Welcome to Pall Corporation's Conference Call and Webcast for the First Quarter for Fiscal 2012. Today's call is being recorded and simultaneously webcast. [Operator Instructions] We'd like to remind you that the company's first 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 CEO and President. Please go ahead, sir. Lawrence D. Kingsley: Good morning, and thank you for joining us. So this is my first conference call as Pall's CEO, and I'm delighted to be with the company. I'm here today with Lisa McDermott, our CFO; and Frank Moschella, Corporate Controller. We'll review the quarter and our outlook in a moment, but before that, I want to answer some questions that I've received in recurring form since I joined the company in October. First, why did I come to Pall? Second, what should you expect from me or us in the short and long term? And where do I stand in our externally stated goals for 2013? So first, what drew me to Pall? The answer is simple: It's a unique prospect. I left IDEX, a great company in really good shape, for the opportunity to build Pall into the company that I believe it can be. I see Pall as a huge long-term value creation opportunity, and I'd like you to think about it that way as well. Clearly, we have work to do. Some of it's foundational in nature, and it's going to take some time. But Pall is already a good company with the potential to be one of the best global technology enterprises. Opportunities to lead a company that serve great markets with differentiated technology, with strong global reach and a dedicated team, well, those just don't come along every day. As shown on our Slide 5, our business model includes high barriers to entry. More than 2/3 of our sales are consumable purchases that are largely nondiscretionary decisions. Beyond the business model, add our technology, brand leadership, strong customer relationships and applications expertise and a global sales channel that's arguably the best of any company in our space, these characteristics combined deliver a great profile. And the company has the girth, and that's the presence and the fixed cost structure to grow. We're going to be working to develop our Pall Enterprise System to drive improved process and operational execution. We should be able to drive significantly more volume through our manufacturing plants, more products through our sales organization and new technology to our customers. And last but not least, we have a terrific balance sheet that provides tremendous flexibility and can be deployed for growth. We also have a substantial amount of cash tied up in working capital. We will move to a more aggressive capital allocation strategy in the future. But the operative word is strategy. It's not a desire to just become highly acquisitive. Our investments will be thoughtful and disciplined to enhance our offering and to accelerate growth. So that's why I'm here, and now what are we going to do? And I'm on to Slide 6 on your deck. Focus is one of the other very key and operative words for us. We have some fundamental issues that we need to either address or drive to completion. They all center around people, process and technology. All of our efforts are designed to drive improvements in consistency and operating performance. First, we're evaluating our organization’s structure, have already reworked our executive incentive plans. Executive compensation with the recent change is now based on multiple metrics to better align our leadership with growing the company, executing our focused agenda and driving shareholder return. Second, we're building our corporate business development team to establish core acquisition capability, but also to augment Pall's organic strategies in the most attractive end markets. We'll be investing in the skills necessary to integrate these new acquisitions as well. In the short term, you can expect that we'll only acquire opportunistically where we intend to operate the new business with pre-existing leadership. And given that, we'll continue to accumulate cash and execute our repurchase program as previously announced. We'll also be enhancing our capabilities to tap into the faster growing regions. We're currently shifting resources from mature to expanding economies. So those are the key initiatives around people. Now in terms of process, we've spoken externally about our global ERP system project. Europe and Asia are up and running now. We'll be bringing the Americas online by the end of the fiscal year. However, we need to develop the architecture of a business system that the ERP system is the enabler for. Our business system, or what we again will now refer to as the Pall Enterprise System, will be the means for how we drive process improvement, customer relationship improvement and shareholder return. We're shifting from a country-based operations in terms of structure to 3 regional fulfillment centers. Once complete, we'll be able to provide better and faster commercial and technical support. At the same time, it will allow us to better leverage our fixed cost structure. And finally, technology. I believe that we can tremendously improve our product vitality. Our R&D investment appears to be adequate. It’s a matter of better choices, organizational effectiveness and new product development based on good cross-functional process, which we're addressing in our marketing and design groups. So we have a few very critical company-wide priorities that will solidify our foundation and allow us to further develop this gem of a company. I can't stress enough, it's going to take time to see recognizable differences on how the company performs, but I'm highly confident we'll get there. Now before getting into the first quarter review, I want to tell you where I stand on the previously committed 2013 goals that were first presented in 2009. I don't believe that executives or a CEO, in my case, should arrive and provide excuses or hit the reset button. So the goals are the goals. The current macroeconomic environment certainly makes some of them more challenging, but our team has executed well and we're in range for most of the stated goals. If the global economy continues to slow, we may have to adjust our fixed cost structure to achieve our stated profitability targets. That said, I will always balance the short- versus the long-term needs of the company with a bias toward growth. We are currently evaluating how we will characterize our aspirational goals for the longer term, given the economic outlook, and our ability to improve our performance. And we'll discuss this further in our earnings calls to come, but also Lisa's also -- she's got a couple of comments in her prepared remarks here shortly. So now what happened in the quarter? Now we're on to Slide 7. First, we achieved very good top line growth. Sales crossed the $700 million mark in the first quarter for the first time. Total sales grew almost 17% on an as-reported basis and 12% excluding FX. Business was split about 50-50 between Life Sciences and Industrial. We saw a good growth across the major markets, with the exception of Microelectronics. Sales in the Americas increased almost 11%, with Latin America a key contributor. Europe was up 11%, marking 4 consecutive quarters of double-digit growth. Some of this is coming from large Pharmaceutical customers in Western Europe, while the aggressive investment in the Middle East is another driving force, and remember that we account for the Middle East and Europe. Sales in Asia increased 14%. This growth came from throughout the region. Emerging regions were just under 20% of sales for the quarter and grew about 35%. Pall is already in good position to seize these global sales opportunities. We're counting on these markets to fuel our growth, and we'll be aggressively weighting our investments to extend our reach. On to Slide 8. We also experienced healthy orders in the quarter. Orders increased 11% overall and grew by double digits in all 3 regions. Most markets were up. Consumables demand increased 9% and orders for systems grew 28%. Backlog is up 14% year-over-year. Customers in the Energy markets continued to invest aggressively in capital equipment to increase output and lower operating costs. We saw systems orders increase almost 200% in these markets, reflecting significant growth in Latin America and MENA. Systems orders in Food and Bev and BioPharm grew over 25%. So while there are clearly economic uncertainties across the global stage, this continued willingness to invest is a great sign. Before I comment on the segment performance, I want to make it clear that while I'm pleased with our sales and our orders performance, we should and will demonstrate much better operating flow-through or incremental profit on the incremental organic sales. We have a number of issues to address, and they're all within our control. So now, I'm going to move to Slide 9. And talk about Life Sciences first. Sales in Life Sciences increased 9.5% excluding FX. Just under half of this business is in Europe and is dominated by BioPharm. Although BioPharm is not immune to the economic cycle, it is resilient, and BioPharm grew 22% in the first quarter in Europe and orders were up double digits. BioPharm at 28% of first quarter sales is the engine of our Life Sciences business. On a global basis, sales grew 16% excluding FX. Consumables represented over 90% of the total, while systems sales, which feed future annuities, increased over 25%. First quarter orders increased 9%. And the BioPharm market, as you know, is driven by biotech. This market is global, fast-growing, filtration-intensive, has high barriers to entry and is bound by stringent regulation. On to Slide 11. Sales in the medical area increased almost 3% excluding FX. A key growth driver was again the increasing use of IV filters with drug infusion pumps. Regulators are recommending precautionary measures to prevent air in the tubing from reaching patients. This trend began to take shape over a year ago and continues to our benefit. Blood also grew almost 4%, driven by increased adoption of new product in the Americas. We saw a good growth in medical in total in the Americas and Asia, while Europe was down mid-single digits. Despite this, orders on a global basis are up 6%. Slide 12, Food and Bev. Food and Beverage sales increased 4% excluding FX. This was driven by systems. Customers are investing to adhere to global standards for Food and Bev production in the emerging markets. Producers are also highly motivated to reduce unit costs. Sales are down in the large European wine and beer market as producers cut production in response to softer consumer demand. This particularly affects the quality-conscious premium brands, which use more filters. And here, we also sold a non-core asset group in Europe that didn't meet our growth or margin profile. A bit of a comp issue on the top line throughout the year but it will be offset by slightly higher gross margins. Q1 orders grew a solid 10% within the Food and Bev market. And now we'll shift to Pall Industrial, where sales increased 14% excluding FX, and we're on Slide 13. The largest region for this segment is in Asia. The business in Asia is largely Microelectronics followed by Energy. We're expecting Microelectronics to have a tough year. And Energy and Water on Slide 14 shows sales in Energy and Water increased over 29%. We saw a comparable growth in both markets. The growth in Energy reflects increases in consumables and capital goods in all regions. The oil and gas and alternative energy end markets were very strong. And we continue to see a lot of investment in capital equipment coming out of the emerging regions. For Pall, this means higher housings and system sales. And we've made progress since the fourth quarter, but we still have much more to do to improve our systems business profile. Muni Water's strong sales were driven by a large shippable backlog in the Americas and large wastewater project in Australia. The lion's share of our Muni Water business is also driven by regulations. We've been in a cycle of reduced capital spending in Europe for water infrastructure projects the last 2 years and expect this to continue until conditions improve there. But overall, orders in Energy and Water increased almost 22% in the quarter, and this growth is driven principally by the Energy markets. So now on to Microelectronics. We were expecting volatility in Microelectronics for the year, and that's what we're getting. First quarter sales decreased almost 2%, about what we had anticipated. Q1 orders are down almost 6%, and this filtration-intensive, largely consumables market is cyclical. However, it's technically demanding, which, obviously through the cycle, is good for us. First quarter sales reflect a decline in semiconductor chip production, a corresponding reduction in OEM sales and weakness in the display market. There's an additional complicating factor to our outlook. While our sales in Thailand are not material, it accounts for about 25% of the global hard drive output. As a result, many involved in the electronics industry, including us, are bracing for shortages and supply chain interruptions. The impact is difficult to estimate at this time, but we do anticipate that the market may start to improve around the beginning of our fiscal year 2013. So now on to Slide 16, Aeropower. Aeropower, the combination again of Aerospace and Machinery and Equipment was up 11% excluding FX. Sales in Aerospace increased 10%, driven by the Commercial Aerospace markets, which grew over 14%. This result reflects our strong position on new commercial aircraft, which are now rolling off the assembly lines, as well as an increased aftermarket sales content to the airlines. We're expecting Military Aerospace to have a good year based on a better than $100 million backlog. First quarter sales grew almost 6%. We're not expecting any major program cancellations this year. In fact, Aerospace orders increased 25% in the quarter, with that growth almost entirely in Military. And finally, in Machinery and Equipment, which along with Microelectronics, has the highest gross margins in the Industrial segment and grew over 12%. This market has grown, at least at this rate, for 6 of the last 7 quarters. Sales continue to be driven by strength in manufacturing and mining applications. We have a decent backlog here, and we saw orders grow 13% in the quarter. So that concludes my remarks for now. I'm going to turn it over to Lisa.

Thank you, Larry, and good morning, everyone. I'll begin with a discussion of each of the businesses' results in the quarter. So starting on Slide 18 with Pall Industrial, where, excluding foreign exchange, sales grew 14%. And while we're still not achieving what we believe is our entitlement on price, we did realize about a 20-basis point improvement. Consumables sales increased over 10%. This includes the pertinent hardware, or in other words, the housings that hold filters. This growth was propelled by strong growth in Energy and Water and Aeropower. The Energy and Machinery and Equipment components of these markets drove 46% emerging market growth. Likewise, systems grew about 40%, driven by Energy and Water. System sales represented 16% of total Industrial segment sales compared to 13% in the first quarter of last year. And the growth in these markets was partly offset by the decline that Larry mentioned in Microelectronics. Now given the mix impact of the top line I just discussed, the end result was that revenues exceeded expectation while gross profit was nominally above expectations. The 220-basis point decrease in Industrial gross margin year-over-year reflects more systems coupled with the decline in MicroE. Importantly, gross margins in the quarter improved sequentially by 180 basis points to 45%, due to better mix and execution. SG&A increased about $11 million, or 13%, excluding FX in the quarter. Selling expenses, which were about 18% of sales, increased by about 12%. This increase was driven by resource deployment into emerging countries. G&A, which represents about 11% of sales, was up about 14%. And this reflects related infrastructure build for emerging countries, including our Brazilian acquisition, cost to bring Pall Industrial into our European and Asian headquarter structure and our IT investments. So segment profit came in at $48 million, and this was about the same, excluding FX, as last year even with the sales growth in the quarter. Accordingly, segment margins decreased to 13.8% from 15.4% last year. As we started to discuss last quarter, we are executing several restructuring initiatives to improve Pall Industrial's leverage. We expect to see the benefit of these in the second half of this fiscal year, and I'll address these in further detail when I get to the financial recap in a moment. So I'm switching now to Life Sciences, and I'm on Slide 19. Excluding FX, sales grew 9.5% in the quarter. Pricing was about 1%. Emerging markets growth was 22% and developed regions growth was 8%. Systems grew approximately 50%. And Food and Beverage system sales almost doubled, and in Pharmaceutical, they were up 25%. So systems represented close to 7% of Life Sciences sales compared to 5% last year. Life Sciences' gross margins increased 130 bps to 55.8%. This primarily reflects manufacturing cost-saves and the benefit of exchange rates on foreign currency-denominated source goods, primarily in the Eurozone. Here, segment profit came in at almost $89 million, a 14% increase, excluding FX. Segment margin improved 150 basis points to 25%, yielding 35% incremental margin on top line growth of 9.5%. We believe we're missing 10 points of incremental margin, the result of investments in selling resources reflected in SG&A, IT cost, as well as some yield issues in our facility in Puerto Rico. Turning now to Slide 20. The end result was that we grew sales by 12% and operating profit by just over 7%, both excluding FX. Not the operating leverage you should, nor do we, expect from our performance. In our current state, we should be achieving at least 25% incremental margins. Thus, we would expect to grow operating profit by between 15% and 20% with this kind of sales growth and achieve operating margin of at least 18%. Longer term, we should be targeting incremental margins in the high 30s to low 40s. This is the beginning of characterizing our aspirational goals for the long term that Larry referred to earlier. To that end, last quarter, we announced that we would be implementing several restructuring initiatives early in the year, and that these would likely generate $30 million to $40 million in charges. We reported $25 million of these charges in the first quarter, mostly for cash severance for Pall Industrial. The most significant restructuring activities include realigning sales and marketing management in Aeropower and Energy and Water, reorganizing the global management structure that supports the company's systems product line and shifting resources from mature to emerging regions. Turning now to income taxes. The effective tax rate was 24.9% for the quarter compared to 26.8% last year. Excluding the impact of restructuring and other charges, Pall's underlying tax rate was 24.5%, in line with our full-year outlook. This is the low end of the tax rate we targeted to achieve for fiscal year 2013, and reflects early benefits of our Asian headquarters. Wrapping up the discussion about the P&L, net earnings were $69.5 million or $0.59 per share. This compares to $71.4 million or $0.61 per share last year. Pro forma earnings per share, as defined in the appendix slides, were $0.74 compared to $0.62, an increase of 19%. Now bridging this increase, foreign currency translation increased EPS by about $0.05. The tax rate contributed about $0.03, supported by costs we're taking above the line, and included in underlying growth, which added about $0.04. Turning now to Slide 21 and cash flow. Operating cash flow in the quarter was $78 million. This 34% increase, or $20 million, was driven by increased earnings exclusive of the restructuring and other items, which had a minimal impact on cash outflows, and continued improvement in working capital management, most significantly in inventories. Significant uses of cash included $70 million in net repayments of debt, $57 million in capital spending, which include significant investment in a new facility in the United Kingdom, including customer support laboratories, $28 million for our acquisition in Brazil and $20 million in dividends to shareholders. So wrapping up the discussion on liquidity, our cash position sit at $475 million at quarter end, and our net debt to net debt plus equity was 9.7%, essentially on par with July 31, 2011. That concludes my report. I will now turn this to Larry to talk about our expectations for the full year. Lawrence D. Kingsley: Great. So before we get to questions, let me just recap 2012 guidance. This is on Slide 22. For the full year, we continue to expect mid-single digit organic growth in both Life Sciences and Industrial. In Life Sciences, we expect low-single digit growth for Medical and high-single digit growth for BioPharm. In Food and Bev, we now expect low-single digit growth. In Industrial, we now expect the Energy market to deliver high-single digit growth, but the -- with high systems content. We expect Water and Machinery and Equipment to grow by mid-single digits, and Aerospace to deliver high-single digit growth, driven by our current backlog. And our current thinking is that Microelectronics could be down mid-single to as much as low-double digits. Let me just go through those again. So I'll repeat. Low-single digit organic growth for both Medical and Food and Bev; high-single digit growth for BioPharm; and then over -- on the Industrial side, Energy, high-single digit; as well as Aerospace is high-single digits; while Water, Machinery and Equipment will be mid-single digit; and Microelectronics, again, down as much as double digit, depending on how the supply chain recovers and how the U.S. consumer behaves here in the short term. So that said, we continue to expect gross margins to be in the range of 50% to 51.25%, EBIT margins to be in the range of 17% to 18.5%, with the benefit of the restructuring that Lisa just walked through. We're holding our original guidance, with pro forma EPS expected to be in a range of $3.07 to $3.32. This includes a slight benefit from foreign currency translation at current rates, but also assumes opportunistic stock buybacks of about $150 million, which will, depending on the timing, be accretive to earnings by about $0.03. And finally, a $0.10 benefit from our lower tax rate. Our operating cash flow is expected to be in the range of $490 million to $540 million, and we're estimating about $185 million in CapEx as we continue to invest in our IT infrastructure, the manufacturing plants and the labs. And along those lines, we've spent $57 million in the first quarter, which was mainly already committed capital and not great in terms of CapEx run rate in terms of start to the year. That said, we have made significant investments that will support future growth, and we will change our spending habits. So we entered the year with good order and sales momentum. Growth was stronger in the first quarter and yielded a better outcome than our expectation. However, as I said earlier, Lisa said as well, from a leverage perspective, we're not pleased with the quarter. Operating performance, given the strong top line, was anemic. And we need to correct this, and we will. We also need to stress that our first half assumptions remain consistent with our original outlook. And again, our view of full year EPS expectations remain within the range provided in September. So with that and the help of our operator here, we'll take your questions.

[Operator Instructions] Your first question comes from the line of Nandita Koshal with Barclays Capital.

I was wondering, as you sort of started to look at the organization, and this is a question that we receive often from investors, is there a floor on there just structurally the SG&A can go for this organization? And what are some of the fundamental reasons behind it when you benchmark versus peers on some of these metrics? Lawrence D. Kingsley: Let me make sure I'm clear. Is your question is there a floor of where the SG&A rate can go?

Yes, the percentage of revenue. Lawrence D. Kingsley: Yes, yes. I'm not going to make too many terribly specific comments in this call in terms of commitment of where rate could go. But Lisa and I have spent a fair amount of time over the last 2 months thinking about as a function of growth rates that we just outlined and some structural initiatives already underway plus some things that we'd like to do a little bit longer term, that we ought to be able to get back in line frankly with what the 2013 goal set basically illustrated. Now I'm sure you've been pretty familiar with that. So if you refer to that, I think that our sales expense, as a percentage of sales, obviously, is probably where it needs to be. Maybe a tad high. And we have an SG&A opportunity in total. So G&A certainly needs to get leveraged better either in terms of growth and/or fixed cost reduction. I wouldn't commit you to a rate total for SG&A at this point.

I understand. And if -- Lisa, if you could give us the pricing in Pall Industrial, and then Larry, if you could provide us sort of overarching comments around pricing for the organization's strategy going forward. And in the past, Pall has talked about increasing the attachment rate of consumables to systems, to Pall systems. Could you tell us what those attachment rates look like today, and what's the opportunity there? Lawrence D. Kingsley: Want to go ahead, Lisa?

I'll start. The pricing in Pall Industrial in the quarter was up about 20 basis points, principally in consumables. Lawrence D. Kingsley: So maybe on to the overarching comments. All of the senior management team believes that we have a pricing opportunity that we need to improve upon, and that means what we need to do strategically from a new product positioning standpoint, tactically in terms of sales execution. We all just spent a fair amount of time with our Asia team in Asia. And we walked away with the perspective that somewhat, as a function of system sales leading consumables that we're not getting what we believe to be full price entitlement if you look at it very short term in terms of kind of the mix and what that enthuses. But also, we think we need to improve in some of the country markets where we’re customer facing how we better achieve price. I think the biggest overarching comment I would make is that we as an organization can and need to do a better job in how we value-sell the great capability that we've got, because we've got -- as you know, we've got a very differentiated technology, we've got great applications expertise, we've got great support lab capability in the field. We're able to essentially gain the spec, the technical spec for most of those applications, and I think there's frankly a better opportunity to achieve price as part of that process. How do I quantify that to get back to the third portion of your question? I think it's a bit early, frankly. I could set you some aspirational goals at this point, but I think it'd be better just to say that there's plenty of opportunity as we continue to grow.

Your next question comes from the line of David Rose with Wedbush Securities. David L. Rose: If you could, I have a couple of questions. The first of which is this: Is it possible to elaborate a little bit more on the timing and give a little bit more clarity on the restructuring initiatives, how it’ll take place on a quarterly basis and what we should see in terms of margin improvement? Lawrence D. Kingsley: Well, in the prepared remarks, obviously, you have the $25 million kind of Q1 start to what were the comments Lisa and Eric made last quarter. David L. Rose: Of the $40 million? Lawrence D. Kingsley: Of the $35 million to $40 million, yes. I would tell you that I think we'll be front half-loaded in terms of action and we'll get the back half benefit out of that. Again, largely skewed toward Industrial. If growth on an organic pace continues, as we just outlined it, and mix is reasonably consistent with where we have it pegged, with those initiatives, we ought to be able to target an exit rate that's better than 16% EBIT for the segment for the year. And you can do the math, obviously, against where we are for Q1. David L. Rose: Okay, that's helpful. And then on the CapEx side. I didn't quite understand the comments, and maybe if you could clarify them. The CapEx number was a bit bigger than I think I had been forecasting. Does it imply that you're going to continue at that rate, you're going to increase it, you're going adjust it? I didn't quite understand. Lawrence D. Kingsley: We will absolutely not continue at that rate, I'll be very clear. And we had 2 big items in the quarter, one of which was capital spend associated with the building in the U.K., which becomes a major portion of our European presence going forward. And good news piece of that is that there's a much better lab capability to serve our BioPharm customers, particularly in the U.K. associated with that, but there's also plenty of space to build out for a long period of time to come. The other portion you've heard us talk about for a few quarters now, which is our ERP system deployment. And we are in the last third in terms of phases of deployment there. So you'll see the CapEx come down through the end of the year here. And certainly, that will be a great enabler for us for a long time to come. David L. Rose: Okay. And then I have one last question, and I'll get back in the queue. On the Brazil operation, the acquisition, how much did that contribute to revenues and EPS?

I'll take that, Larry. On revenues, it contributed a little less than, for this quarter, 1%. Difficult to measure because a lot of the operation previously was distributing Pall product, and not much in terms of EPS for the quarter, although we do expect it to be a couple of cents accretive for the full year.

Your next question comes from the line of Jon Wood with Jefferies.

My question is can you achieve that high 30% to low 40% drop-through you called out within the current system strategy you're pursuing? So in other words, are there systems markets that must be exited over time in order to kind of drive that high 30s, low 40s drop-through for the business? Lawrence D. Kingsley: Not a lot is the simple answer. There may be some customer profiles of current system sales that really do cost us more than we properly think about and how we think about return on investment for some of those systems opportunities. And those are fairly small as a percentage of total revenue. So a little bit and not much to really move the needle in terms of total sales. Really, the issue is we need to get a little better frankly at how we sell systems and deal with the longer-term nature of the sale. What becomes typically incremental cost as a function of change orders as systems are spec-ed and built and installed, and make sure that where we're bringing something very valuable to the customer that we're getting all that value for it, all that price associated with that value. So it's really, I'd say, it's going to take some time frankly, but it's an ability that we need to build into our organization on both sides of the house, but particularly on the Industrial side, for how we achieve the appropriate price for our system sales. And again, back to my earlier comments and those were applicable to consumables as well on how we achieve price more generally. In terms of how we get to high 30s incremental margins, beyond just what the price portion of that needs to look like, the good news is we can leverage our current operating footprint. We don't need to expand that. And we can do a better job, frankly, in terms of operating performance within our existing facilities. And Lisa talked a little bit about in the quarter how one of them, our largest facility, in particular, in Puerto Rico, did cost us a fair amount in terms of just basic operating and manufacturing performance. So how quickly we get there? Not this year. But I do think that we have that opportunity in 2013.

Last one is, Larry, you talked about being more aggressive on the capital deployment front going forward. Could you just share with us what you perceive to be the optimal kind of financial -- net financial gearing of this business? So where are you comfortable operating from a net leverage basis going forward? Lawrence D. Kingsley: Yes, the issue is after we get capability in place for both the strategic business development portions of that organizational capability plus the integration skill set required, and we deploy the balance sheet toward very strategic, very critical acquisition. This is not just a turn on a highly acquisitive machine but to make sure that we can bolster a great organic capability that we've got. I think that the balance sheet kind of net-debt-to-cap could be 20s. It could even go higher. It could be as much as 30. But I'll stress in anything obviously here, and you've seen us there times in the past but that's kind of where we ought to be on a perpetual basis.

Your next question comes from the line of Brian Drab with William Blair.

First question is just regarding this project in Australia. Can you give us an idea how large that project was and what the impact. . . Lawrence D. Kingsley: A few million, a few million dollars.

Okay, great... Lawrence D. Kingsley: U.S. dollars versus Aussie dollars, so there’s not much difference.

Okay, okay. And then regarding the, I guess, it's $35 million to $40 million restructuring that you're expecting for the year, is there a possibility that we're going to go -- in the end move above that $40 million range given the strong start? And is there -- what can we expect in the longer term in terms of restructuring expense? Lawrence D. Kingsley: Well, yes. Short answer to the short-term portion of your question is yes. And with respect to longer term, TBD. It comes down to making sure that we believe we're operating the right structure. And I think that there's plenty of opportunity for improved structure over time, how much of that results as a function of restructuring in [indiscernible] form is TBD.

So really, the $35 million to $40 million was the initial target kind of identified projects but there's no reason for us to think that restructuring expense for 2012 is capped at $40 million necessarily? Lawrence D. Kingsley: That's correct.

Your next question comes from the line of Jon Groberg with Macquarie. Jonathan P. Groberg: I'll just ask 2. I mean, first, I'll start with you, Larry. Obviously, great quarter from the operations, revenues and order revenue, et cetera, but the biggest story of Pall here is clearly you joining the company, a significant change at the top. I mean, it's something that -- it's pretty radical departure from what's been going on there. So can you maybe -- you've been there roughly a quarter or so, can you maybe just talk about what changes you think we can expect, maybe a bit more detail, I know you hit on some broad ones. And obviously, M&A is one that clearly you're trying to build up a team and capability there. Can you maybe just talk a little bit about maybe which side of the business you're seeing more opportunities or how you're kind of looking at the business as you come in? Lawrence D. Kingsley: Yes, sure. Well, first, back to your first comment. I would say that neither Lisa nor I think it was a great quarter, and maybe that frames up one element of how we want to think about our company a little differently going forward. Now I'm proud of the team. I think that we've got a great team who's working very hard and doing some very, very good things. But structurally, we need to get our hands around how that kind of organic top line growth generates a lot more incremental profitability, and that model needs to be not so short-term focused, but certainly the operating leverage that we both harped on is an important element of how we need to modify the thinking of how our team operates. At the same time, we're going to aggressively reinvest in the business, and that's both organically as well as acquisitively. And we've got a long list of organic initiatives that we're honing down to the things that we think really move the needle, things that need to get done in terms of new product and other initiatives to expand our global reach and things that we want to do to improve our profile more generally. From an acquisitive perspective, in terms of difference going forward, I think that we definitely need to prepare ourselves first, and then be very thoughtful and very disciplined. But ultimately, execute a much more aggressive capital deployment strategy. And we need to allocate primarily toward how we grow the business, and then what we can do otherwise in terms of balancing the shareholder return, short and long term. In terms of how I think about the allocation of that capital across the business in terms of simple Life Sciences versus Industrial, clearly, the profile of Life Sciences is very attractive. How we build out Life Sciences has got to be a bit artful, frankly. I won't get into too much detail because competition listens to these calls too. But we've, I think, got the beginning of a line of sight toward how we can do that, with strong presence in the lab continuing, the instrument leads and the consumables are leveraged by way of it and how we can, in combination with good acquisitive pieces that we already have our sights on plus organic buildout, continue to extend the capability first in BioPharm to support some of that core biotech, but also in the other Life Science applications. On the Industrial side, it's a little bit of a different M&A opportunity set. And there, frankly, it's about going after the higher growth niches and making sure that we have the best possible presence and the most attractive subsets today, which obviously includes Microelectronics and some of the other segments that we’re well penetrated but we certainly could stand to grow share. On top of all that, I think there's both acquisitive opportunities and organic initiatives again that can improve our global reach, particularly in the emerging markets, and allow us better local operational support for fast customer turn time in those areas. And if you think about then, so what does the -- if you look a few years out, if you were -- if you had the benefit of that point in time in hindsight looking at what we did, it'll comprise a balance of certainly Life Science investments to drive the growth profile of the company, continued I would call it more of a bolt on-like approach or niche approach in the Industrial side to drive the highest growth and most attractive strategic positions within Industrial. And then supplementing that with what we can do, again, organically and acquisitively, to get that global reach. Jonathan P. Groberg: Okay, that's very helpful. Just one clarification on the incremental margins as you mention. Should we expect or do you need to make significant organizational changes to make that happen? Lawrence D. Kingsley: I made some comments in my prepared remarks about the fact that we are looking at organization structure, and that's one element of how we need to get at leverage. There's a few that would apply. So yes, I'd hold my comments to that for now. Jonathan P. Groberg: Okay. And then just one last one. As we think about, historically with Pall and a bit more on the systems side, but we always think about orders being able to kind of lead what would happen with revenue -- organic revenues. But I mean, lately, it seems like it's been a bit all over the place. So given the pretty strong order growth in this quarter, can you maybe just talk about your more -- obviously, a bit more tempered view for the rest of the year, given the annual rates that you kept at in terms of your outlook? Can you maybe just talk a little bit about that? Lawrence D. Kingsley: Yes, sure. And we did see a nice little bounce versus the fourth quarter order commentary. But we won't and we don't expect that to continue at the same rate for the full year. And I think that's a current view, if you will, also. We're a month into the next quarter. The issue is obviously we're taking a kind of watchful approach toward what happens in Europe, while we think again that BioPharm in particular but some of the rest of our business is somewhat insulated from the more macroeconomic issues in Europe, still there's going to be an impact. And we talked about concerns on the Life Science side, Food and Bev and Medical in Europe, and on the Industrial side about half of that total segment that does have a direct and immediate impact as a function of overall macroeconomic performance. So that's point number one. And point number two is the wildcard around what happens within MicroE. And I'd tell you right now that I think it's not dire by any means. If the U.S. consumer buys a lot of electronics over the Christmas season or the holiday season here then that will help. And if the supply chain that finds its way through Thailand doesn't fall apart for a long period of time, it doesn't look like it will, that'll help. But we're certainly going to see a couple of quarters of pretty slow performance. And again, not just the top line, but it's a pretty profitable segment, the most profitable segment within Industrial.

Your next question comes from the line of Hamzah Mazari with Crédit Suisse. Christopher S. Parkinson: This is Chris Parkinson on behalf of Hamzah. Just a quick question on BioPharma. Your sales are once again strong this quarter. Can you talk a little more about what you saw on a geographic basis, particularly in Asia, and what longer-term trends you're seeing there? Lawrence D. Kingsley: Yes. BioPharm gets skewed from the standpoint of where we transact the business is not necessarily an indication of where the relative growth in the end markets are. So if you think about -- we sell to global Pharmaceuticals, the point at which the transaction’s recorded versus how it's distributed ultimately in terms of product to end users, is not a kind of an equation that's easily to see in terms of the read-through of that. But that said, with the intelligence we have, it was basically pretty strong across the globe. And that's why, again, when we talk about BioPharm in Europe, which is a pretty good chunk of our total revenue, we feel pretty good because it's BioPharm purchases of our product that are essentially going to be used to enable sales of their product all around the world. Christopher S. Parkinson: Perfect. And also just a quick follow-up. You mentioned an asset sale in the Food and Beverage market in Europe. What do you believe the effect was on the subsegment for the top line during the quarter? And then also does it have any bearing on your longer term outlook as well? I mean, you tweaked your guidance there a little bit so just what was the effect of that specifically? Lawrence D. Kingsley: It's small. We sold a business in Verona in Italy. And in terms of top line impact in the quarter, it's very small. Lisa, how much was it?

It was very small. To Food and Beverage, it was a couple of percentage points. Lawrence D. Kingsley: Yes, in terms of growth...

In terms of growth, but to total Pall, it was small. And suffice it to say that we don't expect that it will have any impact on full-year earnings. It was not a highly profitable business for us.

Your next question comes from the line of Jeff Zekauskas with JPMorgan. Jeffrey J. Zekauskas: You've spoken of your restructuring this year and some headcount reductions. Will Pall's employee count grow this year or shrink, or if it will grow by how much or shrink by how much? Lawrence D. Kingsley: I'd like to think that our headcount will grow this year as a function of better growth and what we outlined in our prepared remarks, but that, obviously, has to do with all the things we already talked about, what happens in Europe and otherwise. Look, our view is we need to take our company and continually reposition it to take advantage of the best end markets and the best geographic opportunities. And so what we need to do, is figure out how to shift some of our capabilities so it's closer to the customer and it's closer to the customers in the fastest-growing parts of the world. I'd be absolutely pleased if that net-net was a net headcount growth opportunity because that would be evidence of the fact that we've executed that extremely well. We definitely have the fixed cost structure, as I mentioned in my remarks upfront, to support growth. It's a matter of where. So restructuring activities obviously need to take that kind of broader view into account. That said, I think we've got frankly a great team, and we want to take good advantage of this great team and there’s certainly opportunities to, with the existing group of people, continue to grow this business at a very nice clip. So it's a matter of how we're and where we're focusing our resources more so than the total number. Jeffrey J. Zekauskas: In your Industrial business, your European operations really grew pretty quickly and sort of much faster than in the Americas, so Industrial and local currency in Europe grew 16.5% and it grew 8% in the Americas. What is it about Europe and those businesses that Europe is growing faster? And when you look at that magnitude of positive change going into obviously much tougher conditions in Europe, is that an area of particular concern for you? Lawrence D. Kingsley: Well, if -- I don't know how much granularity we've provided in prior calls, but if you take a look at sales by destination across Europe, what you'd find pretty closely correlates to what you're reading in the paper about everyday or listening to those squawk about otherwise. And that is what we had is, in the quarter and frankly as far as our expectations are concerned, not a fantastic growth picture for the countries in Europe, South in general, that aren't performing very well. The Germanic countries performed extremely well. The Scandinavian countries other than Denmark performed very well. U.K. did pretty well. Eastern Europe was a mixed bag, with a couple disappointing, but most of them doing pretty well. And the MENA portion of Europe, which again, we account for MENA in Europe, grew very nicely. And then in terms of content, very strong systems performance, which again, double-edged sword, because systems means immediately not great mix in terms of margin profile. But long term, in most cases, it does provide us with the consumables profile longer term that we like. Jeffrey J. Zekauskas: And then lastly, I think your BioPharm local currency expectation this year is high-single digits but in the first quarter, you were up 16%. So what was it about the first quarter that was so unusually strong? Or is it your expectation that business conditions across the board will just generally weaken through the year? Lawrence D. Kingsley: We had one customer that represented a pretty good size order commitment in the first quarter that we know bolstered that rate pretty nicely. And if you extract that, you get to an underlying order growth rate that, if you were to look at it in kind of continuing terms, is more kind of 9-ish, 10-ish percent.

We have time for one more question. Your final question comes from the line of Richard Eastman with Robert W. Baird. Richard C. Eastman: Larry, just, could you speak for a second or 2 to -- when you talk about reallocating resources to the emerging markets, do we lead with sales and marketing there and do we have -- is that essentially what we're doing, more feet on the street in those markets? And is that where we're putting the resources at this point in time? Lawrence D. Kingsley: Yes, Rick. Short answer, yes. We have made nice investments, as you know, in Asia. But even if you take Asia, we still have proportionally more of our resources in Japan, which is obviously not an emerging market relative to where we could continue to invest in Southeast Asia and other what are going to be great future growth markets for us. So what I like a lot about the regional fulfillment plan that Lisa and team initiated a couple of years ago is it provides us with the operating flexibility to put in-region capability that we can then kind of by way of the spokes or the hub go after some of these what are today's smaller country markets using what are local technical and commercial resources but still having that body of support within essentially the same time zone in almost all cases. And so, historically, as you know, we kind of had a country-based organization structure where fiefdoms [ph] kind of ruled, and now we've, over the last couple of years, moved that to hub and spoke, with the 3 hubs, Europe, Asia and the Americas. And we've got -- go ahead, Rick? Richard C. Eastman: And that's --would you build out your -- oh, I'm sorry, I just -- when you build out the sales piece of the business in the emerging markets in kind of feet on the street, is this has to be more of a direct-sale approach than it does distribution? Lawrence D. Kingsley: It depends is the short answer. There's some markets depending on the market structure that's there, so which are the secular markets that reside there and the geography, kind of the how dispersed it might be, where a channel structure that consists of what our resellers, systems integrators and/or hybrids, reps and distributors, may make sense. Usually where we get to a big enough market size and enough customer concentration, we're going to have our own feet on the ground. Richard C. Eastman: Okay. And then just lastly, given the systems growth in the quarter overall for Pall, and I'm not sure if I captured the capital equipment piece of the business in the first quarter, but are you confident that your backlog on the systems side has been bid with a higher margin? Or is this again given the backlog and the strength in the backlog on the systems side, is that going to -- is it going to break down into execution here going forward to deliver more margin on both the systems and capital equipment? Lawrence D. Kingsley: Yes. It's a yes and no, to be honest. The backlog content, not to draw us back to the fourth quarter call, but to -- essentially where we are today, when you dissect that and look at it, it's still not what it needs to be. I think we've put in some stop gap measures to make sure that we don't bid very low margin business. I think we've got a slightly better understanding of timing and how it hits, but we haven't and we won't be able to sell for tremendously improved systems content for a little while here yet.

I will now turn the call back over to Mr. Kingsley for closing remarks. Lawrence D. Kingsley: Okay. So before we conclude the call, I'd like to thank our employees for very warmly welcoming me to the team. I really feel like I'm blessed with a great opportunity here and a great group of people. We're going to do some fantastic things. For all of you, thanks for your participation, thanks for your interest. Put the dates of March 7 and 8 on your calendars for our second quarter call. The release will be issued on the 7th, and the call will be at 8:30 in the morning again on the 8th. Thanks for your Friday morning participation in particular. Have a good day.

This concludes Pall Corporation's conference call. You may now disconnect.