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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 July 28, 2001
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 $2,266,961,538, based on the closing price on September 27, 2001.
The number of common shares, $.10 par value outstanding of the registrant was
121,958,649 shares on September 27, 2001.
Total number of pages - 91 Exhibit index located on page 18
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's Proxy Statement for the 2001 annual meeting of
shareholders, previously filed, (hereinafter referred to as the "Proxy
Statement") are incorporated by reference into Part III.
Portions of the registrant's Annual Report to Shareholders for the fiscal year
ended July 28, 2001, filed as Exhibit 13 hereto, (hereinafter referred to as the
"Annual Report to Shareholders") are incorporated by reference into Parts I, II
and IV of this report.
2
PART I
------
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, principally 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 serves customers in two principal markets: Life Sciences
(formerly Health Care) and Industrial. The two principal markets are further
divided into five sub-segments: Blood and Bio-Pharmaceuticals (which
comprise the Life Sciences business) and General Industrial, Aerospace and
Microelectronics (which comprise the Industrial business). Reference is made
to pages 38 and 39 of the Annual Report to Shareholders.
During the past five years, the Company has continued its development and
sale of fluid clarification and separations products in a wide variety of
markets.
(b) Financial information about market segment information.
Reference is made to page 40 of the Annual Report to Shareholders.
(c) Narrative description of business.
The Company is a specialty materials and engineering company with the
broadest-based filtration, separations and purification capabilities in the
world. Its proprietary products are used to discover, develop and produce
pharmaceuticals, produce safe drinking water, protect hospital patients,
enhance the quality and efficiency of manufacturing processes, keep
equipment running efficiently and to protect the environment. The Company
actively pursues only those applications in which Pall products can make a
substantial difference to the customer. The products sold are principally
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 for its filters and a wide variety of
appurtenant devices, are also made. Competition is intense in all of the
Company's markets and includes many large and small companies in its global
markets, however no one company has a significant presence in all of the
Company's markets.
Life Sciences business:
Blood:
Includes sales of disposable blood filtration and cardiovascular filtration
products primarily to blood centers and hospitals. For information about the
Blood market, reference is made to the sections titled "Pall Life Sciences"
on pages 1, 4 and 5 and the "Review of Market Segments and Geographies" on
page 18 of the Annual Report to Shareholders.
BioPharmaceuticals:
The BioPharmaceuticals market includes sales of separation systems and
disposable filters primarily to pharmaceutical, biotechnology and laboratory
companies. For information about the BioPharmaceuticals market, reference is
made to the section titled "Pall Life Sciences" on pages 1, 4 and 5 of the
Annual Report to Shareholders.
3
Sales in the Blood and BioPharmaceuticals markets 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 these
portions 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 business,
although economy of use is important.
The Company believes that its principal competitors in the Life Sciences
markets include Millipore, Baxter, Sartorius, CUNO, Asahi Medical, Maco
Pharma, Terumo and Fresenius.
Industrial business:
General Industrial:
Included in this diverse market are sales of filters, coalescers and
separation systems for hydraulic, fuel and lubrication systems on
manufacturing equipment across many industries as well as to producers of
oil, gas, electricity, chemicals, food and beverages, municipal water and
paper. For information about the General Industrial sub-market, reference is
made to the section titled "Pall Industrial" on pages 1 and 4 of the Annual
Report to Shareholders. Backlog at July 28, 2001 was approximately
$60,142,000 and is equal to about two months of sales. The Company's sales
to General Industrial customers are made through Company personnel, through
distributors and manufacturers' representatives. 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.
Aerospace:
The Aerospace market includes sales of filtration, fluid monitoring
equipment and shipboard water/waste water filtration to the aerospace
industry for use on commercial and military aircraft, ships and land-based
vehicles. Commercial and Military sales represented 52% and 41%,
respectively of total Aerospace sales. For information about the Aerospace
market, reference is made to the section titled "Pall Industrial" on pages 1
and 4 and "Review of Market Segments and Geographies" on page 18 of the
Annual Report to Shareholders. The Company's products are sold to customers
in this sub-segment through its own personnel, and through distributors.
Backlog at July 28, 2001 was approximately $73,202,000 and is equal to about
six months sales. The Company believes that performance and quality of
product and service, as well as price, are determinative in most sales.
Microelectronics:
Included in this market are sales of disposable filtration products to
producers of semiconductors, computer terminals, fiber optics, disc drives,
thin film rigid discs and photographic film. For information about the
Microelectronics market, reference is made to the section titled "Pall
Industrial" on pages 1 and 4 of the Annual Report to Shareholders. The
Company's products are sold to customers in this segment through its own
personnel, through distributors and manufacturers' representatives. Backlog
at July 28, 2001 was approximately $10,487,000. The Company believes that
performance and quality of product and service, as well as price, are
determinative in most sales.
The principal competitors in the Industrial market are US Filter/Vivendi, CUNO,
Mykrolis, Ronnigen-Petter, Fuji, Donaldson, Parker Hannifin, Hydac, Schroeder,
Taisei and ESCO Technologies Inc.
For information about Pall proprietary products sold in all five of the above
sub-segments, reference is made to pages 7-15 of the Annual Report to
Shareholders.
The following comments relate to the five sub-segments discussed above:
Raw materials:
4
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.
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.
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 $56,041,000 in 2001,
$51,434,000 in 2000 and $56,490,000 in 1999.
(b) There was no one customer to whom sales were made totaling 10% or more
of consolidated sales in fiscal 2001, 2000 or 1999.
(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.
The Company continues the cleanup of contaminated water at its Ann
Arbor, Michigan facility that began in fiscal 1998. In February 2000,
the state of Michigan filed a court motion seeking approximately
$4,900,000 in penalties for alleged violations of a consent judgment
entered into between Gelman Sciences Inc., a subsidiary of the Company,
and the state concerning the cleanup. In July 2000, the court took the
matter of penalties "under advisement" but held that Gelman was not in
violation of the consent judgment. The court issued a remediation
enforcement order requiring Gelman to complete the cleanup within five
years under a court approved plan. Also in July 2000, the Company
received funds aggregating approximately $5,000,000 from its insurance
carrier as final settlement of its insurance obligation. These funds
were added to the Company's reserve for estimated future environmental
remediation costs and in the fourth quarter of 2001 the Company
reviewed and increased this reserve by $8,200,000. The Company's
balance sheet at July 28, 2001 reflects $18,200,000 of accruals related
to environmental matters, mainly pertaining to the Ann Arbor site. 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 July 28, 2001, the Company employed approximately 9,400 persons.
(d) Financial information about geographic areas.
Reference is made to page 41 of the Annual Report to Shareholders.
5
ITEM 2. PROPERTIES.
-------------------
Location Type Markets Size (square feet)
-------- ---- --------- -----------------
OWNED:
East Hills, NY Office, plant & Executive Office, Head-
warehouse quarters & all markets 326,000
Pt. Washington, NY Office, laboratory
& training center Life Sciences, Industrial 215,000
Hauppauge, NY Plant, office Life Sciences, Industrial 75,000
Cortland, NY Plants, office Life Sciences, Industrial 338,000
Putnam, CT Plant Life Sciences, Industrial 62,000
Ft. Myers, FL Plant, office, warehouse Industrial 111,000
New Port Richey, FL Plant, office Industrial 166,000
Pensacola, FL Plant Life Sciences 73,000
Covina, CA Plant, office &
laboratory Life Sciences 176,000
Ann Arbor, MI Plant, office, warehouse Life Sciences 180,000
Fajardo, Puerto Rico Plants, warehouse,
laboratory Life Sciences, Industrial 259,000
Ilfracombe, U.K. Plant & office Life Sciences, Industrial 112,000
Newquay, U.K . Plant & office Life Sciences, Industrial 106,000
Portsmouth, U.K. Plant, office, warehouse,
laboratory Life Sciences, Industrial 248,000
Redruth, U.K. Plant, office, warehouse Industrial 163,000
Tipperary, Ireland Plant Life Sciences, Industrial 178,000
Ascoli, Italy Plant, office, warehouse Life Sciences 71,000
Frankfurt, Germany Office & warehouse Life Sciences, Industrial 72,000
Oud Beijerland, Netherlands Plant, office, warehouse Industrial 12,000
Paris, France Office & warehouse Life Sciences, Industrial 65,000
Tsukuba, Japan Plant, laboratory &
warehouse Life Sciences, Industrial 119,000
Johannesburg, South Africa Office & warehouse Life Sciences, Industrial 7,000
LEASED:
Clearwater, FL Office Industrial 23,000
Cortland, NY Warehouse Industrial 20,000
Covina, CA Plant, warehouse Life Sciences 66,000
Exton, PA Office Industrial 13,000
Toronto, Montreal, Canada Office & warehouse Life Sciences, Industrial 18,000
Frankfurt, Hamburg, Germany Office & warehouse Life Sciences, Industrial 100,000
Tijuana, Mexico Plant Life Sciences 55,000
Milan, Italy Office & warehouses Life Sciences, Industrial 54,000
Vienna, Austria Office & warehouse Life Sciences, Industrial 10,000
Basel, Switzerland Office & warehouse Life Sciences, Industrial 13,000
Madrid, Spain Office & warehouse Life Sciences, Industrial 28,000
Brussels, Belgium Office & warehouse Life Sciences, Industrial 12,000
Oslo, Norway Office & warehouse Life Sciences, Industrial 6,000
Warsaw, Poland Office & warehouse Life Sciences, Industrial 4,000
Buenos Aires, Argentina Office Life Sciences, Industrial 3,000
Tokyo, Osaka, Nagoya, Japan Offices Life Sciences, Industrial 39,000
Singapore Office & warehouse Life Sciences, Industrial 15,000
Seoul, South Korea Office Life Sciences, Industrial 2,000
Beijing, China Plant, office, warehouse Life Sciences, Industrial 137,000
Melbourne, Sydney
& Perth, Australia Office & warehouse Life Sciences, Industrial 33,000
Auckland, New Zealand Office & warehouse Life Sciences, Industrial 6,000
In the opinion of management, these premises are suitable and adequate to meet
the Company's requirements.
6
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 (amended September 1996 and October 1999), which resolved that litigation,
Gelman is remediating the contamination without admitting wrongdoing. In
February 2000, the State Assistant Attorney General filed a Motion to Enforce
Consent Judgement in the Court seeking approximately $4,900,000 in stipulated
penalties for the alleged violations of the consent judgment and additional
injunctive relief. Gelman disputed these assertions. In July 2000, the Court
took the matter of penalties "under advisement" and held that Gelman was not in
violation of the Consent Judgement. The Court issued a Remediation Enforcement
Order requiring Gelman to complete the cleanup within five years under a Court
approved plan. Also during the fourth quarter of 2000, the Company received
funds aggregating approximately $5,000,000 from its insurance carrier as final
settlement of its insurance obligations for the Gelman remediation. These funds
were added to the reserve for environmental matters, principally to cover
revised estimates for the future costs of remediation and ongoing legal
expenses. In the fourth quarter of 2001 the Company recorded a charge of
$8,200,000 for future environmental remediation costs. The reserve of nearly
$18,200,000 of accruals reflected in the Company's balance sheet at July 28,
2001 relates mainly to the aforementioned proceedings. In the opinion of
management, the Company is in substantial compliance with applicable
environmental laws and its current accruals for environmental remediation are
adequate.
Reference is also made to Contingencies and Commitments 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 2001.
7
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 42 of the Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA.
Reference is made to page 43 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 17-21 of the Annual Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Reference is made to pages 21 and 22 of the Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to pages 23-42 of the Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES.
None.
8
PART III
--------
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. 16 Pall Corp.
Name 2001 Position Held Began
---- ---- ------------- --------
Eric Krasnoff* 49 Chairman and Chief
Executive Officer 1986
Jeremy Hayward-Surry* 58 President 1989
Donald B. Stevens 56 Executive Vice President 1996
Marcus Wilson 46 Executive Vice President 1998
John Adamovich, Jr. 48 Group Vice President and Treasurer,
Chief Financial Officer 1998
Paul Kohn 55 Group Vice President 1996
Samuel T. Wortham 54 Group Vice President 1990
Steven Chisolm 43 Senior Vice President 1998
Charles Grimm 61 Senior Vice President 1998
Heinz Ulrich Hensgen 49 Senior Vice President 2000
Neil MacDonald 51 Senior Vice President 2000
John Miller 56 Senior Vice President 2000
Riichi Inoue 53 Senior Vice President 2001
* Member of the Executive Committee of the Board of Directors.
None of the persons listed above is related.
Messrs. Krasnoff and Hayward-Surry 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 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.
9
ITEM 11. EXECUTIVE COMPENSATION.
Reference is made to "Compensation and Other Benefits of Senior Management"
beginning on page 7 of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to "Beneficial Ownership of Common Stock" beginning on page 26
of the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to "Election of Directors" starting on page 3 of the Proxy
Statement.
Reference is made to "Indebtedness of Officers and Directors under Stock Option
Plans" beginning on page 10 of the Proxy Statement.
Disclosure of information relating to delinquent filers required by Item 405 of
Regulation S-K is set forth on page 28 of the Proxy Statement.
10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a. Documents filed as part of the Form 10-K:
(1) The following financial statements are incorporated by reference to
the indicated pages of the 2001 Annual Report to Shareholders, filed
as Exhibit 13 hereto.
Page Number in
Annual Report
---------------
Independent Auditors' Report 23
Consolidated Statements of Earnings - years ended
July 28, 2001, July 29, 2000 and July 31, 1999 23
Consolidated Balance Sheets - July 28, 2001
and July 29, 2000 24
Consolidated Statements of Stockholders' Equity -
years ended July 28, 2001, July 29, 2000 and July 31, 1999 25
Consolidated Statements of Cash Flows - years ended
July 28, 2001, July 29, 2000 and July 31, 1999 26
Notes to Consolidated Financial Statements 27-42
(2) Financial Statement Schedule
The following schedules are filed herewith: Page Number in
Form 10-K
---------------
Report of Independent Auditors on Financial Statement Schedule 15
Schedule II - Valuation and Qualifying Accounts 16
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or in the notes thereto.
11
(3) Exhibits filed herewith:
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
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 5, 1999, filed as
Exhibit 3(ii) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1999 (the "1999 10-K").
4* Credit Agreement dated as of August 30, 2000 by and among the
Registrant and, Fleet Bank, National Association as Administrative
Agent, The Chase Manhattan Bank as Syndication Agent, Wachovia Bank,
N.A. as Documentation Agent and The Lenders Party Thereto, filed as
Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended October 28, 2000.
The exhibits filed herewith do not include other 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) Employment Agreement dated February 1, 1992 between the Registrant
and Samuel Wortham, filed as Exhibit 10.15 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 1, 1992
(the "1992 10-K").
10.5*(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 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.
12
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
10.6*(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 Registrants Annual Report on Form 10-K for the
fiscal year ended August 3, 1996 (the "1996 10-K").
10.7*(a) Third Amendment dated August 1, 1998 to Employment Agreement dated
February 1, 1992 between the Registrant and Samuel Wortham, filed as
Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 1, 1998 (the "1998 10-K").
10.8*(a) Employment Agreement dated January 22, 2001 between the Registrant
and Donald B. Stevens, filed as Exhibit 10.2 (a) to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended April
28, 2001.
10.9*(a) Employment Agreement dated August 5, 1996 between the Registrant and
Paul Kohn, filed as Exhibit 10.25 to the 1996 10-K.
10.10*(a) First Amendment dated August 1, 1998 to Employment Agreement dated
August 5, 1996 between the Registrant and Paul Kohn, filed as
Exhibit 10.26 to the 1998 10-K.
10.11*(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.
10.12*(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.
10.13*(a) First Amendment dated August 1, 1998 to Employment Agreement dated
January 12, 1998 between the Registrant and Steven Chisolm, filed as
Exhibit 10.29 to the 1998 10-K.
10.14*(a) Employment Agreement made as of August 1, 1998 between the
Registrant and Charles R. Grimm, filed as Exhibit 10.30 to the 1998
10-K.
10.15*(a) Service Agreement dated August 1, 1998 between Pall Europe Limited
and Marcus Albert Wilson, filed as Exhibit 10.31 to the 1998 10-K.
10.16*(a) Employment Agreement made as of February 1, 1992 between the
Registrant and John Miller, filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 29, 2000.
* 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.
13
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
10.17*(a) Amendment dated July 19, 1993 to Employment Agreement dated February
1, 1992 between the Registrant and John D. Miller, filed as Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended April 29, 2000.
10.18*(a) Employment Agreement made as of June 7, 2000 between Pall Europe
Limited and Neil MacDonald, filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 29, 2000.
10.19 (a) Service Contract dated February 26, 2001 between Pall Deutschland
GmbH Holding and Heinz Ulrich Hensgen.
10.20*(a) Pall Corporation Supplementary Profit Sharing Plan as amended and
restated February 15, 1995, filed as Exhibit 10.26 to the 1996 10-K.
10.21*(a) Pall Corporation Supplementary Pension Plan (As amended effective
October 6, 1997), filed as Exhibit 10.25 to the 1997 10-K.
10.22*(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.
10.23*(a) Pall Corporation 1988 Stock Option Plan, as amended through October
8, 1991, filed as Exhibit 10.32 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 3, 1991.
10.24*(a) Pall Corporation 1991 Stock Option Plan, as amended effective
November 19, 1998, filed as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended October
31, 1998.
10.25*(a) Pall Corporation 1993 Stock Option Plan, as amended effective
November 19, 1998, filed as Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended October
31, 1998.
10.26*(a) Pall Corporation 1995 Employee Stock Option Plan, as amended
effective November 19, 1998, filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 1998.
10.27*(a) Pall Corporation 1998 Employee Stock Option Plan as amended
effective July 12, 2000, filed as Exhibit 99 to the Registrant's
Registration Statement on Form S-8 (Registration No.333-51090).
10.28*(a) Pall Corporation Stock Option Plan for Non-Employee Directors, as
amended effective November 19, 1998, filed as Exhibit 10.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 1998.
* 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.
14
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
10.29*(a) Pall Corporation Management Stock Purchase Plan, as amended
effective March 28, 2001, filed as Exhibit 10.1(a) to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 28, 2001.
10.30*(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.
10.31*(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 July 28, 2001.
21 Subsidiaries of Pall Corporation.
23 Consent of Independent Auditors.
* 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 its fourth fiscal quarter
ended July 28, 2001.
15
KPMG LETTERHEAD
Independent Auditors' Report on Schedule
The Board of Directors
Pall Corporation:
Under date of August 29, 2001, we reported on the consolidated balance sheets of
Pall Corporation and subsidiaries as of July 28, 2001 and July 29, 2000, and the
related consolidated statements of earnings, stockholders' equity and cash flows
for each of the years in the three-year period ended July 28, 2001, as contained
in the Company's fiscal 2001 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 2001. 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 LLP
------------
KPMG LLP
Melville, New York
August 29, 2001
16
SCHEDULE II
PALL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED
JULY 28, 2001,
JULY 29, 2000 AND
JULY 31, 1999
(in thousands)
Balance at Charged to Balance
Beginning Costs and Write-offs at End
Description of Year Expenses of Year
-------------------------------------------------- ---------- ------------ ----------- ----------
Allowance for doubtful accounts:
Year ended July 28, 2001 $ 7,832 2,491 3,126 $ 7,197
Year ended July 29, 2000 $ 6,623 2,468 1,259 $ 7,832
Year ended July 31, 1999 $ 5,879 1,891 1,147 $ 6,623
Reserve for inventory obsolescence:
Year ended July 28, 2001 $14,043 5,032 2,770 $16,305
Year ended July 29, 2000 $13,317 6,766 (a) 6,040 $14,043
Year ended July 31, 1999 $ 8,382 27,890 (b) 22,955 $13,317
(a) Includes $3,421 related to the restructuring and other charges
(b) Includes $24,738 related to the restructuring and other charges
17
SIGNATURES
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.
Pall Corporation
October 26, 2001 By: /s/ Jeremy Hayward-Surry
------------------------
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 26, 2001
----------------- Chief Executive Officer
Eric Krasnoff
/s/ Jeremy Hayward-Surry President and Director October 26, 2001
-------------------------
Jeremy Hayward-Surry
/s/ John Adamovich, Jr. Chief Financial Officer October 26, 2001
--------------------------- and Treasurer
John Adamovich, Jr.
/s/ Lisa Kobarg Chief Corporate October 26, 2001
--------------------------- Accountant
Lisa Kobarg
/s/ Abraham Appel Director October 26, 2001
------------------
Abraham Appel
/s/ Daniel J. Carroll, Jr. Director October 26, 2001
--------------------------
Daniel J. Carroll, Jr.
/s/ John H. F. Haskell, Jr. Director October 26, 2001
---------------------------
John H. F. Haskell, Jr.
/s/ Ulric S. Haynes, Jr. Director October 26, 2001
---------------------------
Ulric S. Haynes, Jr.
/s/ Edwin W. Martin Director October 26, 2001
-------------------
Edwin W. Martin
/s/ Katharine L. Plourde Director October 26, 2001
------------------------
Katharine L. Plourde
/s/ Heywood Shelley Director October 26, 2001
---------------------------
Heywood Shelley
/s/ Alan B. Slifka Director October 26, 2001
------------------
Alan B. Slifka
/s/ Edward L. Snyder Director October 26, 2001
---------------------------
Edward L. Snyder
/s/ James D. Watson Director October 26, 2001
--------------------
James D. Watson
18
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
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 5, 1999, filed as
Exhibit 3(ii) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1999 (the "1999 10-K").
4* Credit Agreement dated as of August 30, 2000 by and among the
Registrant and, Fleet Bank, National Association as Administrative
Agent, The Chase Manhattan Bank as Syndication Agent, Wachovia Bank,
N.A. as Documentation Agent and The Lenders Party Thereto, filed as
Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended October 28, 2000.
The exhibits filed herewith do not include other 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) Employment Agreement dated February 1, 1992 between the Registrant
and Samuel Wortham, filed as Exhibit 10.15 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 1, 1992
(the "1992 10-K").
10.5*(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 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
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
10.6*(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 Registrants Annual Report on Form 10-K for the
fiscal year ended August 3, 1996 (the "1996 10-K").
10.7*(a) Third Amendment dated August 1, 1998 to Employment Agreement dated
February 1, 1992 between the Registrant and Samuel Wortham, filed as
Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 1, 1998 (the "1998 10-K").
10.8*(a) Employment Agreement dated January 22, 2001 between the Registrant
and Donald B. Stevens, filed as Exhibit 10.2 (a) to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended April
28, 2001.
10.9*(a) Employment Agreement dated August 5, 1996 between the Registrant and
Paul Kohn, filed as Exhibit 10.25 to the 1996 10-K.
10.10*(a) First Amendment dated August 1, 1998 to Employment Agreement dated
August 5, 1996 between the Registrant and Paul Kohn, filed as
Exhibit 10.26 to the 1998 10-K.
10.11*(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.
10.12*(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.
10.13*(a) First Amendment dated August 1, 1998 to Employment Agreement dated
January 12, 1998 between the Registrant and Steven Chisolm, filed as
Exhibit 10.29 to the 1998 10-K.
10.14*(a) Employment Agreement made as of August 1, 1998 between the
Registrant and Charles R. Grimm, filed as Exhibit 10.30 to the 1998
10-K.
10.15*(a) Service Agreement dated August 1, 1998 between Pall Europe Limited
and Marcus Albert Wilson, filed as Exhibit 10.31 to the 1998 10-K.
10.16*(a) Employment Agreement made as of February 1, 1992 between the
Registrant and John Miller, filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 29, 2000.
* 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
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
10.17*(a) Amendment dated July 19, 1993 to Employment Agreement dated February
1, 1992 between the Registrant and John D. Miller, filed as Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended April 29, 2000.
10.18*(a) Employment Agreement made as of June 7, 2000 between Pall Europe
Limited and Neil MacDonald, filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 29, 2000.
10.19 (a) Service Contract dated February 26, 2001 between Pall Deutschland
GmbH Holding and Heinz Ulrich Hensgen.
10.20*(a) Pall Corporation Supplementary Profit Sharing Plan as amended and
restated February 15, 1995, filed as Exhibit 10.26 to the 1996 10-K.
10.21*(a) Pall Corporation Supplementary Pension Plan (As amended effective
October 6, 1997), filed as Exhibit 10.25 to the 1997 10-K.
10.22*(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.
10.23*(a) Pall Corporation 1988 Stock Option Plan, as amended through October
8, 1991, filed as Exhibit 10.32 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 3, 1991.
10.24*(a) Pall Corporation 1991 Stock Option Plan, as amended effective
November 19, 1998, filed as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended October
31, 1998.
10.25*(a) Pall Corporation 1993 Stock Option Plan, as amended effective
November 19, 1998, filed as Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended October
31, 1998.
10.26*(a) Pall Corporation 1995 Employee Stock Option Plan, as amended
effective November 19, 1998, filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 1998.
10.27*(a) Pall Corporation 1998 Employee Stock Option Plan as amended
effective July 12, 2000, filed as Exhibit 99 to the Registrant's
Registration Statement on Form S-8 (Registration No.333-51090).
10.28*(a) Pall Corporation Stock Option Plan for Non-Employee Directors, as
amended effective November 19, 1998, filed as Exhibit 10.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 1998.
* 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
Exhibit
Number Description of Exhibit
-------------------------------------------------------------------------------
10.29*(a) Pall Corporation Management Stock Purchase Plan, as amended
effective March 28, 2001, filed as Exhibit 10.1(a) to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 28, 2001.
10.30*(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.
10.31*(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 July 28, 2001.
21 Subsidiaries of Pall Corporation.
23 Consent of Independent Auditors.
* 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.