<PAGE>
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 April 29, 2000
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 June 6, 2000, 123,378,412 shares of common stock
of the Registrant were outstanding.
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<PAGE>
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 - April 29, 2000
and July 31, 1999 3
Condensed consolidated statements of earnings -
three months and nine months ended April 29, 2000 4
and May 1, 1999
Condensed consolidated statements of cash flows -
nine months ended April 29, 2000 and May 1, 1999 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial condition and
results of operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands)
April 29, July 31,
2000 1999
----------------- -----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 71,624 $ 86,677
Short-term investments 65,400 50,500
Accounts receivable, net of allowances
for doubtful accounts of $6,944
and $6,623, respectively 303,177 326,197
Inventories - Note 2 208,315 205,867
Other current assets 76,409 74,948
----------- -----------
Total Current Assets 724,925 744,189
Property, plant and equipment, net of
accumulated depreciation of $443,395
and $429,012, respectively 503,896 507,016
Other assets 238,675 237,122
----------- -----------
Total Assets $ 1,467,496 $ 1,488,327
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 267,794 $ 301,647
Accounts payable and
other current liabilities 197,631 198,979
Income taxes 27,725 20,147
Current portion of long-term debt 58,589 37,506
----------- -----------
Total Current Liabilities 551,739 558,279
Long-term debt, less current portion 87,765 116,815
Deferred taxes and other
non-current liabilities 78,969 82,569
----------- -----------
Total Liabilities 718,473 757,663
----------- -----------
Stockholders' Equity:
Common stock, $.10 par value 12,796 12,796
Capital in excess of par value 97,554 92,893
Retained earnings 771,887 732,970
Treasury stock, at cost (89,229) (82,283)
Stock option loans (5,644) (7,216)
Accumulated other comprehensive loss:
Foreign currency translation adjustment (32,327) (12,149)
Minimum pension liability (2,127) (1,937)
Unrealized investment losses (3,887) (4,410)
----------- -----------
(38,341) (18,496)
Total Stockholders' Equity 749,023 730,664
----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,467,496 $ 1,488,327
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, (in thousands,
except per share data) except per share data)
Three Months Ended Nine Months Ended
--------------------------------------- -------------------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Net sales $ 318,049 $ 299,896 $ 879,870 $ 828,001
Costs and expenses:
Cost of sales 143,568 159,529 404,997 410,633
Selling, general and
administrative expenses 103,585 103,502 297,175 306,073
Research and development 12,762 13,452 36,260 43,421
Restructuring and other charges, net - 64,695 - 64,695
Interest expense, net 3,860 3,620 10,896 9,603
--------------- --------------- ---------------- ---------------
Total costs and expenses 263,775 344,798 749,328 834,425
Earnings (loss) before income taxes (Note 1) 54,274 (44,902) 130,542 (6,424)
Income taxes 12,482 (16,579) 30,024 (7,536)
--------------- --------------- ---------------- ---------------
Net earnings (loss) $ 41,792 $ (28,323) $ 100,518 $ 1,112
=============== =============== ================ ===============
Earnings (loss) per share (Note 1):
Basic $0.34 ($0.23) $0.81 $0.01
Diluted $0.34 ($0.23) $0.81 $0.01
Dividends declared per share $0.165 $0.160 $0.490 $0.475
Average number of shares
outstanding:
Basic 123,692 124,515 123,947 124,380
Diluted 124,504 124,782 124,848 124,797
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands)
Nine Months Ended
----------------------------------------
April 29, May 1,
2000 1999
------------------ ------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 159,732 $ 104,395
INVESTING ACTIVITIES:
(Acquisition) sale of businesses (15,380) 5,600
Investments and licenses (3,248) (9,434)
Capital expenditures (43,168) (54,062)
Disposals of fixed assets 4,355 2,015
Short-term investments (14,900) (12,700)
--------------- --------------
NET CASH USED BY INVESTING ACTIVITIES (72,341) (68,581)
FINANCING ACTIVITIES:
Net short-term (repayments) borrowings (26,446) 117,174
Long-term borrowings 14,878 3,703
Payments on long-term debt (27,040) (17,364)
Net proceeds from stock plans 12,901 34,271
Purchase of treasury stock (14,604) (39,256)
Dividends paid (60,144) (58,433)
--------------- ---------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (100,455) 40,095
--------------- ---------------
CASH FLOW FOR PERIOD (13,064) 75,909
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 86,677 12,125
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,989) (433)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 71,624 $ 87,601
=============== ===============
Supplemental disclosures:
Interest paid (net of amount capitalized) $ 16,013 $ 12,688
Income taxes paid (net of refunds) 17,074 17,881
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
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 the Company's financial position, results of
operations and cash flows as of the dates and for the periods presented herein.
These financial statements should be read in conjunction with the financial
statements and notes set forth in the Company's Annual Report on Form 10-K for
the fiscal year ended July 31, 1999.
The third quarter of 1999 results of operations include restructuring and other
charges of $89,433 (including $24,738 contained in cost of sales) or 51 cents
per share (after pro forma tax effect).
NOTE 2 - INVENTORIES
The major classes of inventory are as follows:
(in thousands)
April 29, July 31,
2000 1999
------------ -----------
Raw materials and components $ 80,578 $ 77,092
Work-in-process 25,007 25,127
Finished goods 102,730 103,648
--------- ---------
Total inventory $ 208,315 $ 205,867
========= =========
NOTE 3 - COMPREHENSIVE INCOME (LOSS)
The components of comprehensive income (loss) for the three months and nine
months ended April 29, 2000 and May 1, 1999 were comprised of the following:
<TABLE>
<CAPTION>
(in thousands)
Three months ended Nine months ended
-------------------------- --------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
------- -------- ------- -------
<S> <C> <C> <C> <C>
Net earnings (loss) $41,792 ($28,323) $100,518 $1,112
Foreign currency translation adjustment (11,786) (8,950) (19,840) (2,226)
Income taxes (436) (308) (338) (197)
------- -------- ------- -------
Foreign currency translation adjustment, net (12,222) (9,258) (20,178) (2,423)
Minimum pension liability adjustment 24 (20) (344) (70)
Income taxes (10) 7 154 24
------- -------- ------- -------
Minimum pension liability adjustment, net 14 (13) (190) (46)
Unrealized investment (losses) gains, net (525) (4,928) 805 (11,776)
Income taxes 183 1,725 (282) 4,121
------- -------- ------- -------
Unrealized investment (losses) gains, net (342) (3,203) 523 (7,655)
Total comprehensive income (loss) $29,242 ($40,797) $80,673 ($9,012)
======= ======== ======= =======
</TABLE>
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<PAGE>
NOTE 4 - SEGMENT INFORMATION
<TABLE>
<CAPTION>
Market Segment Information: Three Months Ended Nine Months Ended
(in thousands) ----------------------------- -----------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers:
Blood $ 53,981 $ 47,297 $154,940 $131,539
Critical Care 22,474 21,065 64,804 62,912
-------- -------- -------- --------
Medical 76,455 68,362 219,744 194,451
-------- -------- -------- --------
BioPharmaceuticals 61,499 65,008 170,956 175,029
Food and Beverage 13,591 14,720 39,907 39,261
Specialty Materials 8,581 10,278 26,444 29,117
-------- -------- -------- --------
BioPharmaceuticals 83,671 90,006 237,307 243,407
-------- -------- -------- --------
Health Care 160,126 158,368 457,051 437,858
-------- -------- -------- --------
Aerospace 34,875 36,881 95,971 98,843
Industrial Hydraulics 35,477 32,471 101,245 95,493
-------- -------- -------- --------
Aeropower 70,352 69,352 197,216 194,336
-------- -------- -------- --------
Microelectronics 27,774 17,936 71,274 43,836
Industrial Process 59,797 54,240 154,329 151,971
-------- -------- -------- --------
Fluid Processing 87,571 72,176 225,603 195,807
-------- -------- -------- --------
Total $318,049 $299,896 $879,870 $828,001
------------------------------------------------------------------------------------------------------------------------
Operating Profit:
Medical $ 21,341 $ 19,834 $ 58,136 $ 43,596
BioPharmaceuticals 19,335 19,144 52,625 38,852
-------- -------- -------- --------
Health Care 40,676 38,978 110,761 82,448
-------- -------- -------- --------
Aeropower 16,913 17,400 46,551 44,964
Fluid Processing 15,310 8,612 26,691 14,391
-------- -------- -------- --------
Subtotal 72,899 64,990 184,003 141,803
Restructuring and other charges, net - (89,433) - (89,433)
General corporate expenses (14,765) (16,839) (42,565) (49,191)
Interest expense, net (3,860) (3,620) (10,896) (9,603)
-------- -------- -------- --------
Earnings (loss) before income taxes $ 54,274 $(44,902) $130,542 $ (6,424)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Geographic Segment Information:
(in thousands)
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers:
Western Hemisphere $150,156 $133,569 $406,471 $367,253
Europe 111,282 119,789 314,844 331,501
Asia 56,611 46,538 158,555 129,247
-------- -------- -------- --------
Total $318,049 $299,896 $879,870 $828,001
-------------------------------------------------------------------------------------------------------------------------
Operating Profit:
Western Hemisphere $ 41,210 $ 27,737 $101,362 $ 59,562
Europe 23,928 30,292 66,069 77,555
Asia 10,017 5,762 24,372 9,232
Eliminations (2,256) 1,199 (7,800) (4,546)
-------- -------- -------- --------
Subtotal 72,899 64,990 184,003 141,803
Restructuring and other charges, net - (89,433) - (89,433)
General corporate expenses (14,765) (16,839) (42,565) (49,191)
Interest expense, net (3,860) (3,620) (10,896) (9,603)
-------- -------- -------- --------
Earnings (loss) before income taxes $ 54,274 $(44,902) $130,542 $ (6,424)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
Note 5 - OTHER MATTERS
On January 20, 2000, the Board of Directors extended the Company's current stock
buy-back program by three years with an authorization to expend up to an
additional $200 million. The repurchased shares will be available for general
corporate purposes, including the exercise of stock options. The Company bought
back an additional $14.6 million of its common stock in the first nine months of
the current fiscal year and an additional $10.4 million so far in the fourth
quarter, thereby completing the October 1997 $150 million authorization program.
On January 31, 2000, the Company purchased a new manufacturing facility,
equipment and certain other assets from Laboratory SpA, a publicly traded
company in Italy, for approximately $15 million. Additional consideration of
approximately $3 million will be paid over the next three years as certain
production levels are achieved. The new facility will be used in the manufacture
of blood product systems.
Gelman continues to remediate the contamination at its Ann Arbor, Michigan
facility, pursuant to a Consent Judgment entered into by the State of Michigan
and Gelman. On February 2, 2000, the State of Michigan advised Gelman of its
intention to file a court motion seeking approximately $4.2 million in penalties
for alleged violations of the Consent Judgment. Gelman disputes these assertions
and has been vigorously contesting them.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's discussion & analysis may contain "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. In
addition to foreign exchange rates, such risks and uncertainties include, but
are not limited to, regulatory approval, market acceptance of new technologies,
economic conditions and market demand.
I. Results of Operations
Review of Consolidated Results
Sales for the quarter were $318.0 million, an increase of 6%, compared to $299.9
million in the third quarter of last year. Exchange rates, principally the
weakness of European currencies partially offset by the strength of the Japanese
Yen against the U.S. dollar, decreased sales by 2%, or $5.9 million. In local
currency, sales increased 8%. Sales of $879.9 for the nine months increased
6 1/2% over the prior year's sales of $828.0 million. In local currency, sales
improved by 8% over the prior period and 8 1/2% excluding the effect of the
divestiture of the Company's Stratapac(R) division which occurred in the third
quarter of last year. Blood filter and Microelectronic sales were the principal
contributors to the sales growth. Pricing decreased sales by 1% during the
quarter and for the nine months, principally due to the Medical segment.
Cost of sales, at 45.1% and 46.0% as a percentage of sales (before restructuring
and other charges last year) has remained flat and improved by 60 basis points
for the quarter and nine months, respectively, despite the continued change in
mix of blood filter sales. This was largely due to improvements in the Fluid
Processing margins.
Selling, general and administrative expenses combined with R&D expenses were
$116.3 and $333.4 in the aggregate, for the quarter and nine months which
represents 36.6% and 37.9% of sales, respectively. Compared to last year's third
quarter, these costs improved 2.4% as a percentage of sales. During the nine
months, a 4.3% improvement, or $16.1 million, occurred principally due to the
restructuring initiated in the third quarter of 1999. The results for the nine
months of fiscal 2000 include a profit of $1.3 million from the sale of a
property located in the United Kingdom.
The underlying effective income tax rate was approximately 23% for all periods
presented. The as-reported effective income tax rate for the third quarter last
year of 21% reflects the benefit attributable to reducing the effective income
tax rate from 25% to 23% in the third quarter.
Top-line growth coupled with savings achieved as a result of on-going cost
reduction efforts and the restructuring initiated in last year's third quarter
can be readily seen in earnings. For the third quarter, earnings per diluted
share increased 21% to 34 cents from the 28 cents (before restructuring and
other charges) reported last year. For the nine months, earnings per diluted
share increased to 81 cents from 52 cents (before restructuring and other
charges) in the prior year.
The Company recently announced the planned closing of three manufacturing
facilities in the U.S. and the reorganization of its medical manufacturing
structure to lower costs. These actions and others will result in a charge in
the fourth quarter of this year which is not expected to exceed $10 million.
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<PAGE>
The Company started the year with three goals to help increase its earnings per
share by 30% (excluding last year's restructuring and other charges) and achieve
at least a 19% return on equity. Those goals were:
o Increase local currency sales growth in the range of 8% to 10%
o Stop the reduction in gross margins
o Reduce selling, general and administrative expenses plus R & D as a
percentage of sales by at least 2 percentage points.
These goals remain intact and the Company believes it will exceed the goal of
30% growth in earnings per share (excluding the impact of the aforementioned
fourth quarter charge) compared to last year's 92 cents (before restructuring
and other charges).
Review of Market and Geographic Segments
For the quarter and nine months, Medical's sales grew by 13 1/2% and 14 1/2%,
respectively, in local currency, despite some pricing reduction due to the
continued shift in mix of sales towards blood centers. Overall, blood filter
sales have grown by 15% in the quarter and 19% for the nine months. This growth
was fueled by blood center sales which have increased by 37% in the quarter and
50% during the nine months reflecting the growth trends in both Europe and the
United States as more countries move towards 100% leukodepletion. Hospital sales
have declined by 7% and 15% in the quarter and for the nine months,
respectively. Critical Care's upward sales trend noted last quarter continued as
sales have increased by 9% in the quarter and 5% for the nine months.
In local currency, Biopharmaceutical sales declined 4 1/2% for the quarter and
were flat year to date. Food and Beverage sales are up on a year-to-date basis
by 5%. However, compared to last year's third quarter, sales decreased 4%. Sales
to pharmaceutical producers and laboratories declined slightly in the quarter
and year to date due to the timing of large system sales last year as well as
some pharmaceutical plant closures in the United States. For the quarter and
nine months, Specialty Materials sales have decreased 15% and 8%, respectively.
On a local currency basis, sales in the Aeropower segment were up 5% in the
quarter with another strong quarter from Industrial Hydraulics which was up 15%.
Industrial Hydraulics sales in Asia, which suffered in the prior year, have
increased 35% in the quarter and 21% year to date. Aerospace sales, which were
down 4% during the quarter, were affected by a large military sale in Europe
last year. On a year to date basis, Aeropower sales have increased 4 1/2% in
local currency. The increase was led by Industrial Hydraulics.
Fluid Processing sales increased 21 1/2% and 14 1/2%, in local currency, during
the quarter and year to date, respectively. Driving this growth is the
Microelectronics subsegment, which had 52 1/2% local currency growth in the
quarter as it benefited from growth in the semiconductor market. Microelectronic
sales have grown by more than 40% in both United States and Asia, and 77% in
Europe. Sales in Industrial Process have increased 11 1/2% in the quarter and 2%
for the nine months. However after adjusting for the divested Stratapac(R)
business, comparable sales increased by approximately 4 1/2% for the nine
months. Within Industrial Process, Power Generation sales doubled in the quarter
due to sales for the construction of two reactor plants in Taiwan and
Hydrocarbon, Chemical & Polymer grew by 23%, both driven by growth in the United
States. In the third quarter, Water Processing's sales were down 25%; however
orders have more than doubled from $8 million to $17 million.
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<PAGE>
During the quarter, consolidated operating profits grew to 22.9% compared to
21.7%, benefiting from the restructuring initiated in the third quarter of 1999.
For the nine months, consolidated profit margins were 20.9%, an increase of 3.8%
over the prior year. In Medical, the operating profit margin for the quarter has
decreased 1% due to additional costs for the new plant in Italy, the added cost
of strengthening management and price reductions. For the nine months medical
increased 4% reflecting the combined effect of the increased sales volume to
blood centers and the restructured selling organization. Operating profit in
Biopharmaceutical improved 2% in the quarter and approximately 6% year to date
due to the joint effect of reduced systems sales and the restructuring.
Aeropower's operating profits were essentially flat for the quarter and for the
nine months. Operating profit in Fluid Processing, which was driven by rapid
growth in sales and improved margins in systems business, has grown to 17.5%
from 11.9% in the quarter and to 11.8% from 7.3% in the nine months.
By geography, Western Hemisphere sales have increased 12 1/2% and 10 1/2% for
the quarter and year to date, respectively, while operating profit as a
percentage of sales has improved by 6.6% and 8.7%, respectively, reflecting the
restructuring cost cuts as well as improved gross margins in Fluid Processing.
Reported sales in Asia, which benefited from the strong Yen, increased 21 1/2%
and 22 1/2% in the quarter and nine months, respectively. In local currency,
sales in Asia have increased 13% and 11 1/2% for the quarter and year to date,
respectively, fueled by growth in Microelectronics and overall growth in Japan
and Korea . Operating margins in Asia improved by 5.3% in the quarter and 8.3%
year to date. In Europe, reported sales decreased by 7% in the quarter and 5%
for the nine months. In local currency, sales in Europe were flat and increased
3 1/2% for the quarter and year to date, reflecting the negative impact the weak
Euro has had on sales. Operating profits have declined for the quarter from
25.3% to 21.5% also as a result of the weak Euro. For the nine months, Europe's
operating profit of 21% decreased 2.4% compared to last year.
II. Liquidity and Capital Resources
The Company's balance sheet is affected by the spot exchange rates used at the
end of the quarter for translating local currency amounts into US dollars. In
relation to the spot exchange rates at the end of last year, the European
currencies have generally weakened against the dollar while the Asian currencies
have strengthened against the dollar.
Net cash provided by operating activities has increased by $55.3 million
attributable to increased net earnings, income taxes payable and accounts
payable partially offset by decreased accrued liabilities. The Company purchased
$14.6 million of treasury stock during the nine months and an additional $10.4
million so far in the fourth quarter, completing the October 1997 $150 million
authorization program. Capital expenditures and depreciation and amortization
expense for the nine months were $43.2 million and $53.6 million, respectively.
During the quarter, the Company acquired a blood systems manufacturing facility
in Italy for approximately $15 million. The purchase price was paid with cash
generated from the Company's operating cash flows.
-11-
<PAGE>
Net debt declined by approximately $42 million and $12 million during the nine
months and the quarter, respectively. At April 29, 2000 net debt as a percentage
of net debt plus equity was 27% compared to 30% at the end of fiscal year 1999.
During the fourth quarter the Company plans to refinance on a long-term basis
approximately $160 million borrowed under uncommitted lines of credit which are
included in Notes Payable in the accompanying balance sheets. The refinancing
will result in a marked improvement in the Company's working capital. The
increase in interest rates (which is normally associated with longer term
financing) is estimated to result in additional interest expense of
approximately $2 million (or 1 cent per share) on an annual basis, beginning in
fiscal year 2001.
III. Other Matters
Euro Currency Conversion
A new European currency (Euro) was introduced in January 1999 to replace the
separate (legacy) currencies of eleven individual countries. This will entail
changes in our operations as we modify systems and commercial arrangements to
deal with the new currency. Modifications will be necessary in operations such
as payroll, benefits and pension systems, contracts with suppliers and customers
and internal financial reporting systems. A three-year transition period is
expected during which transactions can be made in the legacy currencies. This
may require dual currency processes for our operations. We have identified
issues involved and are developing and implementing solutions. The cost of this
effort is not expected to have a material effect on our business or results of
operations. There is no guarantee, however, that all problems will be foreseen
and corrected, or that no material disruption of our business will occur. The
conversion to the Euro may have competitive implications on our pricing and
marketing strategies; however, any such impact is not known at this time.
-12-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In February 1988, an action was filed in the Circuit Court for Washtenaw
County, Michigan ("Court") by the State of Michigan ("State") against Gelman
Sciences Inc. ("Gelman") (a subsidiary acquired by the Company in February 1997)
seeking to compel Gelman to investigate and remediate the contamination near
Gelman's Ann Arbor facility, which the State alleged was caused by Gelman's
disposal of waste water from its manufacturing process. Pursuant to a consent
judgement entered into by Gelman and the State in October 1992 (amended
September 1996 and October 1999), which resolved that litigation, Gelman is
remediating the contamination without admitting wrongdoing. In February 2000 the
State filed a Motion to Enforce Consent Judgement in the Court seeking
approximately $4.2 million in stipulated penalties for alleged violations of the
Consent Judgement and additional injunctive relief. Gelman disputes these
assertions and has been vigorously contesting them.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
See the Index to Exhibits for a list of exhibits filed herewith.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the three
months ended April 29, 2000.
-13-
<PAGE>
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
June 12, 2000 /s/ John Adamovich, Jr.
------------------ -----------------------
Date John Adamovich, Jr.
Chief Financial Officer
and Treasurer
June 12, 2000 /s/ Lisa Kobarg
------------------ -----------------------
Date Lisa Kobarg
Chief Corporate
Accountant
-14-
<PAGE>
Exhibit Index
------------------
Exhibit
Number Description of Exhibit
------------- ------------------------------
3 ( i )* Restated Certificate of Incorporation of the Registrant
as amended through November 23, 1993, filed as
Exhibit 3 ( i ) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 30, 1994.
3 (ii )* By-Laws of the Registrant as amended on October
5, 1999, filed as Exhibit 3 (ii) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
July 31, 1999.
10.1 (a) Employment Agreement made as of February 1, 1992
between the Registrant and John Miller.
10.2 (a) Amendment dated July 19, 1993 to Employment
Agreement dated February 1, 1992 between the
Registrant and John D. Miller.
10.3 (a) Employment Agreement made as of June 7, 2000
between Pall Europe Limited and Neil MacDonald.
27 Financial Data Schedule.
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement.
-15-
