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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 1, 1998
Commission File Number 1-4311
PALL CORPORATION
2200 Northern Boulevard, East Hills, N.Y. 11548
(516) 484-5400
Incorporated in New York State I.R.S. Employer Identification
Number 11-1541330
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Class on Which Registered
------------------------- -----------------------------
Common Stock $.10 par value New York Stock Exchange
Common Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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 registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $2,737,000,000, based on the closing price on October 8, 1998.
The number of common shares, $.10 par value outstanding of the registrant was
124,247,002 shares on October 8, 1998.
Total number of pages - 162 Exhibit index located on page 18
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's Proxy Statement for the 1998 annual meeting of
shareholders, previously filed, (hereinafter referred to as the "Proxy
Statement") are incorporated by reference into Items 10, 11, 12 and 13.
Portions of the registrant's Annual Report to Shareholders for the fiscal year
ended August 1, 1998, filed as Exhibit 13 hereto, (hereinafter referred to as
the "Annual Report to Shareholders") are incorporated by reference into items 1,
3, 5, 7 and 8.
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PART I
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ITEM 1. BUSINESS.
- -----------------------------
(a) General development of business.
Pall Corporation, incorporated in July 1946, and its subsidiaries (hereinafter
collectively called "the Company" unless the context requires otherwise) is a
leading supplier of fine filters mainly made by the Company using its
proprietary filter media, and other fluid clarification and separations
equipment for the removal of solid, liquid and gaseous contaminants from a wide
variety of liquids and gases.
The Company's business is best analyzed by the following three principal
markets, or industry segments, in which it sells its products:
(1) Health care.
(2) Aeropower.
(3) Fluid processing.
During the past five years, the Company has continued its development of fluid
clarification and separations products and of their sale in a wide variety of
markets.
(b) Financial information about industry segments.
Reference is made to page 28 of the Annual Report to Shareholders.
(c) Narrative description of business.
1) Reference is made to the section titled "Company Profile" contained in the
inside cover of the Annual Report to Shareholders. The products sold are mainly
filters made with proprietary Pall filter media produced by chemical film
casting, melt-blowing of polymer fibers, papermaking and metallurgical
processes. Metal and plastic housings and a wide variety of appurtenant devices,
are also made.
(A) Health Care Segment:
The Health Care Segment consists of two sub segments: BioPharmaceuticals and
Medical. The BioPharmaceuticals sub segment includes the following markets:
BioPharmaceuticals, Specialty Materials, Food & Beverage; sales in the Medical
sub segment are primarily to hospitals and blood centers. For a description of
these markets refer to the inside cover and pages 6, 7, 10 and 11 of the Annual
Report to Shareholders. BioPharmaceutical sales in fiscal 1998 were $294,202,000
or 27% of total sales; Medical sales in fiscal 1998 were $260,124,000 or 24% of
total sales. Sales in this market are made through the Company's own personnel
and through distributors. Backlog information is omitted, as it is not
considered meaningful to an understanding of this segment of the Company's
business. The Company feels that safety, efficacy, ease of use, technical
support, as well as price, are the principal competitive factors in this market,
although economy of use is important. A principal list of competitors is
included in the inside cover of the Annual Report to Shareholders.
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(B) Aeropower Segment:
The Aeropower segment includes the following markets: Aerospace and Industrial
Hydraulics. For a description of these markets refer to the inside cover and
pages 14, 15, 18 and 19 of the Annual Report to Shareholders. Sales in fiscal
1998 were $258,490,000 or 24% of total sales. Backlog at August 1, 1998 was
approximately $76,360,000. The backlog at August 1, 1998 is equal to about three
months of sales. The Company's sales to aerospace and military customers are
made principally through its own personnel and manufacturers' representatives;
sales to Industrial Hydraulics customers are made through Company personnel and
through distributors. The Company believes that product performance and quality,
and service to the customer, as well as price, are the principal competitive
factors in this market segment. A principal list of competitors is included in
the inside cover of the Annual Report to Shareholders.
(C) Fluid Processing Segment:
The Fluid Processing Segment encompasses the following markets: Microelectronics
and Industrial Process. For a description of these markets refer to the inside
cover and pages 8, 9, 12, 13, 16 and 17 of the Annual Report to Shareholders.
Sales in this market in fiscal 1998 were $274,469,000 or 25% of total sales. The
Company's products are sold to customers in these markets through its own
personnel, and through distributors and manufacturers' representatives. Backlog
information is omitted, as it is not considered material for an understanding of
this segment of the Company's business. The Company believes that performance
and quality of product and service, as well as price, are determinative in most
sales. A principal list of competitors is included in the inside cover of the
Annual Report to Shareholders.
(D) The following comments relate to the three segments discussed above:
(i) Raw materials:
Most raw materials used by the Company are available from multiple sources of
supply. A limited number of materials are proprietary products of major chemical
companies. The Company believes that it could find satisfactory substitutes for
these materials if they should become unavailable, and has in fact done so
several times in the past.
(ii) Patents:
The Company owns a broad range of patents covering its filter media, filter
designs and other products, but it considers these to be mainly defensive, and
relies on its proprietary manufacturing methods and engineering skills. However,
it does act against infringers when it believes such action is economically
justified.
2) The following comments relate to the Company's business in general:
(a) With limited exceptions, research activities conducted by the
Company are company-sponsored. Such expenditures totaled
$58,540,000 in 1998, $53,747,000 in 1997 and $53,772,000 in
1996.
(b) There was no one customer to whom sales were made totaling 10%
or more of consolidated sales in fiscal 1998, 1997 or 1996.
(c) The Company is in substantial compliance with federal, state
and local laws regulating the discharge of materials into the
environment or otherwise relating to the protection of the
environment. To date, compliance with environmental matters
has not had a material effect upon the Company's capital
expenditures or competitive position.
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In May 1997, the Company's newly acquired subsidiary, Gelman Sciences
received a permit from the State of Michigan which requires that all
processed water discharged meet the standards set by the State. Based
on the permit obtained from the State and upon review of environmental
issues at its other facilities, the Company decided to record a pre-tax
charge of $10,000,000 in the third quarter of fiscal year 1997. The
Company started the clean up process at its Ann Arbor facility in
fiscal 1998. In the opinion of management, the Company is in
substantial compliance with applicable environmental laws. Because
regulatory standards under environmental laws are becoming increasingly
stringent, there can be no assurance that future developments will not
cause the Company to incur material environmental liabilities or costs.
For a further description of the environmental issues see Item 3, Legal
Proceedings.
(d) At August 1, 1998, the Company employed approximately 8,900 persons.
(d) Financial information about foreign and domestic operations and export
sales.
Reference is made to page 29 of the Annual Report to Shareholders.
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ITEM 2. PROPERTIES.
Location Type Industry Segment Size (square feet)
- -------- ---- ---------------- ------------------
OWNED:
Glen Cove, NY Office & laboratory Research Center 65,000
East Hills, NY Office, plant & Executive Office &
warehouse All Segments 326,000
Pt. Washington, NY Office, laboratory All 215,000
& training center
Hauppauge, NY Plant, office Health Care & Fluid
& laboratory Processing 75,000
Cortland, NY Plants, office Health Care & Fluid
Processing 338,000
Putnam, CT Plant All 62,000
Pinellas Park, FL Plant, office Aeropower 152,000
Ft. Myers, FL Plant, warehouse Aeropower 111,000
New Port Richey, FL Plant Aeropower 164,000
Pensacola, FL Plant Health Care 58,000
Covina, CA Plant, office &
laboratory Health Care 176,000
Ann Arbor, MI Plant & office Health Care 180,000
Fajardo, Puerto Rico Plants Health Care & Fluid
Processing 259,000
Portsmouth, U.K. Plant, office, warehouse All 331,000
Ilfracombe, U.K. Plant & office Health Care & Fluid
Processing 112,000
Redruth, U.K. Plant, warehouse Aeropower 123,000
Newquay, U.K. Plant & office Health Care & Fluid
Processing 106,000
Tipperary, Ireland Plant Health Care, Aeropower 178,000
Frankfurt, Germany Office & warehouse All 72,000
Paris, France Office & warehouse All 65,000
Limay, France Warehouse All 23,000
Tsukuba, Japan Plant, laboratory &
warehouse All 119,000
LEASED:
Clearwater, FL Office Aeropower 23,000
New Iberia, LA Plant Fluid Processing 60,000
Houston, TX Plant & office Fluid Processing 40,000
Northborough, MA Plant & office Health Care 38,000
Exton, PA Office Fluid Processing 13,000
Toronto, Montreal, Canada Office & warehouse Health Care & Fluid
Processing 18,000
Frankfurt, Hamburg, Germany Office & warehouse All 104,000
Oud Beijerland, Netherlands Plant, office, warehouse Fluid Processing 12,000
Milan, Italy Office & warehouses All 54,000
Vienna, Austria Office & warehouse All 13,000
Basel, Switzerland Office & warehouse All 13,000
Madrid, Spain Office & warehouse All 28,000
Warsaw, Poland Office All 4,000
Tokyo, Osaka, Japan Offices All 39,000
Singapore Office & warehouse All 17,000
Seoul, South Korea Office All 7,000
Beijing, China Office & warehouse All 9,000
Melbourne, Sydney Office & warehouse
& Perth, Australia All 21,000
Hong Kong Office All 2,000
Auckland, New Zealand Office & warehouse All 6,000
In the opinion of management, these premises are suitable and adequate to meet
the Company's requirements.
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ITEM 3. 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.
Pursuant to a consent judgment entered into by Gelman and the State in October
1992 and amended in September 1996, which resolved that litigation, Gelman is
remediating the contamination without admitting wrongdoing. In July 1997 and in
October 1997 the State notified Gelman that it believes that Gelman is not in
full compliance with the consent judgment and that Gelman is potentially liable
for stipulated penalties of more than $100,000, which penalties may continue to
accrue. Gelman disputes these assertions and has been vigorously contesting
them.
Reference is also made to Commitments and Contingencies on page 37 of the Annual
Report to Shareholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of shareholders during the fourth
quarter of fiscal year 1998.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
Reference is made to the section titled "Common Stock Prices and Cash Dividends"
on page 38 of the Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA.
Reference is made to page 39 of the Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Reference is made to pages 21-23 of the Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to pages 24-38 (excluding the sections titled "Common Stock
Prices and Cash Dividends" and "Six-Year Sales" on page 38) of the Annual Report
to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES.
None.
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PART III 8
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Identification of directors:
Reference is made to "Election of Directors" on page 3 of the Proxy
Statement.
None of the persons listed in the section of the Proxy Statement referred to
in the preceding paragraph has been involved in those legal proceedings
required to be disclosed by Item 401(f) of Regulation S-K during the past
five years.
(b) Identification of executive officers:
Year in which
Service as
Age at Officer of
Oct. 15 Pall Corp.
Name 1998 Position Held Began
- ---- ---- ------------- -----
Eric Krasnoff* 46 Chairman and Chief
Executive Officer 1986
Jeremy Hayward-Surry* 55 President 1989
Derek T.D. Williams** 66 Executive Vice President
and Chief Operating Officer 1985
John Adamovich, Jr. 45 Group Vice President and Treasurer,
Chief Financial Officer 1998
Peter S. Cope 44 Group Vice President 1994
Clifton Hutchings 60 Group Vice President 1993
Paul Kohn 52 Group Vice President 1996
Donald B. Stevens 53 Group Vice President 1994
Gerhard Weich 62 Group Vice President 1993
Arnold Weiner 61 Group Vice President 1986
Marcus Wilson 43 Group Vice President 1998
Samuel T. Wortham 51 Group Vice President 1990
Steven Chisolm 40 Senior Vice President 1998
Charles Grimm 58 Senior Vice President 1998
Akio Satake 61 Senior Vice President 1995
Robert Simkins 54 Senior Vice President 1994
* Member of the Executive Committee of the Board of Directors.
** Retires effective October 31, 1998.
None of the persons listed above is related.
Messrs. Krasnoff, Hayward-Surry and Williams are directors of Pall Corporation.
For more than the past five years, the principal occupation of each person
listed above has been their employ by the registrant, except for Mr. Adamovich,
who joined the Company in January 1998. Previously, Mr. Adamovich was
partner-in-charge of Professional Practice in the Long Island office of KPMG
Peat Marwick LLP and while at that firm, he served as engagement partner for its
audits of the Company's financial statements for each of the years in the seven
year period ending July 29, 1995.
Executive officers are elected by the Board of Directors annually, to serve
until the next annual organizational meeting of the Board.
None of the above persons has been involved in those legal proceedings required
to be disclosed by Item 401(f) of Regulation S-K, during the past five years.
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ITEM 11. EXECUTIVE COMPENSATION.
Reference is made to "Compensation and Other Benefits of Senior Management"
beginning on page 6 of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to "Beneficial Ownership of Common Stock" on page 22 of the
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
Disclosure of information relating to delinquent filers required by Item 405
of Regulation S-K is set forth on the last page of the Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a. Certain documents filed as part of the Form 10-K:
(l) The following documents are incorporated by reference to the indicated
pages of the 1998 Annual Report to Shareholders, filed as Exhibit 13
hereto.
Item
Independent Auditors' Report 24
Consolidated Statements of Earnings - years ended
August 1, 1998, August 2, 1997 and August 3, 1996 24
Consolidated Balance Sheets - August 1, 1998
and August 2, 1997 25
Consolidated Statements of Stockholders' Equity -
years ended August 1, 1998, August 2, 1997 and August 3, 1996 26
Consolidated Statements of Cash Flows - years ended
August 1, 1998, August 2, 1997 and August 3, 1996 27
Notes to Consolidated Financial Statements 28-38
(2) The following schedules are filed herewith:
Name of Schedule
II Valuation and qualifying accounts 15
Independent auditors' report on schedules 16
Schedules not listed above have been omitted either because they are
not applicable or the required information is shown in the financial statements
or in the notes thereto.
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(3) Exhibits filed herewith: 11
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
- --------------------------------------------------------------------------------
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 (the "1994 10-K").
3(ii) By-Laws of the Registrant as amended on October 9, 1998. 22-42
4 Note: The exhibits filed herewith do not include the
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.
10.1*(a) Amended And Restated Employment Agreement dated October 6,
1997 between the Registrant and Eric Krasnoff, filed as
Exhibit 10.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 2, 1997 (the "1997 10-K").
10.2*(a) Letter agreement dated July 17, 1997 between the Registrant
and Eric Krasnoff, filed as Exhibit 10.4 to the 1997 10-K.
10.3*(a) Amended And Restated Employment Agreement dated October 6,
1997 between the Registrant and Jeremy Hayward-Surry, filed
as Exhibit 10.5 to the 1997 10-K.
10.4*(a) Service Agreement dated November 28, 1995 between Pall Europe
Limited and Derek Thomas Donald Williams, filed as Exhibit
10.7 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 3, 1996 (the "1996 10-K").
10.5*(a) Service Agreement dated November 28, 1995 between Pall Europe
Limited and Clifton Stanley Hutchings, filed as Exhibit 10.9
to the 1996 10-K.
10.6*(a) Service Agreement dated November 28, 1995 between Pall
Deutschland GmbH Holding and Gerhard Friedrich Weich, filed
as Exhibit 10.10 to the 1996 10-K.
10.7*(a) Employment Agreement dated February 1, 1992 between the
Registrant and Arnold Weiner, filed as Exhibit 10.32 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 1, 1992 (the "1992 10-K").
10.8*(a) Amendment dated July 19, 1993 to Employment Agreement dated
February 1, 1992 between the Registrant and Arnold Weiner,
filed as Exhibit 10.14 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1993 (the "1993
10-K").
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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12
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
10.9*(a) Second Amendment dated August 1, 1995 to Employment Agreement
dated February 1, 1992 between the Registrant and Arnold
Weiner, filed as Exhibit 10.13 to the 1996 10-K.
10.10*(a) Third Amendment dated October 6, 1997 to Employment
Agreement dated February 1, 1992 between the Registrant and
Arnold Weiner, filed as Exhibit 10.12 to the 1997 10-K.
10.11(a) Fourth Amendment dated August 1, 1998 to Employment Agreement 43-47
dated February 1, 1992 between the Registrant and
Arnold Weiner.
10.12*(a) Employment Agreement dated February 1, 1992 between the
Registrant and Samuel Wortham, filed as Exhibit 10.15 to the
1992 10-K.
10.13*(a) Amendment dated July 19, 1993 to Employment Agreement dated
February 1, 1992 between the Registrant and Samuel Wortham,
filed as Exhibit 10.4 to the 1993 10-K.
10.14*(a) Second Amendment dated August 1, 1995 to Employment
Agreement dated February 1, 1992 between the Registrant and
Samuel Wortham, filed as Exhibit 10.16 to the 1996 10-K.
10.15(a) Third Amendment dated August 1, 1998 to Employment Agreement
dated February 1, 1992 between the Registrant and Samuel
Wortham. 48-53
10.16*(a) Employment Agreement dated August 1, 1994 between the
Registrant and Peter Cope, filed as Exhibit 10.13 to the 1994
10-K.
10.17*(a) Amendment dated August 1, 1995 to Employment Agreement dated
August 1, 1994 between the Registrant and Peter Cope, filed
as Exhibit 10.18 to the 1996 10-K.
10.18(a) Second Amendment dated August 1, 1998 to Employment Agreement
dated August 1, 1994 between the Registrant and Peter Cope. 54-59
10.19*(a) Employment Agreement dated August 1, 1994 between the
Registrant and Robert Simkins, filed as Exhibit 10.14 to the
1994 10-K.
10.20*(a) Amendment dated August 1, 1995 to Employment Agreement dated
August 1, 1994 between the Registrant and Robert Simkins,
filed as Exhibit 10.20 to the 1996 10-K.
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) of
Form 10-K.
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Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
10.21(a) Second Amendment dated August 1, 1998 to Employment
Agreement dated August 1, 1994 between the Registrant and
Robert Simkins. 60-65
10.22*(a) Employment Agreement dated September 26, 1994 between the
Registrant and Donald B. Stevens, filed as Exhibit 10.17 to
the 1994 10-K.
10.23*(a) Amendment dated August 1, 1995 to Employment Agreement dated
September 26, 1994 between the Registrant and Donald B.
Stevens, filed as Exhibit 10.24 to the 1996 10-K.
10.24(a) Second Amendment dated August 1, 1998 to Employment
Agreement dated September 26, 1994 between the Registrant
and Donald B. Stevens. 66-71
10.25*(a) Employment Agreement dated August 5, 1996 between the
Registrant and Paul Kohn, filed as Exhibit 10.25 to the 1996
10-K.
10.26(a) First Amendment dated August 1, 1998 to Employment Agreement
dated August 5, 1996 between the Registrant and Paul Kohn. 72-76
10.27*(a) Employment Agreement made as of January 5, 1998 between the
Registrant and John Adamovich, filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended November 1, 1997.
10.28*(a) Employment Agreement made as of January 12, 1998 between the
Registrant and Steven Chisolm, filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended January 31, 1998.
10.29(a) First Amendment dated August 1, 1998 to Employment Agreement
dated January 12, 1998 between the Registrant and Steven
Chisolm. 77-82
10.30(a) Employment Agreement made as of August 1, 1998 between the
Registrant and Charles R. Grimm. 83-102
10.31(a) Service Agreement dated August 1, 1998 between Pall Europe
Limited and Marcus Albert Wilson. 103-114
10.32*(a) Pall Corporation Supplementary Profit Sharing Plan as
amended and restated February 15, 1995, filed as Exhibit
10.26 to the 1996 10-K.
10.33*(a) Pall Corporation Supplementary Pension Plan (As amended
effective October 6, 1997), filed as Exhibit 10.25 to the
1997 10-K.
10.34*(a) Pall Corporation Profit Sharing Plan, as amended and
restated as of January 1, 1997, filed as Exhibit 10.26 to
the 1997 10-K.
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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14
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
- --------------------------------------------------------------------------------
10.35*(a) Pall Corporation 1993 Stock Option Plan, filed as Exhibit
10.22 to the 1993 10-K.
10.36*(a) Pall Corporation 1991 Stock Option Plan, filed as Exhibit
10.42 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 3, 1991 (the "1991 10-K").
10.37*(a) Pall Corporation 1988 Stock Option Plan, as amended through
October 8, 1991, filed as Exhibit 10.32 to the 1991 10-K.
10.38*(a) Pall Corporation Stock Option Plan for Non-Employee
Directors, filed as Exhibit 10.26 to the Registrant's Form
10-Q for the quarterly period ended October 28, 1995.
10.39*(a) Pall Corporation 1995 Employee Stock Option Plan, filed as
Exhibit 10.27 to the Registrant's Form 10-Q for the
quarterly period ended October 28, 1995.
10.40*(a) Principal Rules of the Pall Supplementary Pension Scheme,
filed as Exhibit 10.25 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 29, 1995 (the "1995
10-K").
10.41*(a) Pall Deutschland GmbH Holding, Concept Of An Additional
Pension Plan For Senior Executives, filed as Exhibit 10.35
to the 1996 10-K.
13 Annual Report to Shareholders for the year ended August 1,
1998 115-160
21 Subsidiaries of Pall Corporation. 161
23 Consent of Independent Auditors. 162
27 Financial Data Schedule (only filed electronically).
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
b. Reports on Form 8-K:
The registrant filed no reports on Form 8-K during the three months ended
August 1, 1998.
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SCHEDULE II
PALL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED AUGUST 1, 1998,
AUGUST 2, 1997 AND AUGUST 3, 1996
Balance at Charged to Write-off of Balance
Beginning Costs and Uncollectible at End
Description of Year Expenses Accounts of Year
--------------- ---------------- --------------- ---------------- ----------------
Year ended August 1, 1998:
Allowance for doubtful
accounts $ 6,602,000 1,915,000 $ 2,638,000 $ 5,879,000
Year ended August 2, 1997:
Allowance for doubtful
accounts $ 5,998,000 1,417,000 $ 813,000 $ 6,602,000
Year ended August 3, 1996:
Allowance for doubtful
accounts $ 6,318,000 1,851,000 $ 2,171,000 $ 5,998,000
16
[KPMG PEAT MARWICK LLP LETTERHEAD]
16
Independent Auditors' Report on Schedule
The Board of Directors
Pall Corporation:
Under date of September 2, 1998, we reported on the consolidated balance sheets
of Pall Corporation and subsidiaries as of August 1, 1998 and August 2, 1997,
and the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the years in the three-year period ended August 1, 1998,
as contained in the Company's fiscal 1998 annual report to stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the Company's annual report on Form 10-K for fiscal year 1998. In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule as
listed in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Melville, New York
September 2, 1998
17
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Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ Jeremy Hayward-Surry
PALL CORPORATION
October 27, 1998 By: Jeremy Hayward-Surry
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Eric Krasnoff Chairman of the Board and October 28, 1998
- ----------------- Chief Executive Officer
Eric Krasnoff
/s/ Jeremy Hayward-Surry President and Director October 28, 1998
- -------------------------
Jeremy Hayward-Surry
/s/ John Adamovich, Jr. Chief Financial Officer October 28, 1998
- ----------------------- and Treasurer
John Adamovich, Jr.
/s/ Viraj J. Patel Chief Accountant (Chief October 28, 1998
- ------------------- Accounting Officer)
Viraj J. Patel
/s/ Abraham Appel Director October 28, 1998
- ------------------
Abraham Appel
/s/ John H. F. Haskell, Jr. Director October 28, 1998
- ---------------------------
John H. F. Haskell, Jr.
/s/ Ulric S. Haynes, Jr. Director October 28, 1998
- ------------------------
Ulric S. Haynes, Jr.
/s/ Edwin W. Martin Director October 28, 1998
- -------------------
Edwin W. Martin
/s/ Katharine Plourde Director October 28, 1998
- ---------------------
Katharine L. Plourde
/s/ Chesterfield F. Seibert Director October 28, 1998
- ---------------------------
Chesterfield F. Seibert
/s/ Heywood Shelley Director October 28, 1998
- --------------------
Heywood Shelley
/s/ Alan B. Slifka Director October 28, 1998
- ------------------
Alan B. Slifka
/s/ James D. Watson Director October 28, 1998
- --------------------
James D. Watson
/s/ Derek T.D. Williams Director October 28, 1998
- ------------------------
Derek T.D. Williams
18
18
EXHIBIT INDEX
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
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 (the "1994 10-K").
3(ii) By-Laws of the Registrant as amended on October 9, 1998. 22-42
4 Note: The exhibits filed herewith do not include the
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.
10.1*(a) Amended And Restated Employment Agreement dated October 6,
1997 between the Registrant and Eric Krasnoff, filed as
Exhibit 10.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 2, 1997 (the "1997 10-K").
10.2*(a) Letter agreement dated July 17, 1997 between the Registrant
and Eric Krasnoff, filed as Exhibit 10.4 to the 1997 10-K.
10.3*(a) Amended And Restated Employment Agreement dated October 6,
1997 between the Registrant and Jeremy Hayward-Surry, filed
as Exhibit 10.5 to the 1997 10-K.
10.4*(a) Service Agreement dated November 28, 1995 between Pall
Europe Limited and Derek Thomas Donald Williams, filed as
Exhibit 10.7 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 3, 1996 (the "1996 10-K").
10.5*(a) Service Agreement dated November 28, 1995 between Pall
Europe Limited and Clifton Stanley Hutchings, filed as
Exhibit 10.9 to the 1996 10-K.
10.6*(a) Service Agreement dated November 28, 1995 between Pall
Deutschland GmbH Holding and Gerhard Friedrich Weich, filed
as Exhibit 10.10 to the 1996 10-K.
10.7*(a) Employment Agreement dated February 1, 1992 between the
Registrant and Arnold Weiner, filed as Exhibit 10.32 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 1, 1992 (the "1992 10-K").
10.8*(a) Amendment dated July 19, 1993 to Employment Agreement dated
February 1, 1992 between the Registrant and Arnold Weiner,
filed as Exhibit 10.14 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1993 (the "1993
10-K").
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
19
19
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
10.9*(a) Second Amendment dated August 1, 1995 to Employment
Agreement dated February 1, 1992 between the Registrant and
Arnold Weiner, filed as Exhibit 10.13 to the 1996 10-K.
10.10*(a) Third Amendment dated October 6, 1997 to Employment
Agreement dated February 1, 1992 between the Registrant and
Arnold Weiner, filed as Exhibit 10.12 to the 1997 10-K.
10.11(a) Fourth Amendment dated August 1, 1998 to Employment 43-47
Agreement dated February 1, 1992 between the
Registrant and Arnold Weiner.
10.12*(a) Employment Agreement dated February 1, 1992 between the
Registrant and Samuel Wortham, filed as Exhibit 10.15 to the
1992 10-K.
10.13*(a) Amendment dated July 19, 1993 to Employment Agreement dated
February 1, 1992 between the Registrant and Samuel Wortham,
filed as Exhibit 10.4 to the 1993 10-K.
10.14*(a) Second Amendment dated August 1, 1995 to Employment
Agreement dated February 1, 1992 between the Registrant and
Samuel Wortham, filed as Exhibit 10.16 to the 1996 10-K.
10.15(a) Third Amendment dated August 1, 1998 to Employment Agreement
dated February 1, 1992 between the Registrant and Samuel
Wortham. 48-53
10.16*(a) Employment Agreement dated August 1, 1994 between the
Registrant and Peter Cope, filed as Exhibit 10.13 to the
1994 10-K.
10.17*(a) Amendment dated August 1, 1995 to Employment Agreement dated
August 1, 1994 between the Registrant and Peter Cope, filed
as Exhibit 10.18 to the 1996 10-K.
10.18(a) Second Amendment dated August 1, 1998 to Employment
Agreement dated August 1, 1994 between the Registrant and
Peter Cope. 54-59
10.19*(a) Employment Agreement dated August 1, 1994 between the
Registrant and Robert Simkins, filed as Exhibit 10.14 to the
1994 10-K.
10.20*(a) Amendment dated August 1, 1995 to Employment Agreement dated
August 1, 1994 between the Registrant and Robert Simkins,
filed as Exhibit 10.20 to the 1996 10-K.
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
20
20
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
10.21(a) Second Amendment dated August 1, 1998 to Employment
Agreement dated August 1, 1994 between the Registrant and
Robert Simkins. 60-65
10.22*(a) Employment Agreement dated September 26, 1994 between the
Registrant and Donald B. Stevens, filed as Exhibit 10.17 to
the 1994 10-K.
10.23*(a) Amendment dated August 1, 1995 to Employment Agreement dated
September 26, 1994 between the Registrant and Donald B.
Stevens, filed as Exhibit 10.24 to the 1996 10-K.
10.24(a) Second Amendment dated August 1, 1998 to Employment
Agreement dated September 26, 1994 between the Registrant
and Donald B. Stevens. 66-71
10.25*(a) Employment Agreement dated August 5, 1996 between the
Registrant and Paul Kohn, filed as Exhibit 10.25 to the 1996
10-K.
10.26(a) First Amendment dated August 1, 1998 to Employment Agreement
dated August 5, 1996 between the Registrant and Paul Kohn. 72-76
10.27*(a) Employment Agreement made as of January 5, 1998 between the
Registrant and John Adamovich, filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended November 1, 1997.
10.28*(a) Employment Agreement made as of January 12, 1998 between the
Registrant and Steven Chisolm, filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended January 31, 1998.
10.29(a) First Amendment dated August 1, 1998 to Employment Agreement
dated January 12, 1998 between the Registrant and Steven
Chisolm. 77-82
10.30(a) Employment Agreement made as of August 1, 1998 between the
Registrant and Charles R. Grimm. 83-102
10.31(a) Service Agreement dated August 1, 1998 between Pall Europe
Limited and Marcus Albert Wilson. 103-114
10.32*(a) Pall Corporation Supplementary Profit Sharing Plan as
amended and restated February 15, 1995, filed as Exhibit
10.26 to the 1996 10-K.
10.33*(a) Pall Corporation Supplementary Pension Plan (As amended effective
October 6, 1997), filed as Exhibit 10.25 to the 1997 10-K.
10.34*(a) Pall Corporation Profit Sharing Plan, as amended and
restated as of January 1, 1997, filed as Exhibit 10.26 to
the 1997 10-K.
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
21
21
Page
Exhibit of 1998
Number Description of Exhibit Form 10-K
10.35*(a) Pall Corporation 1993 Stock Option Plan, filed as Exhibit
10.22 to the 1993 10-K.
10.36*(a) Pall Corporation 1991 Stock Option Plan, filed as Exhibit
10.42 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 3, 1991 (the "1991 10-K").
10.37*(a) Pall Corporation 1988 Stock Option Plan, as amended through
October 8, 1991, filed as Exhibit 10.32 to the 1991 10-K.
10.38*(a) Pall Corporation Stock Option Plan for Non-Employee
Directors, filed as Exhibit 10.26 to the Registrant's Form
10-Q for the quarterly period ended October 28, 1995.
10.39*(a) Pall Corporation 1995 Employee Stock Option Plan, filed as
Exhibit 10.27 to the Registrant's Form 10-Q for the
quarterly period ended October 28, 1995.
10.40*(a) Principal Rules of the Pall Supplementary Pension Scheme,
filed as Exhibit 10.25 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 29, 1995 (the "1995
10-K").
10.41*(a) Pall Deutschland GmbH Holding, Concept Of An Additional
Pension Plan For Senior Executives, filed as Exhibit 10.35
to the 1996 10-K.
13 Annual Report to Shareholders for the year ended August 1,
1998 115-160
21 Subsidiaries of Pall Corporation. 161
23 Consent of Independent Auditors. 162
27 Financial Data Schedule (only filed electronically).
* Incorporated herein by reference.
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.