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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 January 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 March 6, 2000, 123,649,516 shares of common stock of the Registrant were
outstanding.
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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 - January 29, 2000
and July 31, 1999 3
Condensed consolidated statements of earnings -
three months and six months ended January 29, 2000 4
and January 30, 1999
Condensed consolidated statements of cash flows -
six months ended January 29, 2000 and January 30, 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 4. Submission of matters to a vote of security holders 13
Item 6. Exhibits and reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
January 29, July 31,
ASSETS 2000 1999
Current Assets: ----------------- -----------------
Cash and cash equivalents $ 81,945 $ 86,677
Short-term investments 40,500 50,500
Accounts receivable, net of allowances
for doubtful accounts of $7,171
and $6,623, respectively 283,096 326,197
Inventories - Note 2 203,950 205,867
Other current assets 79,348 74,948
----------------- -----------------
Total Current Assets 688,839 744,189
Property, plant and equipment, net of
accumulated depreciation of $436,298
and $429,012, respectively 506,063 507,016
Other assets 241,087 237,122
----------------- -----------------
Total Assets $ 1,435,989 $ 1,488,327
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 258,067 $ 301,647
Accounts payable and
other current liabilities 179,456 198,979
Income taxes 25,955 20,147
Current portion of long-term debt 52,308 37,506
----------------- -----------------
Total Current Liabilities 515,786 558,279
Long-term debt, less current portion 100,863 116,815
Deferred taxes and other
non-current liabilities 86,935 82,569
----------------- -----------------
Total Liabilities 703,584 757,663
----------------- -----------------
Stockholders' Equity:
Common stock, $.10 par value 12,796 12,796
Capital in excess of par value 92,894 92,893
Retained earnings 750,979 732,970
Treasury stock, at cost (92,608) (82,283)
Stock option loans (5,865) (7,216)
Accumulated other comprehensive loss:
Foreign currency translation adjustment (20,105) (12,149)
Minimum pension liability (2,141) (1,937)
Unrealized investment losses (3,545) (4,410)
----------------- -----------------
(25,791) (18,496)
Total Stockholders' Equity 732,405 730,664
----------------- -----------------
Total Liabilities and
Stockholders' Equity $ 1,435,989 $ 1,488,327
================= =================
See accompanying Notes to Condensed Consolidated Financial Statements.
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PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, (in thousands,
except per share data) except per share data)
Three Months Ended Six Months Ended
------------------------------- ---------------------------------
Jan. 29, Jan. 30, Jan. 29, Jan. 30,
2000 1999 2000 1999
----------- ----------- ------------- ------------
Net sales $ 294,699 $ 278,255 $ 561,821 $ 528,105
Costs and expenses:
Cost of sales - Note 1 136,683 133,764 261,429 251,104
Selling, general and
administrative expenses 98,857 105,684 193,590 202,571
Research and development 11,680 15,034 23,498 29,969
Interest expense, net 3,546 3,035 7,036 5,983
----------- ----------- ------------- ------------
Total costs and expenses 250,766 257,517 485,553 489,627
Earnings before income taxes 43,933 20,738 76,268 38,478
Income taxes 10,105 4,764 17,542 9,043
----------- ----------- ------------- ------------
Net earnings $ 33,828 $ 15,974 $ 58,726 $ 29,435
=========== =========== ============= ============
Earnings per share:
Basic $0.27 $0.13 $0.47 $0.24
Diluted $0.27 $0.13 $0.47 $0.24
Dividends declared per share $0.165 $0.160 $0.325 $0.315
Average number of shares
outstanding:
Basic 123,952 124,595 124,049 124,339
Diluted 124,860 125,067 124,994 124,831
See accompanying Notes to Condensed Consolidated Financial Statements.
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PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
------------------------------
Jan. 29, Jan. 30,
2000 1999
------------ ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 112,818 $ 43,884
INVESTING ACTIVITIES:
Investments and licenses (3,248) (9,435)
Capital expenditures (28,414) (36,251)
Disposals of fixed assets 3,165 1,198
Short-term investments 10,000 (17,200)
----------- ----------
NET CASH USED BY INVESTING ACTIVITIES (18,497) (61,688)
FINANCING ACTIVITIES:
Net short-term (repayments) borrowings (41,919) 64,305
Long-term borrowings 14,878 2,960
Payments on long-term debt (20,976) (11,524)
Net proceeds from exercise of stock options 5,097 33,445
Purchase of treasury stock (14,604) (30,000)
Dividends paid (39,739) (38,481)
----------- ----------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (97,263) 20,705
----------- ----------
CASH FLOW FOR PERIOD (2,942) 2,901
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 86,677 12,125
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,790) 250
----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 81,945 $ 15,276
=========== ==========
Supplemental disclosures:
Interest paid (net of amount capitalized) $ 10,336 $ 8,081
Income taxes paid (net of refunds) 17,881 13,449
See accompanying Notes to Condensed Consolidated Financial Statements.
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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 results of operations for the first and second quarters of fiscal 1999 have
been adjusted to include $1,567 (1 cent per share) and $4,200 (2 cents per
share), respectively, of previously capitalized start-up costs expensed in cost
of sales when the Company adopted Statement of Position 98-5, "Reporting the
Costs of Start-up Activities" in the third quarter of fiscal year 1999.
NOTE 2 - INVENTORIES
The major classes of inventory are as follows: (in thousands)
Jan. 29, July 31,
2000 1999
-------- --------
Raw materials and components $ 75,327 $ 77,092
Work-in-process 27,193 25,127
Finished goods 101,430 103,648
-------- --------
Total inventory $203,950 $205,867
======== ========
NOTE 3 - COMPREHENSIVE INCOME
The components of comprehensive income for the three months and six months
ended January 29, 2000 and January 30, 1999 were comprised of the following:
(in thousands)
Three months ended Six months ended
-------------------------- --------------------------
Jan. 29, Jan. 30, Jan. 29, Jan. 30,
2000 1999 2000 1999
-------- -------- ---------- --------
Net income $33,828 $15,974 $58,726 $29,435
Foreign currency translation adjustment (8,057) (6,067) (8,054) 6,724
Income taxes (726) 365 98 111
------- -------- ------- -------
Foreign currency translation adjustment, net (8,783) (5,702) (7,956) 6,835
Minimum pension liability adjustment 27 (20) (368) (50)
Income taxes (12) 7 164 17
------- ------- ------- -------
Minimum pension liability adjustment, net 15 (13) (204) (33)
Unrealized investment gains (losses) 3,238 1,999 1,330 (6,848)
Income taxes (1,133) (700) (465) 2,396
------- ------- ------- ------
Unrealized investment gains (losses), net 2,105 1,299 865 (4,452)
Total comprehensive income $27,165 $11,558 $51,431 $31,785
======= ======= ======= =======
NOTE 4 - SEGMENT INFORMATION -7-
Three Months Ended Three Months Six Months
--------------------------- Six Months Ended Ended Ended
Market Segment Information: Oct. 30, Jan. 29, Jan. 29, Jan. 30, Jan. 30,
(in thousands) 1999 2000 2000 1999 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to Unaffiliated Customers:
Blood $ 48,572 $ 52,387 $100,959 $ 44,803 $ 84,242
Critical Care 18,578 23,752 42,330 21,236 41,847
-------- -------- -------- -------- --------
Medical 67,150 76,139 143,289 66,039 126,089
-------- -------- -------- -------- --------
BioPharmaceuticals 52,940 56,517 109,457 59,086 110,021
Food and Beverage 12,991 13,325 26,316 13,358 24,541
Specialty Materials 8,648 9,215 17,863 9,779 18,839
-------- -------- -------- -------- --------
BioPharmaceuticals 74,579 79,057 153,636 82,223 153,401
-------- -------- -------- -------- --------
Health Care 141,729 155,196 296,925 148,262 279,490
-------- -------- -------- -------- --------
Aerospace 30,013 31,083 61,096 32,061 61,962
Industrial Hydraulics 31,291 34,477 65,768 32,651 63,022
-------- -------- -------- -------- --------
Aeropower 61,304 65,560 126,864 64,712 124,984
-------- -------- -------- -------- --------
Microelectronics 18,822 24,678 43,500 14,202 25,900
Industrial Process 45,267 49,265 94,532 51,079 97,731
-------- -------- -------- -------- --------
Fluid Processing 64,089 73,943 138,032 65,281 123,631
-------- -------- -------- -------- --------
Total $267,122 $294,699 $561,821 $278,255 $528,105
- ------------------------------------------------------------------------------------------------------------------------------
Operating Profit: (a)
Medical $ 14,745 $ 22,050 $ 36,795 $ 13,925 $ 23,762
BioPharmaceuticals 15,733 17,557 33,290 9,214 19,708
-------- -------- -------- -------- --------
Health Care 30,478 39,607 70,085 23,139 43,470
-------- -------- -------- -------- --------
Aeropower 14,865 14,773 29,638 13,184 27,564
Fluid Processing 4,968 6,413 11,381 3,434 5,779
-------- -------- -------- -------- --------
Subtotal 50,311 60,793 111,104 39,757 76,813
General corporate expenses (14,486) (13,314) (27,800) (15,984) (32,352)
Interest expense, net (3,490) (3,546) (7,036) (3,035) (5,983)
-------- -------- -------- -------- --------
Earnings before income taxes $ 32,335 $ 43,933 $ 76,268 $ 20,738 $ 38,478
- ------------------------------------------------------------------------------------------------------------------------------
Geographic Segment Information:
(in thousands)
Sales to Unaffiliated Customers:
Western Hemisphere $122,715 $133,600 $256,315 $120,793 $233,684
Europe 97,458 106,104 203,562 112,050 211,712
Asia 46,949 54,995 101,944 45,412 82,709
-------- -------- -------- -------- --------
Total $267,122 $294,699 $561,821 $278,255 $528,105
- ------------------------------------------------------------------------------------------------------------------------------
Operating Profit:
Western Hemisphere $ 29,073 $ 31,079 $ 60,152 $ 19,003 $ 31,825
Europe 20,002 22,139 42,141 23,770 47,263
Asia 5,433 8,922 14,355 2,556 3,470
Eliminations (4,197) (1,347) (5,544) (5,572) (5,745)
-------- -------- -------- -------- --------
Subtotal 50,311 60,793 111,104 39,757 76,813
General corporate expenses (14,486) (13,314) (27,800) (15,984) (32,352)
Interest expense, net (3,490) (3,546) (7,036) (3,035) (5,983)
-------- -------- -------- -------- --------
Earnings before income taxes $ 32,335 $ 43,933 $ 76,268 $ 20,738 $ 38,478
- ------------------------------------------------------------------------------------------------------------------------------
(a) Certain components of market segment operating profit for the three months
ended October 30, 1999 have been reclassified to conform to the second
quarter presentation.
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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 $1.6 million and $13 million of its common stock during the
first and second quarters, respectively, and has $10 million remaining under 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.
9
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 $294.7 million, an increase of 6%, compared to $278.3
million in the second quarter of last year. Exchange rates, principally the
weakness of certain European currencies partially offset by the strength of the
Japanese Yen against the U.S. dollar, decreased sales by 2%, or $6.1 million. In
local currency, sales increased 8%; excluding the effect of the Stratapac(R)
business divested in the third quarter of fiscal 1999, sales increased 9%. Sales
of $561.8 for the six months, increased 6 1/2% over the prior year's sales of
$528.1 million. In local currency, sales improved by 7 1/2% over the prior
period and 8 1/2% excluding the effect of the 1999 divestiture. Increased blood
filter and Microelectronic sales fueled the growth while, in local currency,
Aeropower contributed to the growth with moderate improvement and
Biopharmaceutical was essentially flat.
Cost of sales at 46.4% and 46.5% as a percentage of sales for the quarter and
six months, respectively, has improved by 1.7% and 1%, 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 and research and development
expenses of $110.5 and $217.1 in the aggregate, for the quarter and six months
were 37.5% and 38.6% of sales. Compared to the same prior year periods, these
costs decreased $10.2 million, or nearly 6%, and $15.5 million or 5 1/2%,
respectively, principally due to the restructuring initiated in the third
quarter of 1999. Part of the restructuring plan involved the consolidation of
certain facilities. The results for the six months of fiscal 2000 include a
profit of $1.3 million from the sale of a property located in the United
Kingdom.
The effective income tax rate for the quarter and six months of both years was
approximately 23%.
The benefits of the restructuring started in the third quarter last year coupled
with on-going cost reduction efforts and local currency growth in the top-line,
10
can clearly be seen in the earnings. For the second quarter, earnings per
diluted share increased 112% to 27 cents from the 13 cents reported last year.
For the six months, earnings per share increased to 47 cents from 24 cents per
diluted share in the prior year. The prior year amounts have been reduced by two
cents for the quarter and three cents for the six months for a change in an
accounting principle related to start-up costs.
The Company started the year with three goals to help increase its earnings per
share by 30% (excluding last year's one-time charge) 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 are fully intact and the Company believes it can exceed the goal of
30% growth in earnings per share compared to last year's 92 cents (before
restructuring and one-time charges).
Review of Market and Geographic Segments
For the quarter and six months, Medical's sales grew by 17 1/2% and 15%,
respectively, in local currency. Overall, blood filter sales have grown by 18
1/2% in the quarter and 21% for the six months. The sales mix continues to shift
to blood centers, which represented approximately 69% of total blood filter
sales as of the end of the second quarter compared to approximately 53% for the
first six months of 1999. Blood center sales have increased by more than 50% in
the quarter and during the six months reflecting the growth trends in both
Europe and the United States as more countries move towards 100% leukodepletion.
Hospital sales have declined by 23% and 20% in the quarter and for the six
months, respectively. On a year to date basis, Critical Care sales have
increased approximately 3 1/2%.
Based on reported amounts, Biopharmaceutical sales declined 4% in the quarter
attributable to the general weakening of certain European currencies against the
U.S. dollar. However, on a local currency basis, Biopharmaceutical sales were
essentially flat for the quarter and up approximately 2% year to date over the
prior year. Growth in Food and Beverage continued with sales up 4% and 10% for
the quarter and six months in local currency. 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.
On a reported basis, sales in the Aeropower business segment were essentially
flat for the quarter and six months. On a local currency basis, sales in the
Aeropower segment were up approximately 4% in the quarter buoyed by an 11%
increase in Industrial Hydraulics sales. Industrial Hydraulics sales in the
United States, which suffered in the prior year, have increased 19% in the
quarter and over 12% year to date. Aerospace sales, which were down
approximately 2% 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%.
11
Fluid Processing sales increased 13 1/2% and 10 1/2%, in local currency, during
the quarter and year to date. Driving this growth is the Microelectronics
subsegment, which had 69% local currency growth in the quarter as it benefited
from growth in the semiconductor market. Microelectronic sales have grown by
more than 50% in both Europe and Asia, and doubled in the United States. Sales
in Industrial Process have declined slightly in the quarter and six months.
However after adjusting for the divested Stratapac(R) business, comparable sales
increased by approximately 3% for the quarter and are flat for the six months.
Within Industrial Process, IH Power Generation sales increased 26% in the
quarter and water processing grew by 13%, both driven by growth in the United
States.
During the quarter, consolidated operating profits grew to 20.6% compared to
14.3%, benefiting from the restructuring initiated in the third quarter of 1999.
For the six months, consolidated profit margins were 19.8%, an increase of 5.2%
over the prior year. Operating profit margins have improved in all business
segments. In Medical, the operating profit margin for the quarter has increased
8% and 7% for the six months reflecting the combined effect of the increased
sales volume to blood centers and the restructured selling organization.
Operating profit in Biopharmaceutical improved 11% in the quarter and
approximately 9% year to date due to the joint effect of reduced systems sales
and the restructuring. Aeropower's operating profits grew approximately 2% for
the quarter and remained flat for the six months. Operating profit in Fluid
Processing, which has benefited from improved margins in systems sales, has
grown to 8.7% and 8.2% in the quarter and six months from 5.3% and 4.7% last
year, respectively.
By geography, Western Hemisphere sales have increased 10 1/2% and 9 1/2% for the
quarter and year to date, respectively, while operating profit has improved by
7.6% and 10%, 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% and 23% in the quarter and six
months, respectively. In local currency, sales in Asia have increased 11% and
10% for the quarter and year to date, respectively, fueled by growth in
Microelectronics and overall growth in Korea and Singapore . Operating margins
in Asia improved approximately 10% in both the quarter and year to date. In
Europe, reported sales decreased by 5 1/2% in the quarter and 4% for the six
months. However, in local currency, sales have increased by 4 1/2% for both
periods, reflecting the negative impact the weak Euro has had on sales.
Operating profits have declined slightly for the quarter from 21.2% to 20.9%
also as a result of the weak Euro. For the six months, Europe's operating profit
of 20.7% represents a decrease of 1.6% compared to last year.
12
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, except for the British Pound, have generally weakened against the
dollar while the Asian currencies have strengthened against the dollar. During
the six months, net debt declined by approximately $30 million and was flat
during the quarter. The reduction in the six months was comprised of net
reductions of approximately $35 million partially offset by the effect of
foreign currency exchange, primarily in Japan, of approximately $5 million.
Net cash provided by operating activities has increased by $68.9 million
attributable to increased net earnings and collection of receivables partially
offset by decreased payables. During the quarter, the Board of Directors
authorized an extension of the Company's existing stock repurchase program and
also authorized expenditure of up to another $200 million to repurchase the
Company's shares. The Company purchased $14.6 million of treasury stock during
the six months. Capital expenditures and depreciation and amortization expense
for the six months were $28.4 million and $34.9 million, respectively. At the
beginning of the third quarter, the Company closed the purchase of a
manufacturing facility in Italy for a purchase price of $15 million. The
purchase price was paid with cash generated from the Company's operating cash
flows.
III. Other Matters
Year 2000 Compliance
The Company satisfactorily completed its Year 2000 (Y2K) project as scheduled.
During the Y2K rollover period and to date, the Company's information systems
and operations have not experienced any major Y2K related problems.
Additionally, the Company is not aware of any significant Y2K problems impacting
its major customers or suppliers. Although the Company believes its information
systems and operations are Y2K compliant, uncertainties remain relating to
whether Y2K problems may arise in the future. In the event that Y2K issues do
arise, the Company's previously developed Y2K contingency plans remain intact.
The expenditures necessary to achieve Y2K compliance were not material to the
Company's financial statements
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.
-13-
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The Annual Meeting of Shareholders of the Company was held November 17,
1999. Proxies for the meeting were solicited pursuant to Regulation 14A
under the Securities Exchange Act of 1934.
(b) Not required.
(c) The matters voted upon and the results of the voting were as follows:
1. Holders of 108,986,355 shares of common stock voted either in
person or by proxy for the election of five directors. The number of
votes cast for each nominee were as indicated below:
Director For Withheld
-------- --- --------
Abraham Appel 106,362,119 2,624,236
Daniel J. Carroll, Jr. 106,404,909 2,581,446
Ulric Haynes, Jr. 106,397,445 2,588,910
Jeremy Hayward-Surry 106,359,509 2,626,846
Edwin W. Martin, Jr. 106,399,371 2,586,984
2. The proposal to adopt a management stock purchase plan was approved
as follows: for 95,904,978; against 12,389,135 and 692,242
abstensions.
3. The proposal to adopt an employee stock purchase plan was approved
as follows: for 107,263,950; against 1,131,497 and 590,908
abstensions.
(d) Not applicable.
-14-
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 January 29, 2000.
-15-
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
March 14, 2000 /s/ John Adamovich, Jr.
- -------------- -----------------------
Date John Adamovich, Jr.
Chief Financial Officer
and Treasurer
March 14, 2000 /s/ Lisa Kobarg
- --------------- -----------------------
Date Lisa Kobarg
Chief Corporate
Accountant
-16-
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(a) Pall Corporation Management Stock Purchase Plan, as
amended on January 19, 2000.
27 Financial Data Schedule.
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement.