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Change in Accounting Principle | 12 Months Ended
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Dec. 31, 2012
Change in Accounting Principle |
3. |  | Change in Accounting Principle
During the fourth quarter of 2012, we changed our method of recognizing actuarial gains and losses for all of our pension and other post-retirement plans. Historically, we recognized actuarial gains and losses as a component of AOCI in our Consolidated Balance Sheets and amortized them into our Consolidated Statements of Operations and Comprehensive Income (Loss) over the average future service period of the active employees of these plans to the extent such gains and losses were outside of a corridor. We elected to immediately recognize actuarial gains and losses in our Consolidated Statements of Operations and Comprehensive Income (Loss) on the basis that it is preferable to accelerate the recognition of such gains and losses into income rather than to delay such recognition. Additionally, for purposes of calculating the expected return on plan assets, we will no longer use a calculated value for the market-related valuation of plan assets, but instead will use the actual fair value of our plan assets. These changes will improve transparency in our operating results by more quickly recognizing the effects of external conditions on our plan obligations, investments and assumptions. We applied these changes retrospectively to all periods presented. The cumulative effect of the change on retained earnings as of January 1, 2010 was a reduction of $58.9 million, with an offset to AOCI. The annual recognition of actuarial losses totaled $146.6 million, $65.7 million and $13.6 million for the years ended December 31, 2012, 2011 and 2010, respectively. This change did not have an impact on cash provided by operating activities for any period presented. The following table presents our results under our historical method and our results had we applied these new methods for the periods presented:
In thousands, except per-share data |  | Computed under previous method |  |  | Recognized under new method |  |  | Effect of Change |
As of and for the year ended December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |
Statement of Operations and Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  | $ | 1,016,698 |  |  | $ | 1,158,436 |  |  | $ | 141,738 |
Provision (benefit) for income taxes |  |  | (24,076 | ) |  |  | (79,353 | ) |  |  | (55,277 | )
Income (loss) from continuing operations |  |  | (18,151 | ) |  |  | (104,612 | ) |  |  | (86,461 | )
Net income (loss) attributable to Pentair Ltd. |  |  | (20,725 | ) |  |  | (107,186 | ) |  |  | (86,461 | )
Amortization of pension and other post-retirement prior service cost and transition obligation |  |  | (86,714 | ) |  |  | (253 | ) |  |  | 86,461 |
Basic earnings (loss) per share attributable to Pentair Ltd. |  | $ | (0.16 | ) |  | $ | (0.84 | ) |  | $ | (0.68 | )
Diluted earnings (loss) per share attributable to Pentair Ltd. |  |  | (0.16 | ) |  |  | (0.84 | ) |  |  | (0.68 | )
Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  | $ | 1,492,258 |  |  | $ | 1,292,288 |  |  | $ | (199,970 | )
Accumulated other comprehensive income (loss) |  |  | (207,168 | ) |  |  | (7,198 | ) |  |  | 199,970 |
Statement of Cash Flows |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) before noncontrolling interest |  | $ | (18,151 | ) |  | $ | (104,612 | ) |  | $ | (86,461 | )
Pension and other post-retirement expense |  |  | 25,798 |  |  |  | 167,536 |  |  |  | 141,738 |
Other current liabilities |  |  | 82,455 |  |  |  | 27,178 |  |  |  | (55,277 | )
|  | Previously Reported |  |  | Adjusted |  |  | Effect of Change |
As of and for the year ended December 31, 2011 |  |  |  |  |  |  |  |  |  |  |  |
Statement of Operations and Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  | $ | 626,527 |  |  | $ | 694,841 |  |  | $ | 68,314 |
Provision for income taxes |  |  | 73,059 |  |  |  | 46,417 |  |  |  | (26,642 | )
Income (loss) from continuing operations |  |  | 38,521 |  |  |  | (3,151 | ) |  |  | (41,672 | )
Net income (loss) attributable to Pentair Ltd. |  |  | 34,222 |  |  |  | (7,450 | ) |  |  | (41,672 | )
Amortization of pension and other post-retirement prior service cost and transition obligation |  |  | (41,683 | ) |  |  | (11 | ) |  |  | 41,672 |
Basic earnings (loss) per share attributable to Pentair Ltd. |  | $ | 0.35 |  |  | $ | (0.08 | ) |  | $ | (0.43 | )
Diluted earnings (loss) per share attributable to Pentair Ltd. |  |  | 0.34 |  |  |  | (0.08 | ) |  |  | (0.42 | )
Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  | $ | 1,579,290 |  |  | $ | 1,465,780 |  |  | $ | (113,510 | )
Accumulated other comprehensive income (loss) |  |  | (151,241 | ) |  |  | (37,731 | ) |  |  | 113,510 |
Statement of Cash Flows |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) before noncontrolling interest |  | $ | 38,521 |  |  | $ | (3,151 | ) |  | $ | (41,672 | )
Pension and other post-retirement expense |  |  | 16,031 |  |  |  | 84,345 |  |  |  | 68,314 |
Other current liabilities |  |  | 18,688 |  |  |  | (7,954 | ) |  |  | (26,642 | )
|  | Previously Reported |  |  | Adjusted |  |  | Effect of Change |
For the year ended December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |
Statement of Operations and Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  | $ | 529,329 |  |  | $ | 550,501 |  |  | $ | 21,172 |
Provision for income taxes |  |  | 97,200 |  |  |  | 88,943 |  |  |  | (8,257 | )
Income from continuing operations |  |  | 202,947 |  |  |  | 190,032 |  |  |  | (12,915 | )
Net income attributable to Pentair Ltd. |  |  | 197,828 |  |  |  | 184,913 |  |  |  | (12,915 | )
Amortization of pension and other post-retirement prior service cost and transition obligation |  |  | (12,762 | ) |  |  | 153 |  |  |  | 12,915 |
Basic earnings per share attributable to Pentair Ltd. |  | $ | 2.01 |  |  | $ | 1.88 |  |  | $ | (0.13 | )
Diluted earnings per share attributable to Pentair Ltd. |  |  | 1.99 |  |  |  | 1.86 |  |  |  | (0.13 | )
Statement of Cash Flows |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) before noncontrolling interest |  | $ | 202,321 |  |  | $ | 189,406 |  |  | $ | (12,915 | )
Pension and other post-retirement expense |  |  | 12,926 |  |  |  | 34,098 |  |  |  | 21,172 |
Other current liabilities |  |  | 7,462 |  |  |  | (795 | ) |  |  | (8,257 | )

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