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): October 29, 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 October 29, 2013, announcing the financial results for the third quarter ended September 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 October 29, 2013, summarizing Xylem Inc.’s financial results for the third quarter ended September 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 October 29, 2013.	
 	 	
99.2	  	Presentation summarizing third quarter financial results posted by Xylem Inc. on October 29, 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: October 29, 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 October 29, 2013.	
 	 	
99.2	  	Presentation summarizing third quarter financial results posted by Xylem Inc. on October 29, 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. delivers improvement in third quarter 2013 results
 
 	•	 	Third quarter 2013 adjusted net income was $92 million or $0.49 per share, up 11 percent or $0.05 from third quarter 2012; GAAP net income was $73 million or $0.39 per share	
 
 	•	 	Third quarter 2013 revenue was $965 million, up one percent organically, up 4 percent on constant currency basis	
 
 	•	 	Third quarter organic orders up 6 percent over comparable period 2012	
 
 	•	 	Company raises full year guidance to range of $1.60 to $1.65 per share	
WHITE PLAINS, N.Y., October 29, 2013 – Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported third quarter 2013 net income of $73 million, or $0.39 per share. Adjusted net income was $92 million, or $0.49 per share, excluding the impact of restructuring and realignment charges, as well as special charges. Third quarter revenue was $965 million, up $34 million or 4 percent from third quarter 2012 on a constant currency basis, reflecting strong performance in emerging markets and better than expected activity in Europe. Third quarter 2013 adjusted operating margins were 13.5 percent, up 60 basis points over last year.
“We are pleased with the pickup in sales activity, and we’re encouraged by the immediate impact of operating improvements and cost control initiatives that are reflected in third quarter bottom line growth,” said Steve Loranger, chief executive officer and president of Xylem. “Emerging markets, particularly China with its continued investment in infrastructure, are driving organic revenue growth. Higher sales in northern and central Europe more than offset continued weakness in southern Europe in the quarter.”
Loranger said the business is seeing improved order activity, with third quarter orders up 6 percent organically, including some notable wins, such as a large ozone project in China and a comprehensive pumping and control system for the Singapore Transport Authority’s Downtown Line Mass Rapid Transit project. New products introduced in the quarter include laboratory and water analytical instruments and a more energy-efficient stainless steel pump for industrial applications.
In addition to delivering strong earnings this quarter, Loranger said that the company continues to enhance shareholder value through the active repurchase of Xylem shares on the open market since the approval of a $250 million repurchase program in August.

 
“Our third quarter performance and ongoing cash generation are strong signs that we are regaining traction,” Loranger said. “They give us a solid base from which to execute our strategy and deliver improved operating performance in 2014 and beyond.”
FY 2013 Outlook
Loranger said that due to stronger third quarter performance, the impact of ongoing cost reductions, modestly improving market conditions and better visibility through year end, the company is raising its full year 2013 earnings forecast to a range of $1.60 to $1.65 per share on projected revenue of approximately $3.8 billion.
Third 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.
 
 	•	 	Third quarter 2013 revenue was $619 million, up one percent organically compared with the third quarter 2012, reflecting stronger performance in Europe and strength in emerging markets.	
 
 	•	 	Third quarter adjusted segment operating income was $96 million. Adjusted operating margin was 15.5 percent, up 50 basis points over last year, reflecting a return to organic growth, improved execution and the impact of cost reductions.	
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, industrial and agricultural applications.
 
 	•	 	Third quarter 2013 revenue was $360 million, up two percent organically compared with the third quarter 2012, reflecting strong performance in emerging markets, especially China, and strength in U.S. commercial and agricultural end markets.	
 
 	•	 	Third quarter adjusted segment operating income was $44 million. Adjusted operating margin was 12.2 percent, down 40 basis points from 2012, primarily driven by higher sales mix in emerging markets.	
Supplemental information on Xylem’s third quarter earnings and reconciliations for certain non-GAAP items are posted at 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. Xylem was named to the Dow Jones Sustainability World Index for the last two years 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	 	  	Nine Months	 	
For the periods ended September 30,	  	2013	 	 	2012	 	  	2013	 	 	2012	 	
Revenue	  	$	965	  	 	$	931	  	  	$	2,804	  	 	$	2,822	  	
Cost of revenue	  	 	581	  	 	 	557	  	  	 	1,715	  	 	 	1,702	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Gross profit	  	 	384	  	 	 	374	  	  	 	1,089	  	 	 	1,120	  	
Selling, general and administrative expenses	  	 	256	  	 	 	231	  	  	 	744	  	 	 	682	  	
Research and development expenses	  	 	24	  	 	 	24	  	  	 	78	  	 	 	80	  	
Restructuring charges	  	 	5	  	 	 	4	  	  	 	30	  	 	 	4	  	
Separation costs	  	 	1	  	 	 	4	  	  	 	3	  	 	 	15	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Operating income	  	 	98	  	 	 	111	  	  	 	234	  	 	 	339	  	
Interest expense	  	 	14	  	 	 	14	  	  	 	41	  	 	 	41	  	
Other non-operating (expense) income, net	  	 	(1	) 	 	 	3	  	  	 	(2	) 	 	 	1	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income before taxes	  	 	83	  	 	 	100	  	  	 	191	  	 	 	299	  	
Income tax expense	  	 	10	  	 	 	28	  	  	 	31	  	 	 	75	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income	  	$	73	  	 	$	72	  	  	$	160	  	 	$	224	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Earnings per share:	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Basic	  	$	0.39	  	 	$	0.39	  	  	$	0.86	  	 	$	1.20	  	
Diluted	  	$	0.39	  	 	$	0.38	  	  	$	0.86	  	 	$	1.20	  	
Weighted average number of shares:	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Basic	  	 	185.2	  	 	 	185.9	  	  	 	185.5	  	 	 	185.7	  	
Diluted	  	 	186.0	  	 	 	186.3	  	  	 	186.2	  	 	 	186.2	  	
Dividends declared per share	  	$	0.1164	  	 	$	0.1012	  	  	$	0.3492	  	 	$	0.3036	  	

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

 	  	September 30,
2013	 	 	December 31,
2012	 	
 	  	(Unaudited)	 	 	 	 	
ASSETS	  	 	 	 	 	 	 	 	
Current assets:	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	394	  	 	$	504	  	
Receivables, less allowances for discounts and doubtful accounts of $30 and $34 in 2013 and 2012, respectively	  	 	845	  	 	 	776	  	
Inventories, net	  	 	496	  	 	 	443	  	
Prepaid and other current assets	  	 	120	  	 	 	110	  	
Deferred income tax assets	  	 	44	  	 	 	41	  	
 	  	 	 	 	 	 	 	 	
Total current assets	  	 	1,899	  	 	 	1,874	  	
Property, plant and equipment, net	  	 	478	  	 	 	487	  	
Goodwill	  	 	1,704	  	 	 	1,647	  	
Other intangible assets, net	  	 	497	  	 	 	484	  	
Other non-current assets	  	 	206	  	 	 	187	  	
 	  	 	 	 	 	 	 	 	
Total assets	  	$	4,784	  	 	$	4,679	  	
 	  	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	  	 	 	 	 	 	 	 	
Current liabilities:	  	 	 	 	 	 	 	 	
Accounts payable	  	$	324	  	 	$	332	  	
Accrued and other current liabilities	  	 	475	  	 	 	443	  	
Short-term borrowings and current maturities of long-term debt	  	 	3	  	 	 	6	  	
 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	802	  	 	 	781	  	
Long-term debt	  	 	1,199	  	 	 	1,199	  	
Accrued postretirement benefits	  	 	400	  	 	 	400	  	
Deferred income tax liabilities	  	 	173	  	 	 	173	  	
Other non-current accrued liabilities	  	 	52	  	 	 	52	  	
 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	2,626	  	 	 	2,605	  	
 	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 18)	  	 	 	 	 	 	 	 	
Stockholders’ equity:	  	 	 	 	 	 	 	 	
Common Stock – par value $0.01 per share:	  	 	 	 	 	 	 	 	
Authorized 750.0 shares, issued 186.8 shares and 186.2 shares in 2013 and 2012, respectively	  	 	2	  	 	 	2	  	
Capital in excess of par value	  	 	1,729	  	 	 	1,706	  	
Retained earnings	  	 	359	  	 	 	264	  	
Treasury stock – at cost 2.3 shares and 0.5 shares in 2013 and 2012, respectively	  	 	(61	) 	 	 	(13	) 	
Accumulated other comprehensive income	  	 	129	  	 	 	115	  	
 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	2,158	  	 	 	2,074	  	
 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	4,784	  	 	$	4,679	  	

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

For the nine months September 30,	  	2013	 	 	2012	 	
Operating Activities	  	 	 	 	 	 	 	 	
Net income	  	$	160	  	 	$	224	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  	 	 	 	 	 	 	 	
Depreciation	  	 	72	  	 	 	68	  	
Amortization	  	 	38	  	 	 	35	  	
Share-based compensation	  	 	21	  	 	 	16	  	
Restructuring charges	  	 	30	  	 	 	4	  	
Other, net	  	 	11	  	 	 	1	  	
Payments for restructuring	  	 	(24	) 	 	 	—  	  	
Changes in assets and liabilities (net of acquisitions):	  	 	 	 	 	 	 	 	
Changes in receivables	  	 	(71	) 	 	 	(33	) 	
Changes in inventories	  	 	(59	) 	 	 	(33	) 	
Changes in accounts payable	  	 	4	  	 	 	(7	) 	
Other, net	  	 	(19	) 	 	 	(45	) 	
 	  	 	 	 	 	 	 	 	
Net Cash — Operating activities	  	 	163	  	 	 	230	  	
 	  	 	 	 	 	 	 	 	
Investing Activities	  	 	 	 	 	 	 	 	
Capital expenditures	  	 	(91	) 	 	 	(81	) 	
Acquisitions of businesses and assets, net of cash acquired	  	 	(81	) 	 	 	(12	) 	
Proceeds from the sale of property, plant and equipment	  	 	7	  	 	 	4	  	
 	  	 	 	 	 	 	 	 	
Net Cash — Investing activities	  	 	(165	) 	 	 	(89	) 	
 	  	 	 	 	 	 	 	 	
Financing Activities	  	 	 	 	 	 	 	 	
Issuance of short-term debt	  	 	—  	  	 	 	12	  	
Principal payments of debt and capital lease obligations	  	 	(2	) 	 	 	(6	) 	
Repurchase of common stock	  	 	(44	) 	 	 	(4	) 	
Proceeds from exercise of employee stock options	  	 	2	  	 	 	22	  	
Dividends paid	  	 	(65	) 	 	 	(56	) 	
Other, net	  	 	—  	  	 	 	(9	) 	
 	  	 	 	 	 	 	 	 	
Net Cash — Financing activities	  	 	(109	) 	 	 	(41	) 	
 	  	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	  	 	1	  	 	 	6	  	
 	  	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	(110	) 	 	 	106	  	
Cash and cash equivalents at beginning of year	  	 	504	  	 	 	318	  	
 	  	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	394	  	 	$	424	  	
 	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  	 	 	 	 	 	 	 	
Cash paid during the period for:	  	 	 	 	 	 	 	 	
Interest	  	$	37	  	 	$	38	  	
Income taxes (net of refunds received)	  	$	61	  	 	$	76	  	

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.
“Special charges” defined as costs incurred by the Company associated with the settlement of legal proceedings with Xylem Group LLC, as well as certain costs incurred for the change in chief executive officer made during the third quarter of 2013.

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	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nine Months Ended September 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	2,926	  	 	 	2,856	  	 	 	70	  	 	 	2	% 	 	 	(71	) 	 	 	1	  	 	 	—  	  	 	 	—  	  	 	 	0	% 	 	 	2	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water Infrastructure	 	 	1,865	  	 	 	1,819	  	 	 	46	  	 	 	3	% 	 	 	(71	) 	 	 	4	  	 	 	—  	  	 	 	(21	) 	 	 	-1	% 	 	 	3	% 	
Applied Water	 	 	1,111	  	 	 	1,086	  	 	 	25	  	 	 	2	% 	 	 	—  	  	 	 	(4	) 	 	 	1	  	 	 	22	  	 	 	2	% 	 	 	2	% 	
 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended September 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	955	  	 	 	882	  	 	 	73	  	 	 	8	% 	 	 	(20	) 	 	 	1	  	 	 	—  	  	 	 	54	  	 	 	6	% 	 	 	8	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water Infrastructure	 	 	617	  	 	 	564	  	 	 	53	  	 	 	9	% 	 	 	(20	) 	 	 	3	  	 	 	—  	  	 	 	36	  	 	 	6	% 	 	 	10	% 	
Applied Water	 	 	355	  	 	 	334	  	 	 	21	  	 	 	6	% 	 	 	—  	  	 	 	(3	) 	 	 	1	  	 	 	19	  	 	 	6	% 	 	 	6	% 	
 	 	 	 	 	 	 	 	 	 	 	
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	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nine Months Ended September 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	2,804	  	 	 	2,822	  	 	 	(18	) 	 	 	-1	% 	 	 	(67	) 	 	 	(2	) 	 	 	—  	  	 	 	(87	) 	 	 	-3	% 	 	 	-1	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water Infrastructure	 	 	1,766	  	 	 	1,788	  	 	 	(22	) 	 	 	-1	% 	 	 	(67	) 	 	 	2	  	 	 	1	  	 	 	(86	) 	 	 	-5	% 	 	 	-1	% 	
Applied Water	 	 	1,086	  	 	 	1,078	  	 	 	8	  	 	 	1	% 	 	 	—  	  	 	 	(5	) 	 	 	(4	) 	 	 	(1	) 	 	 	0	% 	 	 	0	% 	
 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended September 30	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	965	  	 	 	931	  	 	 	34	  	 	 	4	% 	 	 	(21	) 	 	 	—  	  	 	 	—  	  	 	 	13	  	 	 	1	% 	 	 	4	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water Infrastructure	 	 	619	  	 	 	595	  	 	 	24	  	 	 	4	% 	 	 	(21	) 	 	 	3	  	 	 	1	  	 	 	7	  	 	 	1	% 	 	 	5	% 	
Applied Water	 	 	360	  	 	 	350	  	 	 	10	  	 	 	3	% 	 	 	—  	  	 	 	(4	) 	 	 	—  	  	 	 	6	  	 	 	2	% 	 	 	2	% 	
 	 	 	 	 	 	 	 	 	 	 	
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)

 	  	Q3	 	 	Q3 YTD	 	
 	  	‘13	 	 	‘12	 	 	‘13	 	 	‘12	 	
Total Revenue	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	965	  	 	 	931	  	 	 	2,804	  	 	 	2,822	  	
• Water Infrastructure	  	 	619	  	 	 	595	  	 	 	1,766	  	 	 	1,788	  	
• Applied Water	  	 	360	  	 	 	350	  	 	 	1,086	  	 	 	1,078	  	
 	 	 	 	 	
Operating Income	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	98	  	 	 	111	  	 	 	234	  	 	 	339	  	
• Water Infrastructure	  	 	88	  	 	 	85	  	 	 	171	  	 	 	253	  	
• Applied Water	  	 	40	  	 	 	43	  	 	 	125	  	 	 	135	  	
 	 	 	 	 	
Operating Margin	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	10.2	% 	 	 	11.9	% 	 	 	8.3	% 	 	 	12.0	% 	
• Water Infrastructure	  	 	14.2	% 	 	 	14.3	% 	 	 	9.7	% 	 	 	14.1	% 	
• Applied Water	  	 	11.1	% 	 	 	12.3	% 	 	 	11.5	% 	 	 	12.5	% 	
 	 	 	 	 	
Separation Costs	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	—  	  	 	 	4	  	 	 	—  	  	 	 	15	  	
• Water Infrastructure	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	3	  	
• Applied Water	  	 	—  	  	 	 	1	  	 	 	—  	  	 	 	2	  	
 	 	 	 	 	
Special Charges	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	20	  	 	 	—  	  	 	 	20	  	 	 	—  	  	
• Water Infrastructure	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
• Applied Water	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
 	 	 	 	 	
Restructuring & Realignment Costs	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	12	  	 	 	5	  	 	 	52	  	 	 	5	  	
• Water Infrastructure	  	 	8	  	 	 	4	  	 	 	40	  	 	 	4	  	
• Applied Water	  	 	4	  	 	 	—  	  	 	 	12	  	 	 	—  	  	
 	 	 	 	 	
Adjusted Operating Income*	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	130	  	 	 	120	  	 	 	306	  	 	 	359	  	
• Water Infrastructure	  	 	96	  	 	 	89	  	 	 	211	  	 	 	260	  	
• Applied Water	  	 	44	  	 	 	44	  	 	 	137	  	 	 	137	  	
 	 	 	 	 	
Adjusted Operating Margin*	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Total Xylem	  	 	13.5	% 	 	 	12.9	% 	 	 	10.9	% 	 	 	12.7	% 	
• Water Infrastructure	  	 	15.5	% 	 	 	15.0	% 	 	 	11.9	% 	 	 	14.5	% 	
• Applied Water	  	 	12.2	% 	 	 	12.6	% 	 	 	12.6	% 	 	 	12.7	% 	
 
*	Adjusted Operating Income excludes restructuring & realignment costs and special charges in 2013 and excludes restructuring & realignment costs and non-recurring separation costs in 2012.	

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

 	  	Q3 2012	 	 	Q3 2013	 	
 	  	As Reported	 	 	Adjustments	 	 	Adjusted	 	 	As Reported	 	 	Adjustments	 	 	Adjusted	 	
Total Revenue	  	 	931	  	 	 	 	 	 	 	931	  	 	 	965	  	 	 	 	 	 	 	965	  	
Operating Income	  	 	111	  	 	 	9a	  	 	 	120	  	 	 	98	  	 	 	32c	  	 	 	130	  	
Operating Margin	  	 	11.9	% 	 	 	 	 	 	 	12.9	% 	 	 	10.2	% 	 	 	 	 	 	 	13.5	% 	
Interest Expense	  	 	(14	) 	 	 	 	 	 	 	(14	) 	 	 	(14	) 	 	 	 	 	 	 	(14	) 	
Other Non-Operating Income (Expense)	  	 	3	  	 	 	 	 	 	 	3	  	 	 	(1	) 	 	 	 	 	 	 	(1	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	100	  	 	 	9	  	 	 	109	  	 	 	83	  	 	 	32	  	 	 	115	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(28	) 	 	 	2b	  	 	 	(26	) 	 	 	(10	) 	 	 	(13	)d 	 	 	(23	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	72	  	 	 	11	  	 	 	83	  	 	 	73	  	 	 	19	  	 	 	92	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.3	  	 	 	 	 	 	 	186.3	  	 	 	186.0	  	 	 	 	 	 	 	186.0	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	0.38	  	 	$	0.06	  	 	$	0.44	  	 	$	0.39	  	 	$	0.10	  	 	$	0.49	  	
 	 	 	
 	  	Q3 YTD 2012	 	 	Q3 YTD 2013	 	
 	  	As Reported	 	 	Adjustments	 	 	Adjusted	 	 	As Reported	 	 	Adjustments	 	 	Adjusted	 	
Total Revenue	  	 	2,822	  	 	 	 	 	 	 	2,822	  	 	 	2,804	  	 	 	 	 	 	 	2,804	  	
Operating Income	  	 	339	  	 	 	20a	  	 	 	359	  	 	 	234	  	 	 	72c	  	 	 	306	  	
Operating Margin	  	 	12.0	% 	 	 	 	 	 	 	12.7	% 	 	 	8.3	% 	 	 	 	 	 	 	10.9	% 	
Interest Expense	  	 	(41	) 	 	 	 	 	 	 	(41	) 	 	 	(41	) 	 	 	 	 	 	 	(41	) 	
Other Non-Operating Income (Expense)	  	 	1	  	 	 	 	 	 	 	1	  	 	 	(2	) 	 	 	 	 	 	 	(2	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	299	  	 	 	20	  	 	 	319	  	 	 	191	  	 	 	72	  	 	 	263	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(75	) 	 	 	(2	)b 	 	 	(77	) 	 	 	(31	) 	 	 	(24	)d 	 	 	(55	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	224	  	 	 	18	  	 	 	242	  	 	 	160	  	 	 	48	  	 	 	208	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.2	  	 	 	 	 	 	 	186.2	  	 	 	186.2	  	 	 	 	 	 	 	186.2	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	1.20	  	 	$	0.09	  	 	$	1.29	  	 	$	0.86	  	 	$	0.26	  	 	$	1.12	  	
 
a	One-time separation costs and restructuring & realignment costs	
b	Net tax impact of separation costs, restructuring & realignment costs and special tax items	
c	Restructuring & realignment costs and special charges	
d	Net tax impact of restructuring & realignment costs, special charges and special tax items	

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

 	  	Nine Months Ended	 	
 	  	2013	 	 	2012	 	
Net Cash - Operating Activities	  	$	163	  	 	$	230	  	
Capital Expenditures	  	 	(91	) 	 	 	(81	) 	
 	  	 	 	 	 	 	 	 	
Free Cash Flow, including separation costs	  	 	72	  	 	 	149	  	
Cash Paid for Separation Costs (incl. Capex)	  	 	—  	  	 	 	22	  	
 	  	 	 	 	 	 	 	 	
Free Cash Flow, excluding separation costs*	  	$	72	  	 	$	171	  	
 	  	 	 	 	 	 	 	 	
Net Income	  	 	160	  	 	 	224	  	
Separation Costs, net of tax (incl. tax friction)	  	 	—  	  	 	 	11	  	
 	  	 	 	 	 	 	 	 	
Net Income, excluding separation costs*	  	$	160	  	 	$	235	  	
 	  	 	 	 	 	 	 	 	
Free Cash Flow Conversion	  	 	45	% 	 	 	73	% 	

*	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	  	 	 	3,770	  	 	 	 	 	 	 	3,770	  	
Segment Operating Income	  	 	512	  	 	 	30a	  	 	 	542	  	 	 	425	  	 	 	73c	  	 	 	498	  	
Segment Operating Margin	  	 	13.5	% 	 	 	 	 	 	 	14.3	% 	 	 	11.3	% 	 	 	 	 	 	 	13.2	% 	
Corporate Expense	  	 	69	  	 	 	(16	)b 	 	 	53	  	 	 	78	  	 	 	(20	)d 	 	 	58	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	  	 	443	  	 	 	46	  	 	 	489	  	 	 	347	  	 	 	93	  	 	 	440	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Margin	  	 	11.7	% 	 	 	 	 	 	 	12.9	% 	 	 	9.2	% 	 	 	 	 	 	 	11.7	% 	
Interest Expense	  	 	(55	) 	 	 	 	 	 	 	(55	) 	 	 	(55	) 	 	 	 	 	 	 	(55	) 	
Other Non-Operating Income (Expense)	  	 	—  	  	 	 	 	 	 	 	—  	  	 	 	(3	) 	 	 	 	 	 	 	(3	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	388	  	 	 	46	  	 	 	434	  	 	 	289	  	 	 	93	  	 	 	382	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(91	) 	 	 	(13	)e 	 	 	(104	) 	 	 	(48	) 	 	 	(32	)e 	 	 	(80	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	297	  	 	 	33	  	 	 	330	  	 	 	241	  	 	 	61	  	 	 	302	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.2	  	 	 	 	 	 	 	186.2	  	 	 	186.0	  	 	 	 	 	 	 	186.0	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	1.59	  	 	$	0.18	  	 	$	1.77	  	 	$	1.30	  	 	$	0.33	  	 	$	1.63	  	
 
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	Special charges incurred at the corporate level	
e	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	  	 	 	3,770	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	  	 	315	  	 	 	276	  	 	 	388	  	 	 	395	  	 	 	443	  	 	 	347	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Margin	  	 	9.6	% 	 	 	9.7	% 	 	 	12.1	% 	 	 	10.4	% 	 	 	11.7	% 	 	 	9.2	% 	
Restructuring, Realignment & Special Charges	  	 	41	  	 	 	31	  	 	 	15	  	 	 	—  	  	 	 	24	  	 	 	93	  	
Separation Costs*	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	87	  	 	 	22	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Income	  	 	356	  	 	 	307	  	 	 	403	  	 	 	482	  	 	 	489	  	 	 	440	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Margin	  	 	10.8	% 	 	 	10.8	% 	 	 	12.6	% 	 	 	12.7	% 	 	 	12.9	% 	 	 	11.7	% 	
Standalone Costs	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	5	  	 	 	28	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adj. Operating Income, excl. Standalone Costs	  	 	356	  	 	 	307	  	 	 	403	  	 	 	487	  	 	 	517	  	 	 	440	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Margin, excl. Standalone Costs	  	 	10.8	% 	 	 	10.8	% 	 	 	12.6	% 	 	 	12.8	% 	 	 	13.6	% 	 	 	11.7	% 	
 
*	2013 separation costs are not excluded from adjusted operating income.	

XYLEM INC.Q3 2013 EARNINGS RELEASEOCTOBER 29, 2013Exhibit 99.2

XYLEM PROPRIETARY / CONFIDENTIALFORWARD-LOOKING STATEMENTSThisdocumentcontainsinformationthatmayconstitute“forward-lookingstatements.”Forward-lookingstatementsbytheirnatureaddressmattersthatare,todifferentdegrees,uncertain.Generally,thewords“anticipate,”“estimate,”“expect,”“project,”“intend,”“plan,”“believe,”“target”andsimilarexpressionsidentifyforward-lookingstatements,whichgenerallyarenothistoricalinnature.However,theabsenceofthesewordsorsimilarexpressionsdoesnotmeanthatastatementisnotforward-looking.Theseforward-lookingstatementsinclude,butarenotlimitedto,statementsabouttheseparationofXylemInc.(the“Company”)fromITTCorporationin2011,capitalizationoftheCompany,futurestrategicplansandotherstatementsthatdescribetheCompany’sbusinessstrategy,outlook,objectives,plans,intentionsorgoals,andanydiscussionoffutureoperatingorfinancialperformance.Allstatementsthataddressoperatingperformance,eventsordevelopmentsthatweexpectoranticipatewilloccurinthefuture—includingstatementsrelatingtoorders,revenues,operatingmarginsandearningspersharegrowth,andstatementsexpressinggeneralviewsaboutfutureoperatingresults—areforward-lookingstatements.Cautionshouldbetakennottoplaceunduerelianceonanysuchforward-lookingstatementsbecausetheyinvolverisks,uncertaintiesandotherfactorsthatcouldcauseactualresultstodiffermateriallyfromthoseexpressedorimpliedin,orreasonablyinferredfrom,suchstatements.TheCompanyundertakesnoobligationtopubliclyupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise,exceptasrequiredbylaw.Inaddition,forward-lookingstatementsaresubjecttocertainrisksanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromtheCompany’shistoricalexperienceandourpresentexpectationsorprojections.Theserisksanduncertaintiesinclude,butarenotlimitedto,thosesetforthinItem1AofourAnnualReportonForm10-K,andthosedescribedfromtimetotimeinsubsequentreportsfiledwiththeSecuritiesandExchangeCommission.2Q3 2013 EARNINGS RELEASE

XYLEM PROPRIETARY / CONFIDENTIAL3Q3’13 BUSINESS UPDATEQ3 2013 EARNINGS RELEASEGAINING TRACTION & BUILDING MOMENTUMStrong 3rd Quarter PerformanceReturntoOrganicRevenue*Growth(+1%);OrganicOrders*(+6%)…Solid BacklogOperatingMargin*of13.5%(Up60Bps),WithStrongIncrementalPerformanceEPS*$0.49Up11%…RaisingFullYearGuidanceEnhancingShareholderReturns…DeployingCapitalintoShareRepurchasesLooking Ahead –Next StepsImprovingEmergingMarketsConditions,U.S.Stable&EuropeBetterThanExpectedPrioritizingInitiatives&DrivingProductivityFocusedonExecution&AccountabilitytoProvideforBetterVisibilityIdentifyingActionstoDriveStronger2014PerformanceCommittedtoLong-TermStrategy&FinancialTargets* See appendix for non-GAAP reconciliations

XYLEM PROPRIETARY / CONFIDENTIAL4Q3’13 XYLEM PERFORMANCE+4%(Dollars, In Millions)(Dollars, In Millions)* See appendix for non-GAAP reconciliationsSTRONG OPERATING PERFORMANCESTRONG OPERATING PERFORMANCEQ3 GROWTHQ3 GROWTHOrganic+1%Acquisitions+2%ConstantCurrency+4%+Double-Digit Growthin Eastern Europe &Asia Pac (China UpOver 40%)Q3'12Op Margin*Volume,Mix, & OtherCostReductions &PriceMaterial,Labor,& OHInflationFX/AcqQ3'13Op Margin*12.9%13.5%0.0%2.1%0.5%3.2%Q3'12Q3'13931965Q3'12Q3'13120130+8%Q3 2013 EARNINGS RELEASEOPERATING INCOME*OPERATING INCOME*REVENUEREVENUEORGANIC PERFORMANCEBy End MarketBy GeographyIndustrialEuropePublic UtilityU.S.CommercialEmerging MarketsResidentialAgriculturePrice  -0.3%FX-0.1%Vol/Other+0.4%Euro HQ-0.2%Pension-0.2%(Note Rounding Impacts Sum Total)

XYLEM PROPRIETARY / CONFIDENTIAL5Q3’13 XYLEM PERFORMANCEQ3 2013 EARNINGS RELEASEEPS** See appendix for non-GAAP reconciliationsSTRONG PERFORMANCE ON MODEST REVENUE GROWTH+Organic Revenue Growth+Strong Incremental MarginsDriven by Productivity & StrictCost Management+Restructuring Savings $0.03+European Realignment $0.01–Unfavorable Mix/Price $0.02–Pension/1x Separation Headwind $0.01+11%AdjustedQ3'12 EPSAdjustedQ3'13 EPS$0.44$0.49

XYLEM PROPRIETARY / CONFIDENTIAL6Q3’13 WATER INFRASTRUCTURE PERFORMANCEQ3 2013 EARNINGS RELEASEOPERATING INCOME*+4%(Dollars, In Millions)(Dollars, In Millions)REVENUE* See appendix for non-GAAP reconciliationsORGANIC GROWTH & COST ACTIONS DRIVING IMPROVED PERFORMANCE(Organic Performance)Transport+2%;Treatment-2%;TestFlat+EuropeUpLowSingleDigits+TransportNorth/CentralStrength…SouthWeak–Treatment…PYBiogas&UKProjectsCompare–U.S.Down1%–Treatment…ProjectDelays,FundingConstraints=TransportFlat…DewateringUpMSD(Sandy,Fracking),OffsetbyCapexDecline+EmergingMarketsUpHighSingleDigits+AsiaPac(ChinaUpOver30%)+EasternEurope(CapexProjects,RussiaShareGains)Q3 GROWTHOrganic+1%Acquisitions+4%ConstantCurrency+5%Q3'12Q3'13595619Q3'12Q3'138996+8%

XYLEM PROPRIETARY / CONFIDENTIAL7Q3’13 APPLIED WATER PERFORMANCEQ3 2013 EARNINGS RELEASEOPERATING INCOME*+3%(Dollars, In Millions)(Dollars, In Millions)REVENUE* See appendix for non-GAAP reconciliationsSTRONGEMERGINGMARKETSPERFORMANCE…MIXDRIVESMARGINDECLINE(Organic Performance)Building Svcs +1%; Ind’l Water +2%; Irrigation +2%+Emerging Markets Up Double-Digits+China Exceptionally Strong …Industrial WaterProjects (Offshore O&G Fire Pump Projects) &Commercial Building Market Share Gains+U.S. Commercial (Timing/Promotions) & Agriculture(Favorable Weather Conditions)–U.S. Residential Slowing …Southern Europe Weak–Continued U.S Industrial WeaknessQ3 GROWTHOrganic+2%Acquisition0%ConstantCurrency+2%Q3'12Q3'13350Q3'12Q3'134444Flat360Vol/Other-0.8%Euro HQ-0.3%Pension-0.3%

XYLEM PROPRIETARY / CONFIDENTIAL8Q3 2013 EARNINGS RELEASEXYLEM FINANCIAL POSITION* See Appendix for Non-GAAP ReconciliationsSeptember 30, 2013Cash394Debt1,202Net Debt808Shareholders’Equity2,158Net Capital2,966Net Debt to Net Capital27%CAPITAL SUMMARY•Strong Cash Position•Enhancing Shareholder Returns …Deployed $107M in Dividends &Repurchases vs. $58M in YTD‘12•Free Cash Flow Decline Driven byLower Income, HigherRestructuring Payments, &Unfavorable Working Capital(Dollars, In Millions)CashDec. 2012OperatingActivities& OtherDividends& ShareRepurchasesAcquisitions& CapexCashSept. 201350439410717216969325SEPT.2013U.S.InternationalQ3'12YTDQ3'13YTD17172CASH DRIVERSCASH DRIVERSFREE CASH FLOW *FREE CASH FLOW *CASH BALANCECASH BALANCE(GEOGRAPHIC)(GEOGRAPHIC)(Dollars, In Millions)(Dollars, In Millions)(Dollars, In Millions)FCF%73%45%

XYLEM PROPRIETARY / CONFIDENTIAL9Q3 2013 EARNINGS RELEASEXYLEM GUIDANCE UPDATEFOCUSED EXECUTION DRIVING PERFORMANCE …RAISING FULL YEAR EXPECTATIONS* See appendix for non-GAAP reconciliationsFY REVENUEFY EPS*3.7B3.8B3.8B$1.45$1.63$1.63•Internal Growth Initiatives & Improved Market ConditionsDrive Top Line Revision-Europe Stabilizing,  U.S. Stable, Emerging MarketsContinue to Grow-Solid Backlog of $752M …$470M Shippable Up 2%•Focused Execution & Disciplined Cost Management DrivesSolid Operating Performance-On Track to Deliver Full Year Restructuring Savings;Incremental Actions IdentifiedMid -PointMid -PointPreviousGuidanceCurrentOutlookPreviousGuidanceCurrentOutlookImplied 4Q Revenue $965M; EPS* $0.51•European Realignment Delivers Benefits AsPreviously Expected•

XYLEM PROPRIETARY / CONFIDENTIAL10Q3 2013 EARNINGS RELEASE2013 Full YearFinancial OutlookGrowth2013E vs. 2012Xylem Consolidated~$3,770~ -1%~ -2%2%-1%Water Infrastructure~$2,405~ -1%~ -3%3%-1%Applied Water~$1,430FlatFlatFlatFlatSegment Margin *13.1% to 13.3%-120 bps to -100 bpsOperating Margin *11.5% to 11.8%-140 bps to -110 bpsEPS * $1.60 to $1.65$1.63 Mid-PointFree Cash FlowConversion~90%Restructuring Pmts, Realignment Capex, & 1x SpinCapexGuidance Assumptions:Operating Tax Rate~21%4Q Tax Rate of 21%Share Count~186.04Q Assumption ~185.0Restructuring &Realignment Costs *~$65 to $80‘13 Net Cost Savings $14 to $15; Realignment Cost$25-$302013 FINANCIAL GUIDANCE SUMMARY* See appendix for non-GAAP reconciliations(Dollars In Millions, Except per Share Data)OrganicAcquisitionFXTotal Growth(Mid-Point)Revenue

XYLEM PROPRIETARY / CONFIDENTIAL11Q3 2013 EARNINGS RELEASEXYLEM 3Q EARNINGS SUMMARYStrong 3    Quarter Performance …Raising 2013 GuidanceEnhancing Shareholder Returns …Deploying Capital into ShareRepurchasesPrioritizing Initiatives & Driving ProductivityFocused on Execution & Accountability to Provide for Better VisibilityIdentifying Actions to Drive Stronger 2014 PerformanceCommitted to Long-Term Strategy & Financial Targetsrd

XYLEM PROPRIETARY / CONFIDENTIAL12Q3 2013 EARNINGS RELEASENON-GAAP MEASURESManagementviewskeyperformanceindicatorsincludingrevenue,grossmargins,segmentoperatingincomeandmargins,ordersgrowth,free cashflow,workingcapital,andbacklog,amongothers.Inaddition,weconsidercertainmeasurestobeusefultomanagementandinvestorsevaluatingouroperatingperformancefortheperiodspresented,andprovideatoolforevaluatingourongoingoperations,liquidityandmanagementofassets.Thisinformationcanassistinvestorsinassessingourfinancialperformanceandmeasuresourabilitytogeneratecapitalfordeploymentamongcompetingstrategicalternativesandinitiatives.Thesemetrics,however,arenotmeasuresoffinancialperformanceunderGAAPandshouldnotbeconsideredasubstituteforrevenue,operatingincome,netincome,earningspershare(basicanddiluted)ornetcashfromoperationsasdeterminedinaccordancewithGAAP.Weconsiderthefollowingnon-GAAPmeasures,whichmaynotbecomparabletosimilarlytitledmeasuresreportedbyothercompanies,tobekeyperformanceindicators:“Organicrevenue”and“Organicorders”definedasrevenueandorders,respectively,excludingtheimpactofforeigncurrencyfluctuations,intercompanytransactions,andcontributionsfromacquisitionsanddivestitures.Divestituresincludesalesofportionsofourbusinessthatdidnotmeetthecriteriaforclassificationasadiscontinuedoperationorinsignificantportionsofourbusinessthatwedidnotclassifyasadiscontinuedoperation.Theperiod-over-periodchangeresultingfromforeigncurrencyfluctuationsassumesnochangeinexchangeratesfromthepriorperiod.“Constantcurrency”definedasfinancialresultsadjustedforcurrencytranslationimpactsbytranslatingcurrentperiodandpriorperiodactivityusingthesamecurrencyconversionrate.ThisapproachisusedforcountrieswhosefunctionalcurrencyisnottheU.S.dollar.“EBITDA”definedasearningsbeforeinterest,taxes,depreciation,amortizationexpense,andshare-basedcompensation.“AdjustedEBITDA”reflectstheadjustmenttoEBITDAtoexcludefornon-recurringseparationcostsassociatedwiththeXylemspin-offfromITTCorporationaswellasnon-recurringrestructuringandrealignmentcosts.“AdjustedOperatingIncome,”“AdjustedSegmentOperatingIncome,”and“Adjusted  EPS”definedasoperatingincomeandearningspershare,adjustedtoexcludenon-recurringseparationcostsassociatedwiththeXylemspin-offfromITT Corporation,non-recurringrestructuringandrealignmentcostsandtax-relatedspecialitems.“NormalizedEPS”definedasadjustedearningspershare,aswellasadjustmentstoreflecttheincrementalcurrentperiodamountofinterestexpenseandstandalonecostsinthepriorcomparableperiod.“FreeCashFlow”definedasnetcashfromoperatingactivities,asreportedintheStatementofCashFlow,lesscapitalexpendituresaswellasadjustmentsforothersignificantitemsthatimpactcurrentresultswhichmanagementbelievesarenotrelatedtoourongoingoperationsandperformance.Ourdefinitionoffreecashflowsdoesnotconsidernon-discretionarycashpayments,suchasdebt.“Realignmentcosts”definedasnon-recurringcostsnotincludedinrestructuringcoststhatareincurredaspartofactionstakentorepositionourbusiness,includingitemssuchasprofessionalfees,relocation,travelandothercosts.“Specialcharges”definedascostsincurredbytheCompanyassociatedwiththesettlementoflegalproceedingswithXylemGroupLLC,aswellascertaincostsincurredforthechangeinchiefexecutiveofficermadeduringthethirdquarterof2013.

XYLEM PROPRIETARY / CONFIDENTIAL13Q3 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. 201220132012Nine Months Ended September 30Xylem Inc.2,8042,822(18)-1%(67)(2)-(87)-3%-1%Water Infrastructure1,7661,788(22)-1%(67)21(86)-5%-1%Applied Water1,0861,07881%-(5)(4)(1)0%0%Quarter Ended September 30Xylem Inc.965931344%(21)--131%4%Water Infrastructure619595244%(21)3171%5%Applied Water360350103%-(4)-62%2%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 /DivestituresReported vs. Organic & Constant Currency Revenue($ Millions)(As Reported -GAAP)(As Adjusted -Organic)

XYLEM PROPRIETARY / CONFIDENTIAL14Q3 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. 201220132012Nine Months Ended September 30Xylem Inc.2,9262,856702%(71)1--0%2%Water Infrastructure1,8651,819463%(71)4-(21)-1%3%Applied Water1,1111,086252%-(4)1222%2%Quarter Ended September 30Xylem Inc.955882738%(20)1-546%8%Water Infrastructure617564539%(20)3-366%10%Applied Water355334216%-(3)1196%6%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 /DivestituresReported vs. Organic & Constant Currency Order Growth($ Millions)(As Reported -GAAP)(As Adjusted -Organic)

XYLEM PROPRIETARY / CONFIDENTIAL15Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJUSTED DILUTED EPSQ3 2012Q3 2013As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjustedTotal Revenue931931965965Operating Income1119a1209832c130Operating Margin11.9%12.9%10.2%13.5%Interest Expense(14)(14)(14)(14)Other Non-Operating Income (Expense)33(1)(1)Income before Taxes10091098332115Provision for Income Taxes(28)2b(26)(10)(13)d(23)Net Income721183731992Diluted Shares186.3186.3186.0186.0Diluted EPS0.38$             0.06$              0.44$              0.39$             0.10$              0.49$            Q3 YTD 2012Q3 YTD 2013As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjustedTotal Revenue2,8222,8222,8042,804Operating Income33920a35923472c306Operating Margin12.0%12.7%8.3%10.9%Interest Expense(41)(41)(41)(41)Other Non-Operating Income (Expense)11(2)(2)Income before Taxes2992031919172263Provision for Income Taxes(75)(2)b(77)(31)(24)d(55)Net Income2241824216048208Diluted Shares186.2186.2186.2186.2Diluted EPS1.20$             0.09$              1.29$              0.86$             0.26$              1.12$            aOne-time separation costs  and restructuring & realignment costsbNet tax impact of separation costs, restructuring & realignment costs and special tax itemscRestructuring & realignment costs and special chargesdNet tax impact of restructuring & realignment costs, special charges and special tax items($ Millions, except per share amounts)

XYLEM PROPRIETARY / CONFIDENTIAL16Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJ. OPERATING INCOME AND MARGINQ3Q3 YTD'13'12'13'12Total Revenue• Total Xylem965          931       2,804        2,822       • Water Infrastructure619          595       1,766        1,788       • Applied Water360          350       1,086        1,078       Operating Income• Total Xylem98            111       234           339          • Water Infrastructure88            85          171           253          • Applied Water40            43          125           135          Operating Margin• Total Xylem10.2%11.9%8.3%12.0%• Water Infrastructure14.2%14.3%9.7%14.1%• Applied Water11.1%12.3%11.5%12.5%Separation Costs• Total Xylem-           4            -            15             • Water Infrastructure-           -        -            3               • Applied Water-           1            -            2               Special Charges• Total Xylem20            -        20             -           • Water Infrastructure-           -        -            -           • Applied Water-           -        -            -           Restructuring & Realignment Costs• Total Xylem12            5            52             5               • Water Infrastructure8               4            40             4               • Applied Water4               -        12             -           Adjusted Operating Income*• Total Xylem130          120       306           359          • Water Infrastructure96            89          211           260          • Applied Water44            44          137           137          Adjusted Operating Margin*• Total Xylem13.5%12.9%10.9%12.7%• Water Infrastructure15.5%15.0%11.9%14.5%• Applied Water12.2%12.6%12.6%12.7%($ Millions)*Adjusted Operating Income excludes restructuring & realignment costs and special charges in 2013 andexcludes restructuring & realignment costs and non-recurring separation costs in 2012.

XYLEM PROPRIETARY / CONFIDENTIAL17Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:FREE CASH FLOW20132012Net Cash - Operating Activities163$                   230$              Capital Expenditures(91)                      (81)                  Free Cash Flow, including separation costs72                       149                 Cash Paid for Separation Costs (incl. Capex)-                      22                    Free Cash Flow, excluding separation costs*72$                     171$              Net Income160224Separation Costs, net of tax (incl. tax friction)-                      11Net Income, excluding separation costs*160$                   235$              Free Cash Flow Conversion45%73%* Separation costs are not excluded in 2013Net Cash - Operating Activities vs. Free Cash Flow($ Millions)Nine Months Ended

XYLEM PROPRIETARY / CONFIDENTIAL18Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:XYLEM EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Income515783191Interest Expense (Income), net12131439Depreciation25242372Amortization12131338Stock Compensation66921EBITDA106113142361Restructuring & Realignment12281252Special Charges--2020Adjusted EBITDA118141174433Revenue8799609652,804Adjusted EBITDA Margin13.4%14.7%18.0%15.4%Q1Q2Q3Q4TotalPre-Tax Income8411510089388Interest Expense (Income), net1313121351Depreciation2321242694Amortization1112121348Stock Compensation556622EBITDA136166154147603Separation Costs564722Restructuring & Realignment--51924Adjusted EBITDA141172163173649Revenue9259669319693,791Adjusted EBITDA Margin15.2%17.8%17.5%17.9%17.1%2012EBITDA and Adjusted EBITDA by Quarter($ Millions)2013

XYLEM PROPRIETARY / CONFIDENTIAL19Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:WATER INFRASTRUCTURE EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Income424387172Interest Expense (Income), net-(1)-(1)Depreciation19171652Amortization9111131Stock Compensation1113EBITDA7171115257Restructuring & Realignment1022840Adjusted EBITDA8193123297Revenue5515966191,766Adjusted EBITDA Margin14.7%15.6%19.9%16.8%Q1Q2Q3Q4TotalPre-Tax Income75938688342Interest Expense (Income), net--(1)-(1)Depreciation1615172068Amortization109101039Stock Compensation113-5EBITDA102118115118453Separation Costs21-14Restructuring & Realignment--41519Adjusted EBITDA104119119134476Revenue5846095956372,425Adjusted EBITDA Margin17.8%19.5%20.0%21.0%19.6%20122013($ Millions)

XYLEM PROPRIETARY / CONFIDENTIAL20Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:APPLIED WATER EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Income40                      45                      40                           125                         Interest, net-                    -                         -                          -                          Depreciation6                        5                        6                             17                           Amortization2                        1                        1                             4                             Stock Compensation1                        -                         1                             2                             EBITDA49                      51                      48                           148                         Restructuring & Realignment2                        6                        4                             12                           Adjusted EBITDA51                      57                      52                           160                         Revenue345                    381                    360                         1,086                      Adjusted EBITDA Margin14.8%15.0%14.4%14.7%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%20122013($ Millions)

XYLEM PROPRIETARY / CONFIDENTIAL21Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:GUIDANCEIllustration of Mid Point Guidance2013 GuidanceFY '12FY '13As ReportedAdjustmentsAdjustedAs ProjectedAdjustmentsAdjustedTotal Revenue3,791               3,791                 3,770               3,770             Segment Operating Income512                   30                      a542                    425                   73                      c498                  Segment Operating Margin13.5%14.3%11.3%13.2%Corporate Expense69                     (16)                     b53                      78                     (20)                     d58                    Operating Income443                   46                      489                    347                   93                      440                  Operating Margin11.7%12.9%9.2%11.7%Interest Expense(55)                    (55)                     (55)                    (55)                   Other Non-Operating Income (Expense)-                    -                     (3)                      (3)                     Income before Taxes388                   46                      434                    289                   93                      382                  Provision for Income Taxes(91)                    (13)                     e(104)                   (48)                    (32)                     e(80)                   Net Income297                   33                      330                    241                   61                      302                  Diluted Shares186.2              186.2               186.0              186.0             Diluted EPS1.59$              0.18$               1.77$               1.30$              0.33$               1.63$             Guidance($ Millions, except per share amounts)abcdeRestructuring and realignment costs incurred at the segment level Special charges incurred at the corporate levelNet tax impact of above items, plus the addition of special tax items One-time separation, restructuring and realignment costs incurred at the segment levelOne-time separation, restructuring and realignment costs incurred at the corporate level 

XYLEM PROPRIETARY / CONFIDENTIAL22Q3 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJUSTED OPERATING INCOMEMid Point Guidance200820092010201120122013ERevenue3,291               2,849               3,202                      3,803                      3,791                    3,770                    Operating Income315                    276                    388                         395                         443                        347                        Operating Margin9.6%9.7%12.1%10.4%11.7%9.2%Restructuring, Realignment & Special Charges41                      31                      15                           -                          24                          93                          Separation Costs*-                    -                    -                          87                           22                          -                        Adjusted Operating Income356                    307                    403                         482                         489                        440                        Adjusted Operating Margin10.8%10.8%12.6%12.7%12.9%11.7%Standalone Costs-                    -                    -                          5                             28                          -                        Adj. Operating Income, excl. Standalone Costs356                    307                    403                         487                         517                        440                        Adjusted Operating Margin, excl. Standalone Costs10.8%10.8%12.6%12.8%13.6%11.7%* 2013 separation costs are not excluded from adjusted operating income.($ Millions)