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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 27, 2001

Commission File No. 1-4311

PALL CORPORATION

Incorporated in New York State I.R.S. Employer
Identification # 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, 2001, 122,792,517 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 27, 2001
and July 29, 2000 3

Condensed consolidated statements of earnings -
three months and six months ended January 27, 2001 4
and January 29, 2000

Condensed consolidated statements of cash flows -
six months ended January 27, 2001 and January 29, 2000 5

Notes to condensed consolidated financial statements 6

Item 2. Management's discussion and analysis of financial condition and
results of operations 10

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 15

Item 4. Submission of matters to a vote of security holders 15

Item 6. Exhibits and reports on Form 8-K 16

SIGNATURES 17

EXHIBIT INDEX 18

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands)
January 27, July 29,
2001 2000
----------------- -----------------

ASSETS
Current Assets
Cash and cash equivalents ............................................... $ 53,861 $ 81,008
Short-term investments .................................................. 72,600 60,700
Accounts receivable, net of allowances
for doubtful accounts of $8,340
and $7,832, respectively .............................................. 309,410 337,806
Inventories - Note 2 .................................................... 221,601 202,959
Other current assets .................................................... 67,368 70,703
----------- -----------
Total Current Assets ...................................... 724,840 753,176

Property, plant and equipment, net of
accumulated depreciation of $463,514
and $443,875, respectively .............................................. 506,320 503,755
Other assets ............................................................... 258,566 250,321
----------- -----------
Total Assets .............................................. $ 1,489,726 $ 1,507,252
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Notes payable to banks .................................................. $ 85,111 $ 112,543
Accounts payable and
other current liabilities ........................................... 214,803 214,079
Income taxes ............................................................ 30,984 31,055
Current portion of long-term debt ....................................... 58,425 80,002
----------- -----------
Total Current Liabilities ................................. 389,323 437,679

Long-term debt, less current portion ....................................... 263,289 223,915
Deferred taxes and other
non-current liabilities .............................................. 80,339 84,352
----------- -----------
Total Liabilities ......................................... 732,951 745,946
----------- -----------
Stockholders' Equity:
Common stock, $.10 par value ............................................ 12,796 12,796
Capital in excess of par value .......................................... 106,657 103,935
Retained earnings ....................................................... 806,561 793,491
Treasury stock, at cost ................................................. (119,362) (104,625)
Stock option loans ...................................................... (5,460) (5,584)
Accumulated other comprehensive loss:
Foreign currency translation adjustment ............................ (39,810) (33,350)
Minimum pension liability .......................................... (1,155) (1,271)
Unrealized investment losses ....................................... (3,147) (4,086)
Unrealized losses on derivatives - Note 3 .......................... (305) --
----------- -----------
(44,417) (38,707)

Total Stockholders' Equity ................................ 756,775 761,306
----------- -----------
Total Liabilities and
Stockholders' Equity ................................... $ 1,489,726 $ 1,507,252
=========== ===========

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. 27, Jan. 29, Jan. 27, Jan. 29,
2001 2000 2001 2000
----------------- --------------- -------------- ---------

Net sales ............................................... $ 304,697 $ 294,699 $ 582,848 $ 561,821
--------- --------- --------- ---------
Costs and expenses:
Cost of sales ........................................ 143,227 136,683 271,217 261,429
Selling, general and
administrative expenses ............................ 105,131 98,857 204,740 194,910
Research and development ............................. 14,147 11,680 27,251 23,498
Gain on sale of property ............................. -- -- -- (1,320)
Interest expense, net ................................ 4,270 3,546 8,497 7,036
--------- --------- --------- ---------
Total costs and expenses ................................ 266,775 250,766 511,705 485,553
--------- --------- --------- ---------
Earnings before income taxes ............................ 37,922 43,933 71,143 76,268
Income taxes ............................................ 8,011 10,105 15,652 17,542
--------- --------- --------- ---------
Net earnings ............................................ $ 29,911 $ 33,828 $ 55,491 $ 58,726
========= ========= ========= =========
Earnings per share:
Basic ............................................. $ 0.24 $ 0.27 $ 0.45 $ 0.47
Diluted ........................................... $ 0.24 $ 0.27 $ 0.45 $ 0.47

Dividends declared per share ............................ $ 0.170 $ 0.165 $ 0.335 $ 0.325

Average number of shares outstanding:

Basic ............................................. 122,402 123,952 122,686 124,049
Diluted ........................................... 123,347 124,860 123,611 124,994

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. 27, Jan. 29,
2001 2000
------------ ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES ................................ $ 88,481 $ 112,818
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures ................................................... (40,023) (28,414)
Disposals of fixed assets .............................................. 2,022 3,165
Short-term investments ................................................. (11,900) 10,000
Benefits protection trust .............................................. (3,947) --
Investments and licenses ............................................... (4,005) (3,248)
Acquisitions of businesses, net of cash acquired ....................... (1,426) --
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES .................................... (59,279) (18,497)
--------- ---------
FINANCING ACTIVITIES:
Notes payable .......................................................... (194,931) (41,919)
Long-term borrowings ................................................... 223,236 14,878
Payments on long-term debt ............................................. (30,085) (20,976)
Net proceeds from stock plans .......................................... 11,773 5,097
Purchase of treasury stock ............................................. (24,977) (14,604)
Dividends paid ......................................................... (40,523) (39,739)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES .................................... (55,507) (97,263)
--------- ---------
CASH FLOW FOR PERIOD ..................................................... (26,305) (2,942)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ........................... 81,008 86,677

EFFECT OF EXCHANGE RATE CHANGES ON CASH .................................. (842) (1,790)
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................... $ 53,861 $ 81,945
========= =========

Supplemental disclosures:
Interest paid ......................................................... $ 8,516 $ 10,336
Income taxes paid (net of refunds) .................................... 12,110 17,881

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 29, 2000.

NOTE 2 - INVENTORIES

The major classes of inventory are as follows:

(in thousands)
Jan. 27, July 29,
2001 2000
---------- --------
Raw materials and components $ 84,818 $ 85,171
Work-in-process 27,137 18,044
Finished goods 109,646 99,744
---------- --------
Total inventory $ 221,601 $202,959
========== ========

NOTE 3 - NEW ACCOUNTING STANDARD

On July 30, 2000, the Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", (SFAS No. 133) which, as amended, is
effective for fiscal years beginning after June 15, 2000. This statement
establishes accounting and reporting standards for derivative instruments and
requires the recognition of all derivative instruments as either assets or
liabilities in the statement of financial position based on their fair values.
Changes in the fair values are required to be reported in earnings or other
comprehensive income depending on the use of the derivative and whether it
qualifies for hedge accounting. Derivatives designated as effective cash flow
hedges qualify for hedge accounting and, therefore changes in fair values are
recognized in other comprehensive income. Changes in fair values related to the
ineffective portion of cash flow hedges, as well as fair value hedges, must be
recognized immediately in earnings.

The Company uses derivative instruments primarily to manage exposures related to
foreign currency denominated receivables and payables and variable rate debt
instruments. To accomplish this, the Company uses certain contracts, primarily
foreign currency forward contracts and interest rate swaps, which minimize cash
flow risks from changes in foreign currency exchange rates and increases in
interest rates. Based on management's review, the Company has determined that
the interest rate swaps are effective cash flow hedges as defined by SFAS No.
133. The cumulative effect of the change in accounting was not significant.

NOTE 4 - COMPREHENSIVE INCOME -7-

The components of comprehensive income for the three months and six months
ended January 27, 2001 and January 29, 2000 were comprised of the following:

(in thousands)
Three months ended Six months ended
-------------------------- --------------------------
Jan. 27, Jan. 29, Jan. 27, Jan. 29,
2001 2000 2001 2000
---------- --------- --------- -----------

Net income ................................................... $ 29,911 $ 33,828 $ 55,491 $ 58,726
-------- -------- -------- --------

Foreign currency translation adjustment ...................... 7,379 (8,057) (5,881) (8,054)
Income taxes ................................................. (143) (726) (579) 98
-------- -------- -------- --------
Foreign currency translation adjustment, net ................. 7,236 (8,783) (6,460) (7,956)
-------- -------- -------- --------

Minimum pension liability adjustment ......................... -- 27 193 (368)
Income taxes ................................................. -- (12) (77) 164
-------- -------- -------- --------
Minimum pension liability adjustment, net .................... -- 15 116 (204)
-------- -------- -------- --------

Unrealized investment gains .................................. 3,129 3,238 1,444 1,330
Income taxes ................................................. (1,094) (1,133) (505) (465)
-------- -------- -------- --------
Unrealized investment gains, net ............................. 2,035 2,105 939 865
-------- -------- -------- --------

Unrealized losses on derivatives ............................. (618) -- (470) --
Income taxes ................................................. 217 -- 165 --
-------- -------- -------- --------
Unrealized losses on derivatives, net - Note 3 ............... (401) -- (305) --
-------- -------- -------- --------

Total comprehensive income ................................... $ 38,781 $ 27,165 $ 49,781 $ 51,431
======== ======== ======== ========

NOTE 5 - SEGMENT INFORMATION

The Company applies the provisions of SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" (SFAS No. 131) in disclosing segment
information in the footnotes to its consolidated financial statements. SFAS No.
131 requires the reporting of certain information about the Company's operating
segments (markets) on a basis consistent with the way in which the Company is
managed and operated.

Toward the end of fiscal 2000 and in the first quarter of fiscal 2001, the
Company undertook certain business realignments that changed the way the Company
is managed and operated. Aeropower and Fluid Process, previously managed as two
operating segments, were consolidated under the management of one segment,
Industrial. In addition, Food and Beverage and Specialty Materials were
transferred out of BioPharmaceuticals to the Industrial segment and Medical
sub-segment, respectively.

As a result of these changes, the composition of the Company's operating
segments has changed such that the Company has identified two operating
segments: Life Sciences (formerly Health Care) and Industrial. Life Sciences is
comprised of two newly defined sub-segments: Medical and BioPharmaceuticals.
Medical is further defined into two additional product lines: Blood and Critical
Care, which includes Specialty Materials. The Industrial sub-segments are now
Aerospace, Microelectronics and General Industrial, which includes the Food and
Beverage product line.

The Company's underlying accounting records continue to be maintained on a legal
entity basis for statutory and public reporting purposes. Many of the legal
entities operate in more than one sub-segment. For internal reporting
purposes,the Company has historically categorized and monitored sales by the
sub-segments, and further, by product lines which comprise its two principal
markets. However, the Company does not categorize other required segment
disclosures by the sub-segments and product lines within its two principal
markets. Accordingly, operating profit is disclosed for the two principal
markets only.

The prior year amounts have been restated to reflect this change.

-8-

Three Months Ended Six Months Ended
-------------------------- --------------------------
Market Segment Information (a): Jan. 27 Jan. 29 Jan. 27 Jan. 29
(in thousands) 2001 2000 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------

Sales to Unaffiliated Customers:
Blood ................................................ $ 56,228 $ 52,387 $ 106,294 $ 100,959
Critical Care ........................................ 27,071 32,967 51,144 60,193
--------- --------- --------- ---------
Medical .............................................. 83,299 85,354 157,438 161,152
BioPharmaceuticals ................................... 57,435 56,517 109,695 109,457
--------- --------- --------- ---------
Total Life Sciences .................................. 140,734 141,871 267,133 270,609
--------- --------- --------- ---------

General Industrial ................................... 96,258 97,067 183,996 186,616
Aerospace ............................................ 34,785 31,083 68,591 61,096
Microelectronics ..................................... 32,920 24,678 63,128 43,500
--------- --------- --------- ---------
Total Industrial ..................................... 163,963 152,828 315,715 291,212
--------- --------- --------- ---------

Total ................................................ $ 304,697 $ 294,699 $ 582,848 $ 561,821
- ----------------------------------------------------------------------------------------------------------------------------------

Operating Profit:
Life Sciences ........................................ $ 27,029 $ 39,362 $ 53,022 $ 68,611
Industrial ........................................... 31,250 21,431 58,549 41,173
--------- --------- --------- ---------
Subtotal ........................................ 58,279 60,793 111,571 109,784
Gain on sale of property ............................. -- -- -- 1,320
General corporate expenses ........................... (16,087) (13,314) (31,931) (27,800)
Interest expense, net ................................ (4,270) (3,546) (8,497) (7,036)
--------- --------- --------- ---------
Earnings before income taxes ......................... $ 37,922 $ 43,933 $ 71,143 $ 76,268
- ----------------------------------------------------------------------------------------------------------------------------------

Geographic Segment Information (a):
(in thousands)

Sales to Unaffiliated Customers:
Western Hemisphere ................................... $ 141,432 $ 133,600 $ 273,977 $ 256,315
Europe ............................................... 100,061 104,658 186,698 200,622
Asia ................................................. 63,204 56,441 122,173 104,884
--------- --------- --------- ---------
Total ................................................ $ 304,697 $ 294,699 $ 582,848 $ 561,821
- ----------------------------------------------------------------------------------------------------------------------------------

Operating Profit:
Western Hemisphere ................................... $ 27,721 $ 31,079 $ 58,044 $ 60,152
Europe ............................................... 17,606 21,832 32,677 40,373
Asia ................................................. 11,654 9,229 22,019 14,803
Eliminations ......................................... 1,298 (1,347) (1,169) (5,544)
--------- --------- --------- ---------
Subtotal ........................................ 58,279 60,793 111,571 109,784
Gain on sale of property ............................. -- -- -- 1,320
General corporate expenses ........................... (16,087) (13,314) (31,931) (27,800)
Interest expense, net ................................ (4,270) (3,546) (8,497) (7,036)
--------- --------- --------- ---------
Earnings before income taxes ......................... $ 37,922 $ 43,933 $ 71,143 $ 76,268
- ----------------------------------------------------------------------------------------------------------------------------------

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

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NOTE 6 - NOTES PAYABLE AND LONG-TERM DEBT

In the first quarter, the Company completed a $100 million private placement of
7.83% unsecured senior notes due in 2010. In addition, the Company closed a $200
million unsecured senior revolving credit facility, of which $150 million
expires in 2005 and $50 million renews annually. Borrowings under this facility
bear interest at a floating rate based upon LIBOR. The agreements contain
various covenants, including financial covenants pertaining to interest
coverage, funded debt and minimum net worth. As a result of these transactions,
uncommitted lines of credit amounting to $230 million were cancelled and the
immediate credit availability of the Company increased $70 million. $170.2
million of then outstanding notes payable, which were immediately repaid with
proceeds of these transactions, were classified as long-term debt in the
consolidated balance sheet at July 29, 2000. However, such proceeds are
reflected in the condensed consolidated statement of cash flows in the current
year.

NOTE 7 - OTHER MATTERS

The Company bought back an additional $15 million and $10 million of its common
stock during the first and second quarters, respectively, leaving $170 million
remaining under the current $200 million authorization program.

The results of operations for the first quarter of fiscal 2000 include a $1,320
gain on the sale of a property in the United Kingdom, which was included in
Restructuring and other charges, net, in the fiscal 2000 Statement of Earnings.

During the quarter the Company made an additional investment of $4 million in
V.I. Technologies, Inc. ("VITEX") in accordance with the terms of the agreements
between the Company and VITEX. As of January 27, 2001, the Company's investment
in VITEX amounts to $16 million, representing a 10.8% interest in VITEX common
shares. The agreements contemplate that the Company will make milestone-driven
equity payments to VITEX of up to another $10 million over the next three years
at the then-current market price of VITEX common shares.

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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. 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; global and
regional economic conditions and legislative, regulatory and political
developments; and domestic and international competition in the Company's global
markets.

I. Results of Operations

Review of Consolidated Results

Sales for the quarter and six months of $304.7 million and $582.8 million,
respectively, increased 3 1/2% over both the quarter and six months last year.
Exchange rates, particularly the Euro and the Yen, reduced sales by $17.6
million, or 6%, and $33.9 million, or 6 1/2%, compared to last year's second
quarter and first half. Overall, pricing was flat in the quarter and year to
date with a 2% price decline in Medical being recovered by price increases in
other parts of the business. For a detailed discussion of sales, refer to the
paragraphs below under "Review of Market and Geographic Segments".

Cost of sales, as a percentage of sales, increased .6% to 47% in the quarter
compared to last year's second quarter. A charge of $1.8 million to accrue costs
to update certain membrane filtration systems in the BioPharmaceutical market as
well as the effect of exchange rates negatively impacted cost of sales. Year to
date, cost of sales, as a percentage of sales, has remained flat at 46.5%.

Selling, general and administrative expenses as a percentage of sales increased
1% during the quarter and .4% for the six months. As approximately half of these
expenses are incurred in the United States and about 55% of sales occur in
foreign locations, the negative impact of exchange rates on sales also
negatively impacts the comparison to sales. Increased compensation and travel
costs to support a bigger sales group contributed to the increase. Also, a loss
on the sale of an investment of approximately $1 million was incurred during the
quarter.

R&D expenses increased to 4.6% of sales during the quarter and 4.7% of sales for
the six months as the Company continues to fund the development of pathogen
inactivation technology with V.I. Technologies, Inc.

-11-

Due to the continued movement of manufacturing to lower tax jurisdictions such
as Puerto Rico and Ireland, the geographic mix of the Company's taxable income
has changed the Company's effective tax rate from 23%, the rate utilized in the
first quarter and for fiscal 2000, to 22% for the six months. Management
believes that a rate of 22% will be sustained through the end of fiscal 2002.

Net earnings were $29.9 million, or 24 cents per share, in the quarter compared
with $33.8 million, or 27 cents per share, in last year's second quarter. For
the six months, net earnings were $55.5 million, or 45 cents per share compared
with $58.7 million, or 47 cents per share, last year. Excluding a one-time gain
of $0.9 million (after pro forma tax effect), or one cent per share, on the sale
of a property in the U.K. last year, earnings were 46 cents per share during the
first half of last year.

The Company started the year with the following goals:

o Increase local currency sales growth in the range of 8% to 10%.

o Gross margins no worse than flat.

o Reduce selling, general and administrative expenses as a percentage of
sales by at least 1 percentage point.

o Increase earnings before interest and taxes at a faster rate than
sales.

Based upon performance in the first half of this year, the sales growth and
gross margin goals are still intact. The goal to reduce selling, general and
administrative expenses may be unattainable due to the negative impact of
exchange rates to sales. Management has taken actions to reduce the level of
increase for the balance of the year to mitigate this impact. Based upon the
results for the first half of this year, management believes earnings per share
will increase 1% to 5% for the year over fiscal 2000's $1.24, which is before
restructuring and one-time charges, net.

Review of Market and Geographic Segments

As a result of these changes, the composition of the Company's operating
segments has changed such that the Company has identified two operating
segments: Life Sciences (formerly Health Care) and Industrial. Life Sciences is
comprised of two newly defined sub-segments: Medical and BioPharmaceuticals.
Medical is further defined into two product lines: Blood and Critical
Filtration, which includes Specialty Materials. The Industrial sub-segments are
now Aerospace, Microelectronics and General Industrial, which includes the Food
and Beverage product line. The prior year amounts have been

-12-

restated to reflect this change and the discussion that follows is consistent
with this presentation.

During the quarter, Life Sciences sales increased 4% in local currency; however,
the weakness of the Yen, and more particularly the Euro, turned the local
currency increase into a reported decrease of 1%. Similarly, Life Sciences sales
were up 4% in local currency during the first half but down 1 1/2% in reported
amounts.

In local currency, Medical sales increased 1 1/2% in the quarter and 2% for the
six months. The increase in Medical sales reflects the increase in Blood filter
sales partially offset by decreased Critical Filtration sales. Blood filter
local currency sales, which increased 10 1/2% and 8 1/2% in the quarter and six
months, respectively, continue to reflect the shift in sales away from higher
priced systems to sterile dockable filters, a trend we began to see in the
fourth quarter of last fiscal year, as well as, a continued shift of sales from
hospitals to blood centers. Local currency sales to hospitals were up 1 1/2% in
the quarter but down overall for the six months by 7%. Sales to blood centers
increased 15% and 16%, respectively, in the quarter and six months. Overall,
unit sales for the quarter and six months increased by approximately 22%. Strong
Western Hemisphere sales in both the quarter and six months were partially
offset by decreased sales in Europe reflecting the strong market in the United
States and tough comparisons last year as customers were stocking up in Europe.
Critical Care sales declined 12 1/2% and 9 1/2% in the quarter and six months,
respectively. The decline is mainly attributable to decreased sales in the
Western Hemisphere due to a reduction in sales to certain OEM Specialty
Materials customers as well as revenue recognized in the second quarter of last
year from an unfulfilled supply agreement.

BioPharmaceuticals sales grew 8% and 7% in local currency during the quarter and
six months. This was comprised of a 9% increase in BioPharmaceuticals for both
the quarter and the six months and 5% and 2% growth in the lab portion of the
business in the quarter and six months, respectively. Sales grew well in all
geographies.

Local currency sales in Industrial improved 14% in the quarter and 15% for the
first half. In reported amounts, Industrial's sales increased 7 1/2% and 8 1/2%
in the quarter and first half, respectively.

The growth in Industrial was again led by growth in Microelectronics which grew
41% and 51 1/2% in local currency for the quarter and six months, respectively.
All of the geographies had high double digit growth in Microelectronics during
the quarter and six months; however, growth is expected to decrease during the
last half of the year given the difficult comparison to last year's second half
and the predicted slowdown in the Microelectronics industry. Microelectronics
growth is expected to be in the range of 20% to 25% for the full year.

Aerospace sales increased 15 1/2% in the quarter and 16% during the first half
in local currency. The growth was led by sales in the Commercial aerospace
market with 24 1/2%

-13-

and 30% growth in the quarter and six months, respectively. Military sales were
flat with last year for the six months and up 4 1/2% in the quarter.

In local currency, General Industrial had 7% growth in the quarter and 6 1/2%
growth for the six months. This reflects growth in Fuels and Chemicals of 26% in
the quarter and notable growth in Municipal Water. Partially offsetting this
growth was a decline in Power Generation of 18% in the quarter and 4 1/2% in the
six months as last year reflected a large sale to a power plant in Taiwan.

Overall, operating profit was 19.1% for the quarter and six months compared with
20.6% in last year's second quarter and 19.5% in the first half of last year. In
Life Sciences, operating profit of 19.2% and 19.8% in the quarter and six
months, respectively, reduced from 27.7% and 25.4%, respectively, in the same
periods last year. The reduced profit reflects the ramp up costs of the blood
system plant purchased in the third quarter of last year, increased R&D for the
development of pathogen inactivation, price reductions of approximately 2% due
to competitive conditions, reduced high margin sales in Critical Filtration, as
well as the costs to upgrade certain membrane filtration systems in the
BioPharmaceutical market.

Operating profit in Industrial increased to 19.1% from 14% in the second quarter
and to 18.5% from 14.1% for the six months. Strong sales in Microelectronics
drove the increase and solid growth in Aerospace coupled with improved
Industrial systems margins contributed to the growth.

General corporate expenses were 21% and 15% higher in the quarter and six
months, respectively. This reflects increased compensation related costs, the
loss on the sale of an investment in the quarter and increased Corporate R&D
expenditures.

By geography, Western Hemisphere sales grew 6% and 7% over last year's second
quarter and first half, respectively, while operating profit declined to 19.6%
from 23.3% in the quarter and to 21.2% from 23.5% in the first half.
Contributing to the profit decline were increased R&D costs related to V.I.
Technologies, Inc., the loss of high margin Critical Filtration sales as well as
price reductions in the blood filter product line. Local currency sales for
Europe increased 7% and 6 1/2% for the quarter and six months. The weak Euro is
reflected in the 4 1/2% and 7% decrease in reported second quarter and six
month's sales, respectively. The weak Euro decreased Europe's sales by $12.1
million and $27.3 million in the quarter and six months, respectively. Operating
profit in Europe of 17.6% and 17.5% declined from 20.9% and 20.1% in the quarter
and the first six months, respectively, as a result of the weak Euro as well as
the costs to ramp up the blood systems plant bought in the third quarter of last
year. Asia's local currency sales increased 21 1/2% in the quarter and 22 1/2%
in the six months driven by strong Microelectronic sales and strong growth in
Japan and Korea. A late weakening of the Yen in the quarter caused the reported
sales increases to be less than the local currency increase by 9 1/2%, or $5.4
million, in the quarter and 6%, or $6.4 million, in the six months. Operating
profit in Asia improved in the quarter to 18.4% from 16.4% last year

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and, in the six months, to 18% from 14.1% from last year due to strong sales
volume, particularly in Microelectronics.

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 U.S. dollars. In
relation to the spot exchange rates at the end of last year, the Yen has
weakened against the dollar, while the Euro was relatively flat.

Compared to the first six months of last year, net cash provided by operating
activities has decreased by approximately $24 million primarily due to changes
in the components of working capital, principally related to inventory, deposits
from customers for long term contracts and accounts receivable. The Company
purchased approximately $10 million of treasury stock in the quarter and $25
million year to date leaving $170 million of the $200 million authorized by the
Board of Directors last January. Capital expenditures were $40 million during
the first half, of which $21.1 million was spent in the second quarter.
Depreciation and amortization expense was $18 million and $35.6 million in the
quarter and six months, respectively. In addition, the Company made a $4 million
milestone investment in V.I. Technologies, Inc. coincident with the achievement
of beginning Phase II FDA clinical trials during the quarter.

During the first quarter, the Company completed a $100 million private placement
of 7.83% unsecured senior notes due in 2010. In addition, the Company closed a
$200 million unsecured senior revolving credit facility, of which $150 million
expires in 2005 and $50 million renews annually. Borrowings under this facility
bear interest at a floating rate based upon LIBOR. The agreements contain
various covenants, including financial covenants pertaining to interest
coverage, funded debt and minimum net worth. As a result of these transactions,
uncommitted lines of credit amounting $230 million were cancelled and the
immediate credit availability of the Company increased $70 million. $170.2
million of then outstanding notes payable were immediately repaid with proceeds
of these transactions. Overall, net debt increased approximately $5.6 million
from year-end, which represents 27% of net debt plus equity, consistent with
year-end.

-15-

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)
requesting reimbursement of costs the State had expended in investigating
contamination near Gelman's Ann Arbor facility, which the State alleged was
caused by Gelman's disposal of waste water from its manufacturing process. A
Consent Judgement entered into by Gelman and the State in October 1992 (amended
September 1996 and October 1999) resolved that litigation. In February 2000 the
State Assistant Attorney General filed a Motion to Enforce Consent Judgement in
the Court seeking approximately $4.9 million in stipulated penalties for alleged
violations of the Consent Judgement and additional injunctive relief. Gelman
disputed these assertions. In July 2000 the Court continued to hold under
"advisement" the matter of penalties, but held that Gelman was not in violation
of the Consent Judgement . The Court issued a Remediation Enforcement Order
requiring Gelman to complete the cleanup within 5 years under a Court approved
plan. Gelman is now remediating the contamination pursuant to this plan. In the
opinion of management, the Company is in substantial compliance with applicable
environmental laws and its current accruals for environmental remediation are
adequate.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a) The Annual Meeting of Shareholders of the Company was held November
15, 2000.

(b) Not required. Proxies for the meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934.

1. Holders of 105,290,047 shares of common stock voted either in
person or by proxy for the election of four directors. The number
of votes cast for each nominee were as indicated below:

Director For Withheld
-------- --- --------

Daniel J. Carroll, Jr. 103,550,496 1,739,551

Eric Krasnoff 103,440,027 1,850,020

Edward L. Snyder 103,330,503 1,959,544

James D. Watson 103,531,140 1,758,907

2. A proposal to amend the 1998 employee stock option plan was
approved as follows:

for 91,054,996; against or withheld 13,428,166 and 806,885
abstensions.

(d) Not applicable.

-16-

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 27, 2001.

-17-

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 13, 2001 /s/ John Adamovich, Jr.
- ------------------ -------------------------------
Date John Adamovich, Jr.
Chief Financial Officer
and Treasurer

March 13, 2001 /s/ Lisa Kobarg
- ------------------ -------------------------------
Date Lisa Kobarg
Chief Corporate
Accountant

-18-

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.

4 * Credit Agreement dated as of August 30, 2000 by and
among the Registrant and Fleet Bank, National Association
as Administrative Agent, The Chase Manhattan Bank as
Syndication Agent, Wachovia Bank, N.A. as Documentation
Agent and The Lenders Party Thereto, filed as Exhibit 4
to the Registrants quarterly report on Form 10-Q for the
quarterly period ended October 28, 2000.

The exhibits filed herewith do not include other
instruments with respect to long-term debt of the
Registrant and its subsidiaries, inasmuch as the total
amount of debt authorized under any such instrument does
not exceed 10% of the total assets of the Registrant and
its subsidiaries on a consolidated basis. The Registrant
agrees, pursuant to Item 601 (b) (4) (iii) of Regulation
S-K, that it will furnish a copy of any such instrument to
the Securities and Exchange Commission upon request.

* Incorporated herein by reference.