Pall Corporation F4Q08 (Qtr End 07/31/08) Earnings Call Transcript

| About: Pall Corporation (PLL)

Pall Corporation (NYSE:PLL)

F4Q08 Earnings Call

September 16, 2008 8:30 am ET

Executives

Eric Krasnoff - Chairman and Chief Executive Officer

Lisa McDermott - Chief Financial Officer

Frank Moschella - Corporate Controller

Analysts

Dan Leonard – First Analysis

Jeff Zekauskas – JP Morgan

Tony Butler – Lehman Brothers

Brian Drab – William Blair

Jonathan Groberg – Merrill Lynch

Richard Eastman – Robert Baird

Operator

Welcome to Pall Corporation’s conference call and webcast for fourth quarter fiscal 2008. (Operator Instructions) We’d like to remind you that the Company’s fourth quarter press release is available on Pall’s website at www.Pall.com.

Management’s remarks this morning will include forward looking statements. Please refer to slide two or request a copy of the specific wording of this qualification for the company’s remarks. Management also uses certain non-GAAP measures to assess the company’s performance. Reconciliations of these measures to the GAAP counterparts are included in the slides at the end of the presentation. At this time I will turn the call over to Mr. Eric Krasnoff, Pall Corporation’s Chairman and CEO.

Eric Krasnoff

Thank you for joining us at this turbulent time in the financial market. We hope to provide you a few minutes of respite today. I’m here with Lisa McDermott our Chief Financial Officer, as well as Frank Moschella our Corporate Controller. We look forward to sharing with you our latest results and the primary drivers behind them. We will also provide a window into 2009 and following that we’ll welcome your questions.

Fiscal 2008 was another year of solid achievement. We continue to make steady progress, executing on our business plan. Our longer term strategic plans have kept the company on track to generate sustainable profitable growth. For the full year, sales increased over 14% as reported, 7% in local currency. This is entirely organic growth and was somewhat higher than expected. This is a good result on its own and better considering the challenges we face in two key markets; fluid filtration and micro electronics which we will touch on later.

The result also highlights the depth of the Pall franchise and the strength of our market application and geographic diversity. Pro-forma earnings per share came in at $1.97 and this too was above the high end of our guidance range. Foreign currency played a role, 68% of our sales now come from outside the United States. An even bigger driver is one, we are in control of, however, and that is the execution of several initiatives you have been hearing about.

Our infrastructure rationalization efforts EuroPall and AmeriPall are having a dramatic impact. SG&A as a percentage of sales is now down to 29.1%. This is a full 90 basis point improvement over last fiscal year. While the first phase of Europol is substantively complete new initiatives are beginning soon. AmeriPall, which covers both Western Hemisphere as well as a significant aspect of global infrastructure activities within its mandate is ramping up employees for significant impact in fiscal ’09 and ’10.

Just last month Pall launched a program of great import, pricing excellence. Pall’s business model has been changing significantly over the past several years and not just through market and geographic expansion. Our strategic engagement with customers through total fluid management and a systems and service capabilities are game changing. It creates new opportunities to define the value equation to the benefit of Pall and most importantly to the benefit of our customers. The pricing activity should begin to contribute late this fiscal year and on.

It was another highly successful year for Systems product lines. Systems sales increased 26% in the year and reached $321 million. The largest increase was in Asia where local currency sales increased 80% and now represent 28% of total system sales, much more representative of our total business. Gross margins were on par with fiscal ’07 as cost improvements kept pace with inflation.

A recurrent question from investors throughout fiscal ’08 has been what’s driving the strong top line. Pall is uniquely positioned within our industry to capitalize on very broad market drivers and the full range of applications within them. These capabilities are the result of several key strategies we’ve been executing over time. Total fluid management, which provides us the ability to complete customer solutions through their toughest requirements, is the center piece of our sales strategy.

Requirements for filtration separation and purification steps in manufacturing span from the raw materials coming into a plant through to the point of use processing and then through to the weigh systems on the environmental side. Along with that there are growing requirements for testing and process monitoring. Earlier this month we announced our acquisition of GeneSystems, a logical extension as we continue rounding out our total fluid management capabilities in key growth markets.

GeneSystems technology will be deployed to capitalize on the urgent need for rapid PCR based pathogen detection methods in markets like biopharmaceutical, medical, food and water safety. The GeneSystems technology has quickly become the standard for detecting Legionella in France where testing is required by hospitals.

Pall’s strength also includes a considerable on the ground presence, a long time strategy to align our business with fast growing markets and regions. This serves customers wherever they are and wherever they choose to set up shop as a driving force behind our success. We’re seeing this in Biopharmaceuticals which just turned in its fourth straight year of double digit growth. Europe and Asia growth both outpaced the US where certain recombinant drugs struggled.

Globally, we are winning business for the production of new drugs both on and off patent as shown by strong systems and base sales. As expected, Medical sales were flat for the year on reduced volume to blood centers in the Western Hemisphere. A strong new product pipeline and other initiatives are part of our plans to reverse this trend but I don’t think we’re going to see it in early 2009.

We have renamed our General Industrial market Energy, Water and Process Technologies. EWPT doesn’t roll off the lips but it does more accurately describe the nature of this business as it has evolved. This market has been accelerating over the past three years with fiscal ’08 sales growing 10.6% in the local currency.

Pall Technologies are helping customers to increase the availability of conventional and alternative energy sources addressing pressing water quality and demand concerns, protecting the environment, meeting government regulations and generally helping make manufacturing more efficient and profitable.

Aerospace & Transportation also had a nice year. All three component markets within it grew a minimum of 13%. This growth reflects continued demand from air frame manufacturers for both military and civil platforms and for both large and small customers. Consumable sales to fleet operators and military upgrade programs were also strong.

The Micro Electronics market sales were flat for the year but up 6% in the fourth quarter. While still experiencing cyclical decline in the semi-conductor part of the market our current expectation is for recovery early next calendar year. Fiscal 2008 results attest to the strength of Pall products and markets and our strategies and ability to execute on them. All in all it was a year that we can build on in 2009.

With that as introduction, Lisa will speak to the financials.

Lisa McDermott

I will provide a brief review of the financial results for the quarter and the full year as well as our expectations for fiscal year 2009. Net earnings in the quarter were about $70 million or $0.57 per share compared to about $17 million or $0.13 per share last year. Earnings per share on a pro-forma basis as defined on slide 20 were $0.61 per share compared to $0.46 per share a year ago. For the year, net earnings were $217 million or $1.76 per share compared to $127.5 million or $1.02 per share last year. Earnings per share on a pro-forma basis were $1.97 compared to $1.48 a year ago.

Turning now to the details of our income statement which are on slides 12 and 13 I’ll start with sales growth. Sales in the quarter increased almost 12% on an as reported basis and a little over 14% for the year. With the lions share of our revenues derived outside of the United States we have benefited from the weak dollar. In fact, foreign currency translation added approximately $46 million or about 7% to our top line in the quarter equating to approximately $0.05 in EPS.

For the year, foreign currency translation added approximately 7% to our top line equating to about $160 million and approximately $0.14 in EPS.

Turning now to sales by geography, both Asia and Europe contributed to the sales growth in the quarter while the Western Hemisphere was essentially flat as lower blood filtration and Biopharmaceutical sales and continued weakness in the semi-conductor markets offset solid growth in other. For the full year Asia led the pack in sales growth at a little over 11% with across the board strength on the industrial side of the business.

Our European sales surpassed $1 billion for the first time, quite a milestone. Europe led in dollar sales growth for the year, increasing $70 million and excluding the impact of currency fluctuation. The Biopharmaceuticals, Energy, Water and Process Technologies and Aerospace and Transportation markets performed particularly well.

The Western Hemisphere posted growth of 4% despite the lower blood filtration sales and continued weakness in the semi-conductor markets. Sales were particularly strong throughout Aerospace and Transportation and in Municipal Water and Fuels and Chemicals. System sales were flat in the quarter reflecting tough comparables to a particularly strong fourth quarter ’07. For year, System sales increased over 26% and represented about 12% of total sales compared to 10% in fiscal year 2007. As Eric mentioned we sold $321 million in Systems in fiscal 2008.

While we are certainly pleased with our sales growth this year the long term trend is equally positive. Pall’s overall local currency CAGR over the last five years, in other words, fiscal 2004 through 2008 is 7%. The five year growth rate in Life Sciences is over 5% and more than 8% in Industrial. Leading market growers were Biopharmaceuticals almost 12%, micro-electronics almost 9% and Energy, Water and Process Technologies 8.5%. These sustained rates growth provide the best customer feedback there is.

Turning now to gross margins which are on slide 16, gross margin in the quarter were 46.8% compared with 46.7% in last year’s fourth quarter and 48.8% in this years third quarter. This result is somewhat lower than we expected. We saw an unusually strong capital goods mix within the consumable sales of the Industrial segment, particularly to our energy customers against both of these comparison points and systems mix higher in this fourth quarter than in the third quarter as well.

Favorable impacts on margin the quarter included price increases, which contributed approximately 50 basis points to margin, mix change in Life Sciences to a larger percentage of high margin Biopharmaceutical consumables, improved profitability of overall industrial system sales and savings generated from the companies various improvement and cost reduction initiatives.

Turning to the full year, gross margin as a percentage of sales was 47.1% in fiscal year 2008 on par with fiscal year 2007. Gross margin in the year reflects the same favorable factors as in the fourth quarter offset by the impact of the 26% growth in systems sales and again higher capital goods sales within Industrial consumables.

Again, while this isn’t the result we wanted it is a good achievement in light of the huge growth in systems and while at lower margins they did contribute to earnings growth for the year. Equally important, systems set the stage for future consumable sales. We are committed to gross margin expansion and continue to focus on pricing. Systems gross margin expansion, lean manufacturing and other continuous improvement activities.

Turning now to SG&A in the quarter excluding the estimated impact of foreign exchange of about $12 million this increased approximately 6% and for the year excluding the estimated impact of foreign exchange of about $42 million increased about 5%. As a percentage of sales came in at 28.2% and 29.1% for the quarter and year respectively. As Eric mentioned this is another 90 basis point improvement.

Looking at the long term results we have reduced SG&A as a percentage of sales by over 400 basis points since fiscal 2003 and there is more opportunity.

Turning now to working capital management, receivables have improved by one day to 73 days outstanding. Inventory turns remained at about 2.7 times. Our facilities rationalization efforts require us to keep safety stock masking what we believe are underlying improvements. While improving working capital management continues to be a challenge and a top priority our balance sheet and liquidity are solid.

Operating cash flow for the quarter was approximately $174 million a 45% improvement over last years fourth quarter results of $119 million. The improvement in operating cash flow reflects increased earnings along with favorable working capital resources specifically from accounts receivable and inventory. Operating cash flow for the year was about $190 million and has been negatively mentioned by the tax deposit of $135 million adding this on item back operating cash flow was about $326 million almost in line with fiscal year 2007.

EBITDA was $451 million up about 15% year over year with depreciation and amortization for the year approximately $93 million on par with last year. Capital expenditures were approximately $124 million in the year up about $26 million reflecting spending on the expansion of existing facilities in Puerto Rico, the US and Europe as we proceed with the consolidation and rationalization of our facilities.

Our net debt to net debt plus equity stood at 22% and our growth debt to growth debt plus equity stood at about 40% at July 31, 2008, which is up about 3% to 5% compared with July 31, 2007, but leaving us well positioned for future acquisitions and returns to shareholders.

Turning to cash returned to our shareholders, we repurchased about $150 million of stock this year or last year leaving just under $200 million remaining on our current Board authorization. We paid dividends of approximately $60 million up 7% from a year ago reflecting the $0.01 dividend increase to $0.13 per share announced last quarter. This represents a 44% increase since 2004.

Entering 2009 there is a general concern given the state of the global macro economic environment. Within the context of our industry and our own strategic plans and business opportunities we are cautiously optimistic. Based upon where the dollar has trended very recently against the major currencies we do business in we would expect foreign currency translations to have a negative impact to our 2009 results as compared to the weaker dollar that existed for most of 2008. My comments are stated in FX neutral terms to fiscal year 2008.

We expect sales in local currency in 2009 to grow between 5% and 6.5%. Within Industrial we are expecting mid single digit growth in all three markets and the same overall across consumables and systems. We expect Life Sciences growth to be a repeat of 2008 with Biopharmaceuticals again the leader. We are targeting gross margins of 48.5% which is slightly below the target range of our five year plan and we expect to see SG&A to be about 29% of sales.

There are inflationary pressures in our operating costs and we are striving to more than offset them with a double punch of pricing increase and surcharges as well as continued efficiencies from our initiatives. Our operating margin or in other words, earnings before interest and taxes margin expectation is a range of 15.5% to 16% which is squarely within our five year plan for 2009 which was 15.5% to 17.2%. We expect to see improvement in our tax rate starting this year.

Putting all of this together we expect fiscal 2009 earnings per share in the range of $2.15 to $2.30 this does contemplate an expectation that GeneSystems will be diluted to earnings in 2009 by $0.03 to $0.05 but does not include items that we would classify as restructuring and other charges including any in process research and development charge we may record related to the GeneSystems acquisition.

Looking now at our expectation as operating cash flows of between $380 to $410 million complemented by a targeted improvement in day sales outstanding of two to three days.

In closing, we are pleased with our results in fiscal year 2008 and the progress we’re making on our portfolio of current initiatives. We’re excited and confident in Pall’s prospects and opportunities and hope you share our enthusiasm. Thank you for your attention this morning and with that I’ll hand this back to Eric.

Eric Krasnoff

To sum up fiscal 2008 was another good year and a solid foundation to the challenges ahead. Taking a longer term view of the last four years have brought us close to achieving almost every 2009 goal we have set for ourselves at the 2006 investor day. The year ahead 2009 looks to be one of incremental improvement. Pall’s market application and geographic diversity are whole marks of the company and considerable strength. These carefully cultivated capabilities have served us well and we look to steadily build upon them.

We are ready for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Dan Leonard – First Analysis.

Dan Leonard – First Analysis

You mentioned that you expect the foreign currency headwind in fiscal ’09, what exactly do you expect that headwind to be, the magnitude?

Lisa McDermott

Based upon where the dollar is against some major currencies like the British Pound, Euro and Yen today or basically yesterday which given the financial market is a bit curious, the dollar has strengthened a bit and it could be around $80 or $85 million on our top line for fiscal year ’09.

Dan Leonard – First Analysis

You’re forecasting gross margin improvement of nearly 150 basis points which is bigger than we’ve seen in a long time. Could you help me understand what granular efforts get you there?

Eric Krasnoff

The sales of other capital goods in the fourth quarter to some extent masked the real improvement that are being made in systems engineering and the ability to get the right price for them. We have a lot more granularity in terms of the underlying efforts to continue to move systems both outsource the locally around the world to build up on our centers in areas such as India and other regional centers as well as the expertise and the continued rationalization of the systems product line to go with the real winners.

Operator

Your next question comes from Jeff Zekauskas – JP Morgan.

Jeff Zekauskas – JP Morgan

In the quarter you’re anticipating repatriation of $160 million why are you repatriating it and what is the use of the $160 million in funds?

Lisa McDermott

To clarify, that was related to a plan that we formed in the fourth quarter fiscal year ’07 and we took a charge in the fourth quarter of about $20 million or so as you may recall which partly explained some of the comp and the GAAP earnings Q4 to Q4. The little bit of the charge that you saw in the fourth quarter of this year just related to the differential between the charge we took last year and what the cost actually was in fiscal year ’08.

Jeff Zekauskas – JP Morgan

There’s not future cash that you’re pulling in, this is an adjustment of the historical?

Lisa McDermott

We’ve done a lot of the $160 million, there’s a little bit left that will come in fiscal year ’09 but most of it is done.

Jeff Zekauskas – JP Morgan

Do you anticipate making further payments to the tax authorities and you’re planning for that or you don’t anticipate it, can you update us on that?

Lisa McDermott

In terms of the tax matter the repatriation and the item we were just talking about are separate from the tax matter to differentiate the two. In terms of the tax matter we continue to provide the tax authorities the information that they are asking for. Our reserves have stayed pretty steady state from where they were.

Jeff Zekauskas – JP Morgan

Your Aerospace really bumped up this quarter, is that a sustainable level that you have going forward or is there something unusual about this quarter?

Eric Krasnoff

This quarter was the beneficiary of a number of project and platforms we’ve been working on as we described over the last couple of years. We don’t expect to continue to grow 20% in A&T but we have moved it out of the low single digit area into much more the upper single digit performer so it is a true ramp up of growth that we’ll see over the next couple of years.

Operator

Your next question comes from Tony Butler – Lehman Brothers.

Tony Butler – Lehman Brothers

For the fourth quarter you made a comment regarding price affected you positively by 50 basis points. When you look at the full year and you have 7% growth in local currency was that 7% in total unit volume growth or how much did price pay a role there. Point two is staying on the same theme, with pricing excellence, how much do you think, perhaps you said that, forgive me I did not hear it, how much do you think that will play a role in ’09. More importantly how much might that play a role in this 48.5% margin number that you’re anticipating for ’09?

Lisa McDermott

Going to your first question about how do we break up the 7%, about 6% of that was volume about 1% was price. In terms of the pricing project…

Eric Krasnoff

The pricing project we expect a minimal impact in 2009 so the gross margin essentially that goal is without regard to pricing improvements from the pricing excellence program.

Tony Butler – Lehman Brothers

Would it be unrealistic to assume that maybe 1% is how you’re looking at ’09 from a PX perspective?

Eric Krasnoff

About 1.5%.

Operator

Your next question comes from Brian Drab – William Blair.

Brian Drab – William Blair

I wanted to ask a couple specific questions on the restructuring programs maybe you could update us, first of all remind us what your goals for AmeriPall and EuroPall and the general rationalization were for 2008 and where you came in relative to those goals.

Eric Krasnoff

The various programs we have are so inter-related both AmeriPall and EuroPall which are infrastructure more on the SG&A side as well as the manufacturing rationalization. We’re really not breaking them out it’s almost impossible to do that. Rather what we’re planning to accomplish from them is built into our basic guidance. You can look both to ’08 and ’09 for that.

Brian Drab – William Blair

You won’t make any comment regarding any specific program, even a broad comment on how EuroPall is going or how AmeriPall is going and how they’re going relative to one another.

Eric Krasnoff

EuroPall is essentially the first round of what we used to call EuroPall one is complete. We’re kicking off the next round in the end of October and we’ve identified another area of savings which I would say would equal what the original program did yield. We did give a number at that time a few years ago which was $20 to $22 million in savings.

The AmeriPall target is much larger in terms of the opportunity at hand because we’re not just dealing with all of our Western Hemisphere infrastructure which is a bigger dollar number but also dealing on an international or global basis with finance logistics, purchasing and IT so there are some big numbers there. We just finished the first of what we expect to be a three year program. Again, we are quite satisfied with where we are proceeding with it.

Operator

Your next question comes from Jonathan Groberg – Merrill Lynch.

Jonathan Groberg – Merrill Lynch

Maybe you can just explain given as you mentioned the economic environment that we’re in and if I just look at the last downturn 2002-2003, 2002 organic growth was actually negative so maybe you can categorize what you’re seeing now or what your view is of this potential downturn versus then and maybe what you could do if things slow more than what you’re anticipating.

Eric Krasnoff

In 2002 the micro electronics business, semi-conductor business went into a severe trough. If we take that out of the equation Pall was not negative at that time it was actually up.

Lisa McDermott

With regard to some of the things that we could do going forward into 2009 and obviously we’re already beginning to think about them given all the press and the news is looking at a lot of the spend as well as head count, planned increases and where it’s critical and where we may be able to defer and that includes on capital expenditures.

All in all though when you look at Pall and the cash flow that we threw off in fiscal year 2008 as well as the cash flow that we expect to throw off in 2009 we have sound liquidity and we won’t make decisions to benefit the short term to lose for the long term especially given the strength of our liquidity.

Jonathan Groberg – Merrill Lynch

Can you explain a little bit more the rationale of the GeneSystems acquisition; this technology for PCR based technology for testing the pathogens and maybe give us a sense of the size of that business.

Eric Krasnoff

In the core bio tech markets as they more and more producing through single use disposables they need ways to know if the production which will take a number of days is contaminated or not. Traditionally you can pull a sample, culture it on a plate and it can take a fair amount of time and is not as reliable. To know that immediately is a great benefit and we can build these into our disposable systems.

Extending beyond that, areas such as food safety where E. coli testing could be done very quickly, very economically with their reader and their disposable which is important to our business is a very broad opportunity. Water safety is a big one as well and food and beverage. Any place where you’re dealing with something that eventually is going to be imbibed or injected into humans or animals is fertile ground for this and it tears up beautifully with total fluid management.

If people are going to filter they want to know up front what they are filtering and downstream if they filtered successfully so that’s a good extension for us.

In terms of very big numbers if we got all diagnostics for this technology in all markets but I think initially we’re looking very conservatively to ramp it up and to build on the technology.

Jonathan Groberg – Merrill Lynch

I meant GeneSystems specifically do you know what their revenues were or are you willing to talk about how big of a business that was?

Eric Krasnoff

Their revenues are very, at this point, very small about $4 million and the reason they wanted to have a larger owner with bigger pockets is just because there’s so much potential that we can develop with prudent investment and expansion through our distribution chain.

Jonathan Groberg – Merrill Lynch

You’re seeing this as kind of being a process monitoring tool rather than being used in more of a clinical diagnostic setting this particular technology.

Eric Krasnoff

Absolutely correct.

Jonathan Groberg – Merrill Lynch

You mentioned you know you expect continued tax rate improvements, could you maybe just elaborate on that given if you went back you’re obviously under provisioning for taxes and what you’re doing or how you think you can bring down the tax rate and to what level in a three to four year timeframe where you think that rate can get to.

Lisa McDermott

I’ll comment that in previous guidance that our outlook was that our rate would be between 30% and 32% and that compares to about 33.5% for fiscal year ’08. We continue to believe we’ll be in that range. We’ll provide more granularities and answer specifically things to your question about our strategic planning for the tax rate at our investor day on October 29th.

Operator

Your next question comes from Richard Eastman – Robert Baird.

Richard Eastman – Robert Baird

Could you real quickly when you look at the sales growth forecast or expectation for ’09 the five business groups which of those would be expected to be above that average 5% to 6.5%? Would it be BioPharm and Aerospace?

Eric Krasnoff

I’m happy to do that. I think Biopharmaceuticals definitely we’re looking to maintain that double digit growth. At the beginning of ’08 we said 8% to 10% that’s probably a reasonable range and hoping to get up around 10%. On the Industrial side the Energy, Water and Process Technology business will be certainly a little bit above I’d hope in the 6% to 8% range. Aerospace and Transportation I think will probably be mid single digit this year just because of the tough comps.

Micro Electronics is the wildcard, we still see the semi-conductor industry which is I’d say 45% to 50% of that total market is still depressed, It’s not getting any worse and we’re picking up a lot of business on the other side on solar, on consumer electronics, ink jet printers and such. I would say conservatively again we’re going to be there 5%, 6% but if there’s some turnaround in semi-conductor that number should shoot up.

Richard Eastman – Robert Baird

Medical just flattish with the blood business the losses share there is that pretty much flattish for the year?

Eric Krasnoff

Yes, we’re hoping that’s up a couple of percent but that would be weighted towards the second half of the year. Again with medical we have margins that are above the corporate average its tremendous cash generator and that wouldn’t be enough for us to keep that business but what does keep it is the exciting new products we have in development and the strong position we have in the market.

Richard Eastman – Robert Baird

When I walk my way down to the EPS line again we can kind of look at the tax rate we got a good sense of interest expense and share count. The range of $2.15 to $2.30 I’m curious maybe what the one or two largest puts and takes are there. We’re looking at this in local currency so my assumption is this again going to be sales mix dependent or dependent on how much price we get?

Lisa McDermott

Some large puts and takes certainly one is pricing, an obvious one that we attain the kind of local currency growth that we’re looking to attain. Continued improvements in our manufacturing processes to sustain back some of the inflationary pressures; those are some large ones that could give us upside or a bit of downside. The wildcard which is not reflected in those numbers is foreign exchange.

Eric Krasnoff

To add to that a little bit it’s possible of course that inflation abates because of some of the economic problems right now. That would certainly play right into our EPS and we’re being of course cautious as anyone would be to say.

Richard Eastman – Robert Baird

If we zero in on the gross profit margin line that’s going to be the primary issue is the conversion to gross profit.

Lisa McDermott

Yes.

Richard Eastman – Robert Baird

Did you buy back a fair amount of stock very late in the quarter? There wasn’t much impact on the fully diluted number and it looks like you bought maybe 70 million of stock back.

Lisa McDermott

I don’t know if I would characterize it very late in the quarter it was after our blackout period so it was say in the last month and a half of the quarter.

Operator

At this time there are no further questions.

Eric Krasnoff

Thank you very much for your attention today. As mentioned last quarter we are developing a new five year plan that takes us out to the end of 2013 and we look forward to sharing that plan and our new goals with you at our investor day which is October 29, in New York City. If you can’t join us in person we hope you’ll be able to tune in to the webcast or access the archive proceeding at Pall.com.

We’d also like you to put December 9 and 10 on your calendars when we’ll release Q1 ’09 results on the 9th and after the market closes of course follow with our conference call the next morning. These are difficult times we look forward to meeting and exceeding our goals for you this year.

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