Pall 8-K Pall Corporation Reports Second Quarter and First Half Results

Exhibit 99

Pall Corporation Reports Second Quarter and First Half Results

East Hills, NY (March 11, 2009) — Pall Corporation (NYSE:PLL) today reported sales and earnings for the second quarter and six months ended January 31, 2009.

Overview

Sales for the six months were $1.1 billion, a decrease of 5.5% or 1.7% in LC, from a year earlier. Net earnings were $82 million, compared to $84.1 million in the period last year. Diluted earnings per share (“EPS”) were $0.68, on par with a year earlier. Pro forma EPS, excluding restructuring and other charges as well as non-recurring favorable tax items, were $0.78 versus last year’s $0.82. The estimated impact of foreign currency translation reduced earnings per share by $0.03 in both the quarter and six months.

Second quarter sales were $543.3 million compared to $625.7 million in the second quarter of fiscal 2008. Foreign exchange reduced sales by $38 million or 6%. Net earnings were $38.9 million compared to $48 million in the second quarter of fiscal 2008. Diluted EPS were $0.33, down from $0.39 a year earlier. Pro forma EPS, excluding restructuring and other charges, were $0.38 versus last year’s $0.46.

Eric Krasnoff, Chairman and CEO, stated, “While the economy deteriorated during our second quarter, Pall is weathering the storm. Our market and geographic diversity provides some shelter. Well-established productivity improvement and cost-reduction programs have been advanced to stay ahead of forecasted changes in market demand. The results can be seen clearly in the 110 basis point improvement in gross margins.

Our ability to respond to the economic downturn contributed to a $13 million reduction in SG&A expenses compared to the first quarter. We are also executing on further plans to align operating costs to this business climate.

Pall maintains a sound balance sheet and solid liquidity. We returned $95 million of cash to shareholders in the six months and increased the quarterly dividend to 14¹/2 ¢ per share.

We are managing to the current reality while preserving our longer-term perspective. Pall should be well-positioned when the economy rebounds.”

Life Sciences — Second Quarter Highlights

(Dollar Amounts in Thousands)

Sales:	JAN. 31, 2009		% CHANGE			% CHANGE IN LC
Medical (a)	$	96,887		(9.0	)		(3.4	)
BioPharmaceuticals (a)		128,135		(7.2	)		(0.1	)
Total Life Sciences segment	$	225,022		(8.0	)		(1.5	)
			% OF SALES
Gross profit	$	115,302		51.2
Operating profit	$	48,602		21.6

(a) The BioPharmaceuticals market includes the Laboratory market previously reported in Medical. The amounts above reflect this change.

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Medical sales decreased 3.4% in the quarter. This is in line with expectations and reflects lower Blood Filtration sales in the Western Hemisphere. Both Cell Therapy and OEM market sales increased.

Sales in BioPharmaceuticals were essentially flat compared to 16.7% growth in the prior year. Pharmaceutical customers were working down inventory levels and delaying capital projects. Laboratory sales were up 10.1% (in LC) with growth in Europe and Asia particularly robust.

Gross margins improved 160 basis points to 51.2% driven by price and market mix changes. SG&A dollars decreased about 2% in LC and decreased 40 basis points as a percentage of sales to 25.4%.Operating profit in the quarter was $48.6 million. Operating profit margin improved to 21.6%.

Industrial — Second Quarter Highlights

(Dollar Amounts in Thousands)

Sales:	JAN. 31, 2009		% CHANGE			% CHANGE IN LC
Energy, Water & Process Technologies	$	201,332		(13.2	)		(6.3	)
Aerospace & Transportation		66,388		(6.5	)		1.3
Microelectronics		50,554		(35.4	)		(34.7	)
Total Industrial segment	$	318,274		(16.5	)		(10.7	)
			% OF SALES
Gross profit	$	141,047		44.3
Operating profit	$	35,882		11.3

Energy, Water & Process Technologies (“EWPT”) sales decreased 6.3% reflecting global weakness in Industrial Manufacturing which declined 23%. On the positive side, Power Generation grew 10% globally. Other bright spots included double-digit sales growth in the Municipal Water market in the Western Hemisphere and in Food & Beverage in the Western Hemisphere and Asia.

In Aerospace & Transportation, Military sales continued to be strong increasing 12.9% (in LC). Commercial Aerospace and Transportation were down.

Microelectronics sales decreased in all geographies driven by continued weakness in the semiconductor and consumer electronics markets.

Gross margins improved 50 basis points to 44.3% driven by price and the benefits of lean manufacturing and cost reduction initiatives. SG&A was flat (in LC). Operating profit was $35.9 million, while operating profit margin was 11.3%.

Conclusion/Outlook

Mr. Krasnoff concluded, “Pall’s strategic market positions across the globe can help mitigate the impact of the present global macroeconomic environment. We also continue strong cost control measures to palliate the impact of the recession. In light of the turbulent global economic environment, we are not providing specific guidance on sales and earnings. We remain committed to keeping the public informed of conditions and prospects for key markets, trends that affect the business and of our long-term vision and strategy.

While the timing and triggers of economic recovery are unknown at this juncture, what is clear to us is that the long-term drivers for Pall’s enabling technologies are compelling.”

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Conference Call

On Thursday, March 12, 2009, 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 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 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. 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. Forward-looking statements are those that use terms such as “anticipate”, “should”, “believe”, “estimate”, “expect”, “intend”, “plan”, “predict”, “potential” or similar expressions about matters that are not historical facts. Forward-looking statements contained in this and 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. Such risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors” in the 2008 Form 10-K, and other reports the Company files with the Securities and Exchange Commission, including the impact of the current global recessionary environment and its likely depth and duration, the current credit market crisis, volatility in currency and energy costs and other macro economic challenges currently affecting the Company, our customers (including their cash flow and payment practices) and vendors, and the effectiveness of our initiatives to mitigate the impact of the current environment. The Company makes these statements as of the date of this disclosure and undertakes no obligation to update them.

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 the Company’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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PALL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in Thousands)

	JAN. 31, 2009		JULY 31, 2008
Assets:
Cash and cash equivalents	$	221,486	$	454,065
Accounts receivable		502,282		617,079
Inventories		458,742		492,977
Other current assets		173,206		95,518
Total current assets		1,355,716		1,659,639
Property, plant and equipment, net		623,528		662,985
Other assets		565,925		634,122
Total assets	$	2,545,169	$	2,956,746
Liabilities and Stockholders’ Equity:
Short-term debt	$	21,168	$	29,314
Accounts payable, income taxes and other current liabilities		504,441		544,649
Total current liabilities		525,609		573,963
Long-term debt		654,771		747,051
Deferred taxes and other non-current liabilities		352,465		496,497
Total liabilities		1,532,845		1,817,511
Stockholders’ equity		1,012,324		1,139,235
Total liabilities and stockholders’ equity	$	2,545,169	$	2,956,746

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

	SECOND QUARTER ENDED						SIX MONTHS ENDED
	JAN. 31, 2009			JAN. 31, 2008			JAN. 31, 2009			JAN. 31, 2008
Net sales	$	543,296		$	625,747		$	1,121,318		$	1,186,754
Cost of sales		286,947			337,471			585,578			637,162
Gross profit		256,349			288,276			535,740			549,592
% of sales		47.2	%		46.1	%		47.8	%		46.3	%
Selling, general and administrative expenses		167,084			178,845			347,590			349,832
% of sales		30.8	%		28.6	%		31.0	%		29.5	%
Research and development		17,419			18,092			36,352			34,987
Earnings before restructuring and other charges, net (“ROTC”), interest expense, net, and income taxes		71,846			91,339			151,798			164,773
% of sales		13.2	%		14.6	%		13.5	%		13.9	%
ROTC		8,747	(a)		13,859	(b)		16,922	(a)		22,628	(b)
Interest expense, net		6,553			8,063			15,979			15,784
Earnings before income taxes		56,546			69,417			118,897			126,361
Provision for income taxes		17,675			21,429			36,939	(a)		42,271	(b)
Net earnings	$	38,871		$	47,988		$	81,958		$	84,090
Earnings per share:
Basic	$	0.33		$	0.39		$	0.69		$	0.68
Diluted	$	0.33		$	0.39		$	0.68		$	0.68
Average shares outstanding:
Basic		118,428			123,372			118,931			123,256
Diluted		119,213			124,572			119,921			124,449
Net earnings as reported	$	38,871		$	47,988		$	81,958		$	84,090
ROTC after pro forma tax effect		6,322	(a)		9,229	(b)		13,016	(a)		15,325	(b)
Tax adjustments		—			—			(1,426	)(a)		2,435	(b)
Pro forma earnings	$	45,193		$	57,217		$	93,548		$	101,850
Diluted earnings per share as reported	$	0.33		$	0.39		$	0.68		$	0.68
ROTC after pro forma tax effect		0.05	(a)		0.07	(b)		0.11	(a)		0.12	(b)
Tax adjustments		—			—			(0.01	)(a)		0.02	(b)
Pro forma diluted earnings per share	$	0.38		$	0.46		$	0.78		$	0.82

(a)	ROTC in the quarter and six months include charges of $7,384 (5 cents per share, after pro forma tax effect) and $9,974 (6 cents per share, after pro forma tax effect), respectively, comprised of severance and other costs related to the Company’s cost reduction programs. Furthermore, ROTC includes $1,363 in the quarter and $3,228 (3 cents per share, after pro forma tax effect) in the six months comprised of legal and other professional fees related to the previously reported matters that were under inquiry by the audit committee of the Company’s board of directors, an increase to previously established environmental reserves, net of insurance settlements and the impairment of capitalized software development costs related to discontinued projects. ROTC in the six months also includes $1,977 (1 cent per share after pro forma tax effect) related to the impairment of equity and debt investments held by the Company’s benefits protection trust and $1,743 (1 cent per share, after pro forma tax effect) to write-off in process research and development acquired in the acquisition of GeneSystems, SA.
	Provision for income taxes includes a benefit of $1,426 (1 cent per share) in the six months primarily resulting from an adjustment to the net tax cost of the repatriation of foreign earnings and newly enacted tax legislation. Pro forma earnings excludes these items as they are deemed to be non-recurring in nature.
(b)	ROTC in the quarter and the six months includes charges of $3,959 (2 cents per share, after pro forma tax effect) and $8,962 (5 cents per share, after pro forma tax effect) primarily comprised of severance and other costs related to the Company’s cost reduction programs ROTC in the quarter and six months also includes $9,900 (5 cents per share, after pro forma tax effect) and $13,666 (7 cents per share, after pro forma tax effect) primarily comprised of legal and other professional fees related to the previously reported matters that were under inquiry by the audit committee of the Company’s board of directors.
	Provision for income taxes in the six months includes a charge of $2,435 (2 cents per share) resulting from newly enacted tax legislation in a foreign tax jurisdiction. Pro forma earnings excludes this item as it is deemed to be non-recurring in nature.

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PALL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)

	SIX MONTHS ENDED
	JAN. 31, 2009			JAN. 31, 2008
Net cash provided/(used) by operating activities	$	61,893		$	(74,905	)
Investing activities:
Acquisitions, net of cash acquired		(37,214	)		—
Disposals of long-lived assets		2,992			4,605
Capital expenditures		(58,387	)		(52,681	)
Other		(14,297	)		(4,789	)
Net cash used by investing activities		(106,906	)		(52,865	)
Financing activities:
Dividends paid		(30,814	)		(29,425	)
Notes payable and long-term borrowings		(63,636	)		101,453
Purchase of treasury stock		(64,884	)		—
Other		7,874			8,222
Net cash (used)/provided by financing activities		(151,460	)		80,250
Cash flow for period		(196,473	)		(47,520	)
Cash and cash equivalents at beginning of year		454,065			443,036
Effect of exchange rate changes on cash		(36,106	)		14,749
Cash and cash equivalents at end of period	$	221,486		$	410,265
Free cash flow:
Net cash provided by operating activities	$	61,893		$	(74,905	)
Less capital expenditures		58,387			52,681
Free cash flow	$	3,506		$	(127,586	)

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PALL CORPORATION
SUMMARY OPERATING PROFIT BY SEGMENT
(Unaudited)
(Dollar Amounts in Thousands)

	SECOND QUARTER ENDED						SIX MONTHS ENDED
	JAN. 31, 2009			JAN. 31, 2008			JAN. 31, 2009			JAN. 31, 2008
Industrial
Sales	$	318,274		$	381,267		$	675,967		$	727,660
Cost of sales		177,227			214,334			370,048			410,559
Gross profit		141,047			166,933			305,919			317,101
% of sales		44.3	%		43.8	%		45.3	%		43.6	%
Selling, general and administrative expenses		97,360			103,606			198,460			201,420
% of sales		30.6	%		27.2	%		29.4	%		27.7	%
Research and development		7,805			7,884			16,471			15,161
Operating profit	$	35,882		$	55,443		$	90,988		$	100,520
% of sales		11.3	%		14.5	%		13.5	%		13.8	%
Life Sciences
Sales	$	225,022		$	244,480		$	445,351		$	459,094
Cost of sales		109,720			123,137			215,530			226,603
Gross profit		115,302			121,343			229,821			232,491
% of sales		51.2	%		49.6	%		51.6	%		50.6	%
Selling, general and administrative expenses		57,086			62,982			119,470			124,729
% of sales		25.4	%		25.8	%		26.8	%		27.2	%
Research and development		9,614			10,208			19,881			19,826
Operating profit	$	48,602		$	48,153		$	90,470		$	87,936
% of sales		21.6	%		19.7	%		20.3	%		19.2	%
CONSOLIDATED:
Operating profit	$	84,484		$	103,596		$	181,458		$	188,456
General corporate expenses		12,638			12,257			29,660			23,683
Earnings before ROTC, interest and income taxes		71,846			91,339			151,798			164,773
ROTC		8,747			13,859			16,922			22,628
Interest expense, net		6,553			8,063			15,979			15,784
Earnings before income taxes	$	56,546		$	69,417		$	118,897		$	126,361

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PALL CORPORATION
SUPPLEMENTAL SEGMENT SALES INFORMATION BY MARKET AND GEOGRAPHY
(Unaudited)
(Dollar Amounts in Thousands)

								EXCHANGE			% CHANGE
								RATE			IN LOCAL
SECOND QUARTER ENDED	JAN. 31, 2009		JAN. 31, 2008		% CHANGE			IMPACT			CURRENCY
					|------------------------ Increase/(Decrease) ------------------------|
Industrial
By Market:
Energy, Water & Process Technologies	$	201,332	$	232,005		(13.2	)	$	(16,141	)		(6.3	)
Aerospace & Transportation		66,388		71,013		(6.5	)		(5,536	)		1.3
Microelectronics		50,554		78,249		(35.4	)		(545	)		(34.7	)
Total Industrial	$	318,274	$	381,267		(16.5	)	$	(22,222	)		(10.7	)
By Geography:
Western Hemisphere	$	100,065	$	98,976		1.1		$	(1,904	)		3.0
Europe		117,423		149,309		(21.4	)		(18,219	)		(9.2	)
Asia		100,786		132,982		(24.2	)		(2,099	)		(22.6	)
Total Industrial	$	318,274	$	381,267		(16.5	)	$	(22,222	)		(10.7	)
Life Sciences
By Market:
Medical (a)	$	96,887	$	106,432		(9.0	)	$	(5,948	)		(3.4	)
BioPharmaceuticals (a)		128,135		138,048		(7.2	)		(9,843	)		(0.1	)
Total Life Sciences	$	225,022	$	244,480		(8.0	)	$	(15,791	)		(1.5	)
By Geography:
Western Hemisphere	$	84,867	$	95,897		(11.5	)	$	(705	)		(10.8	)
Europe		107,676		117,471		(8.3	)		(15,163	)		4.6
Asia		32,479		31,112		4.4			77			4.1
Total Life Sciences	$	225,022	$	244,480		(8.0	)	$	(15,791	)		(1.5	)

(a) The BioPharmaceuticals market includes the Laboratory market previously reported in Medical. The amounts in this table reflect this change.

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PALL CORPORATION
SUPPLEMENTAL SEGMENT SALES INFORMATION BY MARKET AND GEOGRAPHY
(Unaudited)
(Dollar Amounts in Thousands)

								EXCHANGE			% CHANGE
								RATE			IN LOCAL
SIX MONTHS ENDED	JAN. 31, 2009		JAN. 31, 2008		% CHANGE			IMPACT			CURRENCY
					|------------------------ Increase/(Decrease) ------------------------|
Industrial
By Market:
Energy, Water & Process Technologies	$	418,931	$	440,694		(4.9	)	$	(19,135	)		(0.6	)
Aerospace & Transportation		139,083		137,272		1.3			(7,088	)		6.5
Microelectronics		117,953		149,694		(21.2	)		175			(21.3	)
Total Industrial	$	675,967	$	727,660		(7.1	)	$	(26,048	)		(3.5	)
By Geography:
Western Hemisphere	$	201,964	$	195,909		3.1		$	(2,827	)		4.5
Europe		249,520		281,768		(11.4	)		(21,572	)		(3.8	)
Asia		224,483		249,983		(10.2	)		(1,649	)		(9.5	)
Total Industrial	$	675,967	$	727,660		(7.1	)	$	(26,048	)		(3.5	)
Life Sciences
By Market:
Medical (a)	$	189,293	$	200,674		(5.7	)	$	(6,906	)		(2.2	)
BioPharmaceuticals (a)		256,058		258,420		(0.9	)		(12,059	)		3.8
Total Life Sciences	$	445,351	$	459,094		(3.0	)	$	(18,965	)		1.1
By Geography:
Western Hemisphere	$	166,183	$	182,899		(9.1	)	$	(966	)		(8.6	)
Europe		217,134		218,493		(0.6	)		(18,246	)		7.7
Asia		62,034		57,702		7.5			247			7.1
Total Life Sciences	$	445,351	$	459,094		(3.0	)	$	(18,965	)		1.1

(a) The BioPharmaceuticals market includes the Laboratory market previously reported in Medical. The amounts in this table reflect this change.

Contact:
Pall Corporation
Patricia Iannucci
V.P. Investor Relations & Corporate Communications
Telephone: 516-801-9848
Email: piannucci@pall.com

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