Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeff Zekauskas – JP Morgan.
Jeff Zekauskas – JP Morgan
Can you talk about your outlook for your aerospace business both on the commercial and the military side in the light of such high fuel costs?
Eric Krasnoff
It’s really a double edged sword as far as fuel costs. On the one hand we see some carriers reducing their fleets or retiring older aircraft. On the other hand we see the drive for the newer more fuel efficient planes is continuing. Talking with our key OEM such as Boeing we see that their expectation for production has not really been impacted over the last few months with the higher fuel costs. On the military side we don’t see an impact at all.
Jeff Zekauskas – JP Morgan
In your opinion you expect to see continued strong progress in aerospace over the next 12 months?
Eric Krasnoff
We certainly do, yes.
Lisa McDermott
We would expect to see aerospace be in the mid single digit or high single digit growth.
Operator
Your next question comes from Dan Leonard – First Analysis.
Dan Leonard – First Analysis
My one question is on gross margin. Eric you offered up a target of 49% to 50% gross margin for fiscal year 2009 originally. Given all the moving pieces, all the inflationary pressures, systems mix and foreign currency do you think that target is still achievable?
Eric Krasnoff
No, I think I said that in the last couple of sentences that we think we’re still going to see progress but we’ll be a little bit short of that target in ’09. It’s specifically related to the overwhelming success of the systems business. Systems is now 12% of Pall Corporation and we did not envision that five years ago.
Dan Leonard – First Analysis
Do you expect the Systems mix to continue to grow or do you think it will remain flat about 12%.
Eric Krasnoff
We think it will be steady and perhaps even come down a couple of percent over the next few years.
Lisa McDermott
Although we do believe we will hit the operating margin, the target will be in the range of the 15.5% to 17%.
Operator
Your next question comes from David Chung – Lehman Brothers.
David Chung – Lehman Brothers
I had a question about pricing, you made comments that you had pricing benefit in both life sciences and in the industrial segments. Could you talk a little bit more about some of your broader pricing initiatives and how that might be affecting your operating margins moving forward?
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