Management’s Discussion and Analysis of Financial Condition and Results of Operations * Thedisclosureoftotalsegmentoperatingprofitandtotalsegmentoperatingprofitmarginprovidessupplementalinformationtoassistmanagementandinvestorsinanalyzingour profitabilitybutisconsideredanon-GAAPfinancialmeasurewhenpresentedinanycontextotherthantherequiredreconciliationtooperatingprofitinaccordancewithASC280 “DisclosuresaboutSegmentsofanEnterpriseandRelatedInformation.”Managementbelievesthatthedisclosureoftotalsegmentoperatingprofitandtotalsegmentoperating profitmargin,non-GAAPfinancialmeasures,presentadditionalusefulcomparisonsbetweencurrentresultsandresultsinprioroperatingperiods,providinginvestorswithaclearer viewoftheunderlyingtrendsofthebusiness.Managementalsousesthesenon-GAAPfinancialmeasuresinmakingfinancial,operating,planningandcompensationdecisionsand inevaluatingourperformance.Non-GAAPfinancialmeasures,whichmaybeinconsistentwithsimilarlycaptionedmeasurespresentedbyothercompanies,shouldbeviewedin additionto,andnotasasubstituteforourreportedresultspreparedinaccordancewithGAAP. 18 Results From Continuing Operations — For the Years Ended December 31, 2012, 2011 and 2010 For the year ended December 31, 2012 vs 2011 Favorable / (Unfavorable) Change 2011 vs 2010 Favorable / (Unfavorable) Change (in millions, except %) 2012 2011 2010 $ % $ % Net Sales Aerospace & Electronics $ 701 $ 678 $ 577 $ 24 3% $ 101 17% Engineered Materials 217 220 212 (4) (2)% 8 4% Merchandising Systems 372 374 298 (2) (1)% 76 25% Fluid Handling 1,196 1,140 1,008 55 5% 133 13% Controls 94 88 84 6 6% 4 5% Total Net Sales $ 2,579 $ 2,500 $ 2,179 $ 79 3% $ 321 15% Sales Growth: Core business $105 4% $ 211 10% Acquisitions/dispositions 12 1% 60 3% Foreign exchange (38) (2)% 51 2% Total Sales Growth $ 79 3% $ 321 15 Operating Profit from Continuing Operations Aerospace & Electronics $ 156 $ 146 $ 109 $ 10 7% $ 36 33% Engineered Materials 25 30 30 (5) (18)% — (1)% Merchandising Systems 34 30 17 3 11% 13 81% Fluid Handling 148 150 121 (2) (1)% 28 23% Controls 13 11 5 2 14% 6 121% Total Segment Operating Profit from Continuing Operations* $ 375 $ 367 $ 283 $ 9 2% $ 84 30% Corporate Expense $ (65) $ (58) $ (49) $ (7) (11)% $ (9) (19)% Corporate — Asbestos charge — (242) — 242 NM (242) NM Corporate — Environmental Charge — (30) — 30 NM (30) NM Total Operating Profit from Continuing Operations $ 310 $ 37 $ 233 $274 749% $(197) (84)% Operating Margin % Aerospace & Electronics 22.2% 21.5% 18.9% Engineered Materials 11.3% 13.5% 14.2% Merchandising Systems 9.1% 8.1% 5.6% Fluid Handling 12.4% 13.1% 12.1% Controls 13.6% 12.7% 6.0% Total Segment Operating Profit Margin % from Continuing Operations* 14.6% 14.7% 13.0% Total Operating Margin % from Continuing Operations 12.0% 1.5% 10.7%