Pall Corporation (NYSE:PLL) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Kevin Maczka – BB&T Capital Markets: Larry, if I could just start with what you commented on at the end of your remarks there on the guidance, just trying to get a sense for how conservative or not conservative that initial view is on EPS? I think you said that you did achieve your $50 million cost takeout goal for ’13 and you are still on track for $25 million in ’14. So I guess, if we exclude that $25 million on low-single-digit revenue in ’14, it doesn’t look like that’s implying the normal kind of strong 30% plus incrementals that I think you’ve described in the past. Is that the proper way to think about it? I guess, why would that not be particularly, if Systems mix maybe is getting more favorable?
Lawrence D. Kingsley – President and CEO: It’s a fair question, Kevin. I think that let’s take a look at the big picture first. When you think about the current environment, first on a macro basis, there is still a fair number of mixed indicators out there as to how growth opportunity there is. For us, if you look at relative to history, against the emerging world, we are not going to see the same kind of outpaced emerging world growth going forward that we have, at least not in the very short-term. We’ve taken a pretty muted view, I would say in total if you look at all the emerging country and economies in aggregate. Then you look at the kind of what the mature world is contributing, as we’ve said this several times during the prepared remarks, we don’t see that there is a huge capacity expansion basis for spend. So, we do think that the top line opportunity is still yet to be determined. We may be taking a slightly conservative approach. So that’s the top line environment. To your point, we are now operating the Company the way that we should be. We’ve got our cost management in place, we’re beginning to earn the productivity that we’ve been talking about for a number of quarters on the operations side. We do feel pretty confident about our ability to earn incremental margin and whatever organic growth we produced. So, when we factor in admittedly so, a kind of mixed view of the top line, but some reasonable confidence on the bottom line. There – again, excluding some of the thinking around what happens with FX, both transactional and translational impact, we netted to the stated range that you see there. The good news is, any incremental growth beyond what’s inherent to the implications that are stated on Slide 10, should convert very well, but I think what we’ve said by way of influence is nothing else is that there is good conversion capability in the Company at this point.
Akhil Johri – Chief Financial Officer: If I may, Kevin, also just to – the math would suggest that our incremental margin for 2014 is about 50% including the benefit of these cost reduction actions. So I think organically we are talking about the range of 35% to 40% excluding the cost reduction benefits…
Kevin Maczka – BB&T Capital Markets: Maybe if I could ask one more, you talked about Systems, you’ve talked about it for a number of quarters. It was up, big in Life Science and I am wondering two things. If you can maybe talk about how much that negatively impacted the margins, that growth in Life Sciences’ mix? Then going forward, Larry, you’ve talked about it becoming a smaller, more profitable piece of the business. Can you just maybe help us frame that a little bit for next year? Should we see Systems dollars down substantially as you are more disciplined, if you will, about how you take those orders?
Lawrence D. Kingsley – President and CEO: I would again step one step back and think about the big picture as to how you might model the business looking forward. First, Systems historically for us have been between kind of 12% and 15% of total sales. Irrespective of what System mix we’ve seen within a given year, Systems always has a fairly dilutive impact to our margin rate in the neighborhood of 20 points when you think it average to average Systems to Consumables. We’ve talked on a number of calls about the fact that the Systems business is an important business for us. It’s a strategic business. It’s one that for three of our sub-segments, we will continue to certainly pursue and we will generate more revenue there, but they all need to have the important criteria. We said it again in the prepared remarks that they generate an aftermarket opportunity for us, ideally in the form of the filter devices that we sell as our core Consumables. We hadn’t seen that. As we continue to peel the onion though the course of fiscal year ’13, we found that there were quite a few Systems opportunities that were either one-off by nature and not of appropriate margin, or two, we didn’t see the kind of the recurring revenue opportunity by way of a modular approach that we would want to take for the future. We’re not a business that wants to go after just one-off opportunities by way of our model and our strategy. We’re one that wants to go after recurring revenue and ideally again in the form of the Consumable strength. Now, in terms of the financial impact to Systems in the quarter, I don’t want to go there too specifically, but now it did have a reasonable impact as of associated margin from a mixing contribution. I mean now of the same kind of proportion that I just spoke about as to what we’ve seen more generally. There were some even lower margin Systems opportunities within that higher Systems sales. So it did pretty adversely contribute to both the gross margin rate and the bottom line in the quarter.
Richard Eastman – Robert W. Baird: Just a couple of quick questions. One is, can you just help us a little bit? When I look at the gross margin and I’m really just looking year-over-year and in particular in Pall Life Sciences and I’m trying to get a sense of gross margin overall was down 40 basis points, I believe, year-over-year in Life Sciences and I’m just trying to get a sense of why that number and should that number drift higher going forward. We have prices a positive, we have consumable growth, at the same time FX and I think Food & Beverage probably was a negative draw, but I’m still surprised that the price in the Consumables growth in all of Pall Life Sciences didn’t provide us a better year-over-year for the full year gross margin. Should that be the case going forward?
Akhil Johri – Chief Financial Officer: Great question, Richard. I think you had your finger on a couple of the points. One is FX clearly, that had a significant impact in both Life Sciences and Industrials, particularly yen, right. I mean I think we’ve talked about for the year, the transactional FX impact that we have experienced in our gross margin line, fourth quarter was a little more accentuated because of the yen problem. Also the other point, which is not quite as visible is as a result of the Blood divestiture we’ve had some media or raw material sales which are at very, very low-margin, which are also included in the Medical business of the Life Sciences and that brings the margin down as well. So, I think the FX phenomena will probably continue again in 2014 and we’ve baked that into the plan. The effect of the raw material sales will come down over time and we would expect to see some improvement in the gross margin in the Life Sciences.
Richard Eastman – Robert W. Baird: We’re still capturing a 100 bps plus in price in Life Sciences?
Akhil Johri – Chief Financial Officer: Slightly below that.
Lawrence D. Kingsley – President and CEO: Not quite that in the quarter or the year, Rick, but it really does, I think, first and foremost come down to the transactional impact, i.e. the cost of goods impact from the dollar yen payer and as Akhil said and the other thing that’s in there from a op margin perspective for Life Science is the increase in R&D spend, which has a fairly large impact in the quarter, Akhil, is it 40 or 50 bps?
Akhil Johri – Chief Financial Officer: 50 basis points.
Lawrence D. Kingsley – President and CEO: 50 bps EBIT line.
Richard Eastman – Robert W. Baird: Then, just two questions on the Pall Industrial. One is, can you just give us a sense of how big does the muni water business, I guess remain or how big is it? How much was it down for the year? Was that business…?
Lawrence D. Kingsley – President and CEO: Again, I hate to slice and dice to that degree, but just to say substantially. There is a couple end markets if you look at where Systems was most impacted, from a top line standpoint; the first would be municipal water, most of that’s in North America. Second, this is maybe telling and interesting, we do a fair amount of our Systems revenue or had historically in some specific chemicals applications and if you look at just what we had done historically in – for instance polyurethane or the components that go into polyurethane, which is construction and furniture making and things of this sort, down almost equally substantially and a lot of that being lack of Asia content. So, if you look at water and that in combination, that’s almost all of the contribution to the delta that we’re talking about. Again, some of that strategic exit, some of that’s not wanting to compete on a price basis. It doesn’t make sense, if there is no recurring revenue opportunity.
Richard Eastman – Robert W. Baird: Just related to that, we are seeing quite a few, U.S. at least nuclear plant shutdowns and some of the relicensing is either held up or some the relicense applications have been canceled. So the question I have, I know Pall is a big player in that nuclear, water space. Is that big enough to have an impact here as we go forward in the energy piece?
Lawrence D. Kingsley – President and CEO: It’s a slight headwind, for sure, we do — to your point do well in power generation, in nuclear globally and if plants shutdown at a fast pace globally, then yeah, in aggregate, it could have an impact to us as we look forward. The number of plants that have been announced, that are going to shut their doors in the U.S. and as a percentage of the global content, isn’t huge. Again, the dynamics globally of energy costs, natural gas versus other forms of fossil fuel and other alternative fuels isn’t as dramatic going forward as it is here in the State. So I don’t think you can be too concerned about this at this point.