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): April 30, 2013

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

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

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

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

 

Item 2.02	Results of Operations and Financial Condition	
Attached hereto as Exhibit 99.1 and incorporated herein by reference is the news release issued by Xylem Inc. on April 30, 2013, announcing the financial results for the first quarter ended March 31, 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 April 30, 2013, summarizing Xylem Inc.’s financial results for the first quarter ended March 31, 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 April 30, 2013.	
 	 	
99.2	  	Presentation summarizing first quarter financial results posted by Xylem Inc. on April 30, 2013.	

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

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

EXHIBIT INDEX

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

Exhibit 99.1

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

Contacts:        	  	Media	  	Investors	
 	  	Tom Glover +1-914-323-5891	  	Phil DeSousa +1-914-323-5930	
 	  	tom.glover@xyleminc.com	  	phil.desousa@xyleminc.com	
Xylem Inc. reports first quarter 2013 results, affirms full-year guidance
 
 	•	 	First quarter 2013 adjusted net income was $50 million or $0.27 per share, down $0.09 from first quarter 2012; GAAP net income was $41 million or $0.22 per share, down $0.12	
 
 	•	 	First quarter 2013 revenue was $879 million, down $46 million from first quarter 2012	
 
 	•	 	Xylem maintains FY 2013 EPS of $1.79-$1.89 on revenue midpoint of $3.9 billion	
WHITE PLAINS, N.Y., April 30, 2013 – Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported first quarter 2013 net income of $41 million, or $0.22 per share. Adjusted net income was $50 million, or $0.27 per share, excluding the impact of special items that include restructuring and realignment charges, and special tax items. First quarter revenue was $879 million, down $46 million from the first quarter 2012, reflective of on-going European economic challenges, U.S. industrial weakness and lower shipments for treatment projects. First quarter 2013 adjusted operating margins were down 230 basis points, down 320 basis points as reported, resulting from lower volume, acquisition costs and continued investments in growth initiatives.
“We were pleased to deliver earnings in line with our expectations despite weaker revenue for the quarter than we had anticipated,” said Gretchen McClain, president and chief executive officer of Xylem Inc. “We’re addressing continued market challenges in several key regions of the world, especially Europe, and are taking assertive cost actions to reposition ourselves as a more competitive and efficient organization, and to create more value for our customers. We continue to pursue attractive acquisitions that will help to strengthen our portfolio. During the first quarter, we completed two acquisitions — PIMS, which bolsters our attractive service business; and MultiTrode, which enhances our global water and wastewater monitoring and control offering.”
“Exciting new product launches are winning in the market place, leading to share gains in key market segments,” McClain said. “We were proud to launch several innovative products this quarter, including new dewatering solutions from our Godwin and Flygt brands, as well as new analytical lab instruments from our YSI and OI

 
Analytical brands. As we look ahead to the remainder of 2013, we are focused on introducing additional new products, and continuing to expand geographically. Through these and other customer-focused solutions, we will continue to position Xylem as a global leader in the water industry.”
Xylem affirms full year guidance, forecasting full year 2013 revenue growth of 3 to 4 percent to approximately $3.9 billion. Full year 2013 adjusted net income is forecast to grow 1 to 7 percent to $333 to $352 million, for adjusted earnings per share of $1.79 to $1.89 per share. The company anticipates that restructuring and realignment costs will range from $60 to $70 million for the year.
First 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.
 
 	•	 	First quarter 2013 revenue was $551 million, down 6 percent compared with the first quarter 2012, reflecting U.S. industrial weakness, European economic challenges and decreased treatment shipments.	
 
 	•	 	First quarter adjusted segment operating income was $52 million. Adjusted operating margin was 9.4 percent, reflecting lower volumes, acquisition impacts and continued investments.	
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, industrial and agricultural applications.
 
 	•	 	First quarter 2013 revenue was $345 million, down 3 percent compared with the first quarter 2012, reflecting weak industrial demand and European economic challenges, offset by strength in U.S. residential and agricultural end markets.	
 
 	•	 	First quarter adjusted segment operating income was $42 million, up 2 percent versus the same period in 2012. Adjusted operating margin was 12.2 percent, reflecting strong operational performance.	
Supplemental information on Xylem’s first 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 12,700 employees worldwide. In 2012, Xylem was named to the Dow Jones Sustainability World Index for advancing sustainable business practices and solutions worldwide.

 
The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all — that which occurs in nature. For more information, please visit us at www.xyleminc.com .
Forward-Looking Statements
This document contains information that may constitute “forward-looking statements.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
These forward-looking statements include, but are not limited to, statements about the separation of Xylem Inc. (the “Company”) from ITT Corporation in 2011, capitalization of the Company, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to orders, sales, operating margins and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements.
Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those set forth in Item 1A in our Annual Report on Form 10-K, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission.
###

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

For the three months ended March 31,	  	2013	 	 	2012	 	
Revenue	  	$	879	  	 	$	925	  	
Cost of revenue	  	 	545	  	 	 	562	  	
 	  	 	 	 	 	 	 	 	
Gross profit	  	 	334	  	 	 	363	  	
Selling, general and administrative expenses	  	 	236	  	 	 	231	  	
Research and development expenses	  	 	26	  	 	 	28	  	
Restructuring charges	  	 	5	  	 	 	—  	  	
Separation costs	  	 	1	  	 	 	5	  	
 	  	 	 	 	 	 	 	 	
Operating income	  	 	66	  	 	 	99	  	
Interest expense	  	 	13	  	 	 	14	  	
Other non-operating (expense), net	  	 	(2	) 	 	 	(1	) 	
 	  	 	 	 	 	 	 	 	
Income before taxes	  	 	51	  	 	 	84	  	
Income tax expense	  	 	10	  	 	 	21	  	
 	  	 	 	 	 	 	 	 	
Net income	  	$	41	  	 	$	63	  	
 	  	 	 	 	 	 	 	 	
Earnings per share:	  	 	 	 	 	 	 	 	
Basic	  	$	0.22	  	 	$	0.34	  	
Diluted	  	$	0.22	  	 	$	0.34	  	
Weighted average number of shares:	  	 	 	 	 	 	 	 	
Basic	  	 	185.8	  	 	 	185.4	  	
Diluted	  	 	186.4	  	 	 	185.9	  	
Dividends declared per share	  	$	0.1164	  	 	$	0.1012	  	

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

 	  	March 31,
2013	 	 	December 31,
2012	 	
 	  	(Unaudited)	 	 	 	 	
ASSETS	  	 	 	 	 	 	 	 	
Current assets:	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	375	  	 	$	504	  	
Receivables, less allowances for discounts and doubtful accounts of $27 and $34 in 2013 and 2012, respectively	  	 	767	  	 	 	776	  	
Inventories, net	  	 	461	  	 	 	443	  	
Prepaid and other current assets	  	 	111	  	 	 	110	  	
Deferred income tax assets	  	 	43	  	 	 	41	  	
 	  	 	 	 	 	 	 	 	
Total current assets	  	 	1,757	  	 	 	1,874	  	
Property, plant and equipment, net	  	 	474	  	 	 	487	  	
Goodwill	  	 	1,669	  	 	 	1,647	  	
Other intangible assets, net	  	 	504	  	 	 	484	  	
Other non-current assets	  	 	185	  	 	 	187	  	
 	  	 	 	 	 	 	 	 	
Total assets	  	$	4,589	  	 	$	4,679	  	
 	  	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	  	 	 	 	 	 	 	 	
Current liabilities:	  	 	 	 	 	 	 	 	
Accounts payable	  	$	309	  	 	$	332	  	
Accrued and other current liabilities	  	 	406	  	 	 	443	  	
Short-term borrowings and current maturities of long-term debt	  	 	6	  	 	 	6	  	
 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	721	  	 	 	781	  	
Long-term debt	  	 	1,199	  	 	 	1,199	  	
Accrued postretirement benefits	  	 	397	  	 	 	400	  	
Deferred income tax liabilities	  	 	179	  	 	 	173	  	
Other non-current accrued liabilities	  	 	53	  	 	 	52	  	
 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	2,549	  	 	 	2,605	  	
 	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 17)	  	 	 	 	 	 	 	 	
Stockholders’ equity:	  	 	 	 	 	 	 	 	
Common Stock — authorized 750.0 shares, par value $0.01 per share:	  	 	 	 	 	 	 	 	
Issued 186.3 shares and 186.2 shares in 2013 and 2012, respectively	  	 	2	  	 	 	2	  	
Capital in excess of par value	  	 	1,711	  	 	 	1,706	  	
Retained earnings	  	 	283	  	 	 	264	  	
Treasury stock – at cost 1.0 shares and 0.5 shares in 2013 and 2012, respectively	  	 	(28	) 	 	 	(13	) 	
Accumulated other comprehensive income	  	 	72	  	 	 	115	  	
 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	2,040	  	 	 	2,074	  	
 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	4,589	  	 	$	4,679	  	

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

For the three months ended March 31,	  	2013	 	 	2012	 	
Operating Activities	  	 	 	 	 	 	 	 	
Net income	  	$	41	  	 	$	63	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  	 	 	 	 	 	 	 	
Depreciation	  	 	25	  	 	 	23	  	
Amortization	  	 	12	  	 	 	11	  	
Share-based compensation	  	 	6	  	 	 	5	  	
Restructuring charges	  	 	5	  	 	 	—  	  	
Payments for restructuring	  	 	(4	) 	 	 	—  	  	
Changes in assets and liabilities (net of acquisitions):	  	 	 	 	 	 	 	 	
Changes in receivables	  	 	1	  	 	 	7	  	
Changes in inventories	  	 	(29	) 	 	 	(31	) 	
Changes in accounts payable	  	 	(8	) 	 	 	14	  	
Other, net	  	 	(29	) 	 	 	(31	) 	
 	  	 	 	 	 	 	 	 	
Net Cash — Operating activities	  	 	20	  	 	 	61	  	
 	  	 	 	 	 	 	 	 	
Investing Activities	  	 	 	 	 	 	 	 	
Capital expenditures	  	 	(30	) 	 	 	(31	) 	
Acquisitions, net of cash acquired	  	 	(78	) 	 	 	—  	  	
Proceeds from the sale of property, plant and equipment	  	 	3	  	 	 	2	  	
 	  	 	 	 	 	 	 	 	
Net Cash — Investing activities	  	 	(105	) 	 	 	(29	) 	
 	  	 	 	 	 	 	 	 	
Financing Activities	  	 	 	 	 	 	 	 	
Repurchase of common stock	  	 	(15	) 	 	 	(1	) 	
Proceeds from exercise of employee stock options	  	 	—  	  	 	 	16	  	
Dividends paid	  	 	(22	) 	 	 	(19	) 	
Other, net	  	 	1	  	 	 	(6	) 	
 	  	 	 	 	 	 	 	 	
Net Cash — Financing activities	  	 	(36	) 	 	 	(10	) 	
 	  	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	  	 	(8	) 	 	 	7	  	
 	  	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	(129	) 	 	 	29	  	
Cash and cash equivalents at beginning of year	  	 	504	  	 	 	318	  	
 	  	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	375	  	 	$	347	  	
 	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  	 	 	 	 	 	 	 	
Cash paid during the period for:	  	 	 	 	 	 	 	 	
Interest	  	$	11	  	 	$	11	  	
Income taxes (net of refunds received)	  	$	27	  	 	$	18	  	

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 (not excluded for 2013) 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 (not excluded for 2013), non-recurring restructuring and realignment costs and tax-related special items.
“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.

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) = (B + D) / 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	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended March 31, 2013	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	962	  	 	 	1,004	  	 	 	(42	) 	 	 	-4.2	% 	 	 	(26	) 	 	 	2	  	 	 	—  	  	 	 	(66	) 	 	 	-6.6	% 	 	 	-4.0	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water Infrastructure	 	 	601	  	 	 	638	  	 	 	(37	) 	 	 	-5.8	% 	 	 	(26	) 	 	 	2	  	 	 	—  	  	 	 	(61	) 	 	 	-9.6	% 	 	 	-5.5	% 	
Applied Water	 	 	378	  	 	 	382	  	 	 	(4	) 	 	 	-1.0	% 	 	 	—  	  	 	 	—  	  	 	 	(1	) 	 	 	(5	) 	 	 	-1.3	% 	 	 	-1.0	% 	
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) = (B + D) / 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	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Quarter Ended March 31, 2013	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Xylem Inc.	 	 	879	  	 	 	925	  	 	 	(46	) 	 	 	-5.0	% 	 	 	(23	) 	 	 	2	  	 	 	—  	  	 	 	(67	) 	 	 	-7.2	% 	 	 	-4.8	% 	
 	 	 	 	 	 	 	 	 	 	 	
Water Infrastructure	 	 	551	  	 	 	584	  	 	 	(33	) 	 	 	-5.7	% 	 	 	(23	) 	 	 	1	  	 	 	—  	  	 	 	(55	) 	 	 	-9.4	% 	 	 	-5.5	% 	
Applied Water	 	 	345	  	 	 	355	  	 	 	(10	) 	 	 	-2.8	% 	 	 	—  	  	 	 	—  	  	 	 	(2	) 	 	 	(12	) 	 	 	-3.4	% 	 	 	-2.8	% 	
Note: Due to rounding the sum of segment amounts may not agree to Xylem totals.

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

 	  	Q1	 	
 	  	‘13	 	 	‘12	 	
Total Revenue	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	879	  	 	 	925	  	
• Water Infrastructure	  	 	551	  	 	 	584	  	
• Applied Water	  	 	345	  	 	 	355	  	
 	 	 	
Operating Income	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	66	  	 	 	99	  	
• Water Infrastructure	  	 	42	  	 	 	75	  	
• Applied Water	  	 	40	  	 	 	40	  	
 	 	 	
Operating Margin	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	7.5	% 	 	 	10.7	% 	
• Water Infrastructure	  	 	7.6	% 	 	 	12.8	% 	
• Applied Water	  	 	11.6	% 	 	 	11.3	% 	
 	 	 	
Separation Costs	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	—   	  	 	 	5	  	
• Water Infrastructure	  	 	—   	  	 	 	2	  	
• Applied Water	  	 	—   	  	 	 	1	  	
 	 	 	
Restructuring & Realignment Costs	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	12	  	 	 	—   	  	
• Water Infrastructure	  	 	10	  	 	 	—   	  	
• Applied Water	  	 	2	  	 	 	—   	  	
 	 	 	
Adjusted Operating Income*	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	78	  	 	 	104	  	
• Water Infrastructure	  	 	52	  	 	 	77	  	
• Applied Water	  	 	42	  	 	 	41	  	
 	 	 	
Adjusted Operating Margin*	  	 	 	 	 	 	 	 	
• Total Xylem	  	 	8.9	% 	 	 	11.2	% 	
• Water Infrastructure	  	 	9.4	% 	 	 	13.2	% 	
• Applied Water	  	 	12.2	% 	 	 	11.5	% 	
 
*	Adjusted Operating Income excludes restructuring & realignment costs in 2013 and excludes non-recurring separation costs in 2012.	

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

 	  	Q1 2012	 	 	Q1 2013	 	
 	  	As Reported	 	 	Adjustments	 	 	Adjusted	 	 	As Reported	 	 	Adjustments	 	 	Adjusted	 	
Total Revenue	  	 	925	  	 	 	 	 	 	 	925	  	 	 	879	  	 	 	 	 	 	 	879	  	
Operating Income	  	 	99	  	 	 	5a	  	 	 	104	  	 	 	66	  	 	 	12c	  	 	 	78	  	
Operating Margin	  	 	10.7	% 	 	 	 	 	 	 	11.2	% 	 	 	7.5	% 	 	 	 	 	 	 	8.9	% 	
Interest Expense	  	 	(14	) 	 	 	 	 	 	 	(14	) 	 	 	(13	) 	 	 	 	 	 	 	(13	) 	
Other Non-Operating Income (Expense)	  	 	(1	) 	 	 	 	 	 	 	(1	) 	 	 	(2	) 	 	 	 	 	 	 	(2	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	84	  	 	 	5	  	 	 	89	  	 	 	51	  	 	 	12	  	 	 	63	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(21	) 	 	 	(1	)b 	 	 	(22	) 	 	 	(10	) 	 	 	(3	)d 	 	 	(13	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	63	  	 	 	4	  	 	 	67	  	 	 	41	  	 	 	9	  	 	 	50	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	185.9	  	 	 	 	 	 	 	185.9	  	 	 	186.4	  	 	 	 	 	 	 	186.4	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	0.34	  	 	$	0.02	  	 	$	0.36	  	 	$	0.22	  	 	$	0.05	  	 	$	0.27	  	
 
a	One time separation costs	
b	Net tax impact of separation costs	
c	Restructuring & realignment costs	
d	Tax impact of restructuring & realignment costs	

Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow
Three Months Ended March 31, 2013 and 2012
($ Millions)

 	 	Three Months Ended	 	
 	 	2013	 	 	2012	 	
Net Cash - Operating Activities	 	 	20	  	 	 	61	  	
Capital Expenditures	 	 	(30	) 	 	 	(31	) 	
 	 	 	 	 	 	 	 	 	
Free Cash Flow, including separation costs	 	 	(10	) 	 	 	30	  	
Cash Paid for Separation Costs (incl. Capex)	 	 	—  	  	 	 	11	  	
 	 	 	 	 	 	 	 	 	
Free Cash Flow, excluding separation costs*	 	 	(10	) 	 	 	41	  	
 	 	 	 	 	 	 	 	 	
Net Income	 	 	41	  	 	 	63	  	
Separation Costs, net of tax (incl. tax friction)	 	 	—  	  	 	 	4	  	
 	 	 	 	 	 	 	 	 	
Net Income, excluding separation costs*	 	 	41	  	 	 	67	  	
 	 	 	 	 	 	 	 	 	
Free Cash Flow Conversion	 	 	-24	% 	 	 	61	% 	

*	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	  	 	 	3,925	  	 	 	 	 	 	 	3,925	  	
Segment Operating Income	  	 	512	  	 	 	30a	  	 	 	542	  	 	 	484	  	 	 	65d	  	 	 	549	  	
Segment Operating Margin	  	 	13.5	% 	 	 	 	 	 	 	14.3	% 	 	 	12.3	% 	 	 	 	 	 	 	14.0	% 	
Corporate Expense	  	 	69	  	 	 	(16	)b 	 	 	53	  	 	 	59	  	 	 	—  	  	 	 	59	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	  	 	443	  	 	 	46	  	 	 	489	  	 	 	425	  	 	 	65	  	 	 	490	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Margin	  	 	11.7	% 	 	 	 	 	 	 	12.9	% 	 	 	10.8	% 	 	 	 	 	 	 	12.5	% 	
Interest Expense	  	 	(55	) 	 	 	 	 	 	 	(55	) 	 	 	(55	) 	 	 	 	 	 	 	(55	) 	
Other Non-Operating Income (Expense)	  	 	—   	  	 	 	 	 	 	 	—   	  	 	 	(2	) 	 	 	 	 	 	 	(2	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before Taxes	  	 	388	  	 	 	46	  	 	 	434	  	 	 	368	  	 	 	65	  	 	 	433	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Income Taxes	  	 	(91	) 	 	 	(13	)c 	 	 	(104	) 	 	 	(72	) 	 	 	(19	)c 	 	 	(91	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	  	 	297	  	 	 	33	  	 	 	330	  	 	 	296	  	 	 	46	  	 	 	342	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Shares	  	 	186.2	  	 	 	 	 	 	 	186.2	  	 	 	186.4	  	 	 	 	 	 	 	186.4	  	
 	 	 	 	 	 	 	
Diluted EPS	  	$	1.59	  	 	$	0.18	  	 	$	1.77	  	 	$	1.59	  	 	$	0.25	  	 	$	1.84	  	
 
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	Net tax impact of above items, plus the addition of special tax items	
d	Restructuring and realignment costs incurred at the segment level	

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	  	 	 	3,925	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	  	 	315	  	 	 	276	  	 	 	388	  	 	 	395	  	 	 	443	  	 	 	425	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Margin	  	 	9.6	% 	 	 	9.7	% 	 	 	12.1	% 	 	 	10.4	% 	 	 	11.7	% 	 	 	10.8	% 	
Restructuring & Realignment	  	 	41	  	 	 	31	  	 	 	15	  	 	 	—  	  	 	 	24	  	 	 	65	  	
Separation Costs	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	87	  	 	 	22	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Income	  	 	356	  	 	 	307	  	 	 	403	  	 	 	482	  	 	 	489	  	 	 	490	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Margin	  	 	10.8	% 	 	 	10.8	% 	 	 	12.6	% 	 	 	12.7	% 	 	 	12.9	% 	 	 	12.5	% 	
Standalone Costs	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	5	  	 	 	28	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adj. Operating Income, excl. Standalone Costs	  	 	356	  	 	 	307	  	 	 	403	  	 	 	487	  	 	 	517	  	 	 	490	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Operating Margin, excl. Standalone Costs	  	 	10.8	% 	 	 	10.8	% 	 	 	12.6	% 	 	 	12.8	% 	 	 	13.6	% 	 	 	12.5	% 	

XYLEM INC.Q1 2013 EARNINGS RELEASEAPRIL 30, 2013Exhibit 99.2

FORWARD-LOOKING STATEMENTSThisdocumentcontainsinformationthatmayconstitute“forward-lookingstatements.”Forward-lookingstatementsbytheirnatureaddressmattersthatare,todifferentdegrees,uncertain.Generally,thewords“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 weexpectoranticipatewilloccurinthefuture—includingstatements relating to orders, revenues, operating margins andearningspersharegrowth,andstatementsexpressinggeneralviewsaboutfutureoperatingresults—areforward-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, orreasonablyinferredfrom,suchstatements.TheCompanyundertakesnoobligationtopubliclyupdateorreviseanyforward-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,butarenotlimitedto,thosesetforthinItem1AofourAnnualReportonForm10-K,andthosedescribedfromtimetotimeinsubsequent reports filed with the Securities and Exchange Commission.2013 INVESTOR & ANALYST DAY2

3Q1’13 XYLEM RESULTS* See appendix for non-GAAP reconciliationsEuropean Market Weakness, Project TimingVolume Decline & Continued InvestmentPartially Offset by Cost ReductionsRestructuring & Realignment Actions UnderwayConstantCurrencyBasis *Q1 2013 EARNINGS RELEASEFINANCIALPERFORMANCE SUMMARYPERFORMANCE SUMMARYOrders$962M          Book to Bill 1.09Revenue$879M-5%Gross Margin38.0%         -120 bpsOperating Margin*8.9%         -230 bpsEPS *$0.27In Line with ExpectationsFree Cash Flow *-$10MNormal Seasonality, Lower Income, Timing of Tax Payments

4BUSINESS UPDATEQ1 2013 EARNINGS RELEASESIGNIFICANT PROGRESS MADE ON CRITICAL 2013 ACTIVITIESSIGNIFICANT PROGRESS MADE ON CRITICAL 2013 ACTIVITIES•EnhancingAftermarketCapabilities(PIMSAcquisition/TotalCare)•FocusedonEnsuringRobustDeliveryandResponsiveness•AdvancingAcquisitionStrategy•NewProductLaunchesGainingTraction•AcceleratingGeographicExpansion•ExecutingRestructuring&RealignmentPlans•ContinuingtoDriveCostSavingsThroughLeanSixSigmaandGlobalSourcingInitiatives•FocusedonBusinessSimplificationInitiativesDELIVERCUSTOMERVALUEDRIVEPROFITABLEGROWTHIMPROVEBUSINESSSUSTAINABILITY

5Q1’13 XYLEM PERFORMANCEQ1 2013 EARNINGS RELEASE* See appendix for non-GAAP reconciliationsMANAGING THROUGH MARKET CONDITIONS & TOUGH PRIOR YEAR COMPSMANAGING THROUGH MARKET CONDITIONS & TOUGH PRIOR YEAR COMPS

6Q1’13 XYLEM PERFORMANCEQ1 2013 EARNINGS RELEASE* See appendix for non-GAAP reconciliationsQ1 EPS PERFORMANCE IN LINE WITH EXPECTATIONSQ1 EPS PERFORMANCE IN LINE WITH EXPECTATIONS

7Q1’13 WATER INFRASTRUCTURE PERFORMANCEQ1 2013 EARNINGS RELEASE* See appendix for non-GAAP reconciliationsMAINTAINING INVESTMENT DESPITE LOWER VOLUMEMAINTAINING INVESTMENT DESPITE LOWER VOLUME

8Q1’13 APPLIED WATER PERFORMANCEQ1 2013 EARNINGS RELEASE* See appendix for non-GAAP reconciliationsCUSTOMER EXCELLENCE & PRODUCTIVITY DRIVE MARGIN PERFORMANCECUSTOMER EXCELLENCE & PRODUCTIVITY DRIVE MARGIN PERFORMANCE

9Q1 2013 EARNINGS RELEASEXYLEM FINANCIAL POSITION•Free Cash Flow Decline•Lower Income•Timing of Tax Payments•Capex > 1 reinvestment ratioCapital Summary/Liquidity•Strong cash position•No Significant Debt Maturities Until 2016•1.3x Net Debt/Adj. TTM EBITDA•$600MRevolvingCreditFacility-Unutilized•AccesstoCommercialPaper-UnutilizedFCF%61%-24%March 31, 2013Cash375Debt1,205Net Debt830Shareholders’Equity2,040Net Capital2,870Net Debt to Net Capital29%(Dollars, In Millions)(Dollars, In Millions)* See Appendix for Non-GAAP Reconciliations** (AR+INV-AP-Customer Advances) / Revenue (Adjusted for Acquisitions)

10Q1 2013 EARNINGS RELEASE2013 FINANCIAL GUIDANCE SUMMARY* See appendix for non-GAAP reconciliations2013 Full Year2013 Full YearFinancial OutlookFinancial OutlookGrowthGrowth2013E vs. 20122013E vs. 2012Revenue(Mid-Point)Total GrowthOrganicAcquisitionFXXylem Consolidated~$3,925M~3 to 4%                  0 to 1%                  2%                  1%Water Infrastructure~$2,540M~4 to 5%0 to 1%                  3%                  1%Applied Water~$1,450M~1 to 2%                  0 to 1%                  0%                  1%Segment Margin *13.7% to 14.2%-60 bps to -10 bpsOperatingMargin *12.2%to 12.7%-70 bps to-20 bpsEPS * $1.79 to $1.89$1.84 Mid PointFree Cash Flow Conversion~95%Restructuring Pmts, Realignment Capex, & CHQ RelocationGuidanceAssumptions:OperatingTax Rate~21%1H’13 Rate: ~22%; 2H’13Rate: ~20%ShareCount~186.4MShare Repurchase Program Maintains Current Share CountItemsExcluded from EPS:Restructuring &Realignment Costs~$60M to $70MRestructuring Costs:~$40M to $50M

11REVENUE OUTLOOK BY END MARKETPLANNING ASSUMPTIONS SUPPORT MODEST SECOND HALF RECOVERYPLANNING ASSUMPTIONS SUPPORT MODEST SECOND HALF RECOVERYFY’13vs. PYvs.PreviousOutlookPlanning AssumptionsIndustrialFlat to Up LowSingle Digit•2H U.S. Improvement/EasierComps•Europe ChallengedPublic UtilityFlat•Stable OPEX Market•ModestImprovement in U.S.Capital ProjectsCommercialFlat to Up LowSingle Digit•Modest 2H U.S. Improvement•Successful Launch of NewProductsResidentialFlat to Up LowSingle Digit•U.S. Markets Continueto Improve•Europe StabilizesAgricultureFlat•GoodQ1 Start /Tough FYComparisonQ1 2013 EARNINGS RELEASE

12Q1 2013 EARNINGS RELEASE2013 EPS GUIDANCE* See appendix for non-GAAP reconciliations

13Q1 2013 EARNINGS RELEASESUMMARY•CompletedPIMSandMultiTrodeAcquisitions…IntegrationUnderway•Orders/Revenue Slightly Weaker Than Expected•Operations & Cost Reduction Activities Deliver EPS In Line with Expectations•Successful Product Launches•Continuing to Invest for Growth …Expect Additional Product Launches in 2013•Focused on Driving Cost Savings Through Lean Six Sigma and Global Sourcing Initiatives•Executing 2013 Restructuring & Realignment Actions•Acquisition Pipeline RobustQ1 PERFORMANCE2013 OUTLOOK

14Q1 2013 EARNINGS RELEASEAPPENDIX

15Q1 2013 EARNINGS RELEASENON-GAAP MEASURESManagement views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow,working capital, and backlog, among others.  In addition, we consider certain measures to be useful to management and investors evaluating  our operatingperformance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets.  This information canassist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternativesand initiatives.  These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue,operating income, net income, earnings per share (basic and diluted) or net cash from operations as determined in accordance with GAAP. We consider thefollowing non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:“Organic revenue" and "Organic orders”defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations, intercompanytransactions,andcontributionsfromacquisitionsanddivestitures.Divestituresincludesalesofportionsofourbusinessthatdidnotmeetthecriteriaforclassification as a discontinued operation or insignificant portions of our business that we did not classify as a discontinued operation.  The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period.“Constant currency”defined as financial results adjusted for currency translation impacts by translating current period and prior period activity using thesame currency conversion rate.  This approach is used for countries whose functional currency is not the U.S. dollar.“EBITDA”defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA”reflects theadjustment to EBITDA to exclude for non-recurring separation costs associated with the Xylem spin-off from ITT Corporation (not excluded for 2013) as wellas non-recurring restructuring and realignment costs."Adjusted Operating Income", "Adjusted Segment Operating Income", and “Adjusted EPS”defined as operating income and earnings per share, adjusted toexclude non-recurring separation costs associated with the Xylem spin-off from ITT Corporation (not excluded for 2013), non-recurring restructuring andrealignment costs and tax-related special items.“Free Cash Flow”defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustmentsfor other significant items that impact current results which management believes are not related to our ongoing operations and performance.  Ourdefinition of free cash flows does not consider non-discretionary cash payments, such as debt. 

16Q1 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) = (B + D) / AChange% ChangeChange% ChangeRevenueRevenue2013 v. 20122013 v. 2012FX ContributionEliminationsAdj. 2013 v. 2012Adj. 2013 v. 201220132012Quarter Ended March 31, 2013Xylem Inc.879                    925                    (46)                    -5.0%(23)                    2                        -                          (67)                          -7.2%-4.8%Water infrastructure551                    584                    (33)                    -5.7%(23)                    1                        -                          (55)                          -9.4%-5.5%Applied Water345                    355                    (10)                    -2.8%-                    -                    (2)                            (12)                          -3.4%-2.8%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)

17Q1 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) = (B + D) / AChange% ChangeChange% ChangeOrdersOrders2013 v. 20122013 v. 2012FX ContributionEliminationsAdj. 2013 v. 2012Adj. 2013 v. 201220132012Quarter Ended March 31, 2013Xylem Inc.962                    1,004               (42)                    -4.2%(26)                    2                        -                          (66)                          -6.6%-4.0%Water infrastructure601                    638                    (37)                    -5.8%(26)                    2                        -                          (61)                          -9.6%-5.5%Applied Water378                    382                    (4)                       -1.0%-                    -                    (1)                            (5)                            -1.3%-1.0%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)

18Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJUSTED DILUTED EPSQ1 2012Q1 2013As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjustedTotal Revenue925925879879Operating Income995a1046612c78Operating Margin10.7%11.2%7.5%8.9%Interest Expense(14)(14)(13)(13)Other Non-Operating Income (Expense)(1)(1)(2)(2)Income before Taxes84589511263Provision for Income Taxes(21)(1)b(22)(10)(3)d(13)Net Income6346741950Diluted Shares185.9185.9186.4186.4Diluted EPS0.34$             0.02$              0.36$              0.22$             0.05$              0.27$            aOne time separation costsbNet tax impact of separation costscRestructuring & realignment costsdTax impact of restructuring & realignment costsXylem Inc. Non-GAAP ReconciliationAdjusted Diluted EPS($ Millions, except per share amounts)

19Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJUSTED OPERATING INCOMEQ1'13'12Total Revenue• Total Xylem879     925        • Water Infrastructure551     584        • Applied Water345     355        Operating Income• Total Xylem66       99          • Water Infrastructure42       75          • Applied Water40       40          Operating Margin• Total Xylem7.5%10.7%• Water Infrastructure7.6%12.8%• Applied Water11.6%11.3%Separation Costs• Total Xylem-     5            • Water Infrastructure-     2            • Applied Water-     1            Restructuring & Realignment Costs• Total Xylem12       -        • Water Infrastructure10       -        • Applied Water2         -        Adjusted Operating Income*• Total Xylem78       104        • Water Infrastructure52       77          • Applied Water42       41          Adjusted Operating Margin*• Total Xylem8.9%11.2%• Water Infrastructure9.4%13.2%• Applied Water12.2%11.5%Xylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)*Adjusted Operating Income excludes restructuring &realignment costs in 2013 and excludes non-recurring separationcosts in 2012.

20Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:FREE CASH FLOW20132012Net Cash - Operating Activities20                        61                    Capital Expenditures(30)                      (31)                  Free Cash Flow, including separation costs(10)                      30                    Cash Paid for Separation Costs (incl. Capex)-                      11                    Free Cash Flow, excluding separation costs*(10)                      41                    Net Income4163Separation Costs, net of tax (incl. tax friction)-                      4Net Income, excluding separation costs*4167Free Cash Flow Conversion-24%61%* Separation costs are not excluded in 2013Xylem Inc. Non-GAAP ReconciliationNet Cash - Operating Activities vs. Free Cash FlowThree Months Ended March 31, 2013 and 2012($ Millions)Three Months Ended

21Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:XYLEM EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Net Income51                       Interest Expense (Income), net12                       Depreciation25                       Amortization12                       Stock Compensation6                         EBITDA106                     Restructuring & Realignment12                       Adjusted EBITDA118                     Revenues879                     Adjusted EBITDA Margin13.4%Q1Q2Q3Q4TotalPre-Tax Net Income84                       115                     100                     89                       388                     Interest Expense (Income), net13                       13                       12                       13                       51                       Depreciation23                       21                       24                       26                       94                       Amortization11                       12                       12                       13                       48                       Stock Compensation5                         5                         6                         6                         22                       EBITDA136                     166                     154                     147                     603                     Separation Costs5                         6                         4                         7                         22                       Restructuring & Realignment-                     -                     5                         19                       24                       Adjusted EBITDA141                     172                     163                     173                     649                     Revenues925                     966                     931                     969                     3,791                 Adjusted EBITDA Margin15.2%17.8%17.5%17.9%17.1%20132012Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA by Quarter($ Millions)

22Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:WATER INFRASTRUCTURE EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Net Income42                       Interest Expense (Income), net-                     Depreciation19                       Amortization9                         Stock Compensation1                         EBITDA71                       Restructuring & Realignment10                       Adjusted EBITDA81                       Revenues551                     Adjusted EBITDA Margin14.7%Q1Q2Q3Q4TotalPre-Tax Net Income75                       93                       86                       88                       342                     Interest Expense (Income), net-                     -                     (1)                        -                     (1)                        Depreciation16                       15                       17                       20                       68                       Amortization10                       9                         10                       10                       39                       Stock Compensation1                         1                         3                         -                     5                         EBITDA102                     118                     115                     118                     453                     Separation Costs2                         1                         -                     1                         4                         Restructuring & Realignment-                     -                     4                         15                       19                       Adjusted EBITDA104                     119                     119                     134                     476                     Revenues584                     609                     595                     637                     2,425                 Adjusted EBITDA Margin17.8%19.5%20.0%21.0%19.6%20132012Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA by QuarterWater Infrastructure($ Millions)

23Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:APPLIED WATER EBITDA & ADJ. EBITDAQ1Q2Q3Q4TotalPre-Tax Net Income40                       Interest, net-                     Depreciation6                         Amortization2                         Stock Compensation1                         EBITDA49                       Restructuring & Realignment2                         Adjusted EBITDA51                       Revenues345                     Adjusted EBITDA Margin14.8%Q1Q2Q3Q4TotalPre-Tax Net 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                     Revenues355                     373                     350                     346                     1,424                 Adjusted EBITDA Margin13.8%15.8%15.1%13.3%14.5%20132012Xylem Inc. Non-GAAP ReconciliationEBITDA and Adjusted EBITDA by QuarterApplied Water($ Millions)

24Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:GUIDANCEIllustration of Mid Point Guidance2013 GuidanceFY '12FY '13As ReportedAdjustmentsAdjustedAs ProjectedAdjustmentsAdjustedTotal Revenue3,791              3,791               3,925              3,925             Segment Operating Income512                   30                      a542                    484                   65                      d549                  Segment Operating Margin13.5%14.3%12.3%14.0%Corporate Expense69                     (16)                     b53                      59                     -                     59                    Operating Income443                   46                      489                    425                   65                      490                  Operating Margin11.7%12.9%10.8%12.5%Interest Expense(55)                    (55)                     (55)                    (55)                  Other Non-Operating Income (Expense)-                    -                     (2)                      (2)                     Income before Taxes388                   46                      434                    368                   65                      433                  Provision for Income Taxes(91)                    (13)                     c(104)                  (72)                    (19)                     c(91)                  Net Income297                   33                      330                    296                   46                      342                  Diluted Shares186.2              186.2               186.4              186.4             Diluted EPS1.59$              0.18$               1.77$               1.59$              0.25$               1.84$             aOne time separation, restructuring and realignment costs incurred at the segment levelbOne time separation, restructuring and realignment costs incurred at the corporate levelcNet tax impact of above items, plus the addition of special tax itemsdRestructuring and realignment costs incurred at the segment levelXylem Inc. Non-GAAP ReconciliationGuidance($ Millions, except per share amounts)

25Q1 2013 EARNINGS RELEASENON-GAAP RECONCILIATION:ADJ. OPERATING INCOME AND MARGINMid Point Guidance200820092010201120122013ERevenue3,291               2,849               3,202                      3,803                      3,791                    3,925                    Operating Income315                    276                    388                         395                         443                        425                        Operating Margin9.6%9.7%12.1%10.4%11.7%10.8%Restructuring & Realignment41                      31                      15                            -                          24                          65                          Separation Costs-                    -                    -                          87                            22                          -                         Adjusted Operating Income356                    307                    403                         482                         489                        490                        Adjusted Operating Margin10.8%10.8%12.6%12.7%12.9%12.5%Standalone Costs-                    -                    -                          5                              28                          -                         Adj. Operating Income, excl. Standalone Costs356                    307                    403                         487                         517                        490                        Adjusted Operating Margin, excl. Standalone Costs10.8%10.8%12.6%12.8%13.6%12.5%Xylem Inc. Non-GAAP ReconciliationAdjusted Operating Income($ Millions)

26Q1 2013 EARNINGS RELEASE