Welcome to Pall Corporation's Conference Call and Webcast for the Second Quarter of Fiscal 2014. 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 now turn the conference over to Mr. Larry Kingsley, Pall Corporation's Chairman and CEO. Please go ahead, sir. Lawrence D. Kingsley: Good morning. Thank you, Stephanie. All of our remarks this morning will be made on a continuing operations basis. I'm here today with Akhil Johri, our CFO; and Brent Jones, our VP of Finance and Treasurer. We'll begin our assessment of the global markets that we serve, then an update on our recently closed acquisition of ATMI LifeSciences, followed by a recap of the quarter and some concluding remarks before we go into Q&A. We delivered a solid second quarter, keeping us firmly on track to achieve the plan for the year. Our profit generation and cash conversion were strong. Our sales growth was consistent with our expectations, and our order trends are, in total, quite healthy. So I think the way to summarize where we are in the journey is that we're beginning to demonstrate signs of sustainable progress, but we're still not operating anywhere close to the level that we believe that we are capable of. The Q2 sales were up 4%, excluding FX, and gross margin was actually down 70 bps due to mismatched direct costs versus selling currencies in some low-margin Systems projects. However, solid execution, coupled with better fixed cost leverage, drove strong operating margins, which were up 120 basis points for the quarter. When you look across the portfolio of Life Sciences, BioPharm in particular continues to show solid growth coupled with very strong orders. Bioprocessing for vaccines and large molecule biomedicines is growing at a very healthy rate. The Medical and Food & Beverage markets are also growing, but only slightly better than global GDP. The global Industrial economy, on the other hand, continues to be mixed. This is particularly true for our Process Technologies markets, which include continuous process, batch process and various capital equipment applications. We haven't seen a rebound in Industrial capacity expansion-related spend. And while productivity-based investment is improving, it's not improving at the rate that we'd like it to. But for the balance of our Industrial portfolio, MicroE is performing quite well, with yet another solid quarter. And while the end markets have certainly improved, our technology position and significant new product introductions were additional contributors to our performance. And although Aerospace had a tough quarter, principally due to difficult comps, the pipeline looks strong, and I'm satisfied that we'll grow the business and continue to improve profitability as the market shifts to new customer platforms and more commercial content. So while the portfolio of markets we serve always provides for a broad range of top line performance, the highlights this quarter certainly include the all-in 11% orders growth, excluding FX. However, this is pretty consistent with our expectations and necessary to deliver the step-up in sales and profit we had planned for the balance of the year. So while the leading indicators are encouraging, we still have a big second half to deliver. Before we dive into the quarter details, a quick update on our most recent acquisition. You're looking at Slide 5. We closed the ATMI LifeSciences transaction last week. They're a leader in BioPharm-related single-use technologies. And the ATMI team has developed a very nice range of bioreactors, mixers and other associated products for the rapidly emerging single-use BioPharm environment. They also have sterile packaging solutions and bioprocess storage systems. And beyond that, they bring a very strong intellectual property position underlying their technology. When you combine the ATMI technology and the customer traction they've got with our core product, our sales force and our channel, we believe this is a very strategic transaction for us. And we believe that ATMI will enhance our ability to provide a premiere suite of single-use technologies and customer solutions in this very rapidly growing segment. We were able to structure the transaction in such a way that almost all of the purchase price was paid with offshore cash, which further enhances our strategic capital allocation associated with the deal. So with that, turning to the quarter, looking at Slide 6. As I said before, sales for the second quarter grew at 4%, excluding FX. Life Sciences broadly performed well. Industrial was still impacted by the weakness that I mentioned in Process Technologies. And as I mentioned, gross margin declined 70 basis points. SG&A as a percent of sales was down 210 basis points during the quarter, while R&D was up 20 basis points. A minor component of the SG&A performance in the quarter included certain onetime good-guy [ph] items, including lower bad debt provision and the timing of other expenses. All-in, though, operating margin was 18.2%, again, up 120 basis points from the year-ago quarter. Pro forma earnings per share in the quarter were $0.82, an increase of $0.09 or 12% compared to last year. Bridging this increase, the operating profit contributed $0.11 and our share count reduction and other items combined to contribute $0.02. Translational FX was a $0.04 headwind. So excluding the impact of translational FX but including the transactional FX adverse impact in our cost of goods, on sales growth of 4%, EPS grew 18%. And now I'm going to hand it over to Akhil, who will go through the results in more detail. Akhil?

Thanks, Larry. I'm on Slide 7. As noted, I will talk to year-over-year changes, excluding FX. Life Sciences sales grew by 8% in the quarter, while Industrial sales were flat. Consumables, which were about 87% of sales in the quarter, grew 7% in Life Sciences and 2% in Industrial. Systems were up about 1% overall. Life Sciences Systems sales were up 20%, while Industrial, which comprises a larger share of our Systems business, declined 9%. Turning to Slide 8 with some details on our Life Sciences segment. BioPharm Consumable sales grew 9% on overall market strength and growth in single-use systems. Medical Consumables increased 7% in total. We saw a benefit from Medistad, our recent acquisition, and strength in Water products for hospitals' critical care application, partly offset by lower blood media sales. Finally, Consumables sales in Food & Beverage were flat after a very strong first quarter. Life Sciences Systems sales increased 20% in the quarter, largely due to timing of Food & Beverage projects. On the orders side, Consumables increased 13% in the quarter on strong growth in BioPharm. Systems orders increased 12%. Q2 segment gross margin decreased 180 basis points to 56.6%, largely due to the impact of transactional FX, lower systems margin and lower margins associated with Medistad. SG&A decreased 240 basis points, while R&D spend was on par with last year. The combination of these factors resulted in segment margin of 25.7%, a 60-basis-point improvement from a year ago. Turning to the Industrial segment on Slide 9. Process Consumables sales were flat in the quarter, with strength in Power Generation and Machinery & Equipment offset by ongoing weakness in Fuels & Chemicals. Aerospace Consumables decreased 12%, with Commercial and Military down similarly. As Larry said, this is largely the result of difficult year-over-year comps as Q2 of last year included large aftermarket sales and helicopter program shipments that did not repeat. MicroE Consumables sales grew 19% on continued market spend and new business wins in all regions. Systems sales decreased 9% in the quarter, mainly due to timing of capital spend in Fuels & Chemicals. Regarding orders, Consumables were up 11% in the quarter, with particular strength in MicroE and Aerospace. Systems orders were down 7% year-over-year but up nearly 40% sequentially. And book-to-bill for the quarter was 1.13. Q2 segment gross margin decreased by 50 basis points to 44.5%, largely due to the impact of transactional FX. SG&A declined 70 basis points, while R&D spend increased modestly. All-in, segment margin for the quarter improved slightly to 14.5%. Turning to Slide 10. Operating cash flow in the 6 months was $206 million compared to $89 million last year, an increase of 130%. This increase was driven by both improved working capital management in fiscal '14, particularly on the receivables side, and onetime tax payments that reduced fiscal '13 cash flow. CapEx was $35 million for the 6 months. Free cash flow was $171 million or 110% of reported net income for the 6 months, putting us solidly on track to reach our goal of 100% free cash flow conversion for the year. Significant uses of cash during the 6 months included $58 million of dividend payment and $250 million of share repurchase. Finally, on the liquidity front, our cash position stood at about $952 million as of January 31. Our cash position, net of debt, was $183 million. In the first half of fiscal '14, we see -- saw a marked improvement in cash conversion. However, we still have a lot of work to do to ensure that we have a sustainable cash conversion machine. With that, let me turn the call back to Larry. Lawrence D. Kingsley: Thanks, Akhil. So to summarize the quarter, the Life Sciences market remained strong and we continued to execute very well. MicroE is showing strength, in significant part due to the impact of the new products that we have introduced, as I mentioned. While Process Technologies is still kind of bouncing along the bottom, I'm confident that we're well positioned to take advantage of the growth that we're beginning to see in the order book there. And we remain very focused on operational and sales execution and having the necessary nimbleness to pivot quickly to markets and geographies with better growth opportunities. Now we remain focused on our fixed cost and all that is necessary to better scale our business model. And we continue to target the 35% to 40% incremental margin. That's incremental margin, again, after the R&D investment for growth. The team is already busy, together with the new members from the ATMI LifeSciences team, integrating our single-use platforms. And while we're pleased to have their products and technology, we're already seeing the benefits of their great know-how and the leadership that they bring to us. At the same time, we continue to cultivate additional acquisition opportunities on both the Life Sciences and the Industrial side of the company. And while valuations are full and attractive properties are scarce, we believe that we can successfully execute further M&A while remaining disciplined and focused on our key principles. So I'll conclude my prepared remarks with some comments on our outlook, which we've outlined on Slide 11. As I said at the outset, we're definitely on plan for the year. When we provided our fiscal '14 outlook, our expectation was that we'd see revenue growth x FX of low to mid single digits, which we continue to believe will be the case for the year. We also expected full year pro forma EPS to be between $3.30 and $3.50 per share. Since that time, 2 things have changed. We made the strategic but slightly dilutive acquisition of ATMI, and FX rates have continued to move against us. However, given the solid operating performance across the company and our strong order rate, we're tightening our EPS guidance range while maintaining our original midpoint. We now expect full year pro forma EPS to be between $3.35 and $3.45, which includes the absorption of about $0.10 associated with EPS headwind from ATMI and translational FX. So with that, we're going to open the line for questions. Operator? Stephanie?

[Operator Instructions] Your first question comes from the line of Brian Drab.

So the first question. Can we talk a little bit more about gross margin? You said that some of the pressure came from the transactional FX headwind and stronger Systems sales. I guess the transactional is coming from the yen, and I think that you mentioned that. Is there anything else, any other dynamic related to transactional we should talk about? And could you just sort of rank order the pressures on gross margin in the quarter? Which was the more important headwind? Lawrence D. Kingsley: Yes, sure. Well, in rank order, the transactional component that we spoke to was certainly the biggest adverse contributor. And the yen-dollar was the issue. It cost us about 80 bps in terms of year-over-year margin at the gross margin line. And then if you remember, I think, Brian, back from our Q1 call, we talked about anticipated adverse Systems margin as impacting our Q2, and it did. That cost us about 50 bps year-over-year. So the 2 was 130. And the offsets to that were we did get some price all-in for the quarter, and some improvement otherwise in the Consumables performance of the company and a combination of good mix and some reasonable productivity.

Brian, if I may just clarify. The Systems margin issue was not because we had more Systems sales in the quarter. It is just that the projects specifically in this quarter, which were converted into sales, had lower margin than normal. So it's not a mix issue, it's more a specific projects-related issue.

Okay. And Akhil, I guess that's specific projects probably on the Food & Beverage side?

Largely, on the [indiscernible]. Yes.

Okay, okay. And then shifting to ATMI for a minute. I believe that ATMI had said that this LifeSciences segment would be breakeven. And so I think they said around $15 million in revenue a quarter is about the breakeven point. And they do -- of course, I can see in the filings that it's $35 million or $36 million through September, on pace, maybe, to do about $50 million for the year. Can you talk about that breakeven point under Pall ownership? Is that different? And I know it's still very early. And then secondly, regarding ATMI, they had grown kind of a mid- to high-teens rate on the revenue line for 2013. Do you expect that to accelerate given some of the dynamics you talked about, Larry, the benefits of accessing your channel, et cetera? Lawrence D. Kingsley: Yes, sure. Well, I think that the way to think about it, as we inherit the business, obviously, it's not going to be dramatically different straight out of the chute. So it depends on how you think about corporate allocations on top of what was the standalone business' P&L structure. The standalone business' P&L structure isn't materially changing anytime soon. So the breakeven math is essentially the same. In terms of our view of the business, the growth profile of the business, it's a tad early to talk about, but it's not materially different than what they have been articulating. Now certainly, with the growth profile that it has, plus what we're achieving in our single-use growth overall, it's a very attractive phase. We will be integrating the businesses. So there will be some pickup in terms of leverage as we think about the fixed costs associated with the core single-use technology business that we've had, plus what ATMI brings and with the acquisitions of Medistad and things otherwise. So I think that you get to essentially breakeven GAAP-based EPS next year, and we're already, if you look at the back half of this year, looking at a kind of breakeven cash EPS assumption.

Okay. And then is it too early to say whether in fiscal '15 that this -- that you expect the ATMI acquisition to be accretive? Lawrence D. Kingsley: I wouldn't say hugely accretive.

Yes, I think, Brian, the thing to keep in mind is the intangibles amortization. So the operating performance should be good, and we should get some accretion from that, but the intangibles amortization will probably create a little bit of headwind from a pro forma gap point of view. Lawrence D. Kingsley: Maybe just to dwell on this a bit, Brian, because it's obviously an important acquisition. In the LifeSciences arena, particularly in the bioprocessing space, it's certainly a very attractive space. There is a relative scarcity of good technology and good assets. There's a kind of unique combination here between what Pall brings to the table and what ATMI brings to the table with a very nice complement of products that does give us a very nice position moving forward. And obviously, in fully transparent form, it's a pretty expensive transaction. So the 2 of those do tend to correlate pretty well. We're thrilled, frankly, with what it brings in terms of unique value to us. And the combination, I think, will be just fabulous, frankly, in terms of our ability to execute in a go-forward sense for bioprocess applications.

Your next question comes from the line of Richard Eastman with Robert W. Baird. Richard C. Eastman: Larry or Akhil, could you just -- when you talked about the gross margin impact on the business at the corporate level, at the consolidated level, I'm thinking that, given your PI mix is heavily weighted -- or more heavily weighted towards Asia, that the currency mix and transactional -- or translational FX impact on the margin profile of Pall Industrial is magnified. Is that a fair thought? Lawrence D. Kingsley: Well, in terms of the impact to PI for yen-dollar-based transactional math versus Life Science-equivalent math, it's actually fairly adversely impacting both to almost stay proportional relative to our content in Asia and our content consolidated. Richard C. Eastman: Because I'm kind of looking sequentially. And when I look at the gross margin in PI, again, I'm seeing -- we've got certainly higher sales and we've got flat kind of gross margin. And again, that's going to be currency, yen, and it's also going to be, again, this Systems issue would be somewhat magnified within PI as well?

Yes. So sequentially, Rick, if you look at Industrial's gross margin by itself, the Systems phenomena that I talked about is worth about 90 basis points negative in Q2 to Q1, right? Transaction FX is not a huge driver because yen did worsen a little bit from Q1 to Q2, but that's what made it 30 basis points. And then against that comes the offset of a better mix and slight pricing that Larry talked about. Richard C. Eastman: Okay, that makes more sense. Okay. And then also, I'm trying to put your PI Consumables order growth in some context. And normally, you would look at a double-digit Consumables growth rate in orders as a leading indicator, but I'm -- I then kind of drop below the line there and the Process side was flattish. So how do you feel about the Process business at this point? I mean, we're bouncing along the bottom. It would seem that, with a 6-month timeline to the end of the fiscal year, that we'd probably stay kind of down here and hope for some improvement late in the fiscal year for fiscal '15? Is that maybe the timeline there? Lawrence D. Kingsley: Well, not far off, Rick, is the short answer. We obviously look at it all in a lot more granularity that we don't speak to on these kinds of calls. But if you split out where the Process Technologies business is performing and where it is and through this -- a couple of areas in terms of geography, but principally in the emerging portion of Europe. We're not seeing as much activity in Fuels & Chemicals as we'd like to see right now for the Middle East. And some of that's Systems, but some of that's also Consumables. Otherwise, the business is performing pretty well, just to give you some color beyond the numbers. In terms of the order rate and how that does pertain to the leading indicator for where we see the business going, your numbers are probably good for the fiscal '14 finish. And if we continue to see good organic orders growth or if we do see better organic orders growth on a sustained basis across the globe, it'll pertain well to -- will portend well for '15 for us. Richard C. Eastman: Okay. And again, just staying on PI for the last question. But when I look at the local currency growth rate there on sales, it was actually minus 10% or declined. How did the orders look there in Europe in PI? Was that encouraging? Lawrence D. Kingsley: Similar to what I just told you. So the Process Technologies organic orders performance all-in for Europe was our -- kind of our one holdout to not great orders performance across the globe. And on the other side of the coin, Europe Life Sciences had a very strong organic orders number or performance for the quarter.

Your next question comes from Hamzah Mazari with Crédit Suisse.

Just a question on the balance sheet. It seems like the balance sheet is still running net cash. It seems pretty inefficient for a business that has low CapEx intensity, 80% Consumables mix or somewhere around there. Maybe help us understand the sense of urgency you have or nonurgency in moving to a more capital-efficient structure. I realize that a lot of large deals have already taken place in Life Sciences. It seems like most of the deals out there are tuck-ins for you. So maybe help us understand that. Lawrence D. Kingsley: Sure, Hamza. So -- I mean, we agree with you philosophically that the balance sheet has yet to really be put to work. We've got plenty of opportunity, and for that matter, we're going to generate a lot more free cash, so the opportunity gets even larger. If you do the math following ATMI, which, obviously, we just closed last week, we're just slightly net debt right now. We've got good opportunities, we think, to continue to bolt-on stuff, both in Life Sciences and also in the PI side of the house, and we will. What's most appropriate, though, I think, in this M&A environment, is to remain disciplined, very, very much so because in a frothy environment, the last thing you want to do is incur a volume price that you don't have a good return metrics opportunity around. And so I think we're kind of balanced in our approach. We're going to buy what's strategically interesting, but we're not going to -- we're not going to do stupid things. And so you have to gauge that around your urgency or lack of urgency thought process. But I'm pretty confident that we're beginning to operate the company pretty well. We've got a huge amount of internal improvement opportunity to continue to scale the model, as I said in my remarks, nicely. There's a nice fixed cost leverage opportunity on top of what is a lot of continuous improvement opportunity in front of us just to do things better organically. And we'll find good ways to put the balance sheet to work.

Okay, great. And then could you maybe give us an update on where you are in terms of cost restructuring? How much of the costs have you taken out that are structural versus what is yet to come? Is it more process-oriented in terms of the cost takeout and efficiency that's yet to come? Is the manufacturing footprint optimized, for example? Maybe give us a sense of where you are in terms of long-term structural cost takeout and restructuring. Lawrence D. Kingsley: Yes, I would say the good news is the bulk of what we've been doing, and we're still in the middle of it, is more initiative-based than process-based. So we're going at fixed costs, both within SG&A and you're seeing some of that integral to the results that we've been reporting. Plenty of opportunity, still. And I'd say we're certainly at least halfway along the path that we initially prescribed. But if you go back to what you've heard from Akhil, now 100 bps as an annual entitlement is the way to think about where we're headed for the next few years. And then on the direct costs side, both in terms of the overhead within the cost of goods line but also the variable cost-reduction opportunity, we've got lots of opportunity just for years to come there. And that becomes more process and less initiative in nature.

Great. And last question and I'll turn it over. Could you give us a sense of your competitive position within MicroE, particularly given that one of your competitors did a large deal in the space? Does that impact you positive or negative? Maybe you could just give us a sense of that. Lawrence D. Kingsley: Yes, sure, Hamzah. I mean, to be just very direct, so one of our competitors bought the other side of the ATMI business, the MicroE or semiconductor side. And obviously, we had an opportunity, as well as the rest of the world did, to look at that business. We don't view that their acquisition of that business in any way changes the competitive dynamics of what we serve within the -- what we call the MicroE space. We love our MicroE position. We have demonstrated that we can take share in a technologically challenging environment, as most of the new footprint is focused on some of the most challenging filtration applications. We're doing real well. What we don't necessarily want to do is further expose ourselves to the cyclicality of those end market dynamics. And there are some elements of the competitive dynamics for some of the -- what could have been expanded presence in that space that I didn't like. So we're pleased with the position we have in MicroE. We may do some things acquisitively, some smaller things around that position. But by and large, it's an organic execution plan for us.

Your next question comes from Isaac Ro with Goldman Sachs.

Just want to maybe spend another minute on the big picture here on your geographic kind of visibility this quarter. In Europe, I think we went through some of it, but maybe if you could just point to what you think is sustainable for the balance of this year. Where do you think you might start to see a little bit of a mean reversion to a more normalized growth rate in your various end markets in that region? And then secondly, on Asia, could you just break out China versus the rest of the region, how Asia looks? Lawrence D. Kingsley: Yes, sure. So again, if you were to say on a go-forward or leading-indicator basis, the all-in orders growth rate was quite strong, double-digit. No matter how you parse it, in local currency or even less in terms of just kind of the true organic performance, very, very strong, lead, again, by all of the typical elements: BioPharma kind of had a lift, MicroE doing really well. In terms of geographic performance, to get down to your question, pretty broad and very strong again. The outlier being portions of PI in Europe, and really more the emerging portions of Europe than the so-called developed side of Europe. But I would tell you that the maybe slightly positive surprise, from my perspective in terms of organic orders performance for the quarter, was that emerging markets globally, generally, performed quite well. And what we're seeing is, I think, our ability to pivot kind of nicely to some of the applications that are going to come out of some of the go-forward growth opportunities versus more what's been kind of infrastructure-based growth for us historically. So I think we're proving that we can pivot, at least to some degree, pretty decently in some of these markets. But they're all definitely becoming more market-driven and consumer-driven economy. With regard to what do you think in terms of normalized growth rates on a go-forward basis, we're not going to sustain high-teens or mid-teens kind of organic growth rates in many of these geographies, but I do think that we'll see pretty decent performance. And again, it'll be out of the typical culprits that have continued to outperform for us. Relative to China and how China performed, it performed quite well in the quarter. I'm not going to break out specific growth rates, but just to give you a sense of where we are, both organic orders and book-to-bill in China are quite positive for us, again, I think evidenced in the fact that we were able to slightly morph our strategy into what is a nice go-forward profile for us.

Great. That's helpful. And just to follow up on the Pharma end market, I think one of the things we've seen in the last month or so was pretty strong end-of-year budget flush from a lot of your peers in Life Sciences regarding the Pharma markets. I'm wondering the extent to which you saw it kind of similar? And just in general, if you think the drug companies are starting to open their walls a little bit more as their pipelines start to convert to successful [ph] drugs, and if you see any encouraging sort of renaissance, if you will, on R&D spending and where your products can benefit? Lawrence D. Kingsley: As you know, Isaac, we're downstream and more bioprocess than we are in the research lab. I think what you're seeing in terms of, you want to call it a renaissance, in terms of R&D spend is currently moreso impacting the research more directed spend, which we get some piece of, but we're more in the drug that's developed that's headed into kind of scale-up mode. And so we didn't see a tremendous fall-off in the back half of last year associated with Big Pharma change dynamics, and we are not seeing a huge pickup. We are seeing, maybe counterintuitively, a little bit better ongoing spend dynamics outside of the U.S. than we have within the U.S. And some of that may be correlated to where Big Pharma is spending on a variety of new products. But generally speaking, we're performing pretty well globally in the space.

Your next question comes from the line of Jeff Zekauskas with JP Morgan. Jeffrey J. Zekauskas: Has your electronics business turned the corner in that your rates of growth really seem to have stepped up this quarter? And you seem a little bit more optimistic on electronics underlying fundamentals. Lawrence D. Kingsley: Well, I think we're performing pretty well. The new products are being specified quite nicely. We're seeing some nice designing wins, so I feel pretty good in that respect in terms of execution. In terms of what's going on in the marketplace, I think it's not likely going to be the same kind of sustained longer-term growth that maybe you've seen sometimes historically out of the cyclical behavior out of the semiconductor space. And when you look at what drives the growth there, consumer product demand, at the end of the day, in a variety of applications: cars, electronics and solar devices and things of the sort. And some of that's better but not all of it. And I would say that it's, in our case, we're seeing some nice sales activity is associated with some of the new products and new production. On the other side of that equation, we're actually seeing some of the what had been new fab-intended spend. So the big fab capital investments that a couple of the guys had been making globally not mothballed but slowed, and that's an indication that they don't really need all the capacity that they thought that they were going to need going into this fiscal pickup that we're all experiencing. Jeffrey J. Zekauskas: Your SG&A expense dropped $10 million year-over-year from $206 million to $196 million. And can you analyze that $10 million drop? What was big components? I think you mentioned that there was also a bad debt expense change. What was the size of that, if that influenced this number?

Sure. That was worth about 20 basis points on a year-over-year basis. If you were to look at the bad debt, we had some accruals last year in the second quarter. And this year, actually, based on the improvements we have made in some of our receivables area, we actually had a little bit of a credit. So I think that the net difference was about 40 basis points for us. With regard to the broader question of $10 million, as you know very well, I think we were on spot to get a total of $25 million of structural savings from the initiatives that Larry had launched a couple of years ago. Of that, about $15 million was to come from SG&A for the year, and a portion of that you see in the second quarter. So I think it's a combination of those, offset by some stuff like tight controls during the quarter, helped us get to this good number. Lawrence D. Kingsley: There's not as much there as you might think in terms of just the FX translation, what ought to be help associated with SG&A, because the simple math or the simple statement is that the SG&A content in those geographies where the currency would have helped this equation isn't all that much. It's comparatively lower than our average SG&A rate. So there really wasn't much year-over-year help there associated with the FX component. Jeffrey J. Zekauskas: And then lastly, was there a gain on a sale of assets in the quarter? It looks like your -- from your funds flow statement, it looks like that, that might be the case. Then if there was, what was the size and where was it? And why was the tax rate so low on your restructuring charges? I think it was about 10%.

The tax rate on restructuring charges is consistent with what we have had. Let me get back to you on that, Jeff. But I don't think there is anything significantly abnormal. The restructuring roughly that you are looking at, the $9 million or so, the bulk of that is related to the severance charges and other restructuring costs. There's really not much of other stuff in there. But we'll look into it and get back to you if there's anything special. Jeffrey J. Zekauskas: And was there a gain in the quarter?

Not that I -- nothing significant.

Your next question comes from the line of Paul Knight with Janney Capital Markets.

I was curious on the -- the orders obviously increased a little faster on the Life Science side. What do you think the timing is for Systems? Is it a 3-, 6-month lag based on, call it, capital raised last year? When do you think we'd see a normalized growth rate on the Systems side, or is it still in the process of accelerating, I guess? Lawrence D. Kingsley: I wouldn't read too much into that. There are many cases where we either choose to participate in the Systems application or not, depending on whether or not we've got the, one, the desire to build a particular system or the capacity in-house. And if we don't have the capacity in-house, we may have a third-party integrator build it as long as it's going to use our Consumables product going forward. So I think we've talked a bit about how we think about Systems' attractiveness on a number of these calls, and I wouldn't try and correlate too much of the System growth rate in the quarter to what that dictates in terms of outlook and how long it's going to stay and anything of the sort.

And then last, when I look at the Japan, China, India mix, can you talk about China and where you think you want to be in China versus those other 3 Asian -- versus those other 2 Asian markets? Lawrence D. Kingsley: Well, in the quarter, specifically -- actually, all 3 geographies performed pretty well. And again, I don't want to break out things in too granular form. But we're pretty pleased, frankly, with how Asia picked up in the quarter. In terms of our strategy and where we play, maybe a little counterintuitive, but for us, in Japan, we still think there's a nice opportunity to grow our BioPharm business. And again, I don't want to get into too much more specificity just given competitive dynamics, but we're under way with some things there that look quite good. Obviously, the MicroE business is growing, and some of that is Japan, some of that's in China, and that's doing well, so that contributes accretively to the growth rate for those 2 countries. We saw a pretty good performance out of Power Gen in China, in particular, both in the more traditional forms of Power Gen, the fossil fuel base, but also some of the other areas of Power Gen. So that was a nice area of contributing growth for us in China. India is still broadly performing quite well for us. Clearly, we're taking share in India, and it's both Life Science and Industrial. And I would not get into too much more specificity relative to things that we saw in the quarter, but we're expanding nicely there. So if you think about resource allocation and you're making decisions around one of those country markets versus the other, the good news for us is we think all 3 markets represent good opportunity. But one that's got to continue to be, I think, a strong area of focus for us to make sure that we transition effectively from where we had been, particularly in the PI side, is China as we move from traditional infrastructure and base materials applications over to those that are going to be more consumer-market driven. And again, as I said before, some good evidence of the fact that we're beginning to do that, but there's still a lot of legwork ahead of us, though.

Your next question comes from Derik De Bruin with Bank of America Merrill Lynch.

A couple of housekeeping questions and then I've got a couple of broader ones. So first of all, and if I missed this, my apologies, what was the specific M&A contribution to revenues in the quarter? And what's your guidance for that contribution for the rest of the year?

In this quarter, there was only Medistad on a year-over-year basis which made -- had some kind of an impact, and that was roughly about $5 million in the quarter. Going forward, in the -- starting Q2, we'll pick up ATMI since we just closed the transaction -- Q3, sorry, Q3. We'll pick up about $10 million of ATMI in Q3 and another $15 million in Q4 based on the run rate that I think Brian mentioned before, and that will be incremental to what we've continued to get from Medistad, which is about $5 million to $6 million a quarter.

Great, that's very helpful. On the ATMI, when you look at the combination of the ATMI plus Pall business and you sort of compare that with the other competitors in the single-use space, Sartorius and Millipore, can you sort of talk about how sort of that market breaks down in terms of share and in terms of, like, where are -- I guess you can talk maybe about where your major customers are and where you see some of the opportunities for improving? Lawrence D. Kingsley: Derik, we can, but we won't.

All right. Fair enough, but I'll do a final one. I've got a number of -- and that's who's asking questions about look at the Municipal Water business, particularly as it relates to potential for pollution control in China. Can you sort of talk about where you're sort of seeing this for Water and, specifically, your exposure to sort of that environmental market in China? Lawrence D. Kingsley: Yes, sure. There is -- it's interesting, there is more value for sure being placed on clean water in China. We don't have -- and I don't want to get into all the long explanation, but we don't have the exact same product scope available to us in China that we do in some of the rest of the world. So I don't think that Water -- Municipal Water in China will be a huge growth contributor for us in the short term. We are looking at what we think there are some nice alternative technologies to make sure that we participate in that. But some of that's too early for public commentary.

Your last question comes from the line of Jon Groberg with Macquarie. Jonathan P. Groberg: So I guess, Larry, I have 2 -- just kind of 2 broader questions. One, the comments around M&A and the comments earlier on the balance sheet, you're saying valuations are full but you still have a lot of confidence in your ability to execute on some good deals. Should we -- I mean, is ATMI a good proxy for the types of deals that you're kind of looking to do in terms of the size and valuation and whatnot? Or I'm just trying to get a sense as to what gives you the confidence, given where we are from a valuation standpoint and yet the limited growth, that you'll be able to find some of the deals that are attractive? Lawrence D. Kingsley: Two different models that pertain to Life Sciences -- or really BioPharma than Life Sciences as it relates to what we value there and how much we'll pay if you get right down to it versus, I would call, the rest of the separation science space. I wouldn't use ATMI as a prototypical acquisition. And as I said, ATMI is very unique in its fit with us. We bring the channel, the sales force, the ability to go global, complementary technology to what they have, but they bring some very strong technology that is recognized throughout the space. So we paid a lot for it, is the frank answer. We certainly wouldn't be looking at that as a prototypical acquisition profile for us, though, in the short term. And the bigger comment that is appropriate to make has to do more with the, obviously, the desire to put the balance sheet to work in a fruitful sense but not do it in an irresponsible sense given the -- kind of the current nature of the M&A markets. So we're going to be, I think, disciplined, but we're certainly going to find ways to make good combinations, both top line- and cost synergy-based opportunities that we'll do. In terms of size of acquisition, I don't know that I'd, again, say that the ATMI acquisition is prototypical or somewhat indicative of what we do. There's some bigger ones out there in the space that we like, and there's some other smaller ones that I think will make a lot of sense for us, so there is a range. Jonathan P. Groberg: Okay. And then as a follow-up maybe a little bit on kind of the positioning of ATMI. So I'm just -- a lot of investors look out there and look at the significant window that is open within the biotech universe coming from these smaller and mid-cap names, many have gone [indiscernible] seeing their share prices rise quite significantly, and the thought process is, is all that money to spend? And a lot of this will be in early-stage compound [indiscernible] research, as you say, kind of moving up and scaling up their early-stage compounds. Can you maybe talk about, one, I guess when you -- how you look at all the money that's been raised? And it's a lot different than it was 4 or 5 years ago. What your competitive position specifically within biotech is versus some of the more classic pharma that you've alluded to in Europe where you've had a lot of success? Lawrence D. Kingsley: Sure. Well, I would say, it's not so much biotech versus classic pharma. If you look at where we participate more typically, it's a combination of the bioprocess that's biotech, but also in vaccine-based applications. We don't typically have as much opportunity in a lot of the rest of some of the Big Pharma formulation applications. What we do see, though, now with the advent of more capital flowing into the biotech space, is the need for somebody to do a better job around full systems deployment. And this idea of bringing a suite of solutions to the space better than anyone else is what I think is incumbent upon us. If you think about the world that we play, we started in filtration. We've made some small acquisitions, frankly, that we haven't talked so much about, key technologies that broadened our capability set. We've invested internally organically a great deal, particularly in the single-use side of biotech. We think we now have, with the inclusion of both the Medistad, which brings some key know-how, some key manufacturing technology, plus ATMI, just tremendously improves -- step function to improve what we can bring to the space. But there's still a fair amount of execution to make sure that it all works well together and it's affordable and everything else. Thankfully, we've already got the Systems knowledge. We've had that inherent to how we've been running the business for quite some time. So it comes down to how can we facilitate -- how can we make it easier for some of the new money that's investing in the space, particularly in the midsized group of biotech potential customers, how can we make it easier for them to step up into production volume? And that's what the single-use technologies, more broadly speaking, enable. So I think playing there is key. The investments we've made are really good ones, and I think that it will bode well for quite some time to come. But we've still got a lot of work to do to make it all happen. Jonathan P. Groberg: And so have you -- Larry, just to be clear, have you started seeing any of that money trickle through yet? Or maybe another way of asking is, the percent of yourselves in bioproduction, what percent is single-use today and kind of where do you see that going 5 years from now as a percent of the business? Lawrence D. Kingsley: I'm not going to get into terribly specific comments. But I will tell you that, call it, classical large-volume biotech production, the stainless variety, is still growing very nicely. And we expect it to continue to grow very nicely. Single-use is growing kind of off the charts, really, really high-growth. And we want to participate in both. And for that matter, there's going to be a number of hybrid systems for a good while to come. And we play well with those. So without giving you too much detail, there's a very strong need. We've made the right strategic moves. We've got the position we need to go after the single-use space, but the large-volume bioprocess applications that are more filtration-centric will be a nice contributor for a very long period of time for us.

There are no further questions at this time, sir. Lawrence D. Kingsley: Okay, great. Well, Stephanie, thank you. Thank you all for joining. We definitely look forward to speaking to you throughout the quarter and again at the end of the quarter. Thanks for joining today.

Thank you. This concludes today's conference call. You may now disconnect.