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You are about to review presentations, news releases, reports and/or filings of Pall Corporation that contain time-sensitive information. The information contained therein is only accurate as of the date thereof. Pall Corporation will not be reviewing or updating the material that is contained in these items after the date thereof. The information contained therein may be updated, amended, supplemented or otherwise altered by subsequent presentations, news releases, reports and/or filings by Pall Corporation. |
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Pall Corporation Reports Second Quarter Results Sales Increase 15% Announces Completion of Restatement of Prior Period Financial Statements East Hills, NY (March 28, 2008) - - Pall Corporation (NYSE: PLL) today reported sales and earnings for the second quarter ended January 31, 2008 and the completion of the restatement of prior period financial statements.Audit Committee Inquiry and Restatement The Company previously announced that the audit committee of its board of directors, with the assistance of independent counsel, completed its inquiry with respect to Pall’s previously announced understatement of U.S. federal income tax payments and provision for income taxes. As a result of the matters that led to this inquiry, the Company restated its financial statements for the fiscal years 1999 through 2006 and for each of the fiscal quarters ended October 31, 2006, January 31, 2007, and April 30, 2007. The restatement of those prior period financial statements is now complete and described in detail in the Company's fiscal year 2007 Annual Report on Form 10-K, filed with the SEC today, and accessible on Pall’s website at www.pall.com/investor. The Company concurrently filed its Quarterly Reports on Form 10-Q for the first and second quarters of fiscal year 2008. With these filings, the Company is current with its SEC reporting requirements and in compliance with its reporting obligations under its debt and related agreements. All restated amounts within this document are identified accordingly. Sales and Earnings Overview Sales for the quarter were $625.7 million, an increase of 14.8% compared with the second quarter last year. Diluted earnings per share ("EPS") were $0.39 compared to $0.36 (as restated) a year ago. Net earnings were $48 million compared to $44.3 million (as restated) a year ago. Excluding restructuring and other charges, EPS on a pro forma basis were $0.46 per share as compared to $0.35 per share (as restated) in the same quarter last year. Sales for the six months ended January 31, 2008 were approximately $1.2 billion, up 13.7% compared with the six months ended January 31, 2007. Diluted EPS were $0.68, up from $0.49 (as restated) a year ago. Net earnings were $84.1 million compared to $60.3 million (as restated) a year ago. Excluding items reflected as restructuring and other charges, EPS on a pro forma basis were $0.82 per share as compared to $0.57 per share (as restated) in the same period last year. Sales in local currency increased $44.9 million, or 8.2%, in the quarter and $78.7 million, or 7.5%, for the six months. Foreign currency translation increased reported sales by $36 million or 6.6%, for the quarter, and $63.8 million, or 6.2%, for the six months. The impact of foreign currency translation added approximately $0.02 to earnings in the quarter and $0.04 for the six months. Eric Krasnoff, Chairman and CEO, stated, "We are pleased that the restatement process is behind us and that the Company is now current with its SEC filing obligations. I particularly want to recognize the efforts of our CFO, Lisa McDermott, and her team for their tireless work guiding our Company through this period. We are also grateful for the support of our lenders. It is now time to move forward.”
Within Life Sciences, BioPharmaceuticals sales increased 20%. This was driven by strong systems sales in all geographies and a double-digit increase in consumable sales in Europe. Improved pricing and savings generated from cost reduction initiatives were offset by increased systems sales, reducing Life Sciences gross margin slightly to 49.6% from 50% last year. SG&A expenses, as a percentage of sales, improved 300 basis points to 25.8%. This reflects the impact of cost reduction initiatives and leverage on the top line. Operating profit increased 30% to $48.2 million. Operating profit margin improved to 19.7% from 17.5% last year.
Looking at Pall Industrial, the General Industrial markets saw consumable sales increase in most markets and in all geographies with the highest growth rates reported in two “systems heavy” markets: Municipal Water and Fuels and Chemicals. Systems sales grew 10.3% led by nearly 20% growth in the Municipal Water market. Within Aerospace and Transportation, Military sales increased 21.8%. Commercial Aerospace sales grew 6.3% driven by the Western Hemisphere. As expected, Microelectronics sales were down slightly due to the cyclical downturn in the marketplace. Pall Industrial’s gross margin decreased to 43.8% from 45.8%. Gross margins were adversely affected by an increased proportion of systems sales and a change in market mix within consumables. Incremental costs in Europe related to the facilities rationalization initiative also contributed to the margin decline. These factors were partly offset by savings generated by myriad manufacturing cost reduction and efficiency initiatives. SG&A expenses, as a percentage of sales improved 190 basis points to 27.2% reflecting the impact of cost reduction initiatives and the leveraging of growth in sales. Operating profit increased about 15% to $55.4 million and operating margin was 14.5%, on par with last year. Conclusion Mr. Krasnoff concluded, “We remain committed to delivering long-term sustainable, profitable growth for shareholders. Pall’s Total Fluid ManagementSM (TFM) capability continues to resonate powerfully with customers across our many markets. At the halfway point of the year our Industrial and Life Sciences businesses are on course.” Conference Call On Monday March 31, 2008, at 8:30 am ET, Pall Corporation will host a conference call to review these results. The call will be webcast and individuals can access it at www.pall.com/investor. Listening to the webcast requires audio speakers and Microsoft Windows Media Player software. The webcast will be archived for 30 days. Special Note on Financial Tables The financial tables presented below reflect the restatement of interest expense and provision for taxes in the affected periods as referred to above. For further details on the restatement as related to the periods presented in the financial tables that follow, refer to Note 2, Audit Committee Inquiry and Restatement, to the consolidated financial statements in the Company's fiscal year 2007 Annual Report on Form 10-K. About Pall Corporation Pall Corporation is the global leader in the rapidly growing field of filtration, separation and purification. Pall is organized into two businesses: Life Sciences and Industrial. These businesses provide leading-edge products to meet the demanding needs of customers in biotechnology, pharmaceutical, transfusion medicine, energy, electronics, water purification, aerospace, transportation and broad industrial markets. Total revenues for fiscal year 2007 were $2.2 billion. The Company is headquartered in East Hills, New York and has extensive operations around the world. For more information visit Pall at http://www.pall.com./ Forward-Looking Statements The matters discussed in this release contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this release and in the Company’s other written and oral reports are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. All statements regarding future performance, earnings projections, earnings guidance, management’s expectations about its future cash needs and effective tax rate, and other future events or developments are forward-looking statements. Such risks and uncertainties include, but are not limited to: risks relating to the Company’s restatement of prior period financial statements, including the risks associated with the pending IRS audit and pending SEC and Department of Justice investigations and litigation proceedings; risks associated with the Company’s planned cash management initiatives, which may result in changes in the Company's effective tax rate; changes in product mix and product pricing may affect the Company’s operating results particularly as the systems business expands in which significantly longer sales cycles are experienced with less predictable revenue and profitability and less certainty of future revenue streams from related consumable product offerings and services; increases in costs of manufacturing and operating costs, including energy and raw materials; the Company’s ability to achieve the savings anticipated from its cost reduction and margin improvement initiatives including the timing of completion of its facilities rationalization initiative; fluctuations in foreign currency exchange rates and interest rates; regulatory approval or market acceptance of new technologies; changes in demand for the Company’s products and business relationships with key customers and suppliers including delays or cancellations in shipments; success in enforcing patents and protecting proprietary products and manufacturing techniques; risks associated with the completion or integration of acquisitions; domestic and international competition; and global and regional economic conditions, including particularly the impact of current challenging conditions in the United States that may also have global implications; and legislative, regulatory and political developments. The Company makes these statements as of the date of this disclosure and undertakes no obligation to update them. You should carefully consider these factors as well as the additional risk factors outlined in more detail in our most recent Annual Report on Form 10-K under Item 1A, Risk Factors, and in other filings the Company makes with the Securities and Exchange Commission. Management uses certain non-GAAP measurements to assess the Company's current and future financial performance. The non-GAAP measurements do not replace the presentation of Pall's GAAP financial results. These measurements provide supplemental information to assist management in analyzing the Company's financial position and results of operations. The Company has chosen to provide this information to facilitate meaningful comparisons of past, present and future operating results and as a means to emphasize the results of ongoing operations.
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