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Pall Corporation
(PLL - Analyst Report) has renewed a five-year $500 million revolving credit facility which was due to mature in June 2011. The interest rate on withdrawals from the credit line has been fixed on the lower side given the low interest-rate scenario and ample availability of credit.
 
Pall has recently refinanced its outstanding 6% senior notes due in 2012 aggregating to $280 million. The proceeds of these senior notes will be due in 2020.
 
Pall enjoys above-average financial returns and reasonable growth prospects, attributable to a highly engineered technology, reliable global distribution, a high share in niche markets, long and close working histories with customers, few competitors and solid product quality supplemented by technical service.
 
The company is considered to be the largest player in the filtration/separation industry based on its revenues and approximately 7% market share. Management’s efforts of reducing overall square footage by 20% and head count by 10% are expected to deliver $40 million in annualized savings and drive expansion in margins.
 
In the long run, Pall will likely benefit from several secular trends such as global infrastructure growth, increasing demand for clean and potable water and continued steady growth in medical and pharmaceutical markets.
 
Changes in product mix and product pricing may affect Pall’s operating results, particularly with the expansion of the systems business. The company experiences significantly longer sales cycles in the systems business, with less predictable revenues and no certainty of future revenue streams from related consumable product offerings and services.
 
The company may not be able to achieve the savings anticipated from its cost reduction and margin improvement initiatives.
 
Pall Corporation manufactures and markets filtration, purification and separation products and integrated systems solutions worldwide. The company’s Life Sciences segment offers technologies that facilitate the process of drug discovery, development, and production used in laboratories, pharmaceutical and biotechnology industries and health care.
 
We currently have a Neutral recommendation on Pall Corporation.

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