2’13 XYLEM PERFORMANCEQ2 2013 EARNINGS RELEASE* See appendix for non-GAAP reconciliationsCHALLENGING MARKET CONDITIONS CONTINUE TO IMPACT BOTTOM LINECHALLENGING MARKET CONDITIONS CONTINUE TO IMPACT BOTTOM LINEVolume/Other-$0.13Restruct. Savings+$0.02TailwindsNew Product Launches & PriceCost Reductions & Restructuring SavingsEuropean Realignment BenefitHeadwindsVolume (Market Conditions)InflationForeign ExchangeAdjustedQ2'12 EPSCoreOperationsEuropeanRealignmentFXAdjustedQ2'13 EPS$0.49$0.36$0.11$0.03$0.01EPS*

9Q2’13 WATER INFRASTRUCTURE PERFORMANCEQ2 2013 EARNINGS RELEASEOPERATING INCOME*-2%(Dollars, In Millions)(Dollars, In Millions)REVENUEREVENUE* See appendix for non-GAAP reconciliationsFACING SIGNIFICANT EUROPEAN MARKET  WEAKNESS & FX HEADWINDFACING SIGNIFICANT EUROPEAN MARKET  WEAKNESS & FX HEADWIND(Organic Performance)Transport -6%; Treatment -12%; Test -2%–Europe Down Mid Single Digits–Treatment Project Delays, FundingConstraints and PY Biogas Compare–Southern Europe Continues to Decline+Partially offset by Analytics (+MSD)–U.S. Down Low Single Digits–Industrial Dewatering (Coal Mining)–Emerging Markets Down High Single Digits–Projects Timing (Latin America/Middle East)Euro HQ -0.3%FX -1.6%-33%Q2'12Q2'1394Q2'12Q2'1360959663Q2'12Op Margin*Volume,Mix, & OtherCostReductionsMaterial,Labor,& OHInflationFX/AcqQ2'13Op Margin*15.4%10.6%3.8%2.5%2.0%3.5%Q2 GROWTHOrganic-6%Acquisition+4%ConstantCurrency-2%

10Q2’13 APPLIED WATER PERFORMANCEQ2 2013 EARNINGS RELEASE+2%(Dollars, In Millions)(Dollars, In Millions)* See appendix for non-GAAP reconciliationsSTRONG U.S. & EMERGING MARKETS PERFORMANCESTRONG U.S. & EMERGING MARKETS PERFORMANCE(Organic Performance)Building Svcs +3%; Ind’l Water -2%; Irrigation +10%+Strong U.S. Performance, Up Mid Single Digits+Residential & Ag up Double-Digits+Improving Commercial Market–Partially Offset by Slow Industrial Market+EM Markets Up High Single Digits+Russia & China Maintain Double-Digit Pace–So. European Market Continues to DeclinePrice +0.7%Q2 GROWTHQ2 GROWTHREVENUEREVENUEOPERATING INCOME*OPERATING INCOME*Q2'12Q2'13373381Organic+1%Acquisition0%ConstantCurrency+1%Q2'12Q2'1352-2%51Q2'12Op Margin*Volume, Mix,& OtherCostReductions &PriceMaterial,Labor,& OHInflationQ2'13Op Margin*13.9%13.4%1.7%2.4%3.6%

11Q2 2013 EARNINGS RELEASEXYLEM FINANCIAL POSITIONFree Cash Flow *Free Cash Flow *•Free Cash Flow Decline•Lower Income•Timing of Tax Payments•Unfavorable WorkingCapital•Capex > 1 Reinvest. RatioCapital Summary/LiquidityCapital Summary/Liquidity•Strong Cash Position•No Significant Debt Maturities Until ‘16•1.4x Net Debt/Adj. TTM EBITDA•$600M Revolving Credit Facility -Unutilized•Access to Commercial Paper -UnutilizedWorking Capital as % Revenue **Working Capital as % Revenue **FCF%54%2%June 30, 2013Cash360Debt1,204Net Debt844Shareholders’Equity2,052Net Capital2,896Net Debt to Net Capital29%(Dollars, In Millions)(Dollars, In Millions)* See Appendix for Non-GAAP Reconciliations** (AR+INV-AP-Customer Advances) / Revenue (Adjusted for Acquisitions)Q2'12YTDQ2'13YTD862Q2'12OperationsFXQ2'131.1%0.1%23.1%24.3%

12Q2 2013 EARNINGS RELEASEGUIDANCE UPDATEEPS*(Mid-Point Roll-Forward)Previous Guidance$1.84Operations$(0.30)Foreign Exchange$(0.09)Current Guidance$1.45Reflecting Significant Headwinds–Europe Weaker Than Expected–Slow U.S. Industrial Market–Emerging Markets Weakness–Significant FX Headwind+Partially offset by Additional Cost ActionsRevenue (Mid-Point Roll-Forward)Previous Guidance$3,925Volume/Price(135)Foreign Exchange(70)Current Guidance$3,720End MarketPerformancePreviousOutlookFY’13 vs. PY1H’13vs. PYCurrent OutlookFY’13 vs. PYIndustrial(43% of Revenue)Flat to UpLow Single DigitsDown HighSingle DigitsDown MidSingle DigitsPublic Utility(35% of Revenue)FlatDown HighSingle DigitsDown MidSingle DigitsCommercial(11% of Revenue)Flat to UpLow Single DigitsDown LowSingle DigitsFlat to Up LowSingle DigitsResidential(8% of Revenue)Flat to UpLow Single DigitsUp LowSingle DigitsUp LowSingle DigitsAgriculture(3% of Revenue)FlatUp HighSingle DigitsUp MidSingle Digits(Dollars, In Millions)(Dollars, In Millions)* See appendix for non-GAAP reconciliations

13Q2 2013 EARNINGS RELEASE2H PLANNING ASSUMPTIONS+Modest U.S. Market Improvement•Continued Strength in Residential & Commercial•Mixed Industrial End Market Dynamics•Stable Public Utility Opex/Capex Delays+Emerging Markets Improvement=Europe Remains Challenged–Mining Weakness (CAN/AUS)+2%SequentialGrowth+Sequential Volume Growth+Acquisitions (1H Burdened w/Purchase Price Acctg)+2H Incremental Restructuring Savings+Cost Containment/Acceleration of Cost Reductions–Foreign Exchange Headwind–Investment to Support New Product LaunchesOI% 9.6%11.8%10.7%OPERATING INCOME*OPERATING INCOME*(Dollars, In Millions)REVENUEREVENUE* See appendix for non-GAAP reconciliations(Dollars, In Millions)1H'13Actual2H'13GuidanceFY'13Guidance1,8391,8813,7201H'13Actual2H'13GuidanceFY'13Guidance176398222(Mid-Point Guidance)(Mid-Point Guidance)

Q2 2013 EARNINGS RELEASE2013 FINANCIAL GUIDANCE SUMMARY* See appendix for non-GAAP reconciliations2013 Full Year2013 Full YearFinancial OutlookFinancial OutlookGrowthGrowth2013E vs. 20122013E vs. 2012Revenue(Mid-Point)Total GrowthOrganicAcquisitionFXXylem Consolidated~$3,720-2 % to -1%                 -4%to-3%2%-1%Water Infrastructure~$2,350-4% to -3%-7% to -6%              4%                  -1%Applied Water~$1,4400% to +2%            0% to +2%0%                   0%Segment Margin *12.1% to 12.6%-220 bps to-170 bpsOperatingMargin *10.4%to 10.9%-250 bps to-200 bpsEPS * $1.40 to $1.50$1.45 Mid PointFree Cash Flow Conversion~90%Restructuring Pmts, Realignment Capex, & 1x Spin CapexGuidanceAssumptions:OperatingTax Rate~21%1H’13 Rate: ~22%; 2H’13Rate: ~20%ShareCount~186.4Share Repurchase Program Maintains Current Share CountItemsExcluded from EPS:Restructuring &Realignment Costs~$60 to $80(DollarsInMillions,ExceptperShareData)‘13 Net Cost Savings $13 to $15; Realignment Cost $20-$3014

15Q2 2013 EARNINGS RELEASESUMMARY•RecalibratedProjectionsBasedon1stHalfPerformance,Current Economic Environment and End Market Outlook•Significant Cost Reduction and Restructuring ActionsUnderway•Maintaining Sharp Focus on Delivering Customer ValueThrough New Product Launches•Driving Businesses to Achieve Higher Performance•Continuing to Transition Organization

16Q2 2013 EARNINGS RELEASENON-GAAP MEASURESManagement views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow,working capital, and backlog, among others.  In addition, we consider certain measures to be useful to management and investors evaluating  our operatingperformance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets.  This information canassist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternativesand initiatives.  These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue,operating income, net income, earnings per share (basic and diluted) or net cash from operations as determined in accordance with GAAP. We consider thefollowing non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:“Organic revenue" and "Organic orders”defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations, intercompanytransactions,andcontributionsfromacquisitionsanddivestitures.Divestituresincludesalesofportionsofourbusinessthatdidnotmeetthecriteriaforclassification as a discontinued operation or insignificant portions of our business that we did not classify as a discontinued operation.  The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period.“Constant currency”defined as financial results adjusted for currency translation impacts by translating current period and prior period activity using thesame currency conversion rate.  This approach is used for countries whose functional currency is not the U.S. dollar.“EBITDA”defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA”reflects theadjustment to EBITDA to exclude for non-recurring separation costs associated with the Xylem spin-off from ITT Corporation as wellas non-recurring restructuring and realignment costs."Adjusted Operating Income,”"Adjusted Segment Operating Income,”and “Adjusted EPS”defined as operating income and earnings per share, adjusted toexclude non-recurring separation costs associated with the Xylem spin-off from ITT Corporation, non-recurring restructuring andrealignment costs and tax-related special items.“Normalized EPS”defined as adjusted earnings per share, as well as adjustments to reflect the incremental current period amount of interest expense andstand-alone costs in the prior comparable period. “Free Cash Flow”defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustmentsfor other significant items that impact current results which management believes are not related to our ongoing operations and performance.  Ourdefinition of free cash flows does not consider non-discretionary cash payments, such as debt. “Realignment costs”defined as non-recurring costs not included in restructuring costs that are incurred as part of actions taken to reposition our business,including items such as professional fees, relocation, travel and other costs. 

17Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ORGANIC & CONSTANT CURRENCY REVENUE GROWTHConstant Currency(A)(B)(C)(D)(E)(F) = B+C+D+E(G) = F/A(H)=(F-C)/AChange% ChangeChange% ChangeRevenueRevenue2013 v. 20122013 v. 2012FX ContributionEliminationsAdj. 2013 v. 2012Adj. 2013 v. 201220132012Six Months Ended June 30Xylem Inc.1,8391,891(52)-3%(46)(2)-(100)-5%-3%Water infrastructure1,1471,193(46)-4%(46)(1)-(93)-8%-4%Applied Water726728(2)0%-(1)(4)(7)-1%-1%Quarter Ended June 30Xylem Inc.960966(6)-1%(23)(4)-(33)-3%-1%Water infrastructure596609(13)-2%(23)(2)-(38)-6%-2%Applied Water38137382%-(1)(2)51%1%Quarter Ended March 31Xylem Inc.879925(46)-5%(23)2-(67)-7%-5%Water infrastructure551584(33)-6%(23)1-(55)-9%-5%Applied Water345355(10)-3%--(2)(12)-3%-3%Note: Due to rounding the sum of segment amounts may not agree to Xylem totals.Acquisitions /DivestituresXylem Inc. Non-GAAP ReconciliationReported vs. Organic & Constant Currency Revenue($ Millions)(As Reported -GAAP)(As Adjusted -Organic)

18Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ORGANIC & CONSTANT CURRENCY ORDER GROWTHConstant Currency(A)(B)(C)(D)(E)(F) = B+C+D+E(G) = F/A(H) = (F -C) / AChange% ChangeChange% ChangeOrdersOrders2013 v. 20122013 v. 2012FX ContributionEliminationsAdj. 2013 v. 2012Adj. 2013 v. 201220132012Six Months Ended June 30Xylem Inc.1,9711,974(3)0%(51)--(54)-3%0%Water infrastructure1,2481,255(7)-1%(51)1-(57)-5%0%Applied Water75675241%-(1)-30%0%Quarter Ended June 30Xylem Inc.1,009970394%(25)(2)-121%4%Water infrastructure647617305%(25)(1)-41%5%Applied Water37837082%-(1)182%2%Quarter Ended March 31Xylem Inc.9621,004(42)-4%(26)2-(66)-7%-4%Water infrastructure601638(37)-6%(26)2-(61)-10%-5%Applied Water378382(4)-1%--(1)(5)-1%-1%Note: Due to rounding the sum of segment amounts may not agree to Xylem totals.Acquisitions /DivestituresXylem Inc. Non-GAAP ReconciliationReported vs. Organic & Constant Currency Order Growth($ Millions)(As Reported -GAAP)(As Adjusted -Organic)

19Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJUSTED DILUTED EPSQ2 2012Q2 2013As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjustedTotal Revenue966966960960Operating Income1296a1357028c98Operating Margin13.4%14.0%7.3%10.2%Interest Expense(13)(13)(14)(14)Other Non-Operating Income (Expense)(1)(1)11Income before Taxes1156121572885Provision for Income Taxes(26)(3)b(29)(11)(8)d(19)Net Income89392462066Diluted Shares186.2186.2186.1186.1Diluted EPS0.48$             0.01$              0.49$              0.25$             0.11$              0.36$            Q2 YTD 2012Q2 YTD 2013As ReprtedAjustmentsAdjustedAs ReportedAdjustentsAdjustedTotal Revenue1,8911,8911,8391,839Operating Income22811a23913640c176Operating Margin12.1%12.6%7.4%9.6%Interest Expense(27)(27)(27)(27)Other Non-Operating Income (Expense)(2)(2)(1)(1)Income before Taxes1991121010840148Provision for Income Taxes(47)(4)b(51)(21)(11)d(32)Net Income15271598729116Diluted Shares186.1186.1186.3186.3Diluted EPS0.82$             0.03$              0.85$              0.47$             0.15$              0.62$            aOne time separation costsbNet tax impact of separation costs and special tax itemscRestructuring & realignment costsdNet tax impact of restructuring & realignment costs and special tax itemsXylem Inc. Non-GAAP ReconciliationAdjusted Diluted EPS($ Millions, except per share amounts)

20Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJUSTED OPERATING INCOMEQ2Q2 YTD'13'12'13'12Total Revenue•Total Xylem9609661,8391,891•Water Infrastructure5966091,1471,193•Applied Water381373726728Operating Income•Total Xylem70129136228•Water Infrastructure419383167•Applied Water45528592Operating Margin•Total Xylem7.3%13.4%7.4%12.1%•Water Infrastructure6.9%15.2%7.2%14.0%•Applied Water11.8%13.9%11.7%12.6%Separation Costs•Total Xylem-6-11•Water Infrastructure-1-3•Applied Water---1Restructuring & Realignment Costs•Total Xylem28-40-•Water Infrastructure22-32-•Applied Water6-8-Adjusted Operating Income*•Total Xylem98135176239•Water Infrastructure6394115170•Applied Water51529393Adjusted Operating Margin*•Total Xylem10.2%14.0%9.6%12.6%•Water Infrastructure10.6%15.4%10.0%14.2%•Applied Water13.4%13.9%12.8%12.8%*Adjusted Operating Income excludes restructuring& realignment costs in 2013 and excludes non-recurring separation costs in 2012.Xylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)

21Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:FREE CASH FLOW20132012Net Cash - Operating Activities62$                     125$              Capital Expenditures(60)                      (57)                  Free Cash Flow, including separation costs2                          68                    Cash Paid for Separation Costs (incl. Capex)-                      18                    Free Cash Flow, excluding separation costs*2$                        86$                 Net Income87152Separation Costs, net of tax (incl. tax friction)-                      8Net Income, excluding separation costs*87$                     160$              Free Cash Flow Conversion2%54%* Separation costs are not excluded in 2013Xylem Inc. Non-GAAP ReconciliationNet Cash - Operating Activities vs. Free Cash Flow($ Millions)Six Months Ended

22Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:XYLEM EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Income51                      57                      108                         Interest Expense (Income), net12                      13                      25                            Depreciation25                      24                      49                            Amortization12                      13                      25                            Stock Compensation6                        6                        12                            EBITDA106                    113                    219                         Restructuring & Realignment12                      28                      40                            Adjusted EBITDA118                    141                    259                         Revenue879                    960                    1,839                      Adjusted EBITDA Margin13.4%14.7%14.1%Q1Q2Q3Q4TotalPre-Tax Income84                      115                    100                         89                            388                         Interest Expense (Income), net13                      13                      12                            13                            51                            Depreciation23                      21                      24                            26                            94                            Amortization11                      12                      12                            13                            48                            Stock Compensation5                        5                        6                              6                              22                            EBITDA136                    166                    154                         147                         603                         Separation Costs5                        6                        4                              7                              22                            Restructuring & Realignment-                    -                    5                              19                            24                            Adjusted EBITDA141                    172                    163                         173                         649                         Revenue925                    966                    931                         969                         3,791                      Adjusted EBITDA Margin15.2%17.8%17.5%17.9%17.1%Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA by Quarter($ Millions)20132012

23Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:WATER INFRASTRUCTURE EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Income42                      43                      85                            Interest Expense (Income), net-                    (1)                       (1)                            Depreciation19                      17                      36                            Amortization9                        11                      20                            Stock Compensation1                        1                        2                              EBITDA71                      71                      142                         Restructuring & Realignment10                      22                      32                            Adjusted EBITDA81                      93                      174                         Revenue551                    596                    1,147                      Adjusted EBITDA Margin14.7%15.6%15.2%Q1Q2Q3Q4TotalPre-Tax Income75                      93                      86                            88                            342                         Interest Expense (Income), net-                    -                    (1)                            -                          (1)                            Depreciation16                      15                      17                            20                            68                            Amortization10                      9                        10                            10                            39                            Stock Compensation1                        1                        3                              -                          5                              EBITDA102                    118                    115                         118                         453                         Separation Costs2                        1                        -                          1                              4                              Restructuring & Realignment-                    -                    4                              15                            19                            Adjusted EBITDA104                    119                    119                         134                         476                         Revenue584                    609                    595                         637                         2,425                      Adjusted EBITDA Margin17.8%19.5%20.0%21.0%19.6%2012Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA by QuarterWater Infrastructure($ Millions)2013

24Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:APPLIED WATER EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Income40                      45                      85                            Interest, net-                    -                         -                          Depreciation6                        5                        11                            Amortization2                        1                        3                              Stock Compensation1                        -                         1                              EBITDA49                      51                      100                         Restructuring & Realignment2                        6                        8                              Adjusted EBITDA51                      57                      108                         Revenue345                    381                    726                         Adjusted EBITDA Margin14.8%15.0%14.9%Q1Q2Q3Q4TotalPre-Tax Income40                      52                      43                            35                            170                         Interest, net-                    -                    -                          -                          -                          Depreciation6                        6                        6                              5                              23                            Amortization1                        1                        1                              2                              5                              Stock Compensation1                        -                    2                              (1)                            2                              EBITDA48                      59                      52                            41                            200                         Separation Costs1                        -                    1                              -                          2                              Restructuring & Realignment-                    -                    -                          5                              5                              Adjusted EBITDA49                      59                      53                            46                            207                         Revenue355                    373                    350                         346                         1,424                      Adjusted EBITDA Margin13.8%15.8%15.1%13.3%14.5%2012Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA by QuarterApplied Water($ Millions)2013

25Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:GUIDANCEIllustration of Mid Point Guidance2013 GuidanceFY '12FY '13As ReportedAdjustmentsAdjustedAs ProjectedAdjustmentsAdjustedTotal Revenue3,791              3,791               3,720              3,720             Segment Operating Income512                   30                      a542                    391                   70                      c461                  Segment Operating Margin13.5%14.3%10.5%12.4%Corporate Expense69                     (16)                     b53                      63                     -                     63                    Operating Income443                   46                      489                    328                   70                      398                  Operating Margin11.7%12.9%8.8%10.7%Interest Expense(55)                    (55)                     (55)                    (55)                  Other Non-Operating Income (Expense)-                    -                     (2)                      (2)                     Income before Taxes388                   46                      434                    271                   70                      341                  Provision for Income Taxes(91)                    (13)                     d(104)                  (50)                    (22)                     d(72)                  Net Income297                   33                      330                    221                   48                      269                  Diluted Shares186.2              186.2               186.4              186.4             Diluted EPS1.59$              0.18$               1.77$               1.19$              0.27$               1.45$             aOne time separation, restructuring and realignment costs incurred at the segment levelbOne time separation, restructuring and realignment costs incurred at the corporate levelcRestructuring and realignment costs incurred at the segment leveldNet tax impact of above items, plus the addition of special tax itemsXylem Inc. Non-GAAP ReconciliationGuidance($ Millions, except per share amounts)

26Q2 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJ. OPERATING INCOME AND MARGINMid Point Guidance200820092010201120122013ERevenue3,2912,8493,2023,8033,7913,720Operating Income315276388395443328Operating Margin9.6%9.7%12.1%10.4%11.7%8.8%Restructuring & Realignment413115-2470Separation Costs*---8722-Adjusted Operating Income356307403482489398Adjusted Operating Margin10.8%10.8%12.6%12.7%12.9%10.7%Stand-alone Costs---528-Adj. Operating Income, excl. Stand-alone Costs356307403487517398Adjusted Operating Margin, excl. Stand-alone Costs10.8%10.8%12.6%12.8%13.6%10.7%Xylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)* 2013 separation costs are not excluded from adjusted operating income.