<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended October 29, 1994
Commission File No. 1-4311
PALL CORPORATION
Incorporated in New York State I.R.S. Employer Identifi-
cation # 11-1541330
2200 Northern Boulevard, East Hills, N.Y. 11548
Telephone Number (516) 484-5400
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
At December 5, 1994, 115,324,144 shares of common stock of the
Registrant were outstanding.
<PAGE> 2
PALL CORPORATION
INDEX TO FORM 10-Q
COVER SHEET 1
INDEX TO FORM 10-Q 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed consolidated balance sheets -
October 29, 1994 and July 30, 1994 3
Condensed consolidated statements of earnings -
three months ended October 29, 1994 and
October 30, 1993 4
Condensed consolidated statements of cash flows -
three months ended October 29, 1994 and
October 30, 1993 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial
condition and results of operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 8
SIGNATURES 8
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands) October 29, July 30,
ASSETS 1994 1994
----------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 50,976 $ 38,224
Short-term investments 49,900 50,800
Accounts receivable, net of allowances
for doubtful accounts of $4,702
and $4,776, respectively 174,699 207,159
Inventories - Note 2 147,511 138,382
Deferred income taxes 17,500 17,178
Prepaid expenses 17,070 15,346
Other current assets 3,658 3,336
-------- --------
Total Current Assets 461,314 470,425
Property, plant and equipment, net of
accumulated depreciation of $236,511
and $223,012, respectively 407,569 397,617
Other assets 92,722 91,537
-------- --------
Total Assets $961,605 $959,579
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $109,302 $112,034
Accounts payable 36,034 40,401
Accrued liabilities:
Salaries and commissions 26,908 24,031
Payroll taxes 4,808 5,185
Income taxes 33,258 33,019
Interest 1,443 1,232
Pension and profit-sharing plans 12,852 11,014
-------- --------
Other 15,010 16,437
94,279 90,918
Current portion of long-term debt 2,562 2,819
Dividends payable 0 10,667
-------- --------
Total Current Liabilities 242,177 256,839
Long-term debt, less current portion 54,925 54,097
Deferred income taxes 32,056 31,450
Other non-current liabilities 30,200 29,987
-------- --------
Total Liabilities 359,358 372,373
-------- --------
Stockholders' Equity:
Common stock, $.10 par value 11,735 11,735
Capital in excess of par value 53,769 53,769
Retained earnings 574,225 572,388
Treasury stock, at cost (35,084) (35,144)
Foreign currency translation adjustment 11,173 (1,816)
Minimum pension liability adjustment (4,638) (4,711)
Stock option loans (8,282) (8,432)
Unrealized losses on investments (651) (583)
-------- --------
Total Stockholders' Equity 602,247 587,206
-------- --------
Total Liabilities and
Stockholders' Equity $961,605 $959,579
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except Three Months Ended
per share data) ----------------------------
Oct. 29, Oct. 30,
1994 1993
-------- --------
<S> <C> <C>
Revenues:
Net sales $159,195 $141,874
Interest earned 1,370 1,317
-------- --------
Total revenues 160,565 143,191
Costs and expenses:
Cost of sales 61,988 55,201
Selling, general and
administrative expenses 67,223 61,132
Research and development 10,160 9,559
Interest expense 2,182 1,919
-------- --------
Total costs and expenses 141,553 127,811
Earnings before income taxes
and the cumulative effect of an
accounting change 19,012 15,380
Provisions for income taxes 5,703 4,307
-------- --------
Earnings before the cumulative
effect of an accounting change 13,309 11,073
Cumulative effect of a change in
accounting for postemployment
benefits - Note 3 (780) 0
-------- --------
Net earnings $ 12,529 $ 11,073
======== ========
Earnings per share:
Before the cumulative effect of
an accounting change $0.12 $0.10
Cumulative effect of a change in
accounting for postemployment
benefits - Note 3 (0.01) 0
-------- --------
Net earnings per share $0.11 $0.10
======== ========
Dividends declared per share $0.09 $0.08
Average number of shares
outstanding 115,321 115,905
</TABLE>
See accompanying Notes to Condensed Consolidated Financial
Statements.
<PAGE> 5
PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
(in thousands) Oct. 29, Oct. 30,
1994 1993
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 48,422 $ 34,369
INVESTING ACTIVITIES:
Capital expenditures (14,282) (21,225)
Disposals of fixed assets 703 528
Short-term investments 900 24,700
-------- --------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (12,679) 4,003
FINANCING ACTIVITIES:
Net short-term borrowings (3,693) (7,415)
Payments on long-term debt (555) (1,214)
Net proceeds from exercise of stock options 186 987
Dividends paid (21,334) (18,558)
Treasury stock 0 (5,450)
-------- --------
NET CASH (USED) BY FINANCING ACTIVITIES (25,396) (31,650)
CASH FLOW FOR PERIOD 10,347 6,722
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 38,224 42,652
EFFECT OF EXCHANGE RATE CHANGES ON CASH 2,405 (117)
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 50,976 $ 49,257
======== ========
Supplemental disclosures:
Interest paid (net of amount capitalized) $ 2,062 $ 1,771
Income taxes paid (net of refunds) 5,998 7,712
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The financial information included herein is unaudited. However,
such information reflects all adjustments which are, in the opinion of
management, necessary to present fairly (i) the financial position of
the Company at October 29, 1994 and July 30, 1994, (ii) the results of
its operations for the three month periods ended October 29, 1994
and October 30, 1993, and (iii) its cash flows for the three month
periods ended October 29, 1994 and October 30, 1993.
NOTE 2 - INVENTORIES
The major classes of inventory are as follows:
<TABLE>
<CAPTION>
Oct. 29, July 30,
(in thousands) 1994 1994
-------- --------
<S> <C> <C>
Raw materials and components $61,638 $58,999
Work-in-process 16,354 12,737
Finished goods 69,519 66,646
-------- --------
Total inventory $147,511 $138,382
======== ========
</TABLE>
NOTE 3 - CUMULATIVE EFFECT OF A CHANGE IN AN ACCOUNTING PRINCIPLE
In the quarter ended October 29, 1994, the Company adopted
Financial Accounting Standards Board Statement No. 112 (Employers'
Accounting for Postemployment Benefits). The effect of initially
applying this Statement ($1,200,000 pre-tax, $780,000 after taxes,
1 cent per share) is reported as the cumulative effect of a change
in an accounting principle.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
I. Results of Operations:
Quarter ended October 29, 1994 compared to quarter ended
October 30, 1993.
Sales for the first quarter of 1995 increased 12% over the
first quarter of 1994. If foreign exchange rates had remained
unchanged relative to the first quarter of 1994, sales would
have increased by 8 1/2%, all of which is attributable to
unit growth.
The Company's pre-tax margin increased to 11.9% of sales in
the first quarter of 1995 from 10.8% in the 1994 period. A
decrease in selling, general and administrative expenses as a
percentage of sales to 42.2% in the 1995 period, from 43.1%
in the 1994 period, was the principal factor in the improved
pre-tax margin.
The Company's effective tax rate increased to 30.0% in the
first quarter of 1995 from 28.0% in the 1994 period, such
increase resulting mainly from reduced benefits of the Puerto
Rico operations due to changes in the U.S. tax laws.
Prior to the cumulative effect of a change in an accounting
principle, net earnings for the first quarter of fiscal 1995
increased 20% to $13.3 million from $11.1 million in the prior
year period.
In the first quarter of fiscal 1995, the Company adopted
Financial Accounting Standards Board Statement No. 112
(Employers' Accounting for Postemployment Benefits). The
effect of initially applying this Statement ($1,200,000 pre-
tax, $780,000 after taxes, 1 cent per share) is reported as
the cumulative effect of a change in an accounting principle.
II. Liquidity and Capital Resources:
The Company's working capital increased by $5.6 million
during the first quarter of fiscal 1995. Had foreign exchange
rates not changed from July 30, 1994, working capital would
have declined by $1.7 million.
Capital expenditures totalled $14.3 million, and depreciation
expense totalled $10.1 million, in the quarter ended
October 29, 1994.
On November 15, 1994, the Company announced that it reached
an agreement in principle to acquire Filtron Technology
Corporation. The transaction, valued at a revised price of
$27.65 million, is subject to certain conditions, and is
expected to be completed by the end of the Company's second
quarter.
<PAGE> 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the three
months ended October 29, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PALL CORPORATION
December 7, 1994 /s/ Jeremy Hayward-Surry
- ------------------- --------------------------------
Date Jeremy Hayward-Surry
President and Treasurer -
Chief Financial Officer
December 7, 1994 /s/ Peter Schwartzman
- ------------------- --------------------------------
Date Peter Schwartzman
Secretary and Chief Corporate
Accountant
<PAGE> 9
EXHIBIT INDEX
-------------
EX. 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS FOR 1st QTR 1995 FORM 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-29-1995
<PERIOD-END> OCT-29-1994
<CASH> 50,976
<SECURITIES> 49,900
<RECEIVABLES> 179,401
<ALLOWANCES> 4,702
<INVENTORY> 147,511
<CURRENT-ASSETS> 461,314
<PP&E> 644,080
<DEPRECIATION> 236,511
<TOTAL-ASSETS> 961,605
<CURRENT-LIABILITIES> 242,177
<BONDS> 0
<COMMON> 11,735
0
0
<OTHER-SE> 590,512
<TOTAL-LIABILITY-AND-EQUITY> 961,605
<SALES> 159,195
<TOTAL-REVENUES> 160,565
<CGS> 61,988
<TOTAL-COSTS> 141,553
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,182
<INCOME-PRETAX> 19,012
<INCOME-TAX> 5,703
<INCOME-CONTINUING> 13,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (780)
<NET-INCOME> 12,529
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
