RNS No 7899m
PALL CORPORATION
2nd March 1998
Pall Corporation Announces Second Quarter Results
East Hills, New York--(BUSINESS WIRE)--March 2, 1998--Pall
Corporation (NYSE: PLL) today reported results for the fiscal 1998
second quarter which ended January 31, 1998.
Sales for the second quarter of fiscal 1998 were down slightly at
$259,004,000 compared to $260,759,000 in last year's second quarter.
Sales were up 4 1/2% in local currency. Adverse foreign exchange
rate moves reduced sales by $14,014,000 to a negative 1/2% in the
second quarter. Sales for the six months grew by 5% in local
currency. On an as reported basis they were essentially flat at
$496,355,000, as compared to $496,550,000 reported for the comparable
period of the prior year. There was no effect from price increases
on sales in either the second quarter or first half of the year.
Earnings for the second quarter were $27,546,000, equal to 22
cents per diluted share, compared to last year's $28,968,000, equal
to 23 cents per diluted share. The second quarter of fiscal 1998
includes 4 cents per share (after proforma tax effect) of one-time
income, net of certain one-time charges. The income was from the
payment of lost profits and other compensation to the Company from
Micron Separations Inc., which was found to have infringed Pall's
Nylon membrane patent.
Earnings for the six months declined 1/2 % to $45,960,000, equal
to 36 cents per diluted share, compared to $46,252,000, equal to 36
cents per diluted share last year. Included in these figures is 4
cents per share related to the net one-time income mentioned above
for the second quarter of fiscal 1998 and a one-time charge of 3
cents per share related to expenses incurred by Gelman Sciences in
connection with the termination of its proposed merger transaction
with Memtec Limited in the prior year's first quarter.
The one-time income from the patent litigation settlement of
$13,500,000 is reported net of legal and professional fees related to
the patent litigation, a settlement, including costs, of $2,500,000
with the Department of Defense concerning a long standing
disagreement over a sale dating back nearly 10 years, and a write-off
of $2,200,000 of inventory and equipment due to the acquisition of
new technology.
Commenting on the results for the second quarter, Eric Krasnoff,
Chairman and CEO, said "The upturn of sales in local currency is on
track for the year. Local growth of 4 1/2% in revenues was negated
by the effects of foreign currency exchange rates. Foreign exchange
rates also reduced earnings per share for the quarter by 5 cents. A
late drop-off in the quarter of sales in Asia related to regional
economic conditions reduced earnings by another 1 cent in the
quarter. Orders grew in all segments.
By market segment for the quarter in local currency, sales in
Aeropower grew 11%, Health Care was up 1 1/2% and Fluid Processing
increased 5 1/2%.
Looking at the Health Care market segment in local currency, we
were pleased to see growth in both Patient Protection and
Pharmaceuticals, the two largest subsegments of this market. Patient
Protection grew 4%, led by Europe which grew 7% and the US which grew
6%. This growth was offset by sales in Asia, which decreased 7%.
The European growth was helped by additional countries adopting
national blood filtration policies. The Western Hemisphere numbers
benefited from the adoption of 100% platelet filtration in Canada.
Worldwide, sales of blood filters grew 2% with sales to blood centers
up 8% and sales to hospitals down 2%. Essentially all Asian sales
are to hospitals.
Pharmaceuticals grew 3%. The Western Hemisphere led the
Pharmaceuticals subsegment with growth of 7%, followed by Europe
which grew 5%, while sales in Asia were down 15%. Sales of Pall
Gelman product in the lab and medical OEM market increased 3%.
In our Aeropower market segment, Aerospace grew 13% in local
currency. Commercial Aerospace grew 25%, while Military Aerospace
was flat. Industrial Hydraulics grew 9%.
Fluid Processing, excluding Microelectronics, grew 4% in local
currency, led by Asia with 24% growth. Sales in the US grew 4% due
mainly to a 78% increase in Stratapac(R) filter sales. Sales in Europe
declined 12% due to weakness in the Power Generation market,
particularly in the United Kingdom. Microelectronics grew 8 1/2% in
local currency, with increases of 13% in the US, 8% in Europe and 6%
in Asia.
Continuing a trend noted in the first quarter, orders were again
strong and exceeded sales in the second quarter. Orders increased
11% in local currency. Backlog is up $56 million since the beginning
of the fiscal year.
Turning now to our earnings in the quarter, cost of sales
increased 2 1/2% as a percentage of sales, due to the effects of
currency. The second quarter also saw a reduction of our underlying
effective tax rate to 26% for the year to date, due principally to
our efforts to move production into our manufacturing facilities in
Ireland and Puerto Rico as well as proportionately lower profits in
the high tax rate countries.
Our acquisition of Rochem closed in January 1998 and our sales
number includes about $1 million from Rochem. As reported
previously, we do not expect any dilution to earnings as a result of
the acquisition. The final purchase price for Rochem is expected to
be about $60 million and will be determined and paid in April 1998
when Rochem's audited figures are available.
A valuation of the acquired Rochem business is underway. We
expect to take a one-time charge in our third fiscal quarter in
connection with acquired in-process research and development. The
amount of the one-time charge will be determined when the valuation
is complete and final purchase price determined.
Looking ahead to the second half of the year, we expect to reach
double-digit unit and price growth, even though the Asian financial
crisis has reduced our expectation of third quarter growth to high
single-digits. At current levels, we expect that foreign currency
exchange rates will reduce sales by about 4% for the entire year. We
have taken a number of actions to reduce expenses and preserve
earnings. These include selective price increases, a hold on
employment levels, and programs to selectively increase production
and material sourcing in more favorable locations. The benefits of
producing in more favorable locations are already beginning to
provide benefits in a reduced effective tax rate."
PALL CORPORATION SALES BY MARKET FOR THE SECOND QUARTER AND SIX
MONTHS OF FISCAL 1998 COMPARED TO 1997
(000s omitted)
SECOND QUARTER ENDED EXCHANGE % CHANGE
JAN. 31, FEB. 1, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
____ ____________________________________________________________
Patient Protection $ 62,638 $ 63,245 (1) $ (3,100) 4
Other 69,218 73,596 (6) (4,047) (1/2)
Total Health Care 131,856 136,841 (3 1/2) (7,147) 1 1/2
Microelectronics 22,996 22,809 1 (1,796) 8 1/2
Other 40,577 41,146 (1 1/2) (2,209) 4
Total
Fluid Processing 63,573 63,955 (1/2) (4,005) 5 1/2
Aeropower 63,575 59,963 6 (2,862) 11
TOTAL $259,004 $260,759 (1/2) $(14,014) 4 1/2
SIX MONTHS ENDED EXCHANGE % CHANGE
JAN. 31, FEB. 1, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
________________ ________________________________________________
Patient Protection $117,182 $121,493 (3 1/2) $ (5,661) 1
Other 136,299 142,297 (4) (7,433) 1
Total Health Care 253,481 263,790 (4) (13,094) 1
Microelectronics 45,247 45,248 - (3,232) 7
Other 77,903 77,301 1 (3,683) 5 1/2
Total
Fluid Processing 123,150 122,549 1/2 (6,915) 6
Aeropower 119,724 110,211 8 1/2 (5,097) 13 1/2
TOTAL $496,355 $496,550 - $(25,106) 5
PALL CORPORATION SALES BY GEOGRAPHIC REGION FOR SECOND QUARTER
AND SIX MONTHS ENDED FISCAL 1998 COMPARED TO FISCAL 1997
(000s omitted)
SECOND QUARTER ENDED EXCHANGE % CHANGE
JAN. 31, FEB. 1, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
Asia $ 42,415 $ 48,240 (12) $( 5,517) (1/2)
Europe 90,866 92,980 (2 1/2) ( 8,356) 6 1/2
Western
Hemisphere 125,723 119,539 5 (141) 5 1/2
TOTAL $259,004 $260,759 (1/2) $(14,014) 4 1/2
SIX MONTHS ENDED EXCHANGE % CHANGE
JAN. 31, FEB. 1, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
Asia $ 87,536 $ 94,650 (7 1/2) $( 9,240) 2 1/2
Europe 171,193 176,437 (3) (15,663) 6
Western
Hemisphere 237,626 225,463 5 1/2 (203) 5 1/2
TOTAL $496,355 $496,550 - $(25,106) 5
PALL CORPORATION REPORTS FOR THE SECOND QUARTER AND SIX MONTHS
(Amounts in thousands, except per share data)
2ND QUARTER ENDED 6 MONTHS ENDED
JAN. 31, FEB. 1, JAN. 31, FEB. 1,
1998 1997 1998 1997
REVENUES
Net sales $259,004 $260,759 $496,355 $496,550
COSTS AND EXPENSES
Cost of sales 115,384 109,627 220,995 207,875
Selling, general and
administrative expenses 97,626 96,228 188,613 190,178
Research and development 14,565 12,670 28,755 25,808
Other (income) expenses, net (7,778)(a) - (7,778)(a) 3,911(b)
Interest expense, net 1,728 737 2,716 1,393
Total costs and expenses 221,525 219,262 433,301 429,165
Earnings before income
taxes 37,479 41,497 63,054 67,385
Provisions for income
taxes 9,933 12,529 17,094 21,133
Net earnings $ 27,546 $ 28,968 $ 45,960 $ 46,252
Earnings per share:
Basic $ 0.22 $ 0.23 $ 0.37 $ 0.37
Diluted $ 0.22 $ 0.23 $ 0.36 $ 0.36
Proforma earnings per share
excluding merger related
expenses and other income, net:
Basic $ 0.18 $ 0.23 $ 0.33 $ 0.40
Diluted $ 0.18 $ 0.23 $ 0.32 $ 0.39
Average number of shares
outstanding:
Basic 124,714 125,974 125,861 125,711
Diluted 125,461 127,288 126,561 127,138
(a) Represents income from settlement of patent litigation, net of
resolution of disagreement with the government, and an inventory
and equipment write-off.
(b) Relates to expenses incurred by Gelman Sciences in connection with
the termination of its proposed merger transaction with Memtec
Limited.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
JAN. 31, AUG. 2,
1998 1997
Assets
Cash and short-term investments $ 68,514 $ 55,472
Accounts receivable, net 246,439 266,604
Inventories 207,094 198,080
Other current assets 99,971 86,448
Total current assets 622,018 606,604
Property, plant and equipment, net 507,516 504,046
Other assets 177,818 154,974
Total assets $1,307,352 $1,265,624
Liabilities and Stockholders' Equity
Short-term debt $ 174,812 $ 128,651
Accounts payable, income taxes
and other current liabilities 188,218 172,378
Total current liabilities 363,030 301,029
Long-term debt 105,914 62,126
Deferred taxes and other
non-current liabilities 81,493 77,636
Stockholders' equity 756,915 824,833
Total liabilities and
stockholders' equity $1,307,352 $1,265,624
With annual sales over $1 billion, Pall Corporation is based in
East Hills, New York, USA. The Company has the broadest filtration
and separation capabilities in the world. Since 1946, Pall
Corporation has demonstrated technological leadership and offered
innovative solutions to complex fluid clarification and purification
problems in each of its three major markets: Health Care, Aeropower
and Fluid Processing. The Company employs 9,000 people at offices
and manufacturing facilities throughout the world. The Company's
shares are listed on the New York Stock Exchange (PLL) and the London
Stock Exchange (0668260). To receive the latest information about
Pall Corporation, visit Pall's Internet web site at
http://www.pall.com or dial Pall's Select-A-Fax(TM) system at
1-800-664-PALL.
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. 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.
CONTACT: John Adamovich
(516) 484-5400
END
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