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): May 14, 2014

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.)	

1 International Drive
Rye Brook, New York	 	10573	
(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 7.01 Regulation FD Disclosure
Xylem Inc. (the “Company”) will present at the Oppenheimer 9th Annual Industrial Growth Conference on May 14, 2014 in New York. The presentation slides will be posted in the Investors section of the Company’s website ( www.xyleminc.com ) and are attached hereto as Exhibit 99.1.
The information furnished pursuant to this Item 7.01 and Exhibit 99.1 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, 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	 	Presentation posted by Xylem Inc. on May 14, 2014 (furnished pursuant to Item 7.01).	

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: May 14, 2014	  	 	  	By:	  	/s/ Michael T. Speetzen	
 	  	 	  	 	  	Michael T. Speetzen	
 	  	 	  	 	  	Senior Vice President and Chief Financial Officer	

EXHIBIT INDEX

Exhibit
No.	 	Description	
 	 	
99.1	 	Presentation posted by Xylem Inc. on May 14, 2014 (furnished pursuant to Item 7.01).	

XYLEM INC.INVESTOR PRESENTATIONOPPENHEIMER9THANNUALINDUSTRIALGROWTHCONFERENCEExhibit 99.1

XYLEM PROPRIETARY / CONFIDENTIALFORWARD-LOOKING STATEMENTS2This 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 generallyare not 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 thatdescribe the Company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of futureoperating or financial performance. All statements that address operating performance, events or developments that weexpect or anticipate will occur in the future — including statements relating to orders, revenues, operating margins andearnings per share growth, and statements expressing general views about future operating results — are forward-lookingstatements. 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 materiallyfrom 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 of our Annual Report on Form 10-K, and those described from time to time insubsequent reports filed with the Securities and Exchange Commission.

INVESTMENT HIGHLIGHTS

XYLEM PROPRIETARY / CONFIDENTIAL4•Focused Pure Water Play•Leading Market Positions•Fortress Brands & World ClassDistribution•Diverse Geographic & EndMarket Exposure•Large Installed Base DrivesRecurring Revenue•Strong Financial Position &Cash Flow Generation$3.8BWHY SHOULD YOU INVEST IN XYLEM?STRONG FOUNDATION & FUNDAMENTALS WITH OPPORTUNITY TO OUTPERFORM

XYLEM PROPRIETARY / CONFIDENTIALSPECIALIZED BREADTH IN THE WATER CYCLE5•Global Water Industry: $500B•Public Utilities•Design & Build Firms•Equipment & Service Providers•Industry Consists of Two Sectors•Water & Waste WaterInfrastructure•To Serve End Users•Xylem’s SAM: $35B•Technology Intensive & HighValue Equipment•Critical Applications•Knowledge-Based Services•Long-Term Growth Driven byMacro Trends & Growing WaterChallengesUNIQUELY POSITIONED TO SOLVE THE WORLD’S GROWING WATER CHALLENGES

XYLEM PROPRIETARY / CONFIDENTIALJOURNEY FROM A PORTFOLIO OFBUSINESSES TO A SOLUTION PORTFOLIO6MULTITRODE** Zenon is a registered trademark of GEEVOLUTION TO A LEADING GLOBAL WATER TECHNOLGY PROVIDER

GLOBAL BUSINESS OVERVIEW

XYLEM PROPRIETARY / CONFIDENTIALGLOBAL MARKET PRESENCE8REVENUE BY GEOGRAPHY(2013 Revenue)GLOBAL SCALE & LOCAL PRESENCE PROVIDE A COMPETITIVE ADVANTAGE•360+ Global Locations•50 Emerging Market Sales & Service Centers•11 Emerging Market Production Facilities•Reaching Customers in More Than 150 CountriesA Growing Emerging MarketPresence …Today ~20%United StatesEuropeAsia PacRest of World38%36%12%14%

XYLEM PROPRIETARY / CONFIDENTIALDIVERSE CUSTOMER BASE9REVENUE BY END MARKET(2013 Revenue)UNDERSTANDING & ANTICIPATING OUR CUSTOMERS NEEDSIndustrial45%Public Utility34%Commercial11%Residential7%Agriculture3%

XYLEM PROPRIETARY / CONFIDENTIALFOCUSED ON KEY GROWTH END MARKETS10LEADING POSITIONS & ATTRACTIVE LONG-TERM GROWTH OPPORTUNITIES•Strong Brands•Diverse Market ApplicationsINDUSTRIAL ($1.7B)PUBLIC UTILITY ($1.3B)COMMERCIAL ($400M)(2013 Revenue)•Market Leading Positions•Large Installed Base•LT Growth Opportunities•Market Leading Positions•Large Installed Base•LT Growth Opportunities•US & Europe Pent-UpDemand•Emerging MarketInfrastructureDevelopment•Steady Growth fromMaintenance & RepairBusiness•New Product Launches•Demand for EnergyEfficient Solutions•Regulatory Standards•Emerging Market KeyAccount Strategy•Light Industrial•Energy•Mining•Construction•Food & Beverage•Marine•Underserved Markets•Adjacent Mkt Expansion•LTGrowthOpportunities

XYLEM PROPRIETARY / CONFIDENTIALSERVING CRITICAL NEEDS11GLOBAL LEADER IN WATER APPLICATION SOLUTIONSREVENUE BY APPLICATION(2013 Revenue)Water Infrastructure Includes Transport, Treatment and Test Applications…Which AreIntegrated into the Most Critical Water Infrastructure Systems for Both Public Utility andLarge Industrial CustomersApplied Water Includes Building Services, Industrial Water and Irrigation Applications…Which Are Key Elements Systems for Commercial, Residential, Industrial and AgCustomersTransport47%Treatment8%Test8%Building Svcs18%Industrial Water16%Irrigation3%

XYLEM PROPRIETARY / CONFIDENTIALHISTORICAL XYLEM PERFORMANCEOM%:   10.8%        10.8%       12.6%12.7%       12.9%        11.8%OPPORTUNITYTOACCELERATEGROWTHANDIMPROVEOPERATINGPERFORMANCE$M$M12REVENUEOPERATING INCOME & MARGIN** See appendix for non-GAAP reconciliationsGM%:   34.7%        36.4%       37.9%38.4%       39.6%        39.1%$MGROSS PROFIT & MARGIN2008200920102011201220133,2912,8493,2023,8033,7913,8372008200920102011201220131,1411,0371,2141,4611,5021,499200820092010201120122013356307403482489451‘08-’13 Revenue up 17%; 3% CAGR•New Product Development•Emerging Market Growth•Analytics and Dewatering Platforms100 Bps Operating Margin Expansion•Pricing Improvements; Lean & Global Sourcing•Deployed ~$100M in Restructuring•Includes $33M Stand-Alone Costs•2013 impacted by lower Public Utility CAPEXspending and weak European market conditions-13%            12%          19%1%Organic*:                            -9%              3%            7%-1%Growth:                         0%0%

XYLEM PROPRIETARY / CONFIDENTIALHISTORICAL XYLEM PERFORMANCE* See appendix for non-GAAP reconciliationsMargin %:   12.9%        13.6%       15.7%16.7%       17.1%        16.2%$MEBITDA*Reinvest %:  1.2x1.2x1.5x1.4x     1.2x1.3%Ratio$MCAPEX$MR&D% of :  1.9%2.2%2.3%2.6%      2.8%        2.7%RevenueSTRONG CASH GENERATION FUNDS CONTINUED GROWTH INVESTMENT200820092010201120122013425387504637649622200820092010201120122013646374100106104200820092010201120122013676294126112126Strong Operating Cash Flow GenerationGenerate, Reinvest, Grow•EBITDA Up 47% Since 2008; 8% CAGR•Better Price Execution•Increase in Portfolio Profitability•Improved Productivity•Increasing R&D Investment•Capex Reinvestment Ratio >113

XYLEM PROPRIETARY / CONFIDENTIALSTRONG FINANCIAL POSITIONBALANCED CAPITAL DEPLOYMENT TO ENHANCE SHAREHOLDER RETURNS14* See appendix for non-GAAP reconciliationsCAPITAL SUMMARYMarch 31, 2014Cash466Debt1,243Net Debt777Shareholders’Equity2,229Net Capital3,006Net Debt to Net Capital26%Liquidity and Cash Management•Access to Revolver and Commercial Paperfor Short-Term Liquidity Requirements•No Debt Maturities Until 2016 & 2021Pension & OPEB•Status: 103% (Funded Plans); 67% (Overall)CAPITAL DEPLOYMENT STRATEGYReturn Capital to ShareholdersInvest in Organic Growth InitiativesInorganic Growth Investments•Differentiated Product Development•Maintenance & Investment Capex•Dividends•Share Repurchase Programs•Acquire Bolt-on and Close-to-CoreCompanies•Strategic & Financial Filters Drive DisciplinedApproach•Proven Track Record

REVIEW OF1Q EARNINGS PERFORMANCE& 2014 OUTLOOKNote: Forward Looking information presented on slides17 & 18 were as of April 29, 2014. Please review theForward Looking Statements on slide 2, and note that theCompany undertakes no obligation to publicly update orrevise any forward-looking statements, whether as aresult of new information, future events or otherwise,except as required by law.

XYLEM PROPRIETARY / CONFIDENTIAL16BUSINESS UPDATESOLID 1ST QUARTER PERFORMANCE ... ON TRACK TO DELIVER 2014* See appendix for non-GAAP reconciliationsHighlights1stQuarterFinancialSummaryStrongfinishtothe1Quarter…MarchperformanceoffsetslowstartEmerging Markets off to fast start, Europe slowly recoveringVolume & cost actions drive significant Op Margin expansion & Earnings growthOperating improvements on track to deliver full year savingsOrders of $993M up 3% …Ending Backlog $793M, 2014 Shippable Backlog up 6%Revenue of $906M up 3%, with growth in both segmentsOperatingMargin*of10.4%, up 150 bps; strong incremental margin performanceEarningsPerShare*$0.34 up 26%Free Cash Flow* usage $3M …Seasonality and Working Capital investmentst

XYLEM PROPRIETARY / CONFIDENTIAL172014 GROWTH PROFILE (As of April 29, 2014)IndustrialPublic Utility•Emerging Market infrastructureinvestment; Slow Capex recovery inU.S./Europe•Opex stable in US & Europe(34% of ’13 Revenue)Commercial•Emerging Market growth & new productlaunches•Weak U.S. institutional bldg mkt; Europeslow to recover(11% of ’13 Revenue)Agriculture•Tough year-over-year comparisonfollowing strong 2012 & 2013performance(3% of ’13 Revenue)Residential•Cold winter subsides in U.S.; U.S. housingrecovery moderates; Europe stabilizes•Tough 2Q comp (2Q’13 U.S. +18% vs. PY)(7% of ’13 Revenue)Up LowSingle DigitUp LowSingle DigitUp LowSingle DigitUp LowSingle DigitFlat to UpLow SingleDigitXylem 2014Organic Growth•Improving global Capex environment•Driving market share gains•Mining headwinds continue(45% of ’13 Revenue)STABLE MARKET CONDITIONS …EXPECTATIONS REMAIN UNCHANGED

XYLEM PROPRIETARY / CONFIDENTIAL18(Dollars, In Millions, except EPS)REVENUE* See appendix for non-GAAP reconciliationsOPERATING INCOME*EPS*2014 XYLEM OUTLOOK(As of April 29, 2014)$3,900 to $3,980$490 to $525$1.85 to $2.00OpMarginFREE CASH FLOW*Higher Income, Working CapImprovement, and Lower CapexSpendROIC~11%DIVIDENDS/SHAREREPURCHASES~225Targeting 100 Bps ImprovementExpected 10% Annual DividendIncrease, ~$130M for ShareRepurchases3,8374511.6719815410.0%20132014201320142013201420132014E201320142013201411.8%12.6% to 13.2%~310-345COST FOCUS EXPECTED TO DRIVE SOLID EARNINGS GROWTH …MARKET RECOVERY FUELS UPSIDE

CLOSING SUMMARY

XYLEM PROPRIETARY / CONFIDENTIAL20HOW WILL XYLEM IMPROVE PERFORMANCE?The Xylem Management System(“XMS”) defines how we createvalue. It integrates our key strategicoperating processes to drivesuperior growth and operationalexcellence, efficient capitaldeployment, and strong,consistent leadershipTOP PRIORITIESFOCUSED ON EXECUTION & DRIVING ACCOUNTABILITYAccelerate Revenue GrowthImprove Operating Cost PositionEmbed Continuous Improvement ToolsOptimize Integrated Front End•Invest & Implement Global CRM Tool•Differentiated Product InnovationEmerging Market Expansion••Expand Global Sourcing CapabilitiesManage General & Administrative CostsDrive Lean Six Sigma More Consistently,Deeper and Across the Entire Organization•••Rebalance Portfolio & Product Investments•REIGNITE “XMS”

XYLEM PROPRIETARY / CONFIDENTIAL21

APPENDIX

XYLEM PROPRIETARY / CONFIDENTIALWATER INFRASTRUCTUREMarket Size: $20B2013 Revenues: $2.5B2013 Op Margin*: 13.1%APPLIED WATERMarket Size: $15B2013 Revenues: $1.4B2013 Op Margin*: 12.7%23SEGMENT OVERVIEW64%36%Segment Split(3rdParty Revenue)UNIQUE PORTFOLIO PROVIDES FORINNOVATIVE SOLUTIONSBROAD PRODUCT PORTFOLIO BACKEDBY APPLICATION EXPERTISE* See appendix for non-GAAP reconciliations•World’s Largest Waste Water Pump&  Dewatering Services Provider•Broad Portfolio of Filtration,Biological and DisinfectionTechnologies•Industry-Leading Water &Environment Analytics Platform•Leading Global Provider of a BroadRange of Energy-Efficient Solutionswith a Large & Diverse Customer Base•U.S. Leader in Building ServicesEquipment & Solutions•U.S. Leader in Industrial WaterTechnologies

XYLEM PROPRIETARY / CONFIDENTIALHerford, Germany;Brown Deer, WI;Zelienople, PA24WATER INFRASTRUCTURESEGMENT OVERVIEWMarket Size:2013 Revenues:Key Products& Services:2013 Revenuesby Geography:Key Facilities:Key Brands:$11B$1,812M$5B$329M$4B$298MWater & Waste Water PumpsDewatering  (Sales & Rentals)Aftermarket Parts & ServicesBiologicalU.V. and Ozone DisinfectionFiltrationAnalytical Instrumentation,Doppler and Level Measurement, Water Quality and EnvironmentalMonitoring SystemsEmmaboda, Sweden; Baroda, India; Shenyang, China;Bridgeport, NJYellow Springs, OH;Weilheim, Germany;Bergen, NorwayU.S.EuropeAsiaPacificOther26%U.S.EuropeAsiaPacificOtherU.S.EuropeAsiaPacificOther10%17%47%30%41%13%16%27%43%21%9%TRANSPORTTREATMENTTEST

XYLEM PROPRIETARY / CONFIDENTIALWATER INFRASTRUCTUREGrowth:-10%17%           25%0%           1%Organic*:-4%2%7%            0%          -2%OM%: 13.0%        14.7%14.9%       14.9%       15.1%13.1%‘08-’13 Revenue up 35%; 6% CAGR•Resilient Through the Downturn•Growth Driven by Acquisitions,Emerging Markets & ProductLaunches•Public Utility CAPEX Slowdown•European CrisisRecent Market Conditions NegativelyImpacted Operating Margins•Operating Productivity FundsIncremental Strategic Investments•Decline in Dewatering related toFracking along with weak PublicUtility CAPEX and European marketconditions impacted 2013$M$M25REVENUEOPERATING INCOME & MARGIN*HIGHLIGHTS* See appendix for non-GAAP reconciliations2008200920102011201220131,8241,6511,9302,4162,4252,457200820092010201120122013237242288359365323LEVERAGE & RECENT COST REDUCTION ACTIONS ACCELRATE LONG-TERM GROWTH

XYLEM PROPRIETARY / CONFIDENTIAL26APPLIED WATER SYSTEMSSEGMENT OVERVIEWMarket Size:2013 Revenues:Key Products& Services:2013 Revenuesby Geography:Key Facilities:Key Brands:$9B$696M$4B$600MHVAC Pumps, Valves & HeatExchangers, Drives & Controls,Waste Water Pumps, PressureBoosters, Fire ProtectionAuburn, NY; Buffalo, NY; Cegled, Hungary; Chihuahua, Mexico; Dallas, TX; Hoddesdon, UK; Montecchio, Italy;Morton Grove, IL; Nanjing, China; Stockerau, Austria; Strzelin, Poland; Wolverhampton, UKPumps & Pumping SystemsHeat Exchangers, Drives & ControlsMembrane FiltrationFire Protection$2B$102MGroundwater & Surface PumpsPackaged Systems, Drives &ControlsBUILDING SERVICESINDUSTRIAL WATERIRRIGATION58%16%10%16%U.S.EuropeAsia PacificOther45%37%9%9%U.S.EuropeAsia PacificOther52%33%1%14%U.S.EuropeAsia PacificOther

APPLIED WATERGrowth:            -18%6%9%            -1%            1%Organic*:OM%:11.8%        9.9%12.1%       12.0%        12.4%      12.7%STRONG OPERATING PERFORMANCE DESPITE CHALLENGED MARKETS‘08-’13 Revenue Down 5%•Residential & Commercial BuildingDecline•Growth Driven By New ProductLaunches–Energy-Efficient Solutions–Emerging Markets PenetrationStrong Operating Performance•Margin Expansion Driven by Customer& Operational Excellence Initiatives•Continued to Fund Future GrowthInvestments$M$M27REVENUEOPERATING INCOME & MARGIN** See appendix for non-GAAP reconciliationsHIGHLIGHTS2008200920102011201220131801241611731771832008200920102011201220131,5271,2541,3271,4441,4241,444-15%6%7%1%0%

XYLEM PROPRIETARY / CONFIDENTIALACQUISITION SCORECARDCompletedOn TrackNot Achieved28Laing$302009Nova$3842010Godwin$5852010OI$252010YSI$3102011Through2012MJK$132012$292012PIMS$572013MultiTrode$262013AcquisitionInvested$MYearCompletedStrategicFitGrossMarginAccretiveRisk Adj.Cost ofCapitalMid-TeensROICCashReturn7-9 YearsEPSAccretiveAfter Yr 1Added~200 BpsAdded~$0.45IRR >Heartland

292014 FINANCIAL GUIDANCE SUMMARYQ1 2014 EARNINGS RELEASE* Excluding Restructuring & Realignment costs, and special tax items2014 Full YearGrowthRevenueTotal GrowthOrganicFX/AcquisitionXylem Consolidated$3,900 to $3,9802% to 4%1% to 3%1%Water Infrastructure$2,500 to $2,5402% to 4%2% to 3%1%Applied Water$1,470to $1,4902% to 3%1% to 2%1%Segment Margin *14.1% to 14.6%+90 bps to +140 bpsOperatingMargin *12.6%to 13.2%+80 bps to+140 bpsEPS * $1.85 to $2.00Up 11% to 20%Free Cash Flow Conversion~100%GuidanceAssumptions:OperatingTax Rate *~21%Unchanged from 2013ShareCount~185MQ2: 185.5; ~$130M for Share Repurchases in 2014Restructuring &Realignment Costs~$40 to $50‘14Rest. Savings ~$15M; Realignment Cost $10-$15FinancialOutlook2014E vs. 2013SOLID START TO 2014 …AFFIRMING FULL YEAR GUIDANCE(Dollars In Millions, Except per Share Data)

XYLEM PROPRIETARY / CONFIDENTIAL30NON-GAAP MEASURES“Organic revenue" and "Organic orders”defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations,“Constant currency”defined as financial results adjusted for currency translation impacts by translating current period and prior period activity usingthe same currency conversion rate.  This approach is used for countries whose functional currency is not the U.S. dollar.“EBITDA”definedasearningsbeforeinterest,taxes,depreciation,amortizationexpense,andshare-basedcompensation.“AdjustedEBITDA”reflectsthe adjustment to EBITDA to exclude non-recurring restructuring and realignment costs.“AdjustedOperatingIncome","AdjustedSegmentOperatingIncome",and“AdjustedEPS”definedasoperatingincomeandearningspershare,“Free Cash Flow”defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well asManagement views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cashflow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluating ouroperating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets.  Thisinformation can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competingstrategic alternatives and initiatives.  These metrics, however, are not measures of financial performance under GAAP and should not be considered asubstitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operations as determined in accordancewith 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: “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.adjusted to exclude non-recurring restructuring and realignment costs and tax-related special items.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.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.

XYLEM PROPRIETARY / CONFIDENTIAL31Constant Currency(A)(B)(C)(D)(E)(F) = B+C+D+E(G) = F/A(H) = (F - C) / AChange% ChangeChange% ChangeRevenueRevenueCY v. PYCY v. PYFX ContributionEliminationsAdj. CY v. PYAdj. CY v. PYCurrent YearPrior YearYear Ended December 31, 2013Xylem Inc.3,837               3,791               46                      1%(82)                    (3)                       -                          (39)                          -1%1%Water infrastructure2,457               2,425               32                      1%(82)                    4                        -                          (46)                          -2%1%Applied Water1,444               1,424               20                      1%-                    (9)                       (6)                            5                              0%0%Year Ended December 31, 2012Xylem Inc.3,791               3,803               (12)                    0%(94)                    108                    -                          2                              0%3%Water infrastructure2,425               2,416               9                        0%(94)                    80                      (1)                            (6)                            0%4%Applied Water1,424               1,444               (20)                    -1%-                    32                      (3)                            9                              1%1%Year Ended December 31, 2011Xylem Inc.3,803               3,202               601                    19%(264)                  (111)                  -                          226                         7%15%Water Infrastructure2,416               1,930               486                    25%(264)                  (87)                    2                              137                         7%21%Applied Water1,444               1,327               117                    9%-                    (28)                    (1)                            88                           7%7%Year Ended December 31, 2010Xylem Inc.3,202               2,849               353                    12%(263)                  6                        -                          96                           3%13%Water infrastructure1,930               1,651               279                    17%(247)                  (8)                       -                          24                           1%16%Applied Water1,327               1,254               73                      6%(16)                    15                      -                          72                           6%7%Year Ended December 31, 2009Xylem Inc.2,849               3,291               (442)                  -13%(7)                       158                    -                          (291)                       -9%-9%Water infrastructure1,651               1,824               (173)                  -9%-                    109                    (1)                            (65)                          -4%-4%Applied Water1,254               1,527               (273)                  -18%(7)                       53                      -                          (227)                       -15%-14%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)

XYLEM PROPRIETARY / CONFIDENTIAL32200820092010201120122013Revenue3,2912,8493,2023,8033,7913,837Operating Income315276388395443363Operating Margin9.6%9.7%12.1%10.4%11.7%9.5%Restructuring & Realignment413115-2464Separation Costs*---8722-Special Charges-----24Adjusted Operating Income356307403482489451Adjusted Operating Margin10.8%10.8%12.6%12.7%12.9%11.8%Standalone Costs---528-Adj. Operating Income, excl. Standalone Costs356307403487517451Adjusted Operating Margin, excl. Standalone Costs10.8%10.8%12.6%12.8%13.6%11.8%Xylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)* 2013 separation costs are not excluded from adjusted operating income. 

XYLEM PROPRIETARY / CONFIDENTIAL33201320122011201020092008Total Revenue• Total Xylem3,837 3,791    3,803 3,202      2,849      3,291      • Water Infrastructure2,457 2,425    2,416 1,930      1,651      1,824      • Applied Water1,444 1,424    1,444 1,327      1,254      1,527      Operating Income• Total Xylem363     443        395     388         276315• Water Infrastructure271     342        343     276         227220• Applied Water167     170        160     158         109162Operating Margin• Total Xylem9.5%11.7%10.4%12.1%9.7%9.6%• Water Infrastructure11.0%14.1%14.2%14.3%13.7%12.1%• Applied Water11.6%11.9%11.1%11.9%8.7%10.6%Separation Costs• Total Xylem-     22          87       -          -          -          • Water Infrastructure-     4            16       -          -          -          • Applied Water-     2            13       -          -          -          Special Charges• Total Xylem24       -      -          -          -          • Water Infrastructure4         -      -          -          -          • Applied Water-     -      -          -          -          Restructuring & Realignment Costs• Total Xylem64       24          -      153141• Water Infrastructure48       19          -      121517• Applied Water16       5            -      31518Adjusted Operating Income*• Total Xylem451     489        482     403         307         356         • Water Infrastructure323     365        359     288         242         237         • Applied Water183     177        173     161         124         180         Adjusted Operating Margin*• Total Xylem11.8%12.9%12.7%12.6%10.8%10.8%• Water Infrastructure13.1%15.1%14.9%14.9%14.7%13.0%• Applied Water12.7%12.4%12.0%12.1%9.9%11.8%*Adjusted Operating Income excludes non-recurring separation, restructuring & realignment costsXylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)

XYLEM PROPRIETARY / CONFIDENTIAL34201320122011201020092008Net Cash - Operating Activities324                     396                     449                 395             370               408              Capital Expenditures(126)                    (112)                    (126)               (94)              (62)                 (67)               Free Cash Flow, including separation costs198                     284                     323                 301             308               341              Cash Paid for Separation Costs (incl. Capex)-                      28                        65                    -              -                 -               Free Cash Flow, excluding separation costs*198                     312                     388                 301             308               341              Net Income228297279329263224Separation Costs, net of tax (incl. tax friction)-                      1672000Net Income, excluding separation costs*228313351329263224Free Cash Flow Conversion87%100%111%91%117%152%* Separation costs are not excluded in 2013Year EndedXylem Inc. Non-GAAP ReconciliationNet Cash - Operating Activities vs. Free Cash Flow($ Millions)

XYLEM PROPRIETARY / CONFIDENTIAL35200820092010201120122013Net Income224263329279297228Separation Costs, Net of Tax*---7216-Restructuring & Realignment, Net of Tax282211-1746Special Charges, Net of Tax-----23Adjusted Net Income before Special Tax Items252285340351330297Special Tax Items-(61)(43)7-14Adjusted Net Income252224297358330311Diluted Earnings per Share$1.22$1.42$1.78$1.50$1.59$1.22Separation Costs per Share*$0.00$0.00$0.00$0.39$0.09$0.00Restructuring & Realignment Costs per Share$0.14$0.11$0.06$0.00$0.09$0.25Special Charges per Share-----$0.13Adjusted Diluted EPS before Special Tax Items$1.36$1.53$1.84$1.89$1.77$1.60Special Tax Items per Share$0.00($0.32)($0.23)$0.04$0.00$0.07Adjusted Diluted EPS$1.36$1.21$1.61$1.93$1.77$1.67* Separation costs are not excluded in 2013Xylem Inc. Non-GAAP ReconciliationAdjusted Diluted EPS($ Millions, except per share amounts)

XYLEM PROPRIETARY / CONFIDENTIAL36200820092010201120122013Pre-Tax Income312                    277                    388                         383                         388                         298                         Interest Expense (Income), net-                         -                         -                          17                            51                            52                            Depreciation and Amortization72                      79                      101                         137                         142                         149                         Stock Compensation-                    -                         -                          13                            22                            27                            EBITDA384                    356                    489                         550                         603                         526                         Separation Costs*-                    -                    -                          87                            22                            64                            Restructuring & Realignment41                      31                      15                            -                          24                            32                            Adjusted EBITDA425                    387                    504                         637                         649                         622                         Revenue3,291               2,849               3,202                      3,803                      3,791                      3,837                      Adjusted EBITDA Margin12.9%13.6%15.7%16.7%17.1%16.2%* Separation costs are not excluded in 2013Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA($ Millions)

XYLEM PROPRIETARY / CONFIDENTIAL37Constant Currency(A)(B)(C)(D)(E)(F) = B+C+D+E(G) = F/A(H) = (F -C) / AChange% ChangeChange% ChangeRevenueRevenue2014 v. 20132014 v. 2013FX ContributionEliminationsAdj. 2014 v. 2013Adj. 2014 v. 201320142013Quarter Ended March 31Xylem Inc.906879273%(5)4-263%4%Water infrastructure568551173%(5)71204%5%Applied Water355345103%-(3)(1)62%2%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)Constant Currency(A)(B)(C)(D)(E)(F) = B+C+D+E(G) = F/A(H) = (F -C) / AChange% ChangeChange% ChangeOrdersOrders2014 v. 20132014 v. 2013FX ContributionEliminationsAdj. 2014 v. 2013Adj. 2014 v. 201320142013Quarter Ended March 31Xylem Inc.993962313%(7)3-273%4%Water infrastructure619601183%(7)62193%4%Applied Water394378164%-(4)(3)92%2%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)

XYLEM PROPRIETARY / CONFIDENTIAL38Q120142013Total Revenue•Total Xylem906879•Water Infrastructure568551•Applied Water355345Operating Income•Total Xylem7666•Water Infrastructure4642•Applied Water4140Operating Margin•Total Xylem8.4%7.5%•Water Infrastructure8.1%7.6%•Applied Water11.5%11.6%Restructuring & Realignment Costs•Total Xylem1812•Water Infrastructure1210•Applied Water62Adjusted Operating Income*•Total Xylem9478•Water Infrastructure5852•Applied Water4742Adjusted Operating Margin*•Total Xylem10.4%8.9%•Water Infrastructure10.2%9.4%•Applied Water13.2%12.2%Xylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)*Adjusted Operating Income excludes restructuring & realignment costs.

XYLEM PROPRIETARY / CONFIDENTIAL39Q1 2013Q1 2014As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjustedTotal Revenue879879906906Operating Income6612a787618a94Operating Margin7.5%8.9%8.4%10.4%Interest Expense(13)(13)(14)(14)Other Non-Operating Income (Expense)(2)(2)(1)(1)Income before Taxes511263611879Provision for Income Taxes(10)(3)b(13)(12)(4)b(16)Net Income41950491463Diluted Shares186.4186.4185.8185.8Diluted EPS0.22$             0.05$              0.27$              0.27$             0.07$              0.34$            aRestructuring & realignment costsbNet tax impact of restructuring & realignment costs and special tax itemsXylem Inc. Non-GAAP ReconciliationAdjusted Diluted EPS($ Millions, except per share amounts)****************************

XYLEM PROPRIETARY / CONFIDENTIAL4020142013Net Cash - Operating Activities22$                     20$                 Capital Expenditures(25)                      (30)                  Free Cash Flow(3)$                      (10)$               Net Income49$                     41$                 Free Cash Flow Conversion-6%-24%Xylem Inc. Non-GAAP ReconciliationNet Cash - Operating Activities vs. Free Cash Flow($ Millions)Three Months Ended**************************************************************************************************************************************************************************************************************

XYLEM PROPRIETARY / CONFIDENTIAL41NYSE: XYLPhil De Sousa, Investor Relations Officer(914) 323-5930Dawn Powell, Investor Relations Coordinator(914) 323-5931http://investors.xyleminc.com********************************************************************************************************************