Welcome to Pall Corporation's Conference Call and Webcast for the Second Quarter of Fiscal 2012. Today's call is being recorded and simultaneously webcast. [Operator Instructions] We'd like to remind you that the company's second 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: Good morning, and thanks for joining us. I'm here today with Lisa McDermott, our CFO; and Frank Moschella, our Corporate Controller. We'll review the quarter and our outlook, but before I do that, I'll provide my assessment of the company, generally where we are and what we need to do after a couple quarters of experience. I came to Pall to build a company that's among the most respected in the world, and we have the potential to achieve that level of performance and the respect that comes with it. I visited most of our facilities around the world and met with many employees at all levels and positions within the company. I've also gotten lots of feedback from customers and suppliers. These meetings have reaffirmed my impressions of the company's opportunity. I see a very strong long-term value creation opportunity, and I stress, I'd like you to think about it that way as well. We have a lot of organization and operations foundation work to do over the next couple of years, but we'll get there. We also are focusing on taking waste out of the system and improving our cost structure now, particularly given some of the market softness that we're seeing. The big picture, we serve highly attractive end markets, many with high barriers to entry. 2/3 of the sales are consumables that are largely nondiscretionary purchases. Our applications expertise is second to none, as is our global sales channel, and we have a great balance sheet to fuel growth. Pall employees are highly committed to our success and hungry for change. All of this provides a great platform to build on. We're beginning to execute a more focused company-wide agenda around people, process and technology. And so a little bit on each of those core components. We've changed our executive compensation plan, new metrics and key goals to align the top of the house with growing the company, improving our free cash generation, executing our focused agenda and driving total shareholder return. So a better pay-per-performance system that we will cascade to the organization. We continue to deploy resources into higher growth markets. The increase in SG&A spend reflects this, as we have the transitional overhang from making these investments, while we continue to execute on cost reduction efforts in lower growth markets. We've begun to implement organization and operational changes intended to improve our fixed cost structure and drive operational effectiveness. One that you may have seen in the release last night that impacts our external reporting is the alignment of Machinery & Equipment with Energy & Water under common management. These Pall markets with their connection to infrastructure are among the early beneficiaries of economic development around the world. A lot of their growth and market potential is in emerging markets. Also, these businesses are all similar in that they are the most capital-intensive product profiles that we sell. We believe that the combination will enhance our ability to accelerate our efforts to strengthen contract management, strategic pricing and to ensure that the consumable annuity pull-through potential does exist. So in other words, it's to improve our ability to sell and design systems that we can make money on and ensure that the follow-on consumable opportunity is real. In general, we have a lot of work to do to drive consistent operational execution, particularly in supply chain and manufacturing operations. We've begun to add seasoned executives to the team to lead operations, strategic sourcing and IT. And now moving on to process. We are very pleased that we have successfully fully deployed our ERP system. The Americas, the last phase of our global initiative, is now operational. It has been a major endeavor, and I would like to take this opportunity to acknowledge the tireless dedication that the core group has exhibited over the past several months to prepare and execute this critical step toward a global enterprise system. And we now have a global transactional system in place that can provide end-to-end visibility into the business. It will be a key enabler for moving forward with process improvements to achieve our Pall enterprise objectives. In technology, our team is making real strides toward improving product developments and the time to market for new products. We still have a lot of work to do to improve our total product vitality, but we are now on our way, and you will hear more about this over time. And we closed on an acquisition last week of a small company that we had previously announced. ForteBio is a good strategic fit with technology that accelerates development and validation processes associated with biotech research. We welcome the ForteBio team to the Pall family. And we are implementing a corporate business development team with acquisition-integration capability, which will enable future acquisitive growth. Our investments will be disciplined and thoughtful to enhance our organic profile. So the beginning of a focused corporate agenda is taking shape, and we're making progress. As far that time line to implement, the somewhat flippant answer would be longer than you or I would like. My thinking at this time, though, is that we'll have our executive team fully in place 12 months from now. Enabled by our global ERP system, our operations should be substantially better a year from now. We'll be able to lean out our operations and drive sustainable working capital improvement between now and then, but we should be able to accelerate from that point forward. We'll have our innovation capability to the point of improving the rate of new product vitality by the end of next year. That's the end of our fiscal year '13. And some high-level metrics that our senior team has now aligned to achieve, we should be able to significantly reduce our fixed cost structure based on the strategies that we're currently developing and implementing, and that's now. Once we've done this, we can leverage our new P&L profile. So assuming we grow 5% or better organically, we'll generate at least 35% incremental operating margin on that incremental revenue. That's the go-forward equation. And our aspirational goal is 40% incremental margin. Within that equation, we will continue to invest to grow, with our primary focus on technology and customer-facing resources. We're targeting the end of next year -- that's 18 months from now -- as a very major milestone for most all of the heavy structural action lifting to be behind us. So changing topics here and as far as other key items, before we move on to reviewing the performance in the quarter, we settled the outstanding class-action litigation from 2007 and with minimal future out-of-pocket expense, and I'd refer you to the release for details. Now let's look at the quarter, and we'll talk about the business. Second quarter sales -- and I'm on Slide 7 -- came in just under $700 million, good growth overall. Total sales grew just over 8%, with minimal impact from FX. Just like last quarter, business was split about 50-50 between Life Science and Industrial. And Life Sciences sales increased 7% excluding FX, and Industrial grew more than 9%. Now if you flip to 8, there on Slide 8, increased just over 3% in the quarter. Some of this is a difficult comp to 15% orders growth in the prior year period. Some is also current timing but to be clear, some is the softening order environment in emerging markets and across Europe. And then we saw the same trend in February. Life Science orders were up 2% in the quarter. BioPharm grew by 13%. However, Food & Beverage orders were down by almost 15%. Industrial orders were up 5%. The backlog, which is up 9% over last year, coupled with the moderating orders patterns still supports our mid-single-digit sales outlook for the full year. Now I'm moving on to Slide 9, and I'll walk through the markets, first, with the ones that Life Sciences serves. And as I walk through these, I'll comment on both sales and orders. BioPharm at almost 29% of second quarter total sales continues to be the growth driver of our Life Science business. Although the business is not immune to economic conditions, we believe it will grow through a flat economy. Again, the equipment market is driven by global patient demand, as the societies around the world adapt Western medicine, including drugs that are produced by way of the genetically engineered processes. And our filtration technology and associated systems enable the industry for how it develops and produces a broader variety of biopharmaceuticals. Sales in BioPharm increased about 12%, excluding FX in the quarter. Sales in Europe, the largest part of the market for Pall where the drugs are produced for global consumption, increased about 18%. Asia also grew by about 18%, as the industry takes root there. Consumables sales increased about 10% and represented over 90% of total BioPharm, and system sales increased 47%. Second quarter orders remain strong as well, increasing 13%. Onto Slide 10 for Medical. Sales in Medical were down slightly, while orders decreased about 6%. Excellent sales growth in the blood markets was offset by weak results in the other key medical markets. Hospital spend is under pressure in both North America and in Europe. We're especially feeling this in Europe where our hospital business is larger. Hospital sales were down over 10% there. OEM sales were also down globally. There were several reasons for this. Some of the customers are working down inventory levels, and we have at least one OEM that is still recovering from the Thai flood. And we had also some supply challenges of our own that contributed to the sales results for the quarter. And switching to Slide 11. For Food & Bev, despite strong growth in the Americas, Food & Bev sales were up just 2%. This excludes FX. The result was impacted by a divestiture of a nonstrategic asset in Italy earlier this year. The effect on full year sales is $20 million, and the impact to the second quarter was about 6% on the top line. If we take out the divestiture, the underlying growth rate would have been almost 9%. Orders were down 15%. This reflects a large decrease in systems orders compared to last year when we saw an unusually high order commitment in the same period. Consumable orders were down 3% on an apples-to-apples basis. Orders were up 4.5% on that apples-to-apples basis. While the European economy isn't helping, Food & Beverage is holding up pretty well actually, largely with innovative products that increase output and lower production costs. Orders and sales both grew in February, incidentally. In Process Technologies, sales for Process Technologies increased over 13% in the quarter. This was driven by double-digit growth in the Energy and the Machinery & Equipment markets. Municipal Water was down. Overall orders in Process Technologies increased 4%, with the strongest growth in the water markets. Energy sales grew almost 21%. We saw a good growth across the various markets we serve, and the 2 that really drove the result were the natural gas and the refining markets. Sales were up sharply to these markets, obviously, reflecting the ongoing investments there in the space. And while Pall plays in all of the Energy applications that require filtration, we see growth slowing in the clean energy markets. Big new projects in the nuclear industry have slowed substantially following the Fukushima incident. But despite this, China, Russia and India, which represent half of all planned new capacity, are now expected to proceed with their plans to build nuclear plants. And in the U.S., the NRC recently approved 2 new plants. Wind turbine production is down this year, with the loss of the federal subsidies and programs, and that's the similar case globally. China, in particular, has cut production of wind turbines, and there's also some consolidation among the turbine OEMs in the industry that's underway. Energy orders were up just over 2%, with strong growth in MENA offset by a double-digit decline in the Americas, including an unusually high order volume of systems last year in the quarter, so a tough comp in the Americas in Energy. Municipal Water sales were down almost 19%, while orders, though, were up 20%. With this growth, driven by the Americas, where it appears as though the capital spend cycle for water may have bottomed out and in fact, our backlog grew sequentially by about $8 million in the quarter. And finally, Machinery & Equipment, which accounts for over 20% of total sales, had sales growth of 18%. The global mining industry has been a steady contributor to these results. Our filters are used in a variety of the applications, including the mining equipment as well as the in-water mine systems. Orders were up about 2% in the quarter, as we think we're beginning to see some pushouts from the European companies on capital projects. In Asia, our primary metals business is slowing, consistent with what we're all reading. So turning now to Microelectronics. I'm at Slide 13. We're down 5%, and sales reflect continued weakness in various parts of the market. Fab utilization rates remain low for most of the chip producers, and the display market is operating under capacity. The capital equipment and tool producers are forecast to remain slow for at least the next several months. And Thailand is the source of about 1/4 of the global hard drive output, as you know. Full recovery of production there is still anticipated to be at least a few months from now. Despite all the above, general conditions included, Q2 orders grew about 2%. This was driven by a several-week burst in demand from U.S. OEMs for tools at the end of the calendar year, and we don't see this as a sustainable trend for the rest of our fiscal year. I'm onto 14 for Aerospace. Our Aerospace business is split evenly between Commercial and Military. In total, sales were up 16%, excluding FX. Commercial Aerospace sales were flat, while Military Aerospace sales increased over 31%. Commercial Aerospace was impacted by program delays, and additionally, we continue to prune some low-margin business there. However, commercial jet orders were strong for both aftermarket and the regional jet new equipment market. The Military orders and sales were driven by our Centrisep air cleaners for helicopters, and our backlog remains very healthy at over $100 million. So that's a run-through of our markets and how they stacked up. I'm now going to take a look at it regionally. If you turn to Slide 15. I embedded some of the geographic comments in the segment performance that I've just walked through, but there are some counterintuitive components to how we performed by geography, worth noting. Some of them are, again, quarter comp issues. Others are though more indicative of anticipated trends. Sales in the Americas were up slightly compared to more than 27% growth in the comparable quarter last year. Results were mixed by markets. Food & Bev had a great quarter fueled by new accounts, new products and Latin American growth. Muni Water shipments were way down in the quarter. Again, this is largely an issue of timing. And again, our Military sales in the U.S. have been strong this year, as I just mentioned. Worth noting, all in, sales in Latin America, while still relatively small, increased 40%. Europe grew almost 50%, marking the fifth consecutive quarter of double-digit growth there, and sales in mature European countries grew over 10%, while the emerging markets of Eastern Europe and MENA grew about 37%. Performance in Northern Europe was reasonably strong and again, driven by BioPharm, which accounts for about 1/3 of our European sales. Southern Europe was weak with hospital and just about all forms of capital spending down. And we expect that the broader economic impact throughout the Eurozone will provide a tougher growth environment though going forward. The instability of the euro presents another challenge, and Lisa is going to address this in her remarks here in a minute. Sales in Asia increased almost 8%, but we're seeing signs of slowing in China, with delays in expected orders and talk of changing central government priorities associated with the infrastructure investment. Demand for steel is decreasing. Both Thailand and Japan are still recovering, but sales in Australia and Korea were very robust. Australia is experiencing ongoing demand in the mining industry, and Korea is investing to expand domestic refinery output. In addition, it's home, as you know, to many of the global engineering firms that are strong participants in the oil and gas expansion across the world. So we said from the outset of the year that we would be counting on emerging regions to drive much of our growth this year, and they're living up to that expectation. Sales into emerging Asia and Europe, MENA and Latin America increased over 20% in the quarter, and for a broader prospective, sales for the 6 months are up 29%. Emerging markets now represent about 20% of the company sales, up from 17% last year. Mature market sales grew about 5.5% in the quarter and about 6% for the year. In a given quarter, our organic orders result is typically impacted by lumpy large programs as you know, and that's the case for comps this quarter, as I've said. I think that the bigger picture theme for us for the first half of the year is what we anticipate to play out through the remainder of the year. The better global growth opportunities will be in energy production and in the energy distribution, the continued infrastructure buildout but less so in China and from the large molecule that is the biopharmaceutical drug production. And we also expect that some of the process technology markets will remain strong, too. So that's it for my introductory remarks. I'm now going to turn it over to Lisa, and I'll pick up there again.

Thanks, Larry. Good morning, everyone. I'm starting on Slide 17. So Larry has talked about top line performance. I'm going to review the performance of each business segment and 3 key areas: gross margin, SG&A spend and operating margin. And I'm starting with Pall Industrial. So when we look at Industrial top line performance, we would have expected an improvement of at least 150 bps, with incremental gross margin in this business of just under 60%. Versus the decline of 40 bps, this is almost a 200-basis-point delta. The 3 key bridge items are: One, unfavorable mix reduced margins by about 170 bps, mainly from the decreased sales in Microelectronics, similar to what we saw in the first quarter. Second, overhead absorption challenges reduced margins by about another 70 bps, again, mainly from volume decline in Microelectronics, as well as inventory reductions reflected in an improvement in Industrial's days and inventories, which improved about 13%, 123 days from 139 days in second quarter of last year; and third, there were a number of other factors that contributed to partly offset some of this headwind, but the most notable was an uptick in price as well as continuous improvement savings, which overcame inflation. So despite a 2.5% sequential decline in sales, we did see gross margins in the quarter improve sequentially by 210 basis points to 47.1%. This was due to better mix, pricing and execution. Turning to SG&A. This increased about $8.7 million or 9.5%, excluding FX in the quarter. Selling expenses, which were 17.6% of sales, increased about 4.5%. And this increase was driven, as Larry mentioned earlier, by resource deployment into emerging regions. G&A, which was about 12% of sales, increased about 19%, so this also reflects related infrastructure builds for emerging countries, and this includes our Brazilian acquisition, as well as cost to bring Pall Industrial into our European and Asian hub structure. In addition, this reflects project-related costs that both Life Sciences and Industrial share in such as our IT project and our regional back-office consolidation. So as Larry mentioned, we completed the Americas ERP conversion, essentially the last leg of the core implementation. Earlier in the year, we moved from the build phase, which is considered CapEx, now to data conversion, migration, training and local support, all of which is reflected in the P&L as period costs. These costs will continue to put pressure on incremental margin through the third quarter. However, the incremental cost has already been considered in our EPS. So that said, in addition to the benefits this investment has enabled by way of our regional hubs, this tool is a key enabler for many of our operating efficiency plans and PES. The post-implementation phase is where we will begin to see operating benefits reflected in our back-office function, and this begins largely in fiscal year 2013. Segment profit was $52 million and generated margin of 15.4%, flat to last year. And this translated to incremental margins of 13%, excluding FX. Not the operating leverage we want, but it reflects the items we just discussed. As we mentioned last quarter, we are executing several restructuring initiatives to improve the Industrial segment's leverage. The most significant of them include realigning sales and marketing management in Aeropower and Energy & Water as Larry mentioned, reorganizing the global management structure that supports the company's systems product line and shifting resources from mature to emerging regions. And we do expect to see improved incremental margins in the second half as the cost reduction, which will be principally in SG&A from these industrial restructuring activities, take hold. I'm going to switch now to Life Sciences, and I'm on Slide 18. Life Sciences gross margins increased 60 basis points to 55.9%, and this reflects what we see as an appropriate entitlement given the business' 60-plus percent incremental gross margins. However, the benefits of pricing and manufacturing cost saves were partly offset by some mixed headwinds. SG&A increased about $8.7 million or 10%, excluding FX in the quarter. Selling expenses, which were 16.1% of sales increased about 5%. As with Industrial, this increase was driven by resource deployment into emerging regions, as well as some increased staffing in Life Sciences in the second half of last year. And G&A, which represents 11% of sales, was up 18%, and this reflects the items I discussed a moment ago in the Industrial review, as well as some costs related to the acquisition of ForteBio. So segment profit came in at close to $89 million or a 5% increase, again, excluding FX. Segment margin declined 20 basis points to 24.8%. We achieved 19% incremental margin in the quarter on top line growth of 7%, again, both excluding FX, well below where we should and will get to with Life Sciences. So recapping, operating margin was 17.7%, slightly below the second quarter of last year with pressure from the heavy lifting and spending activities I just described. We achieved overall incremental margin of about 15%, excluding FX. And our minimum target for incremental margin in our current state is 25%, and we do expect to achieve a range of 25% to 30% for the full year, as the euro remains in its current range of $1.31 to $1.33 to the dollar. So let's talk about our P&L risk relative to fluctuations in the euro, and I'm on slide 20. In addition to the impact to reported results from the translation of foreign currency denominated financial results from our foreign subsidiaries or what we call translational impact and what I've been referring to when I talk about excluding FX so far this morning, we also have risks from the impact to gross margin as the cost of products fluctuate from sourcing them outside of one global currency, what we call transactional impact. So as we all know, the euro is blazing its own trail given the sovereign debt crisis even relative to neighboring European countries. And much of our manufacturing footprint rationalization has been in the Eurozone. So as the euro weakens, this puts pressure on gross margins, as the economic cost of that inventory inflates. Since the beginning of the year, we have seen the euro to the dollar go as low as $1.27 or about a 6% reduction and about 0.83 to the British pound. And our sales into the Eurozone comprise about 25% of total Pall sales as many of you know. About 80% of that is denominated in British pounds or U.S. dollars. And with this math, we estimate that a 5% movement of the euro, positive or negative, represents a change in gross margin of about 50 basis points on average. Our initial full year outlook contemplated that the euro would be at about $1.35 to the U.S. dollar and about 0.86 to the British pound. Assuming that the euro now stays in its current range, i.e. $1.31 to $1.33 to the dollar and about 0.83 to the pound and that the pound and dollar move somewhat in tandem, we estimate that we have second half gross profit headwind of about $3.5 million to $6.5 million compared to our original outlook. Year-over-year, this creates a delta in second half gross profit of about $5 million or $0.03 in earnings per share. So to be clear, this would represent $0.02 to $0.04 of transactional impact against our original outlook for the second half. In addition, we estimate that translational impact to be about another $0.02 headwind in the second half against the original outlook for a combined impact of $0.04 to $0.06. So now looking at income taxes. The effective tax rate was 24.6% for the quarter compared 27.3% last year. This reflects the tax benefits associated with the establishment of our Asian hub this year and the expansion, particularly with respect to Pall Industrial, of our European hub. We expect the effective tax rate for fiscal 2012 to be consistent with our original outlook. In wrapping up the discussion about our P&L, net earnings were $84.7 million or $0.72 per share, and this compares to $75.7 million or $0.64 per share last year. Pro forma earnings per share, as defined in the Appendix slides, were $0.76 compared to $0.68 last year, an increase of almost 12%. Now bridging this increase, foreign currency translation increased EPS by about $0.01 in the quarter. The tax rate contributed about $0.02, and underlying growth added about $0.05 or 7.5%. Turning now to cash flow. Operating cash flow in the 6 months was $204 million. This 31% increase or about $48 million was primarily driven by continued improvement in working capital management. Committed capital has continued to dampen free cash flow generation improvement in capital management as an ongoing priority. We increased our quarterly dividend by 20% from $0.175 to $0.21 per share, effective with the dividend declared on January 19, 2012. And our buyback authorization remains at $453 million. Now our cash position stood at $528 million at the end of the quarter, and our net debt to net debt plus equity was 6.3% compared to 9.1% at year-end, as we have used excess cash to pay down debt. That concludes my report this morning. I will now turn this back to Larry. Lawrence D. Kingsley: Thanks, Lisa. So the results at midyear, I think, has held up pretty well given the choppy environment, particularly in Europe. Clearly, the macro situation presents some risk to the top line. We expect second half sales growth to slow, reflecting slower macro trends in Europe and some in emerging Asia. We also anticipate tough mix in Industrial for the remainder of the year. The instability of the euro could further impact results as well as Lisa just walked through. We're stepping up our costs in productivity initiatives. We should be able to offset known market softening and the mix impact to deliver continued reasonable earnings performance. And with the assumptions of a macro market, particularly the European economy and the currency impact, we believe that the bottom end of our guided range is achievable and that our task is to deliver the previously stated midpoint of 320 or better. So with that in mind, we'll turn it over to the operator and take your questions.

[Operator Instructions] Your first question comes from the line of Jon Groberg with Macquarie Capital. Jonathan P. Groberg: Can you hear me okay? Lawrence D. Kingsley: Now I can. Jonathan P. Groberg: Okay. Sorry about that. So I just have, I guess, one question. And you answered a little bit of detail, but on the BioPharma side, this place -- space, we follow for some time. If you look at peers, it looks like business has slowed some. I think you had a big order in the first quarter that got -- or that got pulled into the first quarter. And yet that business continues to show remarkable growth. It's history was that it was a bit lumpy, but you guys have been putting up really good growth for a while. So can you maybe just either describe the -- your comfort with the sustainability of that growth or the visibility of that growth? And maybe are there share dynamics going on there? Lawrence D. Kingsley: Sure. I think we've got reasonable visibility here. We are very close to the customer base, and the rate of which they consume filters once a drug is in production is reasonably predictable. What can fluctuate is the rate of which they may deploy a new drug. And that can vary versus our expectations. And given some of the lab activity upstream, which is influenced by a variety of other associated spend dynamics, that can vary a fair amount. But the bottom line is once it gets to biological production, as long as we understand their relative inventory position and something like an FDA issue doesn't get in their way, we can reasonably predict how well they're going to do. Given all that, I think we feel pretty good about the market. It is going to moderate a bit from where it's been over the last 12 months, and we've got that factored into our thinking. Relative to what's going on in terms of share -- and I assume you mean our share versus customers' share -- we're in pretty good shape. We've got a couple pretty decent competitors, but we think that we're growing with the market at this point, and our opportunity is to grow better than the market. And that comes back to the equation that you've heard us talk before about, about getting systems installed and then to realize that consumable pull-through. One of the things that may be beyond our share that does pertain to this market dynamic though is where our customers either gain or lose share in given product areas, and that can have a fairly large impact, as you could guess, in terms of where their capability may either take route in a new country as planned or not or where they may run into a regulatory hiccup at points along the way or not. And that has impacted us over time, and that probably always will. There's not much we can do to control that. So all, I guess, I'd tell you in summary that the market's healthy for sure. It's -- again, it's driven by those dynamics I talked about in the prepared remarks. That is it's people around the world adopting Western treatments and fighting disease, and that's a big element of fighting poverty, and we're doing really well moving into all the emerging markets, both European as you see in the European numbers but also in Asia, as you see both in the European numbers and in the Asian numbers. Jonathan P. Groberg: If I could just follow up quickly on the share. I didn't mean kind of your competitors. So obviously one of your big competitors got taken over by a big biopharma company, and it's now been a couple years. I'm just curious -- historically, it always you needed to win in kind of very early stages of drug production and then you would see that spill out. Is it -- are we to the point now where you can maybe talk about some of your wins in those earlier stages of development? Lawrence D. Kingsley: Our win rate is as good now as it was a couple years ago prior to the dynamic that you're speaking to. I wouldn't comment specifically on a competitor and how we think they're doing, but we feel just as good about our global reach, our ability to win from a technology standpoint, the rate at which we are winning and how well we're doing against all of the folks that participate in the filtration and some of the other systems space that we serve in the -- both upstream and downstream BioPharma segment.

Your next question comes from the line of Kevin Maczka with BB&T Capital Markets. Kevin R. Maczka: Larry, I appreciate all the color and the focus on incremental margin, but I wanted to ask a couple more questions around that. You talked about this 35% goal and ultimately, 40% longer term. Can you just kind of comment about this or clarify this comment you made about the 18 months to complete some structural actions? What exactly did you mean by that? Is that the Industrial restructuring that Lisa talked about that'll drive better incrementals in the second half? Or is that something else? And maybe we don't see this kind of incrementals achieved until 18 months plus. Lawrence D. Kingsley: Let me -- yes, let me give you a big picture view of it, and we'll let you just add some follow-on questions if you've got them. So as I was listening to myself talk and Lisa talk, I thought maybe we were slightly confusing in how we portray the incremental margin comments. The bottom line is this: The company has not generated consistent profitable growth, appropriately operationally leveraged growth for a very long period of time. And Lisa and I and the senior team in total are working to get to a P&L structure that is appropriately profiled. That means the right fixed cost structure with the right management organizational structure, such that when we grow at least a reasonable organic rate that we can leverage that as a P&L of the appropriate profile should right to the bottom line. So the 35% to 40% incremental margin range that we talked about is a pretax number. That's the incremental operating margin on the incremental organic sales. And just to be clear, what Lisa was talking about and explaining in the quarter was talking first about the gross margin dynamics for the quarter year-over-year and her 60% incremental margin comments, whereas they pertain to the gross margin line. So as we all know, the objective here is to leverage primarily the fixed cost structure in SG&A, but we also believe we've got an opportunity to leverage our indirect fixed cost structure in operations. As an example, as I've now been kind of around the world, we have a very different ratio of indirect to direct costs in our various manufacturing operations. Some of that driven by the profile of the individual operation, but some of it also just because we've gotten to a better level of operating proficiencies in some facilities versus others. A true lean organization gets to a -- an aggressive direct versus indirect labor ratio. So we got work to do there, and that's all within the equation of how we get to 35% to 40% incremental margins and generate those on a pretty consistent quarter-to-quarter and certainly full year basis. Now, back to your question about how long does it take. The reality is to get our P&L to the right profile, to get at the cost structure and to do it in a way that we can then live with and grow from and frankly, still invest to grow within. That full process, all that heavy lifting, I think, is going to take 18 months, and that means we look a little different 18 months from now. In that period of time, we're already incrementally taking appropriate waste reduction actions, if you will, cost actions that we talked about earlier in the year, which we're starting to see some of the benefits this year from some of the restructuring actions that we announced at the beginning of the fiscal year. And so in the back half of this year, albeit on a little bit lower organic growth, you'll start to see evidence of the fact that we can get it done. And I think we'll be able to talk in the back half of the year about the fact that we're starting to see the light, frankly, toward good incremental operating margins based on the performance. And again, it may be muted from a total bottom line performance by the things that we talked about, FX and mix and things of the sort, but in terms of true operating leverage, certainly within our ability to get to the kind of equation that I described. Kevin R. Maczka: Got it. That's very helpful. And then in terms of the 18 months and to kind of get the cost structure the way you want it, it sounds like the ERP systems in place now globally, many other actions are happening. But can you just talk about what some of big buckets or big milestones are over the next 18 months? Is some of this footprint related or other structural types of initiatives like that? Lawrence D. Kingsley: It's -- not to be kind of short with you, but it's kind of all of the above. I'm not going to get overly descriptive. But we've got SG&A structural issues and actions that we're thinking about globally as to how do we get to the most effective go-to-market organization that doesn't have redundant capability throughout the global organization structure. What SAP absolutely allows us to do is to improve our back-office component within the fixed cost structure. And now to your point, we do have it in place. We've got to do some things to get the -- some of the last little systems elements cleaned up in the next 6 to 9 months. But we do have visibility already, and we've got a lot of work behind us, such that we can now use the system to our advantage to think about what's the right cost structure for the company and how do we most efficiently go to market globally. And then within the cost of goods sold, how do we get at that fixed cost component that I spoke to? That's surgery, quite frankly. That needs to take place locally with great local site leadership in place to get to the right profile of what our lean organization structure should look like and what our cost structure should reflect. And that's going to take some time.

You're next question comes from the line of Hamzah Mazari with Crédit Suisse.

The first question, Larry, I know you spoke about your priority to rightsizing the cost structure before you see higher margin. I'm wondering if you could maybe speak to any changes you're making on your go-to-market strategy at Pall during this process, whether that be going through more of a distribution channel, whether that be creation of this new segment. Is there anything you're doing on changing how Pall goes to market relative to how this company was going to market historically? Lawrence D. Kingsley: There are a couple things, Hamzah, that I would point to. We, as you all remember, had a kind of a tough fourth quarter last year because we didn't understand the systems impact to mix, and we're trying by way of our organizational structural thinking and frankly, pruning lower margin business opportunities within the total set to get much more effective at how we understand and desire to participate in more specific systems opportunities, programs going forward. We want to make sure that the consumable profile is appropriate, as I said in the prepared remarks. So number one, it's the right people who understand how to sell and design systems and how to make sure that we're capturing all the value that we should on the front end of a system sale and two, frankly only participating where there's a good consumable ratio going forward. We're underway with that. We still got work to do. The org announcement that was in the release that we talked a little bit about last night is a piece of that. There's some more work to do. And we don't expect that all system sales are going to be certainly neutral, certainly not accretive to the rate, but we want to make sure that they are the appropriate profile for us to generate that downstream consumables stream. In terms of bigger picture though, Hamzah, with regard to how we go to market, I think we've got a great sales organization. I think we've got an outstanding applications capability around the world. I think that we have a, while be it expensive one, one that no one out there can replicate, and many have tried. We've got an organization that's got the local capability to validate existing installations of filters to test new products, to work directly with customers by way of local lab expertise. We've got the people around the world already and including much of the investment we need in the emerging markets to get this done. So I think that's, frankly, going to continue to serve us well, and there's not a major structural change that's required. As far as the direct versus distribution thinking, we've been moving, frankly, to a more direct model globally. We'll continue to partner with those people in the North American market and selectively globally otherwise who really do add value will bring both technical and commercial capability as well as customer relationship value. But generally speaking, globally, the direct organization structure that we've been underway with for some time is the one that we'll continue to execute. We, I think, have a business model that serves a particular business profile, our market profile, if you will, really well. We are different than just about all of the industrial peers, and that's good because we like to go after the relatively low volume, really high mix, really tough-to-do stuff. I think the challenge is going to be to apply some of the almost lean-like thinking to how we do it more cost effectively and really measure our ability to do it over time, particularly in the very high mix portion of the industrial market segment set that we serve. So anyway -- go ahead. Sorry?

Sorry, no, go ahead. Lawrence D. Kingsley: I was just going to say, bottom line is I think we got a front end of the company. We've got a great technical skill set in place to serve the difficult applications that exists in the world we play. And the reality is that we aren't in any way going to radically change that. We're just going to figure out how we can get more effective and efficient within the general strategy.

That's very helpful. The other question I had -- I don't want to focus on the 18 months number that much, but I'm just wondering what your thought process is in terms of using the balance sheet during this time. You'd spoke of the fact that you still need to do some work in order to build up the ability to integrate assets. Maybe if you could speak about how you plan on using this balance sheet over this 18 months. Or what's your thinking around M&A? Is it going to be bolt on over the next year as you plan on reducing this cost structure, and then as we look towards 2013 and beyond, we can see some more meaningful deals to try to use this balance sheet to create some value? Lawrence D. Kingsley: Yes, maybe I'll step back one step further form your question because it's a really good one to, frankly, help all of us understand our company-wide priorities at this point. Maybe one thing that's changed a little bit in my mind since the last quarter call after I've now had the chance to visit many more of our operations and understand kind of the task at hand in front of us. Our senior team is going to be pretty well consumed with some of that foundation work that I'd talked about on my prepared remarks, getting operations fixed, supply chain fixed, getting the ERP up and operational, fully operational. That is, frankly, going to be the primary use of kind of my bandwidth and of the senior team's bandwidth for the next 12 months. So we're not in a position yet and frankly, we're in a less of a position now than I thought we were a quarter or go to go out and bring in acquisitions. Now all that said, just like ForteBio, which we think is going to be a fantastic addition to the company, bolt-on, as you describe them, they come with good leadership, which we think we've absolutely got the case in ForteBio, that are capable of actually assisting us with our ability to tackle some of our core challenges, we'll continue to look at those, and we are. And those need to be somewhat self-sufficient. We do not have the operations or integration skill set in-house at this point, and we need to build it in. And that's going to take that 12-month period of time in the -- in kind of the time line comment that I made. So the balance sheet question really pertains more to our ability to acquire and integrate versus desire. And at this point, I think over the next 12 months, you'll see us continuing to improve our free cash capability. Obviously, we'll get to a reasonably rich balance sheet position, and it'll set us up nicely for, then, what will be our ability to, I think, get more aggressive in terms of acquisitive activity. But short term, we got some internal stuff to focus on.

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

Quick question on pricing. I mean, obviously, we've talked about this many times in the past, sounded like you're making some improvements, and you noted it as an upside potential. Of the leverage you have on pricing and the organizational capabilities required, what's your assessment sort of short term and long term on the leverage you have to pull? And now that you've spent some time with the business, what the order of magnitude we should be thinking about long term? Lawrence D. Kingsley: Okay. A couple things, one, I think, we did start to make a little bit of forward progress in the quarter with price that Lisa talked about, and I was pleased to see it. And we've had a number of internal discussions to make sure that we continue to focus on it. Again, given our technical skill set and our technology in general, we need to be able to demonstrate the value, and some of that is strategic and analytical kind of from the top of the house and how we manage our markets, and some of that is tactical or executional in the sales force. And I think both of those are areas where we need to focus. We are going to begin -- as a matter of fact, we've already begun a process for how we improve the selling process such that we value price our products appropriately for the application, and I think that we'll see some nice incremental benefit out of that, particularly in Asia. And we are taking a much more rigorous approach on how we think about pricing strategically by market segment, by application. As far as what does it deliver quantitatively going forward, I think it's a little early, frankly, for me to tell you that, but I think it's better than what we demonstrated last quarter. And it ought to be able to, certainly on a price versus material cost or kind of the overall material margin equation, be a net positive for us on a sustainable basis.

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

Just a couple questions left here. Regarding the ERP implementation costs, did you specify what those costs were just roughly? And if not, could you do so? And what were they in the quarter? And when do those fall off the P&L?

You want me take that? Lawrence D. Kingsley: Yes. Well, we have talked about it historically. I'll Lisa speak because she spoke to it last, I think, a couple quarters ago.

Yes. I mean, there's 2 legs to this equation. One is the capital piece and one is the P&L piece I presume for the moment, and you can double back if you want. But you're talking about the P&L piece?

Yes. For now, yes.

And what we saw in the quarter was a couple million dollars, $2.5 million or so of incremental spend in the P&L related to all of the activities that I talked about. And I would expect that we're going to see kind of year-over-year that to continue in Q3, and then it'll start to phase down, as quite frankly, we stabilize the Americas.

Okay. So about a -- is $2 million run rate through Q3 is falling off after that. Is that...

Yes.

Pretty accurate? Okay. And then you maintained the organic revenue growth guidance for the year of mid-single digit. Is it fair to assume that maybe we're at slightly -- a slightly lower end of the range, I guess, than we were previously? Maybe it was 5% to 6% before and something like 4% to 5% today or could you give additional clarity on that? Lawrence D. Kingsley: Yes, I think that's fair to say. We're -- as we said in the prepared remarks that we're seeing a slower orders environment. Not all of that translates to back half of this year. But within the mid single-digit range that we talked about last quarter versus this quarter, a point or 2 less. And that's, again, factored into the thinking as to how we bracketed against the former guided range now where we are, which is essentially bottom end of the range to 320.

Okay. A point or 2 less in terms of your organic growth expectation for the full fiscal year, just to be clear? Lawrence D. Kingsley: That's exactly right.

Let me double back to your question. So these period costs, we do expect them to go away, but the other leg to this is what I talked about is the capital, which you weren't specifically asking about. As we're live, the capital flips into P&L vis-à-vis depreciation, and we'll see the Americas piece coming in full swing, so figure another $4 million to $5 million annually coming into our 2013 P&L.

Related to depreciation on the system?

Yes.

That concludes our question-and-answer session for today. I hand the program back over to Mr. Kingsley for any further comments or closing remarks. Lawrence D. Kingsley: I think we covered pretty much all the ground. Thank you very much for your participation. We've got June 6 and 7 for the next quarter call. We, obviously, will talk and see many of you -- talk with and see many you between now and then in the quarter and look forward to it. I'd like to take the opportunity though, again, just one more time to thank the core group of Pall employees that were involved with the ERP deployment over the last couple years, in particularly the group that's been involved over the last few months to bring the Americas up. This team's worked literally around the clock. It's a huge, huge deal. It's a big enabler for us going forward. Thanks, team. Thank you, operator.

Yes, sir. This concludes our conference call. You may now disconnect.