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Company : Business Wire 
Wednesday, May 29, 2002 12:30PM IST (7:00AM GMT)
 
(BW)(NY-PALL-CORPORATION)(PLL)
Pall Corporation Reports Third Quarter Results
East Hills, N.Y., United States

Pall Corporation (NYSE: PLL), the leader in the filtration, separation and purification industry, Tuesday reported sales and earnings results for the third quarter and nine months of fiscal 2002, which ended April 27, 2002.

Sales for the third quarter were $302.4 million compared to $321.1 million last year. Adverse foreign exchange rates reduced sales by 2% or $6.6 million. Earnings for the third quarter were $26.4 million or 21 cents per share, compared to $36.9 million or 30 cents per share last year. Costs incurred during the quarter to integrate the newly acquired Filtration and Separations Group ("FSG") reduced earnings by approximately 1 cent per share.

Sales for the nine months were $861.9 compared to $903.9 million last year. Foreign exchange rates reduced sales 2% or $17.3 million. Earnings for the nine months were $64.3 million or 52 cents per share, compared to last year's $92.3 million or 75 cents per share. The adoption of FASB 142 added 1 cent per share on a pro forma basis to the nine months of last year.

Eric Krasnoff, Chairman and CEO, said, "While we are starting to see signs of a recovery, the general industrial malaise in certain key markets continues. The semiconductor and aerospace markets have been difficult across all geographies. We still expect this to continue through to the end of this fiscal year. Earnings were at the high end of our expectations and exceeded Street consensus estimates in the quarter.

Life Science sales were up in the quarter reflecting growth in BioPharmaceuticals segment sales of 4 1/2%. Sales increases of about 16% in each of BioSciences' Hospital and Laboratories markets were realized and new product introductions are contributing. Pharmaceutical sales increased 3% reflecting good growth in Europe. Blood segment sales were down 1 1/2%, while volume was up 12 1/2%.

In the Industrial group, Microelectronics and Aerospace sales decreased 26 1/2% and 11%, respectively, in the quarter. Military aerospace sales increased 3 1/2% but Commercial aerospace sales fell by 23 1/2%. General Industrial segment sales were flat in the quarter. While the largest part of the segment, Machinery and Equipment, was down 10%, there was good growth in the major non-cyclical parts of the business. The Water Processing business turned in impressive growth of 20% and Food and Beverage was up 13%."

Commenting on earnings, Mr. Krasnoff said, "Gross margins came in at 51.9%, which is about the same as last year. While this year's quarter reflects a 14% price decrease in the Blood segment and the change in product mix in Industrial, last year's third quarter reflects the effect of the Blood products inventory provision. S G & A and R&D have increased about $4.8 million reflecting the $2.5 million property tax refund that reduced last year's S G &A and nearly $900 thousand of costs incurred this quarter to integrate FSG. Interest expense has decreased by about $1.8 million due to lower interest rates and reduced average debt levels.

Turning to the acquisition of FSG, Mr. Krasnoff said, "The process of integrating our two companies is off to a quick start and continues to progress well. With the help of a leading consulting firm, we have put critical retention plans in place for customers and people. We already succeeded in our goal of identifying at least $15 million in cost reductions. Additional opportunities for increased sales through cross-selling are also being developed. We expect to record a charge in this year's fourth quarter when the integration plans are well advanced."

Looking ahead, Mr. Krasnoff said, "As previously indicated, we expect the acquisition to be slightly dilutive to our fourth quarter earnings, ignoring the costs related to the aforementioned charge. We expect to meet our existing earnings guidance of 80 to 90 cents per share for the year, likely at the lower end of that range and excluding the effects of the charge to integrate FSG that we expect to record at the end of this fiscal year.

Looking towards next year, the unfavorable comparison caused by the reduction in blood filter pricing will be behind us. In addition, the cyclical Microelectronics industry is expected to rebound. We also anticipate a recovery in Commercial aerospace. Combining these factors with the accretive effect to earnings per share we expect next year from the FSG acquisition, we are very bullish about our prospects for fiscal 2003."

Tomorrow, May 29, 2002, at 8:30 a.m. EDT, Pall Corporation will host its quarterly earnings conference call. Individuals can access the webcast on the home page of the Company's website,
http://www.pall.com. Listening to the webcast requires speakers and Microsoft Windows Media Player audio software. The webcast will be archived for 14 days.

ABOUT PALL CORPORATION:

Pall Corporation is the global leader in the rapidly growing fields of filtration, separations and purification. Pall's business is organized around two broad markets: Life Sciences and Industrial. The Company provides leading-edge products to meet the demanding needs of customers in biotechnology, pharmaceuticals, transfusion medicine, semiconductors, municipal drinking water and aerospace. Total revenues are $1.5 billion, after giving effect to the FSG acquisition. The Company is headquartered in East Hills, New York and has major operations in more than 30 countries. Further information is available at http://www.pall.com.

This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to: fluctuations in foreign currency exchange rates; regulatory approval and market acceptance of new technologies; changes in product mix and product pricing and in interest rates and cost of raw materials; the Company's success in enforcing its patents and protecting its proprietary products and manufacturing techniques and in integrating the operations of FSG into the Company's existing business; global and regional economic conditions and legislative, regulatory and political developments; and domestic and international competition in the Company's global markets. Additional information regarding these and other factors is available on the Web at http://www.pall.com and is included in the Company's reports filed with the U.S. Securities and Exchange Commission. Copies of such reports can be obtained, without charge, at: http://www.sec.gov.

PALL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
APR. 27, JUL. 28,
2002 FSG(a) 2001
----------------------------------------------------------------------
Assets

Cash and short-term investments $ 128,181 $ 19,671 $ 201,527
Accounts receivable, net 367,477 66,737 309,171
Inventories, net 272,395 61,400 209,499
Other current assets 95,569 34,116 58,791
--------- ------- ---------

Total current assets 863,622 181,924 778,988

Property, plant and equipment,
net 597,319 98,783 503,016
Other assets 448,151(b) 1,911 266,506
--------- ------- ---------

Total assets $1,909,092 $282,618 $1,548,510
--------- ------- ---------

Liabilities and Stockholders'
Equity

Short-term debt $ 411,097 $ 2,892 $ 82,671
Accounts payable, income taxes
and other current liabilities 282,790 79,612 231,178
--------- ------- ---------

Total current liabilities 693,887 82,504 313,849

Long-term debt 309,622 3,363 359,094
Deferred taxes and other
non-current liabilities 124,810 22,333 105,525
--------- ------- ---------

Total liabilities 1,128,319 $108,200 778,468
-------

Stockholders' equity 780,773 770,042
--------- ---------

Total liabilities and
stockholders' equity $1,909,092 $1,548,510
--------- ---------

(a) For informational purposes, the acquired April 27, 2002 balance sheet of the Filtration and Separations Group is presented.

(b) Includes $190,400 which represents the excess cost over the book value of the net assets acquired of the Filtration and Separations Group.

PALL CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)

THIRD QUARTER ENDED NINE MONTHS ENDED
APR. 27, APR. 28, APR. 27, APR. 28,
2002 2001 2002 2001
-------------------------------------------------------------
REVENUES
Net Sales $302,377 $321,057 $861,931 $903,905
------- ------- ------- -------

COSTS AND EXPENSES
Cost of Sales(a) 145,482 153,855 425,946 428,775
Selling, general and
administrative
expenses(a) 107,245 100,831 306,471 301,868
Research and development 13,159 14,778 38,474 42,029
Interest Expense, net 2,590 4,343 8,668 12,840
------- ------- ------- -------

Total costs and expenses 268,476 273,807 779,559 785,512
------- ------- ------- -------

Earnings before
income taxes 33,901 47,250 82,372 118,393
Provision for
income taxes 7,458 10,395 18,122 26,047
------- ------ ------- -------

Net Earnings $ 26,443 $ 36,855 $ 64,250 $ 92,346
------- ------- ------- -------

Earnings per share:
Basic: $ 0.22 $ 0.30 $ 0.53 $ 0.75
---- ---- ---- ----
Diluted: $ 0.21 $ 0.30 $ 0.52 $ 0.75
---- ---- ---- ----


Proforma Earnings per share (b):
Basic: $ 0.22 $ 0.31 $ 0.53 $ 0.77
---- ---- ---- ----
Diluted: $ 0.21 $ 0.30 $ 0.52 $ 0.76
---- ---- ---- ----


Average number of shares outstanding:
Basic: 122,336 122,472 122,242 122,631
Diluted: 123,512 123,721 123,478 123,705


(a) Due to the adoption of EITF 00-10, "Accounting for Shipping & Handling Costs", in the fourth quarter of fiscal 2001, prior year amounts have been restated to reclassify shipping costs from selling, general, and administrative expenses to cost of sales.

(b) Basic earnings per share for the three months and nine months ended April 28, 2001 includes 1 cent per share and 2 cents per share (after pro forma tax effect), respectively, due to the adoption of SFAS 142, "Goodwill and Other Intangible Assets." Diluted earnings per share for the nine months ended April 28, 2001 includes 1 cent per share (after pro forma tax effect) due to the adoption of SFAS 142.

PALL CORPORATION MARKET AND GEOGRAPHIC SEGMENT INFORMATION DOLLAR AMOUNTS IN THOUSANDS
% CHANGE
SALES % IN LOCAL
THIRD QUARTER ENDED(a): APR. 27, 2002 APR. 28, 2001 CHANGE CURRENCY
---------------------------------------------------------------------
MARKET SEGMENT
INFORMATION:

Blood $ 58,528 $ 60,080 (2 1/2) (1 1/2)
BioPharmaceuticals 93,640 91,554 2 1/2 4 1/2
------- -------
Total Life Sciences 152,168 151,634 1/2 2
------- -------

General Industrial 84,351 86,933 (3) (1/2)
Aerospace 38,454 43,504 (11 1/2) (11)
Microelectronics 27,404 38,986 (29 1/2) (26 1/2)
------- -------
Total Industrial 150,209 169,423 (11 1/2) (9)
------- -------

Total $302,377 $321,057 (6) (4)
------- -------

GEOGRAPHIC SEGMENT
INFORMATION:

SALES
TO UNAFFILIATED CUSTOMERS

Western
Hemisphere $141,829 $148,912 (5) (4)
Europe 107,328 114,204 (6) (3 1/2)
Asia 53,220 57,941 (8) (3 1/2)
------- -------

Total $302,377 $321,057 (6) (4)
------- -------


TOTAL SALES
Western
Hemisphere $172,721 $183,657
Europe 123,853 126,912
Asia 53,609 58,943
Eliminations (47,806) (48,455)
-------- --------

Total $302,377 $321,057
-------- --------

(a) Certain prior year amounts have been reclassified to conform to the current year presentation.


OPERATING PROFIT
THIRD QUARTER ENDED(a): APR. 27, 2002 % APR. 28,2001 %
---------------------------------------------------------------------
MARKET SEGMENT
INFORMATION:

Blood $ 7,181 12.3 $ 5,760 9.6
BioPharmaceuticals 23,479 25.1 25,073 27.4
--------- --------
Life Sciences 30,660 20.1 30,833 20.3
--------- --------

General Industrial 9,042 10.7 15,086 17.4
Aerospace 8,961 23.3 13,942 32.0
Microelectronics 2,416 8.8 3,869 9.9
--------- --------
Industrial 20,419 13.6 32,897 19.4
--------- --------
Subtotal 51,079 16.9 63,730 19.9
General corporate
expenses (14,588) (12,137)
Interest expense,
net (2,590) (4,343)
--------- --------
Earnings before income
taxes $ 33,901 $ 47,250
--------- --------

GEOGRAPHIC SEGMENT
INFORMATION:

Western Hemisphere $ 19,981 11.6 $ 28,718 15.6
Europe 22,956 18.5 23,221 18.3
Asia 8,607 16.1 10,859 18.4
Eliminations (465) 932
--------- -------
Subtotal 51,079 16.9 63,730 19.9
General corporate
expenses (14,588) (12,137)
Interest expense, net (2,590) (4,343)
--------- --------
Earnings before income
taxes $ 33,901 $ 47,250
--------- --------

(a) Certain prior year amounts have been reclassified to conform to the current year presentation.

PALL CORPORATION MARKET AND GEOGRAPHIC SEGMENT INFORMATION DOLLAR AMOUNTS IN THOUSANDS
% CHANGE
SALES % IN LOCAL
NINE MONTHS ENDED(a): APR. 27, 2002 APR.28, 2001 CHANGE CURRENCY
----------------------------------------------------------------------
MARKET SEGMENT
INFORMATION:

Blood $165,615 $170,777 (3) (2)
BioPharmaceuticals 259,595 247,990 4 1/2 6 1/2
------- -------
Total Life Sciences 425,210 418,767 1 1/2 3
------- -------

General Industrial 245,046 243,977 1/2 3
Aerospace 114,836 115,753 (1) (1/2)
Microelectronics 76,839 125,408 (38 1/2) (35 1/2)
------- -------
Total Industrial 436,721 485,138 (10) (7 1/2)
------- -------

Total $861,931 $903,905 (4 1/2) (2 1/2)
------- -------

GEOGRAPHIC SEGMENT
INFORMATION:

SALES
TO UNAFFILIATED CUSTOMERS

Western
Hemisphere $393,841 $422,889 (7) (6 1/2)
Europe 307,348 304,436 1 2
Asia 160,742 176,580 (9) (2)
------- -------

Total $861,931 $903,905 (4 1/2) (2 1/2)
------- -------

TOTAL SALES
Western
Hemisphere $479,596 $519,868
Europe 350,238 344,898
Asia 162,097 180,469
Eliminations (130,000) (141,330)
--------- ---------

Total $861,931 $903,905
-------- --------


(a) Certain prior year amounts have been reclassified to conform to the current year presentation.

OPERATING PROFIT
NINE MONTHS ENDED(a): APR. 27, 2002 % APR. 28,2001 %
----------------------------------------------------------------------
MARKET SEGMENT
INFORMATION:

Blood $ 20,745 12.5 $ 30,334 17.8
BioPharmaceuticals 59,379 22.9 53,521 21.6
--------- --------
Life Sciences 80,124 18.8 83,855 20.0
--------- --------

General Industrial 25,338 10.3 43,860 18.0
Aerospace 27,672 24.1 33,221 28.7
Microelectronics 2,560 3.3 14,365 11.5
--------- --------
Industrial 55,570 12.7 91,446 18.8
--------- --------
Subtotal 135,694 15.7 175,301 19.4
General corporate
expenses (44,654) (44,068)
Interest expense,
net (8,668) (12,840)
--------- --------
Earnings before income
taxes $ 82,372 $118,393
--------- --------

GEOGRAPHIC SEGMENT
INFORMATION:

Western Hemisphere $ 51,564 10.8 $ 86,762 16.7
Europe 57,640 16.5 56,317 16.3
Asia 26,174 16.1 32,459 18.0
Eliminations 316 (237)
--------- --------
Subtotal 135,694 15.7 175,301 19.4
General corporate
expenses (44,654) (44,068)
Interest expense, net (8,668) (12,840)
--------- --------
Earnings before income
taxes $ 82,372 $118,393
--------- --------

(a) Certain prior year amounts have been reclassified to conform to the current year presentation.

 
 
 
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