RNS No 8316q
PALL CORPORATION
1 September 1999
For More Information Contact:
John Adamovich, Pall Corporation
(516) 484-5400
Pall Corporation Announces 27% Increase in Fourth Quarter Earnings
East Hills, NY (09/01/99) - - Pall Corporation (NYSE: PLL) today reported sales
and earnings for the fourth quarter and fiscal year ended July 31, 1999.
Continuing revenue momentum and results of the aggressive restructuring program
implemented in March, fueled strong earnings growth of 27%.
Sales for the quarter were up 5 1/2% at $319,065,000 compared to $301,759,000 in
last year's fourth quarter. The effects of foreign exchange were not
significant. Earnings increased 27% to $50,395,000 or 40 cents per share,
compared to $39,726,000 or 32 cents in last year's fourth quarter.
Sales for the year also grew 5 1/2% to $1,147,066,000 compared to $1,087,285,000
last year. Foreign exchange added $8.5 million or 1% to sales for the year.
Excluding the non-recurring items and the effect of adopting a new accounting
standard this year, earnings for the year amounted to $118,752,000 or 95 cents
per share compared to $115,655,000 or 92 cents per share last year. After
non-recurring items and the adoption of the new accounting principle for
start-up costs, the company's earnings amounted to $51,507,000 or 41 cents per
share for the year compared to earnings of $93,633,000 or 75 cents per share
last year. The reported earnings for this year include a charge of 51 cents per
share (after pro forma tax effect) related to the restructuring and one-time
charges mentioned above. The earnings this year also include a charge of 3 cents
per share (after pro forma tax effect) to write-off previously capitalized
start-up costs pursuant to the adoption of the AICPA's Statement of Position
98-5, "Reporting the Costs of Start-Up Activities," retroactive to the beginning
of this fiscal year. The earnings for last year include 17 cents per share
(after pro forma tax effect) of net non-recurring charges.
Commenting on the results for the fourth quarter, Eric Krasnoff, Chairman and
CEO, said, "Sales came in at the high end of expectations. We were quite pleased
with the encouraging growth that has continued in several areas of our business
and the effects of our restructuring which were clearly evident in our fourth
quarter results. Increased plant utilization and the effects of restructuring
improved our gross margins sequentially, and selling, general and administrative
expenses combined with R&D reduced 3.4% as a percentage of sales compared to
last year's fourth quarter.
Looking at sales this quarter, Health Care's growth was again led by a strong
BioPharmaceuticals subsegment, which grew 12% in local currency. Within this
segment, Pharmaceuticals grew 12% and Food and Beverage was up 16%.
In the Medical area, blood filter orders were strong, up 70% to blood centers
and also up 3% to hospitals. Sales to blood centers grew 30%, continuing the
trend away from hospitals we saw earlier in this year and last. Confirming this
pattern, hospital sales declined 13 1/2% in the quarter. Overall for the
quarter, blood filter sales increased 7% in dollars. Sequentially, prices have
remained stable over the last three quarters. The 5% price decline from fiscal
year 1998 is now in our numbers for a full year, so as we proceed into the first
quarter of fiscal year 2000, the effect of this is behind us.
In Fluid Processing, Microelectronics was better than expected being almost flat
on a reported basis and down just 6% in local currency. Business was
particularly strong in the US, where sales grew 23%. Orders showed a global
increase of 16% in the quarter. The anticipated recovery of the semiconductor
industry appears to be at hand and we anticipate good growth next quarter and
next year.
By geography, Asia was our strongest performer this quarter, showing a reported
growth of 29% and a local currency increase of 16 1/2% with a 13% increase in
Japan. Europe continued the good performance we have seen all year with a local
currency increase of 8%. Sales in the Western Hemisphere were up 2% if we take
out the sales of Stratapac(R), a business we sold in the third quarter this
year.
The restructuring and cost savings initiated in the third quarter are continuing
to show in our reported results. Selling, General and Administrative expenses
and R&D costs were down $4.0 million sequentially. Also, Cost of Sales improved
sequentially by 1.9%. A great deal of progress has been made in a very short
period of time.
We entered the first quarter of fiscal year 2000 with a healthy order backlog,
momentum in the Medical and Microelectronics business units which had been
sluggish last year and in general a business environment more positive than at
any time in the past three years."
PALL CORPORATION SALES BY MARKET
(000s omitted)
FOURTH QUARTER ENDED EXCHANGE % CHANGE
JUL.31, AUG.1, % RATE IN LOCAL
1999 1998 CHANGE DIFFERENCE CURRENCY
Medical $ 78,462 $ 72,871 7 1/2 $557 7
BioPharmaceuticals 89,322 79,910 12 (112) 12
Total Health Care 167,784 152,781 10 445 9 1/2
Aerospace 36,700 35,163 4 1/2 (217) 5
Industrial Hydraulics 35,922 36,841 (2 1/2) (551) (1)
Total Aeropower 72,622 72,004 1 (768) 2
Microelectronics 18,704 19,147 (2 1/2) 668 (6)
Industrial Process 59,955 57,827 3 1/2 264 3
Total Fluid Processing 78,659 76,974 2 932 1
TOTAL $319,065 $301,759 5 1/2 $609 5 1/2
YEAR ENDED EXCHANGE % CHANGE
JUL. 31, AUG. 1, % RATE IN LOCAL
1999 1998 CHANGE DIFFERENCE CURRENCY
Medical $272,913 $260,124 5 $2,549 4
BioPharmaceuticals 332,729 294,202 13 2,192 12 1/2
Total Health Care 605,642 554,326 9 1/2 4,741 8 1/2
Aerospace 135,543 124,449 9 478 8 1/2
Industrial Hydraulics 131,415 134,041 (2) 439 (2 1/2)
Total Aeropower 266,958 258,490 3 1/2 917 3
Microelectronics 62,540 87,608 (28 1/2) 1,363 (30)
Industrial Process 211,926 186,861 13 1/2 1,518 12 1/2
Total Fluid Processing 274,466 274,469 - 2,881 (1)
TOTAL $1,147,066 $1,087,285 5 1/2 $8,539 4 1/2
PALL CORPORATION SALES BY GEOGRAPHIC REGION
(000s omitted)
FOURTH QUARTER ENDED EXCHANGE % CHANGE
JUL. 31, AUG. 1, % RATE IN LOCAL
1999 1998 CHANGE DIFFERENCE CURRENCY
Asia $ 53,540 $ 41,475 29 $5,126 16 1/2
Europe 123,587 118,571 4 (4,515) 8
Western Hemisphere 141,938 141,713 - (2) -
TOTAL $319,065 $301,759 5 1/2 $ 609 5 1/2
YEAR ENDED EXCHANGE % CHANGE
JUL. 31, AUG. 1, % RATE IN LOCAL
1999 1998 CHANGE DIFFERENCE CURRENCY
Asia $182,787 $174,110 5 $5,520 2
Europe 455,088 397,880 14 1/2 3,670 13 1/2
Western Hemisphere 509,191 515,295 (1) (651) (1)
TOTAL $1,147,066 $1,087,285 5 1/2 $8,539 4 1/2
PALL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
FOURTH QUARTER ENDED YEAR ENDED
JUL. 31, AUG. 1, JUL. 31, AUG. 1,
1999 1998 1999 1998
REVENUES
Net sales $319,065 $ 301,759 $1,147,066 $1,087,285
COSTS AND EXPENSES
Cost of sales 137,373 130,073 548,006(a) 473,859
Selling, general and
administrative expenses 99,883 102,566 405,956 392,809
Research and development 13,069 14,514 56,490 58,540
Restructuring and other
charges, net - - 64,695(a) 19,222(b)
Interest expense, net 3,412 2,897 13,015 7,870
Total costs and expenses 253,737 250,050 1,088,162 952,300
Earnings before income taxes 65,328 51,709 58,904 134,985
Income taxes 14,933 11,983 7,397 41,352
Net earnings $ 50,395 $ 39,726 $ 51,507 $ 93,633
Earnings per share:
Basic $ 0.40 $ 0.32 $ 0.41 $ 0.75
Diluted $ 0.40 $ 0.32 $ 0.41 $ 0.75
Pro forma earnings per share
excluding restructuring and
other charges, net:
Basic $ 0.40 $ 0.32 $ 0.95 $ 0.93
Diluted $ 0.40 $ 0.32 $ 0.95 $ 0.92
Average number of shares
outstanding:
Basic 124,154 124,132 124,329 125,070
Diluted 124,609 124,618 124,755 125,681
(a) During the third quarter of 1999, the Company announced and implemented a
plan to restructure its operations with targeted payroll and expense cost
reductions of over $50 million per annum. In connection with these actions, the
Company recorded restructuring and other charges of $89,433. During the quarter,
the Company expensed $5,767 of previously capitalized costs when it adopted the
AICPA's statement of Position 98-5 "Reporting the Costs of Start-Up Activities,"
retroactive to the beginning of the fiscal year. Cost of sales includes $30,505
resulting from the above charges.
(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.
PALL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
JUL. 31, AUG. 1,
1999 1998
Assets
Cash and short-term investments $ 137,177 $ 28,925
Accounts receivable, net 326,198 291,535
Inventories 205,867 227,254
Other current assets 74,947 54,775
Total current assets 744,189 602,489
Property, plant and equipment, net 507,016 520,592
Other assets 220,829 223,838
Total assets $1,472,034 $1,346,919
Liabilities and Stockholders' Equity
Short-term debt $ 339,153 $ 184,907
Accounts payable, income taxes
and other current liabilities 209,384 209,183
Total current liabilities 548,537 394,090
Long-term debt 116,815 111,469
Deferred taxes and other
non-current liabilities 79,937 75,745
Stockholders' equity 726,745 765,615
Total liabilities and
stockholders' equity $1,472,034 $1,346,919
With annual sales over $1 billion, Pall Corporation is based in East Hills,
New York, USA and operates directly in 30 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.
END
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