Pall 8-K Results of Operations and Financial Condition

Pall Corporation First Quarter Sales Up 11%

East Hills, NY (December 1, 2004) – Pall Corporation (NYSE: PLL) today reported sales and earnings results for the first quarter ended October 31, 2004.

Sales for the quarter increased 11% to $414.7 million compared to $374.3 million last year. Reported earnings were $21.7 million or 17 cents per share as compared to $24.7 million or 19 cents per share last year. Excluding restructuring and other charges, earnings on a pro forma basis increased 18½% to $26.4 million or 21 cents per share as compared to $22.3 million or 18 cents per share last year. The effect of foreign currency translation added 5% to revenues and increased earnings per share by one cent.

Restructuring and other charges of $5.5 million were recorded in the quarter related to the Company’s ongoing cost reduction and business realignment programs and the write-down of a strategic investment. Starting with quarter one, the BioSciences division results were recorded within the Medical segment. Information for the prior period has been restated accordingly.

Eric Krasnoff, Chairman and CEO, said, “We are pleased with the positive results for the quarter. The 11% top-line increase was accompanied by a decrease in both SG&A and Cost of Sales as a percentage of sales. We see this as further confirmation that our strategic business plans are working.

The results by geography, with sales reported in local currency, are:

Sales in Asia increased 24%, supported by 18% growth in Japan. The Asian growth was led by increases of 30½% in BioPharmaceuticals, 25½% in General Industrial and 27½% in Microelectronics.

Sales in the Western Hemisphere grew 7%, driven by double-digit growth in Microelectronics, BioPharmaceuticals and General Industrial. In Europe, sales declined 2½% primarily due to reduced sales in Aerospace and the sale of our machine tool business.

The results reported in local currency by business are:

Microelectronics, General Industrial and Aerospace combined for an overall Industrial business sales increase of 7%. The Industrial operating profit margin was 10.8% while operating profit dollars were a healthy $26.8 million.

Looking at the Industrial businesses by reporting segment, Microelectronics sales increased 25% compared to last year. Operating profit margins improved to 16.6% from 11.9% last year. New Pall products and increasing sales beyond our core chip manufacturing applications are driving growth.

General Industrial sales grew 8½%. Systems sales were particularly robust. The operating profit margin was 8.3% and operating profit dollars increased by 3% to $13.2 million. Within General Industrial, Water Processing grew 27%. Power Generation’s sales increased 26½% and Fuels and Chemicals grew 19%. Food and Beverage sales were up slightly.

Aerospace sales were down 13½% due to the timing of large projects. Military sales were down 26%. Commercial sales were flat, while orders were up 13½% in the quarter. Aerospace operating margins were 13.1% in the quarter. Our overall outlook for Aerospace remains positive for the year.

Turning now to Life Sciences, sales increased 5% reflecting strong growth in BioPharmaceuticals. Life Sciences operating profit margins increased to 18.5% and operating profit dollars were up 23%. Sales in the BioPharmaceuticals segment increased 12% with particularly strong demand from the biotechnology sector. The BioPharmaceuticals operating profit margin was 23.9% and operating profit dollars were up 11½%.

Within Medical, the blood filtration and hospital product sectors grew 5½%. This gain was offset by the termination of IV filter usage by a major OEM customer due to the reformulation of its injectable drug. In our blood filtration business, eBDS (Bacterial Detection System) sales continue to grow and we are on schedule with our prion removal filter development. Medical operating profit margins improved to 14.5% and operating profit dollars were $13.8 million, up 42%.

Mr. Krasnoff concluded, “During the quarter, we continued the execution of our CoRe (Cost Reduction) programs and they are showing through to the bottom line. Both Cost of Sales and SG&A as a percentage of sales reduced 10 basis points compared to last year. Our balance sheet also remains strong. We are off to a good start.”

Tomorrow, December 2, 2004, at 8:30 am EST, Pall Corporation will host its quarterly earnings conference call. Individuals can access the webcast on the home page of the Company’s website, www.pall.com. Listening to the webcast requires 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, 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, pharmaceutical, transfusion medicine, semiconductor, water purification, aerospace and broad industrial markets. Total revenues are $1.8 billion. The Company headquarters are in East Hills, New York with extensive operations throughout the world. Visit Pall at 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 its ability to achieve the savings anticipated from its cost reduction initiatives; 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 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 www.sec.gov.

Management uses certain non-GAAP measurements to assess Pall’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 Pall’s financial position and results of operations. Pall 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 on-going operations.

Financial Tables Follow...

PALL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)

	Oct. 31, 2004		Jul 31, 2004
Assets
Cash and short-term investments	$	208,388	$	207,277
Accounts receivable, net		440,382		468,905
Inventories, net		338,136		302,861
Other current assets		91,337		90,772
Total current assets		1,078,243		1,069,815
Property, plant and equipment, net		604,670		600,383
Other assets		477,842		470,185
Total assets	$	2,160,755	$	2,140,383
Liabilities and Stockholders' Equity
Short-term debt	$	64,583	$	59,482
Accounts payable, income taxes and other current liabilities		352,437		381,034
Total current liabilities		417,020		440,516
Long-term debt		509,673		488,686
Deferred taxes and other non-current liabilities		153,851		156,742
Total liabilities		1,080,544		1,085,944
Stockholders' equity		1,080,211		1,054,439
Total liabilities and stockholders' equity	$	2,160,755	$	2,140,383

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

	FIRST QUARTER ENDED
	OCT. 31, 2004			OCT.31, 2003
Net sales	$	414,732		$	374,286
Cost of sales		214,860			194,221
Gross profit		199,872			180,065
Selling, general and administrative expenses		145,680			131,907
Research and development		13,713			13,708
Restructuring and other
charges, net		5,523	(a)		(3,703	)(b)
Interest expense, net		5,707			5,152
Earnings before
income taxes		29,249			33,001
Provision for
income taxes		7,550			8,333
Net earnings	$	21,699		$	24,668
Earnings per share:
Basic:	$	.17		$	0.20
Diluted:	$	.17		$	0.19
Average number of
shares outstanding:
Basic:		124,172			125,436
Diluted:		125,009			126,507
Net earnings
as reported	$	21,699		$	24,668
Restructuring and other
charges, net, after
pro forma tax effect		4,728			(2,401	)
Pro forma earnings	$	26,427		$	22,267
Diluted earnings per
share as reported	$	0.17		$	0.19
Restructuring and
other charges, net	$	0.04	(a)	$	(0.01	)(b)
Pro forma diluted
earnings per share	$	0.21		$	0.18

(a)	Restructuring and other charges, net, includes $2,648 (2 cents per share, after pro forma tax effect) primarily comprised of severance costs related to the restructuring of operations into three integrated businesses and $2,875 (2 cents per share, after pro forma tax effect) related to the impairment of a strategic investment.
(b)	Restructuring and other charges, net, reflect an adjustment of $5,289 (2 cents per share, after pro forma tax effect) to decrease a pension liability partially offset by charges of $1,586 (1 cent per share, after pro forma tax effect) primarily related to restructuring of operations in Japan.

PALL CORPORATION MARKET SEGMENT AND GEOGRAPHIC INFORMATION (Unaudited)
(DOLLAR AMOUNTS IN THOUSANDS)

SALES FIRST QUARTER ENDED:	OCT. 31, 2004			OCT. 31, 2003			% CHANGE			% CHANGE IN LOCAL CURRENCY
MARKET SEGMENT
INFORMATION:
Medical (a)	$	95,465		$	92,281			3	½	—
BioPharmaceuticals (a)		70,789			60,013			18		12
Total Life Sciences		166,254			152,294			9		5
General Industrial		158,221			138,623			14		8	½
Aerospace		38,837			43,543			(11	)	(13	½)
Microelectronics		51,420			39,826			29		25
Total Industrial		248,478			221,992			12		7
Total	$	414,732		$	374,286			11		6
GEOGRAPHIC INFORMATION: SALES TO UNAFFILIATED CUSTOMERS
Western
Hemisphere	$	152,278		$	141,987			7	½	7
Europe		169,758			159,723			6	½	(2	½)
Asia		92,696			72,576			27	½	24
Total	$	414,732		$	374,286			11		6
TOTAL SALES
Western
Hemisphere	$	201,879		$	182,015
Europe		195,917			182,803
Asia		93,955			73,575
Eliminations		(77,019	)		(64,107	)
Total	$	414,732		$	374,286

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

OPERATING PROFIT FIRST QUARTER ENDED:		OCT. 31, 2004		%		OCT. 31, 2003		%
MARKET SEGMENT
INFORMATION:
Medical(a)	$	13,795		14.5	$	9,726		10.5
BioPharmaceuticals(a)		16,941		23.9		15,227		25.4
Total Life Sciences		30,736		18.5		24,953		16.4
General Industrial		13,192		8.3		12,824		9.3
Aerospace		5,089		13.1		11,372		26.1
Microelectronics		8,514		16.6		4,747		11.9
Total Industrial		26,795		10.8		28,943		13.0
Subtotal		57,531		13.9		53,896		14.4
Restructuring and other charges		(5,523	)			3,703
General corporate expenses		(17,052	)			(19,446	)
Interest expense, net		(5,707	)			(5,152	)
Earnings before income taxes	$	29,249			$	33,001
GEOGRAPHIC INFORMATION:
Western Hemisphere	$	27,063		13.4	$	20,742		11.4
Europe		21,014		10.7		22,773		12.5
Asia		13,311		14.2		10,508		14.3
Eliminations		(3,857	)			(127	)
Subtotal		57,531		13.9		53,896		14.4
Restructuring and other charges		(5,523	)			3,703
General corporate expenses		(17,052	)			(19,446	)
Interest expense, net		(5,707	)			(5,152	)
Earnings before income taxes	$	29,249			$	33,001

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

Contact:

Marc Wilson

Pall Corporation

Tel: (516) 801-9800

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