RNS No 0849r
PALL CORPORATION
27th May 1998
Pall Corporation Reports Third Quarter Results
EAST HILLS, N.Y.--May 27, 1998--Pall Corporation (NYSE: PLL)
today reported sales and earnings for the third quarter and nine
months ended May 2, 1998.
Sales for the quarter increased 5% to $289,171,000, compared to
last year's $275,339,000. In local currency, sales increased 8%.
Adverse foreign currency exchange rates reduced sales $8,339,000 or
3%. For the nine months, sales increased 2% to $785,526,000, compared
to last year's $771,889,000. In local currency, sales for the nine
months increased 6%. Adverse foreign currency exchange rates reduced
sales $33,445,000 or 4%. There was no effect from price increases on
sales in either the third quarter or nine months.
Earnings for the third quarter were $7,947,000, equal to 6 cents
per diluted share after being reduced by a one-time charge of
$27,000,000, equal to 22 cents per share to write off the in-process
research and development related to the acquisition of Rochem. In the
same quarter of last year, a loss of $22,204,000, equal to 18 cents
per diluted share included the effects of one-time charges (including
the Gelman Sciences merger and restructuring charges) of $92,019,000,
equal to 47 cents per share (after pro forma tax effect). Excluding
non-recurring items, earnings for the third quarter amounted to 28
cents per share compared to 29 cents per share last year.
Earnings for the nine months were $53,907,000, equal to 43 cents
per diluted share compared to $24,048,000, equal to 19 cents per
diluted share last year. Earnings for the nine months of the current
fiscal year include non-recurring income of $4,978,000, equal to 4
cents per share (after pro forma tax effect) reflecting the payment by
MSI to Pall in settlement of patent litigation, net of certain
one-time costs and the one-time charge of $27,000,000, equal to 21
cents per share to write off the in-process research and development
related to the Rochem acquisition. Earnings for the nine months of the
prior fiscal year include the effects of one-time costs for the
Gelman Sciences merger and restructuring charges of $95,930,000, equal
to 49 cents per share (after pro forma tax effect). Excluding
non-recurring items, earnings for the nine months amounted to 60 cents
per share compared to 68 cents per share last year.
Commenting on the results for the quarter, Eric Krasnoff,
Chairman and Chief Executive Officer, said, "The 8% sales growth in
local currency met our expectations for the quarter. This growth was
reduced by 3% on consolidation due to the negative effects of foreign
currency exchange rates. The effect of exchange rates on earnings was
about 3 cents per share. For the year to date, we estimate that
exchange rates have reduced earnings by 12 cents per share.
"By market segment for the quarter, in local currency, sales in
Health Care and Aeropower each grew 6 1/2%, while Fluid Processing
increased 13%.
"Looking at the Health Care segment in local currency, we continue
to be pleased by growth in both Patient Protection and
Pharmaceuticals, the two largest subsegments of this market. Patient
Protection grew 10%, led by Europe which grew 17%. Sales in the US
were up 7 1/2%. The European growth was helped by Austria's launch of
a universal filtration policy. The Western Hemisphere numbers
benefited from the adoption of 100% platelet filtration in Canada.
Worldwide, sales of blood filters grew 9% as the momentum towards
universal filtration of transfused blood products is gaining steam.
This is good news for the safety of the world's blood supply.
"Pharmaceuticals grew 7% in local currency. Asia led the
Pharmaceuticals subsegment with growth of 13%, followed by Europe
which grew 10% and the Western Hemisphere, which grew 4%.
"Aeropower growth continued to be led by double-digit growth in
Commercial Aerospace. Military Aerospace, which can be lumpy, declined
5% but Industrial Hydraulics, led by Europe, grew a healthy 9% in
local currency.
"Fluid Processing, excluding Microelectronics, increased 20 1/2%
in local currency. Sales in Europe grew 67% due mainly to
Rochem-related business which added $6 million to our sales. Sales in
Asia grew 7 1/2% and growth in the Western Hemisphere was 5 1/2%.
Microelectronics was flat in local currency, as increases of 11% in
Asia and 3 1/2% in Europe were offset by a 14% decrease in the US.
"A positive feature of the quarter was the strength of our overall
business in Europe where sales, before the effects of exchange rates,
increased 18%. We also saw a 4% local currency increase in Asia
despite all of the economic turmoil in that region.
"Orders for the quarter were about the same as sales and our
backlog has increased $52 million so far this year.
"Turning now to our earnings in the quarter, cost of sales came in
at 42 1/2%, the same as in this quarter last year, excluding inventory
write-downs. This was despite the negative effects of exchange rates
and reflects our continuing efforts to improve manufacturing
productivity and to achieve a more favorable product mix. We have been
taking actions to keep selling, general and administrative expenses
flat on a sequential basis, but they are up a little this quarter.
This was due primarily to the acquisition of Rochem which added $2 1/2
million. Our underlying tax rate for the quarter, excluding the
one-time charge, was 26%.
"Looking ahead to the fourth quarter, we foresee unit and price
growth similar to the third quarter. The only major uncertainty is
Microelectronics where our customers have entered another cycle of
reduced investment in new plant construction. Exchange rates are
expected to reduce sales by about 3 1/2% in the quarter."
PALL CORPORATION SALES BY MARKET FOR THE THIRD QUARTER AND NINE MONTHS
OF FISCAL 1998 COMPARED TO 1997 (000s omitted)
THIRD QUARTER ENDED EXCHANGE % CHANGE
MAY 2, MAY 3, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
Patient Protection $70,071 $65,452 7 $(1,844) 10
Other 77,993 77,719 1/2 (2,555) 3 1/2
Total Health Care 148,064 143,171 3 1/2 (4,399) 6 1/2
Microelectronics 23,214 24,446 (5) (1,061) (1/2)
Other 51,131 43,357 18 (1,187) 20 1/2
Total
Fluid Processing 74,345 67,803 9 1/2 (2,248) 13
Aeropower 66,762 64,365 3 1/2 (1,692) 6 1/2
TOTAL $289,171 $275,339 5 $(8,339) 8
NINE MONTHS ENDED EXCHANGE % CHANGE
MAY 2, MAY 3, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
Patient Protection $187,253 $186,945 - $(7,505) 4
Other 214,292 220,016 (2 1/2) (9,988) 2
Total Health Care 401,545 406,961 (1 1/2) (17,493) 3
Microelectronics 68,461 69,694 (2) (4,293) 4 1/2
Other 129,034 120,658 7 (4,870) 11
Total
Fluid Processing 197,495 190,352 4 (9,163) 8 1/2
Aeropower 186,486 174,576 7 (6,789) 10 1/2
TOTAL $785,526 $771,889 2 $(33,445) 6
PALL CORPORATION SALES BY GEOGRAPHIC REGION FOR THE THIRD QUARTER AND
NINE MONTHS OF FISCAL 1998 COMPARED TO 1997 (000s omitted)
THIRD QUARTER ENDED EXCHANGE % CHANGE
MAY 2, MAY 3, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
Asia $45,099 $47,191 (4 1/2) $(4,020) 4
Europe 108,116 95,071 13 1/2 (4,208) 18
Western Hemisphere 135,956 133,077 2 (111) 2 1/2
TOTAL $289,171 $275,339 5 $(8,339) 8
NINE MONTHS ENDED EXCHANGE % CHANGE
MAY 2, MAY 3, % RATE IN LOCAL
1998 1997 CHANGE DIFFERENCE CURRENCY
Asia $132,635 $141,841 (6 1/2) $(13,260) 3
Europe 279,309 271,508 3 (19,871) 10
Western Hemisphere 373,582 358,540 4 (314) 4 1/2
TOTAL $785,526 $771,889 2 $(33,445) 6
PALL CORPORATION REPORTS FOR THE THIRD QUARTER AND NINE MONTHS
(Amounts in thousands, except per share data)
THIRD QUARTER ENDED NINE MONTHS ENDED
MAY 2, MAY 3, MAY 2, MAY 3,
1998 1997 1998 1997
REVENUES
Net sales $289,171 $275,339 $785,526 $771,889
COSTS AND EXPENSES
Cost of sales 122,791 139,099(c) 343,786 346,974(c)
Selling, general and
administrative expenses 101,630 92,190 290,243 282,368
Research and development 15,271 13,761 44,026 39,569
Gelman merger and
restructuring charges - 26,710 - 30,621
Other charges, net 27,000(a) 43,360(d) 19,222(b) 43,360(d)
Interest expense, net 2,257 629 4,973 2,022
Total costs and expenses 268,949 315,749 702,250 744,914
Earnings (loss) before
income taxes 20,222 (40,410) 83,276 26,975
Income taxes 12,275 (18,206) 29,369 2,927
Net earnings (loss) $7,947 $(22,204) $53,907 $24,048
Earnings (loss) per share:
Basic $0.06 $(0.18) $0.43 $0.19
Diluted $0.06 $(0.18) $0.43 $0.19
Proforma earnings per share
excluding Gelman merger
and restructuring charges
and other charges, net:
Basic $0.28 $0.29 $0.61 $0.69
Diluted $0.28 $0.29 $0.60 $0.68
Average number of shares
outstanding:
Basic 124,186 126,684 125,373 126,027
Diluted 124,742 126,684 126,025 127,293
(a) Represents a one-time charge of $27,000 to write off in-process
research and development related to the acquisition of Rochem.
(b) Represents a one-time charge of $27,000 in the third quarter to
write off in-process research and development related to the
acquisition of Rochem, net of $7,778 of other income recorded in
the second quarter.
(c) Includes inventory write-downs of $21,949 related to the
restructuring.
(d) Represents charges for asset write-offs, environmental and legal
provisions and severance.
PALL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
MAY 2, AUG 2,
1998 1997
Assets
Cash and short-term investments $66,176 $55,472
Accounts receivable, net 275,495 266,604
Inventories 230,116 198,080
Other current assets 99,435 86,448
Total current assets 671,222 606,604
Property, plant and equipment, net 519,345 504,046
Other assets 196,593 154,974
Total assets $1,387,160 $1,265,624
Liabilities and Stockholders' Equity
Short-term debt $135,916 $128,651
Accounts payable, income taxes
and other current liabilities 260,871 172,378
Total current liabilities 396,787 301,029
Long-term debt 149,959 62,126
Deferred taxes and other
non-current liabilities 85,312 77,636
Stockholders' equity 755,102 824,833
Total liabilities and
stockholders' equity $1,387,160 $1,265,624
With annual sales over $1 billion, Pall Corporation is based in
East Hills, New York, USA and operates directly in 27 countries. Pall
Corporation provides innovative solutions to complex filtration and
separations problems in three major markets: Health Care, Aeropower
and Fluid Processing. The Company's shares are listed on the New York
Stock Exchange (PLL) and the London Stock Exchange (0668260). Further
information about Pall Corporation is available on the Company's Web
site at http://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.
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: Pall Corporation, East Hills
John Adamovich, 516/484-5400
END
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