Welcome to Pall Corporation's conference call and webcast for the third quarter of fiscal 2013. Today's call is being recorded and simultaneously webcast. [Operator Instructions] We'd like to remind you that the company's third quarter press release is available at www.pall.com. Management's remarks this morning will include forward-looking statements. Please refer to Slide 2 or request a copy of the specific wording of this qualification of the company's remarks. Management also uses certain non-GAAP measures to assess the company's performance. Reconciliations of these measures to their GAAP counterparts are included in slides at the end of the presentation. At this time, I will turn the call over to Mr. Larry Kingsley, Pall Corporation's President and CEO. Please go ahead, sir. Lawrence D. Kingsley: Thank you so much. Good morning, and again, thanks for joining us. As usual, all of our remarks this morning will be made on a continuing operations basis. I'm here today with Akhil Johri, our new CFO; and Brent Jones, our VP of Finance and Treasurer. Before we get started, I'd like to welcome Akhil to Pall. Many of you know him already from his distinguished tenure with United Technologies. In addition to his finance expertise, Akhil also has deep experience in operations, cost management and acquisitions integration. He's a terrific hire, and we're fortunate to have him on the team.

Wow. Thanks, Larry. Those are kind words. I'm really excited to be here. Lawrence D. Kingsley: So before we begin, there is an important point for everyone to remember when we're thinking about our year-over-year comparisons. In Q3 of fiscal '12, we had supply chain disruptions due to our global ERP systems go live. As you'll recall, this negatively impacted our Q3 performance but also resulted in revenue catch-up in Q4 last year. The bottom line, the comparables are messy, which makes assessing our year-over-year organic performance a bit trickier than usual. The macro environment continues to be a mixed one. While there is select strength around the globe, including here in the U.S., not all markets and geographies are working well. In addition, pressure on capital spend, that is the bigger ticket spend, continues to be a cross-sector and cross-region challenge. It's not universally the case, but it is providing for a more difficult forecasting and operating environment, particularly associated with project timing. Frankly, this dynamic is causing us to remain a bit cautious with regard to top line expectations as we think about Q4 and forward into fiscal '14. On a regional basis, we're seeing similar challenges to most industrial technology and life science peers, but with some Pall-specific under and outperformance, respectively. As I highlighted last quarter, we continue to face challenges in China. Many of our end markets in China that we focused on historically continue to be down year-over-year. But as I have said before, we have a recovery plan in place and we are allocating sales resources to markets with higher secular growth in the near term. And despite the macro backdrop, we're performing well in Europe where a very strong sales execution has led to meaningful customer wins and share gain. The Americas is performing at market growth rates with good results in both sales and orders, but does face a much tougher comp in Q4. While there are many things that we can't control, like the prevailing economic environment, there are many that we can, more specifically, our costs. And candidly, I'm increasingly confident about what we're able to control. And I don't mean just improving our cost to serve, but our cost structure, generally. Our most notable achievements in the quarter were continued improvement in the customer service metrics, coupled with operating efficiency and cost management, all issues that we have struggled with historically. Despite a top line that was flat, we were able to drive strong EPS growth. Our operations team yet again proved that they can offset the impact of lower volume as it relates to overhead absorption better than most. And that's a real achievement, particularly given where we came from as a company, and there's much more to come. On the SG&A side, our structural cost reduction initiatives are showing real impact. We will achieve our previously promised $50 million of savings in fiscal year '13, but that's just a start. We have a lot of work to do besides our cost structure to our business opportunity. The strength of our integrated business model and the benefits of diverse end markets provide additional opportunity. Leveraging our investments in technology and operations, we're now better able to allocate resources to higher near-term growth markets. When combined with a rationalized cost structure, particularly on the Industrial side of the business, this presents the opportunity to produce attractive incremental margins even in a modest revenue growth environment. So with that, I'm now going to talk about the specifics for the quarter, and I'm on Slide 5. With regard to performance in the quarter, total sales were $640 million compared to $658 million last year. Excluding FX, sales were flat year-over-year. Gross margin increased 130 basis points to 52.1%. This reflects increases in both businesses. SG&A, excluding FX, decreased about 6% associated with savings generated by our improvement initiatives net of select investments that we're making still. As a result, operating margin improved 240 basis points year-over-year and 40 basis points sequentially to 17.4%. The underlying tax rate in the quarter was 21.6% compared to 21% last year. Pro forma earnings per share in the quarter was $0.74, an increase of $0.13 compared to last year. Bridging this increase, operating profit contributed about $0.14 less $0.01 of transactional FX headwind for a net contribution of $0.13. The year-over-year share count reduction and other items contributed about $0.03. Translational FX reduced EPS by about $0.03 for a combined FX headwind of $0.04. So on a flat sales basis, EPS grew about 28%, excluding the impact of FX. On Slide 6, we illustrate how the company performed on a regional basis. Beginning with the Americas, sales increased 8% x FX, driven by growth in most life science markets, as well as in aerospace and in the energy markets and industrial. As I mentioned previously, the year-over-year sales comparison reflects weakness in the third quarter of fiscal year '12, particularly in BioPharm and in Aerospace. Weakness in municipal water continued, though, to adversely impact sales in the region. Overall, orders in the Americas increased by 4% year-over-year and 2% sequentially, both x FX. In Europe, sales were up about 2% excluding FX. Growth in Europe was impacted largely by timing of capital projects in the energy markets, particularly in the Middle East. Orders in Europe were up 18%, with both Life Sciences and Industrial showing strength. Finally, Asia's sales were down 11%, primarily due to the industrial markets in China and mature Asia. MicroE weakness continues to be a negative contributor, though. And on a positive note, BioPharm performed well there. Orders in the region were soft, down nearly 8% in the quarter and down slightly on a sequential basis, largely due to the weakness in the industrial markets in Asia. And with that, I'm going to turn it over to Akhil to discuss our segment performance.

Thanks, Larry. Let's turn to Slide 7. Life Sciences sales grew by almost 5% in the quarter excluding FX, while Industrial declined by the same amount. Consumables, which were a relatively high 89% of sales in the quarter, grew 12% in Life Sciences and decreased about 1% in Industrial. The slight decline in Industrial consumables was from Process and MicroE, only partially offset by strong growth in Aerospace. Systems, which comprised 11% of total sales in the quarter, were down 33%. Both segments were down significantly due to timing of projects this year, some large projects in Q3 of last year and continuing pressure on capital spend, as Larry mentioned earlier. Turning to Slide 8, let's talk about the key performance for Life Sciences. First, let's look at consumables. BioPharm consumable sales grew 15% in the quarter compared to last year with growth in all geographies. They were also up 5% sequentially on continued strength in the biotech sector. Consumables sales in Food & Beverage were up 2%, driven by geographic expansion in the Americas. Sequentially, however, Food & Beverage consumables were down 3%. Medical consumables increased 10% over last year with growth in all geographies and 2% sequentially. Life Sciences system sales were down in the quarter, primarily due to a few large projects in the third quarter last year. Orders increased 11% in the quarter with consumables growth of 6%. Systems orders nearly doubled, principally on the back of a few large wins in BioPharm. Life Sciences gross margins increased 80 basis points to 57.5%. This primarily reflects favorable pricing and mix. R&D increased about $1 million or 9% excluding FX. We continue to increase spend on product development, including our BioPharm instrumentation product lines. As a percentage of sales, SG&A for Life Sciences declined 50 basis points to 28.2%. All in, segment margin was 24.9%, an increase of 120 basis points. Moving on to Slide 9 for Industrial. Consumables sales were down almost 1% year-over-year and essentially flat sequentially. Process was down about 6%, reflecting softness across most end markets, principally in Europe and Asia. Aerospace was up 27%, with particularly strong commercial performance, up about 40%. MicroE declined almost 10% year-over-year, largely due to the continuing weakness in display and data storage end markets. System sales decreased 24% year-over-year. Sales in the energy markets were down due to weak capital spend, as well as project delays. Municipal water again was weak as customers continue to delay projects due to funding challenges. On the order side, consumables were down 4%. Most markets were down with the exception of Aerospace, which was up 13%. Industrial systems orders increased 20%, largely from easy compares given a low order level in Q3 of last year. Turning to margins. Segment gross margin increased by 110 basis points year-over-year to 46.5%. This reflects favorable pricing and reduced warranty and obsolescence costs, partly offset by unfavorable market mix. SG&A declined about 12%, excluding FX, reflecting the benefit of our cost improvement initiatives. All in, segment margin improved by 300 basis points to 14.6%. On to cash flow and working capital on Slide 10. Operating cash flow in the 9 months was $207 million compared to $326 million last year. As we have discussed before, this reduction primarily reflects income tax payments associated with settlement of several years of U.S. tax audits and the gain on the sale of our blood business. CapEx of $66 million is in line with our depreciation run rate and significantly below last year, which included some large systems-related investments. Significant uses of cash during the 9 months included $330 million returned to shareholders with $80 million of dividend payments and $250 million of share repurchases. Finally, on the liquidity front. Our cash position stood at about $904 million as of April 30. Our cash position net of debt was about $221 million. This compares to a net debt position of $196 million as of the end of fiscal 2012. With that, let me turn it back to Larry for a discussion of the outlook. Lawrence D. Kingsley: Thanks, Akhil. When you combine our Q3 top line performance with what we're seeing in demand patterns generally and factoring in specific customer inputs, we're now looking at full year sales that'll be about flat excluding FX, and that's versus our previously articulated flat to up low single-digit guidance. We expect Life Sciences will be up mid-single digits and Industrial will be down mid-single digits, directionally consistent with what we've been saying, but with more caution toward how quickly Industrial recovers. At current rates, we expect the full year impact of translational and transactional FX on EPS to be approximately $0.18 to $0.20 with the impact of Q4 largely as transactional. We also expect our full year tax rate to be a bit lower than previously expected, about 22.5%. Full year pro forma EPS is now expected to be in the range of $2.95 to $3.05 and within our previously discussed range, but narrowed to the bottom half of that range. Now, if consumables sales are more robust than currently anticipated for the remainder of the fiscal year, we should convert those incremental sales to incremental earnings very well. So to summarize our performance for the quarter and year-to-date. In the face of the continued economic and particularly the secular growth challenges, we're delivering a reasonable return. This is largely due to the improved operational execution and the effect of our structural cost actions. As to the latter, a culture of waste reduction is beginning to drive continuous improvement and productivity. But there is no substitute for growth. We continue to invest incrementally in R&D and in sales and marketing. We believe there is an organic growth opportunity even if the current macro environment persists and we need to be more aggressive in certain geographies, specifically in certain global end markets. At the same time, we're taking a more critical approach to the portfolio to distinguish growth versus cash generation objectives for each product family and within each market. And we also continue to ramp up our M&A capability with the intention of making strategic acquisitions that will augment our organic profile. So with that, we're going to open the line to questions.

[Operator Instructions] Our first question comes from the line of Richard Eastman with Robert W. Baird. Richard C. Eastman: Just a couple questions. First of all, on Europe. Larry, you talked a little bit about share gains, about customer wins. It seems pretty apparent on the systems side of Europe. But can you just kind of maybe zero in on where those gains are coming from? And then second question would be just on a consolidated basis, can you talk to pricing between Pall Industrial and Pall Life Sciences? Lawrence D. Kingsley: Sure. First, with respect to the European wins, Rick, good news in a number of different areas. In mature Europe, we did very well in the quarter and continue to do well on the Life Science side, particularly in BioPharm and in Medical. But as we've spoken many times to historically, many of our BioPharm customers are global. They tend to transact in Europe. And so that European growth rate that we're talking about, particularly on the order side, reflects global commitment, in a couple cases, very specifically. They've made that commitment to us that we're recognizing as a European transaction. But the ongoing business, the annuity stream, will actually come out of Asia; in one case, out of North America. So some of it is current transaction in Europe that in the future the annuity stream will come out of a different location globally. The Medical transactions that we are seeing nice traction on both in Europe and otherwise are coming by way of some of the new product that we've just introduced, and later we can go into more detail if we have time around that. But we're seeing some nice vitality increases in our Medical product lines now post the divestiture of blood and we're seeing the team focus well both on the OEM direct market, but also the hospital direct market and probably a little ahead in Europe versus the rest of the world. With regard to emerging Europe, because as you remember, I think, we also account for the Middle East and Europe, the way we roll it up, it's a little bit of a different story. We saw some capital projects push in the first part this year all the way up through the third quarter. But we're starting to see on the Industrial side some better traction with commitments in the Middle East for process applications. And I'm not going to go into too much detail for just competitive reasons, but we feel pretty good about what team we have on the ground now. We announced the opening of a new significant facility in Saudi Arabia during the quarter. Our presence will continue to increase there. We feel as though we're in very good shape with respect to taking advantage of the diversification objectives that many of the Gulf Coast countries, in particular, have and we're well ahead of it from a spec perspective. On the pricing side, to your second question, we did pretty well in the quarter relative to where we've been on a year-to-date basis with both businesses getting 120 to 130 bps. And that's the kind of the incremental gain around pricing as we've changed some of it through contractual changes, through discount changes, et cetera, but the incremental moves through the course of the year. If you were to look at it year-to-date prior to the quarter, I think it was about 80 or 85 bps. So making good headway there. And I would say, not that you asked, but beyond that, I'm beginning to feel a lot more comfortable about, if you will, how we're managing the combination of price and material costs and getting our hands around what most refer to as material margin in that relationship. So again, evidence of the fact that across the function and now from the front end to operations that we're really starting to get our act together.

Your next question comes from the line of Jeff Zekauskas with JPMorgan. Jeffrey J. Zekauskas: In your $13 million restructuring charge, how big was the severance piece?

It's about $6 million, and there was additional employee-related stuff. So probably about a little over $7 million, Jeff. Jeffrey J. Zekauskas: Okay, good. And you talked about some weakness in the Chinese industrial markets. Do you see this as cyclical or secular? Or can you describe in more detail the particular end market weakness that you're seeing? Lawrence D. Kingsley: Yes, sure. It's -- I'd say it's a combination. It's secular, first and foremost. Without a doubt, we're seeing evidence of the fact that the Chinese are trying to move to a consumer-driven economy and there's less infrastructure build focus. And so -- I think we talked about it in pretty good detail in the last quarter call, but we've been moving on the Industrial side of our business more of our emphasis to those end markets that we think do well going forward where the central government has stated their strategic plan to relate to opportunities that we can serve. And some of those are around environmental, there's water opportunities that are a little different, industrial, et cetera. There's new MicroE business in China that we're working. And again, I'm not going to going to go into too much more specific detail for competitive reasons, but we're in the process of allocating our sales resources on the Industrial side to serve the end markets that we think do better over the next few years versus the last few years. The markets, on a secular basis, that have been down cyclically, if you will, are a little bit counterintuitive. And things like wind energy, which others have been speaking to, had been great growth markets as an example and they got ahead of themselves. And so they're still bleeding inventory and they're not seeing big projects consume some of the supply chain that exists in that industry, and that's mainly Chinese-produced product for global consumption. So that's been slow of recent. Similarly, on the off-road equipment side, and I think you've heard many of our customers and other large players step forward in the food chain talk about that, we would agree with their observations. On the Life Science side of our business, we're in great shape. We're growing at or better than the market rate in China. We're investing there and we're thinking carefully about our resource allocation between Industrial and Life Science, particularly BioPharm in China where there's a great growth opportunity that's right within the bull's-eye of the central government plan going forward. So in summary, I guess, what I would tell you is that I do think that the transition from an infrastructure-led build-out for companies like ours that needs to transition to more of a consumer-driven economy in China is going to be kind of an artful one to walk. I think we're on it, we're ahead of it, we're moving the resources into the right places.

Your next question comes from the line of David Rose with Wedbush Securities. David L. Rose: A couple more quick ones. I was wondering if you can discuss maybe in a little bit more detail on a prior question on the progress for the growth initiatives. I mean, you mentioned the vitality index. If you can give us a little bit more color on the gains in sales from the R&D initiatives versus your marketing initiatives. And then if you can talk a little bit about the difference in the warranty reserve versus last year. And that's good for now. Lawrence D. Kingsley: Yes, sure. First with respect to vitality, generally speaking, I'm not going to quote numbers now just from a future reference perspective. But we did improve vitality in both businesses in the quarter, and it's beginning to show a meaningful trend. It's a key internal performance metric for us, and it's evidence of what good companies do even in a flat macro environment. So I think we'll continue to see the new product gain nice traction. I mentioned earlier the medical products that are beginning to sell and sell better in Europe. We have both new respiration devices, as well as new point-of-use water filters. So these are water filters that are used in conjunction with taps and other wash-down locations in hospitals. And that new technology's got a nice foothold, doing well, and we believe that selectively there will be legislation driving nice adoption rates that will buck any other spend dynamic trends that are in place in Europe. So that's all good news. On the BioPharm side, we brought new product to market globally that's been enhancing and enabling some of that win that we talked about, both in Europe, wins that we made in the quarter, but also some of the things that we've got within our sales funnel right now. And without getting into more detail, we'll talk about in the near future some other new technology on the membrane side that's enabling some new applications on the Industrial side. So it's always dangerous to talk too far forward about new product and vitality rates, but I frankly feel, incrementally, quite a bit better about where we're headed. If you look at trying to correlate that spend that we've talked historically about year-over-year to R&D, in the areas that it's most impactful for us at this point in time, in fiscal year '13 we focused mainly on membrane development, that is new technology in what we call media, the guts of a filter, that allows us to get at tighter pore size, combinations of better physical characteristics to enable basically applications that we think we can serve, I wouldn't say unchallenged, but better than most. And we also focused quite a bit this year on dedicating incremental spend in R&D to instrumentation, which I think we've discussed in our prepared remarks here. So new products in the ForteBio portfolio, new products in the Pall legacy instrumentation products that, again, are enabling the upstream content, the research print position or spec position that gets us to downstream bioprocess sales. And then lastly, with where we're going with R&D. The good news is we think from a cost perspective, we don't need to increase at an equivalent rate basis as we move into '14 versus '13 as we did '12 to '13 because we're getting to pretty nice traction already with our R&D programs, but migrate some of that spend from core membrane over to device with more of those resources focused on the fluid dynamics that enable the best possible filter device. So all that, at the end of the day, allows us to get at new business opportunities, to win more of them and to improve vitality. And I know I ducked your vitality rate question, but that's kind of by design, to be honest. David L. Rose: No, that's fine. We can perhaps follow up later on. And then just to get a better sense in terms of the improvement in cost of quality, you had mentioned the warranty reserve or at least the warranty expense down. Can you give us some indication of the difference in the warranty reserve year-over-year and then a little bit more color on other metrics for cost of quality, maybe scrap or something of that sort?

Sure. On the warranty side, David, there is -- there was a couple of million dollars of costs we had booked into the quarter last year, and the absence of that was essentially part of the contribution for the margin expansion at the Industrial segment level. I think, overall, we feel that there is improvement happening in terms of scrap. There is still a lot of work to be done, clearly, in that area. I've had the opportunity to visit just one plant at this point and it was obvious that, that was a metric very high up in the focus of the management team there. It was a significant number, which I quickly asked questions about, as you would imagine, and they are very focused on it. So I think there is opportunity ahead for us to continue to improve that. We are making progress on the quality side, but there is still more to do.

Your next question comes from the line of Kevin Maczka with BB&T Capital Markets. Kevin R. Maczka: Larry, you mentioned a $50 million cost takeout and you're on track to achieve that this year. I'm just wondering, is there anything, as you look into the out years, that you're accelerating now with the macro conditions and the top line a little softer than you thought a couple quarters ago? And can you just kind of quantify for us at all how to think about the timing of what may hit next year? Lawrence D. Kingsley: Yeah, well let me come back and refer to the original plan, which we stated last year, which was a targeted $100 million up over 3 years: $50 million in the first, $25 million and $25 million essentially to keep it simple. The plan is still on track to achieve that. If you remember, we talked about SG&A kind of being front loaded in the plan and then more operations contribution from the back couple years, and that's still the case and we're on track to achieve that. One of the things that we did go ahead and somewhat externally locally discuss in the quarter was the closure of a couple facilities and migrating that content to other facilities within the group. That was intended and it will be realized as savings, particularly around the indirect and fixed costs associated with operating those 2 respective facilities. And we need to do that given the external environment. The concern on the SG&A side at this point is, and many of you have pointed this out historically, is no matter kind of who you compare us to, our fixed cost load is relatively high. Some of that's deserved because of how we go to market being a direct-to-end user business model in many cases with a lot of technical applications content, a lot of diversity and high mix to what we sell and whom we sell it to. But the reality is both Akhil and I and others think that we can drive that cost down on pretty substantially. And that through efficiency, we can get to a lower number. Now we're not in a position in this call right now to specifically discuss where we think SG&A goes as a company. But suffice to say that irrespective of whether the environment is softer in the short term or not, there's an SG&A opportunity. And I will say also back to the work that we've done this year, which certainly has proven to us and to the broader team that it's all very possible because we're getting more done, frankly with less costs, and that's the right equation, and less stress, frankly, that we'll, I think, be able to lever very nicely on the upside. You always have to overcome when you're growing kind of the natural inflation rate that comes by way of people costs and material costs. And I think in our case, it'll be a little more of the people costs because we're actually doing a much better job on the material cost side. But if we go back to our desired or aspired incremental margin rate that we've been talking historically about, I feel very confident that even at a slightly slower growth rate, we should be able to achieve that. We're doing -- we're just doing a much better job on how we think about cost structure, sustainability, controls and efficiency, productivity kind of on down the line and got a great middle management team in place now within the sites on both the material and labor fronts that are allowing us to get at things in a very different manner. So again, continuous improvement both for variable, as well as direct -- or excuse me, fixed costs as we go forward and nice leverage, I hope, on the upside. Kevin R. Maczka: And just to follow up on that point about the incremental margins and what you aspire to there, I think you've talked in the past about trying to position the company for 30% or more, maybe even as high as 40%. Is it your point that even in this lower top line environment, something of 30 plus is achievable next year? Lawrence D. Kingsley: Yes, it is. The only qualifier to that is that you do need to overcome, particularly the people cost inflation or so-called merit inflation, which I think in current form you got to get to 2.5%, 3% before you cover that -- 2.5%, 3% top line growth to overcome your natural inflation rate, then you print incremental margins at that kind of range.

Your next question comes from the line of Tracy Marshbanks with First Analysis.

You've talked about reallocating sales resources obviously to help stimulate growth. When you say that, it does sound more like an allocation between geography and markets. What's your assessment of the type and quality of the sales resources and what might you be doing to improve that, as well as allocating appropriately? Lawrence D. Kingsley: Well, obviously, I think highly of our sales team and I think they're doing a great job. And the question is around mobility. When you have people living in certain parts of the world and you want people in other parts of the world, sometimes that's an individual decision that works and sometimes not. We're -- by way of example, we're moving people within the Middle East, we're moving people from Europe to Sub-Sahara Africa right now. Within China, we're moving people physically and we're also porting people from certain sides of the business to others or within certain markets to others. In the Americas, we're in the process of thinking through that together, too. And we have, I think, good talent. It's not a question of talent, it's a matter of everybody aligned around the best growth opportunities and working smarter because the working smarter comes down to making sure that we're all in the markets that are growing at the fastest pace. And I think that between now and the end of this year, so in the next several weeks, we'll improve that position nicely as need be as we head into next year. The other real key asset that we have as a company and it shouldn't -- no call should go without it being mentioned, is what we call our SLS organization, that's our lab services organization. And we're committed to that globally, and that essentially comes down to 40 on-site varying size labs that we have out around the world of technical resources. We've already seen evidence of the fact that in some cases, our customers can't commit their resources in this environment to the process that gets to the specification of our product, and we're not going to in any way disable that. That's going to be, I think, a very key enabler for us to allow us to win where -- there's fair amount of focus on fixed costs throughout the world. And so I think that, that's a standout for us. It has been historically. We're directionally orienting that more to the customer for specific customer support than we are in support of other kind of testing opportunities that don't have product in annuities, specifically annuity revenue associated with them. So between the combination, or I should say the combination of our commercial and technical resources in the field and how we mobilize them to the best opportunities, I think we'll be in pretty good shape as we do head into this different environment. It's striking. When you look at our growth rates, certainly from a segment level, you see it between kind of plus 5 and minus 5, but also within the segment as we speak to both the sales and order dynamics, you see fairly differentiated growth rate performance there. And it's indicative and it's directionally consistent with what you're seeing out of others. Good news for us is that we think our Aerospace business with Industrial does well -- continues to do well in this environment. We're on good platforms that shouldn't be terribly adversely impacted by any of the sequester activities here or budget cut activities elsewhere around the world. We're not on a lot of land vehicle applications, so we're not at risk where some of that is more acute. So that props up Industrial in the face of the process end markets, which some of which I think will probably continue to be slow. Our Energy business is showing some signs of life, doing a little bit better on the order side and I think we'll continue to take advantage of that globally. So within Process, we're certainly focused there. And the one that's certainly a concern and been a concern for several quarters now is the MicroE business within Industrial where we expected it to bottom out and to begin to grow a tad. Now we're focused now on share gain, and we believe we've got great technical opportunities for share gain there even if the market just kind of bounces around where it is, largely driven by combination of PC end markets and mixed automotive markets now. So we're going to have to earn our way forward in the micro or what we call the MicroE space. On the Life Science side, we're just so fortunate because we have the BioPharm business which, one, we're doing very well with. We've got some of the best new products. We're in a fantastic position. Most of our content is downstream. It's in the processing of the various biologicals, which are filtration rich and which aren't susceptible typically to research spend dynamics. So we think we do very well in a muted economic environment on the Life Science side. And as I said in the prepared remarks, the whole team, this includes middle management, is beginning to get its head around how we manage the portfolio such that in a differentiated set of end markets, how certain portions of the portfolio contribute cash while other portions contribute growth. And that has not been kind of the historical definition of success uniquely so in the company. We've had organic growth across-the-board without direct correlation to where the best growth opportunity is. I think that we're aligning well to where the end market relative growth opportunities are going forward and we'll do well.

Your next question comes from the line of Jon Groberg with Macquarie Capital. Jonathan P. Groberg: Can you give us an update on capital deployment? And what's the M&A pipeline look like? And are you still looking at smaller deals, or are you seeing some bigger assets going to market that look interesting? Lawrence D. Kingsley: We're looking at both is the short answer, but more smaller deals than larger deals. The concerning thing is frankly the environment, more so than our ability to build the pipeline. We're getting actually some pretty nice traction around proprietary deal flow and opportunities. I would tell you that discipline is more critical now than it ever has been, and patience is pretty critical because the valuations can be out of sight. We've seen some middle-sized entities, companies that we were thinking about as targets transact for ridiculous prices. And no matter what kind of strategic value you place or synergies, one assumes the returns just aren't going to be there. So we're both ginning up the pipeline, at the same time we're applying patience. And I think we will certainly see more small deals than large deals as we begin to acquire. But there are good opportunities to be had. And I think that obviously the balance sheet is in very robust shape and it allows us to think about the various opportunities over the next couple years without concern for the opportunity value of what we would buy now versus what we wouldn't have dry powder available for to do later. We just need to be thinking about each one from a stand-alone return basis and the strategic value that it delivers and make sure that we're thinking about the returns both short and long term. Jonathan P. Groberg: Okay. And just one quick one on the tax rate. It's a little bit below what we expected and below your original 24% guidance. Is this more like a one-off, or are there some tax funding benefits that are coming out? I'm just trying to think how we should think about it going forward.

Sure. I think, Jon, the simple answer is that the change in the geographic mix of our earnings is what sort of drove the slight reduction versus whatever our original guidance was and the expectation that you might have had, right? I mean just to be specific, for example, some of the high tax jurisdictions like Japan have seen lower earnings than we had planned for, while some of the low-cost jurisdictions, low tax rate jurisdictions, have seen strength, like European operations. So I think that's basically a mix issue here. We'll talk more about the tax rate for next year at an appropriate time. But I think you should factor in the fact that this geographic mix is what drove it.

Your next question comes from Brandon Couillard with Jefferies. S. Brandon Couillard: Akhil, I know it's only been a little bit of time since you've been in the position, but would be curious to get your views on how you would characterize the company's opportunity to rationalize working capital and where you see the most opportunity.

Sure. I think it's a great question. Again, as an outsider coming in, that was one of the things I talked with Larry about when we were interviewing, the opportunity on the cash flow side. I think clearly, there is room to improve our DSOs. I think we've made some progress, as you saw in our numbers in this quarter. Some of it was a function of issues which arise when you have the ERP implementations. So we are making some progress there, but I think there are some fundamental opportunities in 2 ways: One, first, to reduce any overdues that we have to make sure that the customers are paying when they're expected to pay; and then secondly, to look at the terms and make sure that we are appropriately pressing the buttons there with our customers. On the other hand, there is also an opportunity on the inventory side. And I think Larry has talked about that before. The strategy that the company is taking to invest a little upfront in the media inventory, which will have a multiplying -- multiplier effect on reducing the finished goods inventory. Again, work -- very good work being done by the teams. We are at the early stages of that, but that should drive some significant improvement in the inventory side as well. So I do feel there is significant opportunity to improve our cash conversion cycle, which should then help us offset the demands, which will come as and when the organic growth comes back and the natural pressure on working capital comes in. So I feel very good about our cash flow prospects going forward. S. Brandon Couillard: That's helpful. And then would be curious if you could speak to the Japanese yen impact in the second half of the year and whether or not the company hedges that position and how we should think about that dynamic sort of going into next year. And then separately, would appreciate if you could call out the impact of the discrete tax items and restructuring items on the cash flow in the quarter.

So I think in this -- let me take your second question first. There wasn't much of a tax -- discrete tax payment impact in the second quarter, only in the tune of about $10 million, $12 million in the third quarter. Restructuring year-to-date has been about $26 million, I think a small portion in the third quarter of that. Overall, from a Japanese yen point of view, obviously the weakening of the Japanese yen has impacted us from a translation point of view. I think there was about a $3 million rough impact, so about $0.02 impact in our quarter from the Japanese yen translation impact. We do not hedge that. And I think generally, we do not hedge for translation risks like most other companies. We do look at some transaction hedging, but that is not really relevant for a Japanese yen operation. Lawrence D. Kingsley: It hasn't been at this point, yes.

It hasn't been at this point. We will continue to look at it. And if it becomes relevant, we will consider.

That does conclude our question-and-answer session for today. I hand the program back over to management for any further comments or closing remarks. Lawrence D. Kingsley: Well, thank you very much for joining us on this Friday morning, and we look forward to seeing many of you over the next couple weeks and talking to you again next quarter. Again, I'd say that we feel confident with respect to how we're beginning to operate the company and while we're taking a slightly cautious view of the top line, given the external environment, particularly globally, I do believe that given a little bit of buoyancy in the top line, particularly in consumables, if that were the case, we'd convert well. And we look forward to talking to you next quarter about the perspective that we have headed into fiscal year '14. So thanks for joining, and have a great weekend.

This does conclude today's conference call. You may now disconnect.