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PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands, except per share data)
(Unaudited)

     Intangible assets, net, consist of the following:

     Amortization expense for these intangible assets for the three and nine months ended April 30, 2004 was $2,374 and $6,392, respectively. Amortization expense for the three months and nine months ended May 3, 2003 was $2,051 and $5,947, respectively. Amortization expense is estimated to be approximately $1,437 for the remainder of fiscal 2004 and $5,900 in 2005, $5,600 in 2006, $5,500 in 2007, $4,400 in 2008 and $4,000 in 2009.

NOTE 4 – OTHER NON-CURRENT ASSETS

     At April 30, 2004, the Company owned 6,175 shares of V.I. Technologies, Inc. (“VITEX”) at an adjusted cost basis (original cost less any impairment losses previously recognized) of $1.27 per share, or $7,815. The Company’s investment in VITEX has been recorded at the April 30, 2004 fair market value of $1.14 per share, or $7,039, in the accompanying condensed consolidated balance sheet. The market price of VITEX shares has been extremely volatile since October 31, 2003 with a price as low as $.55 and as high as $2.57 per share. This volatility appeared to be related to the set back of one of two Phase III clinical trials and VITEX’s cash position at that time. Since January and February of 2004, when VITEX raised cash totaling $14,900 via the sale of common stock, the stock price has become less volatile.

NOTE 5 – PRODUCT WARRANTY

     The Company warrants its products against defect in design, materials and workmanship over various time periods. Warranty costs are recorded based upon experience. The warranty accrual as of April 30, 2004 and August 2, 2003 is immaterial to the consolidated financial position of the Company and the change in the accrual for the current quarter and the first nine months of fiscal 2004 is immaterial to the Company’s consolidated results of operations, cash flows or financial position.

NOTE 6 – TREASURY STOCK

     In October 2003, the Company’s Board of Directors authorized and announced the expenditure of up to $200,000 to repurchase shares of the Company’s common stock. The Company’s shares may be purchased over time, as market and business conditions warrant. There is no time restriction on this authorization. During the third quarter of fiscal 2004, we purchased 1,878 shares in open-market transactions at an aggregate cost of $45,000 with an average price per share of $23.97. Therefore, $155,000 remains to be expended under the current stock repurchase program. The Company did not purchase treasury stock during the first six months of fiscal 2004. Repurchased shares are held in treasury for use in connection with the Company’s stock plans and for general corporate purposes.

     During the three and nine month periods ended April 30, 2004, 550 and 2,223 shares, net of shares traded in, were issued for the Company’s stock plans. At April 30, 2004, the Company held 2,940 treasury shares.

NOTE 7 – CONTINGENCIES AND COMMITMENTS

     In January 2004, the Company increased its environmental liabilities by $11,500 as a result of a change in the estimated duration and costs of the remediation effort at the Ann Arbor, Michigan facility of the Company’s subsidiary Gelman Sciences.

     On May 12, 2004, the City of Ann Arbor filed a lawsuit against Gelman Sciences in Washtenaw County Circuit Court. The City’s suit seeks damages, including the cost of replacing a municipal water supply well allegedly affected by the 1,4-dioxane groundwater contamination, as well as injunctive relief in the form of an order requiring Gelman Sciences to remediate the soil and groundwater beneath the City. The contamination levels allegedly detected in the municipal well at issue, however, are well below applicable cleanup standards and the Company will vigorously defend against the claim.

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