Back Pall Corporation Fourth Quarter Sales Up 11.9% Full Year Sales Increase 14.3% East Hills, NY (September 15, 2008) - - Pall Corporation (NYSE: PLL) today reported sales and earnings for the fourth quarter and year ended July 31, 2008. Sales and Earnings Overview Fourth quarter sales grew to $723.2 million, an 11.9% increase over the fourth quarter of fiscal 2007. Diluted earnings per share (“EPS”) were $0.57, up from $0.13 a year earlier. Net earnings were $69.9 million, compared to $16.8 million. Pro forma EPS, excluding restructuring and other charges, were $0.61 versus last year's $0.46, an increase of 32.6%. For the full fiscal year ended July 31, 2008, sales were $2.6 billion, a 14.3% increase over fiscal year 2007. Net earnings were $217.3 million compared to $127.5 million. Diluted EPS were $1.76, up from $1.02 and pro forma EPS, excluding restructuring and other charges, were $1.97 versus $1.48, an increase of 33.1%. Sales in local currency (“LC”) increased $30.4 million, or 4.7%, in the quarter, and $162.6 million, or 7.2%, for the year. Foreign currency translation increased reported sales by $46.5 million or 7.2%, for the quarter, and $159.1 million, or 7.1%, for the year. The impact of foreign currency translation added approximately $0.05 to EPS in the quarter and $0.14 for the year. Eric Krasnoff, Chairman and CEO, stated, "Pall has again successfully executed on its strategic plan. We also exceeded sales and earnings expectations for the year. Sales growth in the quarter was again broad-based and across many markets. Geographically, the highest growth came from Asia. Strong sales throughout the year combined with cost reduction and process improvement initiatives resulted in an operating margin of 15.2%, an 80 basis point improvement.” Industrial - Fourth Quarter Highlights (Dollar Amounts in Thousands)         Sales: JULY 31, 2008 % CHANGE % CHANGE IN LC Energy, Water & Process Technologies (a) $ 288,344 12.3 4.0 Aerospace & Transportation 90,156 26.6 20.9 Microelectronics   81,570 12.9 5.6 Total Industrial segment $ 460,070 15.0 7.3   % OF SALES Gross profit $ 202,662 44.1 Operating profit $ 79,154 17.2   (a) Formerly General Industrial. Starting with this quarter, the General Industrial market has been renamed Energy, Water & Process Technologies (“EWPT”). This new moniker better reflects its market focus. For the quarter, EWPT grew 4% overall, with systems sales down 2.5%. EWPT systems sales grew 16.4% for the full year. In Aerospace & Transportation, Commercial Aerospace sales grew 20.1% in the quarter. This was fueled by strong after-market demand and increased sales to regional and business airframe manufacturers. Military sales increased 17.2% led by the U.S. Microelectronics sales were up 5.6%. Increasing production of solar cells and strength in the display and thin-film rigid disc markets contributed. Western Hemisphere results reflect the semiconductor market cyclical downturn. Operating profit increased in the quarter 16.1% to $79.2 million while operating profit margin improved to 17.2%. Life Sciences - Fourth Quarter Highlights (Dollar Amounts in Thousands)         Sales: JULY 31, 2008 % CHANGE % CHANGE IN LC Medical $ 131,794 1.1 (3.2)   BioPharmaceuticals   131,347 13.3 4.6 Total Life Sciences segment $ 263,141 6.9 0.5   % OF SALES   Gross profit $ 135,615 51.5 Operating profit $ 53,910 20.5 Within Life Sciences, BioPharmaceuticals sales increased 4.6% in the quarter, and 10.8% for the full year. Pall continues to win business for new drugs and factories as evidenced by the 41.1% increase in systems sales in the year. The Company is also benefitting from increased production of biotechnology drugs and vaccines. The recent acquisition of GeneSystems further expands Pall’s capabilities in the biopharmaceuticals, medical, food and water safety markets. Medical sales decreased 3.2% in the quarter, reflecting lower Blood Filtration sales in the Western Hemisphere. Improved pricing provided some offset. Operating profit for Life Sciences increased in the quarter 10.2% to $53.9 million. The effect of price increases and favorable product and market mix improved operating margins to 20.5%. Conclusion/Outlook Mr. Krasnoff concluded, “Pall Corporation has turned in another solid year of sales and earnings growth. In 2009, we expect pro forma EPS to be in the range of $2.15 to $2.30. Pall is well positioned and capitalizing on growing global demand for fluid management technologies and services. We look forward to presenting Pall’s new five-year strategic plan at our Investor Day on October 29, 2008." Conference Call On Tuesday, September 16, 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. 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 2008 were $2.6 billion. The Company is headquartered in East Hills, New York and has extensive operations around the world. For more information visit Pall at 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. Results for 2008 are preliminary until the Company's Form 10-K is filed with the Securities and Exchange Commission on or before September 29, 2008. 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. In some cases forward looking statements can be identified by the use of terms such as "anticipate", "should", "believe", "estimate", "expect", "intend", "plan", "predict", "potential", or other similar expressions concerning matters that are not historical facts. 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 expressly disclaims any 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. PALL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in Thousands)     JULY 31, 2008 JULY 31, 2007   Assets:   Cash and cash equivalents $ 454,065 $ 443,036 Accounts receivable 617,079 551,393 Inventories 492,977 471,467 Other current assets   95,518   140,481 Total current assets   1,659,639   1,606,377   Property, plant and equipment, net 662,985 607,900 Other assets   634,122   494,569 Total assets $ 2,956,746 $ 2,708,846   Liabilities and Stockholders' Equity:   Short-term debt $ 29,314 $ 41,720 Accounts payable, income taxes and other current liabilities   544,649   790,470 Total current liabilities   573,963   832,190   Long-term debt 747,051 591,591 Deferred taxes and other non-current liabilities   496,497   224,464 Total liabilities 1,817,511 1,648,245   Stockholders' equity   1,139,235   1,060,601 Total liabilities and stockholders' equity $ 2,956,746 $ 2,708,846 PALL CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (Amounts in thousands, except per share data)         FOURTH QUARTER ENDED YEAR ENDED JULY 31, 2008 JULY 31, 2007 JULY 31, 2008 JULY 31, 2007   Net sales $ 723,211 $ 646,340 $ 2,571,645 $ 2,249,905 Cost of sales   384,934     344,246   (b)   1,360,810     1,190,549   (b) Gross profit   338,277     302,094     1,210,835     1,059,356   % of sales 46.8 % 46.7 % 47.1 % 47.1 % Selling, general and administrative expenses 204,202 181,750 749,519 675,005 Research and development   18,123     17,247     71,647     62,414   Earnings before restructuring and other charges / (gains), net ("ROTC"), interest expense, net, and income taxes 115,952 103,097 389,669 321,937 ROTC 3,415 (a) 292 (b) 31,538 (a) 22,352 (b) Interest expense, net   6,848     9,430     32,576     39,056   Earnings before income taxes 105,689 93,375 325,555 260,529 Provision for income taxes   35,774   (a)   76,597   (b)   108,276   (a)   133,032   (b) Net earnings $ 69,915   $ 16,778   $ 217,279   $ 127,497     Earnings per share: Basic $ 0.58 $ 0.14 $ 1.77 $ 1.04 Diluted $ 0.57 $ 0.13 $ 1.76 $ 1.02   Average shares outstanding: Basic 120,550 123,114 122,445 123,115 Diluted 121,908 124,551 123,686 124,393   Net earnings as reported $ 69,915 $ 16,778 $ 217,279 $ 127,497 ROTC and one-time purchase accounting adjustment, after pro forma tax effect 2,325 (a) 462 (b) 21,414 (a) 16,599 (b) Tax adjustments   2,436   (a)   39,993   (b)   4,871   (a)   39,993   (b) Pro forma earnings $ 74,676   $ 57,233   $ 243,564   $ 184,089     Diluted earnings per share as reported $ 0.57 $ 0.13 $ 1.76 $ 1.02 ROTC and one-time purchase accounting adjustment, after pro forma tax effect 0.02 (a) 0.01 (b) 0.17 (a) 0.14 (b) Tax adjustments   0.02   (a)   0.32   (b)   0.04   (a)   0.32   (b) Pro forma diluted earnings per share $ 0.61   $ 0.46   $ 1.97   $ 1.48   (a) ROTC in the quarter and year includes charges of $2,436 (1 cent per share, after pro forma tax effect) and $12,457 (7 cents per share, after pro forma tax effect), respectively, primarily comprised of severance and other costs related to the Company's cost reduction programs, including its facilities rationalization initiative. ROTC in the quarter and year also includes $979 (1 cent per share, after pro forma tax effect) and $19,081 (10 cents per share, after pro forma tax effect) primarily comprised of legal and other professional fees related to the previously reported matters under inquiry by the audit committee of the Company’s board of directors.   Provision for income taxes includes a charge of $2,436 (2 cents per share) in the quarter and year ended July 31, 2008 related to an adjustment to the net tax cost of the anticipated repatriation of approximately $160 million of foreign earnings and a charge of $2,435 (2 cents per share) in the year ended July 31, 2008 resulting from newly enacted tax legislation in a foreign tax jurisdiction. Pro forma earnings exclude these items as it is deemed to be non-recurring in nature.   (b) Cost of sales includes income of $148 in the quarter and charges of $2,745 (2 cents after pro for a tax effect) in the year primarily comprised of incremental depreciation and other adjustments recorded primarily in conjunction with the Company's facilities rationalization initiative.   ROTC in the quarter includes charges of $292 (1 cent per share after pro forma tax effect) primarily comprised of severance and other costs related to the Company's cost reduction programs, including its facilities rationalization initiative, partly offset by income from a legal settlement and income from an insurance recovery related to an environmental matter. ROTC in the year were $22,352 (12 cents per share, after pro forma tax effect) primarily comprised of severance costs, other exit costs and an impairment charge on certain long-lived assets partly offset by a gain on the sale of a facility and income from legal settlements. In addition, the year includes a charge related to environmental matters, net of insurance recoveries. Provision for income taxes in the quarter and year includes a charge of $39,993 (32 cents per share) for the net tax cost of the anticipated repatriation of approximately $160 million of foreign earnings which had previously been asserted to be indefinitely reinvested and a change in estimate in fiscal year 2007 of certain income tax reserves. Pro forma earnings exclude these items as they are deemed to be non-recurring in nature. PALL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (Amounts in Thousands)     YEAR ENDED JULY 31, 2008 JULY 31, 2007   Net cash provided by operating activities $ 190,806   $ 332,928     Investing activities:   Disposals of long-lived assets 10,137 47,734 Capital expenditures (123,854)   (97,763)   Other   (7,970)     (5,398)   Net cash used by investing activities   (121,687)     (55,427)     Financing activities:   Dividends paid (59,945)   (56,228)   Notes payable and long-term borrowings 112,245 (91,965)   Purchase of treasury stock (148,850)   (61,795)   Other   20,209     47,540   Net cash used by financing activities   (76,341)     (162,448)     Cash flow for period (7,222)   115,053 Cash and cash equivalents at beginning of year 443,036 317,657 Effect of exchange rate changes on cash   18,251     10,326   Cash and cash equivalents at end of period $ 454,065   $ 443,036       Free cash flow: Net cash provided by operating activities $ 190,806 $ 332,928 Less capital expenditures   123,854     97,763   Free cash flow $ 66,952   $ 235,165   PALL CORPORATION SUMMARY OPERATING PROFIT BY SEGMENT (Unaudited) (Dollar Amounts in Thousands)       FOURTH QUARTER ENDED YEAR ENDED JULY 31, 2008 JULY 31, 2007 JULY 31, 2008 JULY 31, 2007   Industrial Sales $ 460,070 $ 400,134 $ 1,596,414 $ 1,369,718 Cost of sales (a)   257,408     222,895     887,512     755,614   Gross profit 202,662 177,239 708,902 614,104 % of sales 44.1 % 44.3 % 44.4 % 44.8 %   Selling, general and administrative expenses 116,349 101,598 432,326 381,436 Research and development   7,159     7,435     30,721     28,554   Operating profit $ 79,154 $ 68,206 $ 245,855 $ 204,114 % of sales   17.2 %   17.0 %   15.4 %   14.9 %   Life Sciences Sales $ 263,141 $ 246,206 $ 975,231 $ 880,187 Cost of sales (a)   127,526     121,499     473,298     432,190   Gross profit 135,615 124,707 501,933 447,997 % of sales 51.5 % 50.7 % 51.5 % 50.9 %   Selling, general and administrative expenses 70,741 65,954 263,233 248,851 Research and development   10,964     9,812     40,926     33,860   Operating profit $ 53,910 $ 48,941 $ 197,774 $ 165,286 % of sales   20.5 %   19.9 %   20.3 %   18.8 %   CONSOLIDATED: Operating profit $ 133,064 $ 117,147 $ 443,629 $ 369,400 General corporate expenses   17,112     14,198     53,960     44,718   Earnings before ROTC, interest and income taxes 115,952 102,949 389,669 324,682 ROTC (a) 3,415 144 31,538 25,097 Interest expense, net   6,848     9,430     32,576     39,056   Earnings before income taxes $ 105,689   $ 93,375   $ 325,555