10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2008 OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO _________________.

Commission File Number 1-7891

DONALDSON COMPANY, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-0222640
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1400 West 94th Street
Minneapolis, Minnesota 55431
(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (952) 887-3131

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.   Yes x   No o   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company) Accelerated filer o
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o   No x   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $5 Par Value – 77,845,522 shares as of April 30, 2008.

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Thousands of dollars, except share and per share amounts)
(Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2008			2007			2008			2007
Net sales	$	587,760		$	483,988		$	1,625,099		$	1,394,147
Cost of sales		399,494			334,166			1,100,784			959,243
Gross margin		188,266			149,822			524,315			434,904
Operating expenses		124,744			99,649			346,379			288,163
Operating income		63,522			50,173			177,936			146,741
Other income, net		(2,567	)		(1,889	)		(4,589	)		(5,796	)
Interest expense		4,239			4,181			12,555			10,298
Earnings before income taxes		61,850			47,881			169,970			142,239
Income taxes		15,863			7,734			46,590			34,812
Net earnings	$	45,987		$	40,147		$	123,380		$	107,427
Weighted average shares outstanding		78,633,945			79,922,357			79,406,931			80,672,942
Diluted shares outstanding		80,525,835			81,826,193			81,398,771			82,671,646
Basic earnings per share	$	.58		$	.50		$	1.55		$	1.33
Diluted earnings per share	$	.57		$	.49		$	1.52		$	1.30
Dividends paid per share	$	.11		$	.09		$	.31		$	.27

See Notes to Condensed Consolidated Financial Statements.

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DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars, except share amounts)
(Unaudited)

	April 30, 2008			July 31, 2007
ASSETS
Current Assets
Cash and cash equivalents	$	53,277		$	55,237
Accounts receivable, less allowance of $7,992 and $6,768		419,849			357,341
Inventories		260,462			201,221
Prepaids and other current assets		74,544			59,845
Total current assets		808,132			673,644
Property, plant and equipment, at cost		886,093			796,364
Less accumulated depreciation		(480,329	)		(431,931	)
Property, plant and equipment, net		405,764			364,433
Goodwill		133,270			124,607
Intangible assets		47,291			46,301
Other assets		119,088			110,032
Total Assets	$	1,513,545		$	1,319,017
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	108,737		$	123,114
Current maturities of long-term debt		32,899			33,667
Trade accounts payable		196,874			173,862
Other current liabilities		159,386			128,301
Total current liabilities		497,896			458,944
Long-term debt		177,362			129,004
Deferred income taxes		35,179			37,624
Other long-term liabilities		73,416			68,747
Total Liabilities		783,853			694,319
SHAREHOLDERS’ EQUITY
Preferred stock, $1 par value, 1,000,000 shares authorized, no shares issued		—			—
Common stock, $5 par value, 120,000,000 shares authorized, 88,643,194 issued		443,216			443,216
Retained earnings		493,723			387,257
Stock compensation plans		23,385			20,821
Accumulated other comprehensive income		119,489			70,008
Treasury stock, at cost – 10,704,214 and 9,500,372 shares at April 30, 2008 and July 31, 2007, respectively		(350,121	)		(296,604	)
Total Shareholders’ Equity		729,692			624,698
Total Liabilities and Shareholders’ Equity	$	1,513,545		$	1,319,017

See Notes to Condensed Consolidated Financial Statements.

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DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)
(Unaudited)

	Nine Months Ended April 30,
	2008			2007
OPERATING ACTIVITIES
Net earnings	$	123,380		$	107,427
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		41,850			35,498
Changes in operating assets and liabilities		(53,541	)		(66,518	)
Tax benefit of equity plans		(6,588	)		(5,041	)
Stock option expense		3,762			3,127
Other, net		(5,050	)		(27,665	)
Net cash provided by operating activities		103,813			46,828
INVESTING ACTIVITIES
Net expenditures on property and equipment		(52,109	)		(52,933	)
Acquisitions, investments and divestitures, net		(2,475	)		(40,299	)
Net cash used in investing activities		(54,584	)		(93,232	)
FINANCING ACTIVITIES
Purchase of treasury stock		(69,284	)		(61,890	)
Proceeds from long-term debt		50,140			1,036
Repayments of long-term debt		(5,785	)		(5,652	)
Change in short-term borrowings		(17,807	)		125,641
Dividends paid		(24,428	)		(21,659	)
Tax benefit of equity plans		6,588			5,041
Exercise of stock options		5,672			5,045
Net cash provided by (used in) financing activities		(54,904	)		47,562
Effect of exchange rate changes on cash		3,715			1,584
Increase (decrease) in cash and cash equivalents		(1,960	)		2,742
Cash and cash equivalents - beginning of year		55,237			45,467
Cash and cash equivalents - end of period	$	53,277		$	48,209

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Donaldson Company, Inc. and subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Certain amounts in prior periods have been reclassified to conform to the current presentation. The reclassifications had no impact on the Company’s net earnings or shareholders’ equity as previously reported. Operating results for the three and nine month periods ended April 30, 2008 are not necessarily indicative of the results that may be expected for future periods. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.

Note B – Inventories

The components of inventory as of April 30, 2008 and July 31, 2007 are as follows (thousands of dollars):

	April 30, 2008		July 31, 2007
Materials	$	106,239	$	87,490
Work in process		29,046		19,793
Finished products		125,177		93,938
Total inventories	$	260,462	$	201,221

Note C – Accounting for Stock-Based Compensation

Under Statement of Financial Accounting Standards (SFAS) No. 123R, Share Based Payment – Revised 2004, stock-based employee compensation cost is recognized using the fair-value based method for all new awards granted after August 1, 2005. Compensation costs for unvested stock options and awards that were outstanding at August 1, 2005, are recognized over the requisite service period based on the grant-date fair value of those options and awards as previously calculated under the pro-forma disclosures under SFAS 123. The Company determined the fair value of its option awards using the Black-Scholes option pricing model. The following assumptions were used to value the options granted during the nine months ended April 30, 2008 (there were no options granted during the three months ended April 30, 2008): range of 3 months to 8 year expected life; expected volatility range of 15.2 percent to 21.7 percent; risk-free interest rate range of 2.9 percent to 4.2 percent and annual dividend yield of 1.0 percent. The expected life selected for options granted during the period represents the period of time that the options are expected to be outstanding based on historical data of option holder exercise and termination behavior. Expected volatilities are based upon historical volatility of the Company’s stock over a period at least equal to the expected life of each option grant. Option grants are priced at the fair market value of the Company’s stock on the date of grant. The weighted average fair value for options granted during the nine months ended April 30, 2008 and 2007 was $10.75 per share and $7.87 per share, respectively. For the three months and nine months ended April 30, 2008, the Company recorded pretax compensation expense associated with stock options of $0.4 million and $3.8 million, respectively, and recorded $0.2 million and $1.4 million of related tax benefit, respectively. For the three months and nine months ended April 30, 2007, the Company recorded pretax compensation expense associated with stock options of $0.3 million and $3.1 million, respectively, and recorded $0.1 million and $1.2 million of related tax benefit, respectively.

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The following table summarizes stock option activity during the nine months ended April 30, 2008:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at July 31, 2007		5,744,275		$	23.09
Granted		447,703		$	42.88
Exercised		(721,672	)	$	20.73
Canceled		(10,781	)	$	26.03
Outstanding at April 30, 2008		5,459,525		$	25.02

The total intrinsic value of options exercised during the nine months ended April 30, 2008 and 2007 was $16.1 million and $17.4 million, respectively.

The following table summarizes information concerning outstanding and exercisable options as of April 30, 2008:

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$5 to $15		1,099,192		1.85	$	11.69		1,099,192	$	11.69
$15 to $25		1,366,773		4.05	$	18.02		1,366,773	$	18.02
$25 to $35		2,359,038		5.94	$	31.13		2,183,225	$	30.91
$35 and above		634,522		9.28	$	40.48		368,738	$	41.12
		5,459,525		5.03	$	25.02		5,017,928	$	23.94

At April 30, 2008, the aggregate intrinsic value of shares outstanding and exercisable was $101.6 million and $98.8 million, respectively.

As of April 30, 2008, there was $3.2 million of total unrecognized compensation cost related to non-vested stock options granted under the 2001 Master Stock Incentive Plan. This unvested cost is expected to be recognized during the remainder of fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011.

Note D – Net Earnings Per Share

The Company’s basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company’s diluted net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares and dilutive shares relating to stock options, restricted stock and stock incentive plans. Certain outstanding options were excluded from the diluted net earnings per share calculations because their exercise prices were greater than the average market price of the Company’s common stock during those periods. For both the three and nine months ended April 30, 2008 there were 228,548 options excluded from the diluted net earnings per share calculation. For both the three months and nine months ended April 30, 2007 there were 10,000 options excluded from the diluted net earnings per share calculation.

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The following table presents information necessary to calculate basic and diluted net earnings per common share (thousands, except per share amounts):

	Three Months Ended April 30,				Nine Months Ended April 30,
	2008		2007		2008		2007
Weighted average shares outstanding basic		78,634		79,922		79,407		80,673
Diluted share equivalents		1,892		1,904		1,992		1,999
Weighted average shares outstanding – diluted		80,526		81,826		81,399		82,672
Net earnings for basic and diluted earnings per share computation	$	45,987	$	40,147	$	123,380	$	107,427
Net earnings per share – basic	$	.58	$	.50	$	1.55	$	1.33
Net earnings per share – diluted	$	.57	$	.49	$	1.52	$	1.30

Note E – Shareholders’ Equity

The Company reports accumulated other comprehensive income as a separate item in the shareholders’ equity section of the balance sheet.

Total comprehensive income and its components are as follows (thousands of dollars):

	Three Months Ended April 30,					Nine Months Ended April 30,
	2008		2007			2008		2007
Net earnings	$	45,987	$	40,147		$	123,380	$	107,427
Foreign currency translation gain		22,675		17,254			49,167		23,463
Net gain (loss) on hedging derivatives, net of deferred taxes		291		(297	)		69		192
Reduction in pension liability, net of deferred taxes		56		—			245		—
Total comprehensive income	$	69,009	$	57,104		$	172,861	$	131,082

Total accumulated other comprehensive income and its components at April 30, 2008 and July 31, 2007 are as follows (thousands of dollars):

	April 30, 2008			July 31, 2007
Foreign currency translation adjustment	$	130,556		$	81,389
Net loss on hedging derivatives, net of deferred taxes		(138	)		(207	)
Pension liability, net of deferred taxes		(10,929	)		(11,174	)
Total accumulated other comprehensive income	$	119,489		$	70,008

During the third quarter of fiscal 2008, the Company repurchased 0.5 million shares for $20.7 million at an average price of $41.35 per share. The Company repurchased 1.7 million shares for $69.3 million at an average price of $40.67 per share during the first nine months of fiscal 2008. As of April 30, 2008 the Company had remaining authorization to repurchase up to 2.3 million shares pursuant to the current authorization.

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Note F – Segment Reporting

The Company has two reportable segments, Engine Products and Industrial Products, that have been identified based on the internal organization structure, management of operations and performance evaluation. Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments, interest income and expense and non-operating income and expenses. Segment detail is summarized as follows (thousands of dollars):

	Engine Products		Industrial Products		Corporate and Unallocated			Total Company
Three Months Ended April 30, 2008:
Net sales	$	324,992	$	262,768		—		$	587,760
Earnings before income taxes		43,456		25,997		(7,603	)		61,850
Three Months Ended April 30, 2007:
Net sales	$	276,660	$	207,328		—		$	483,988
Earnings before income taxes		35,581		17,801		(5,501	)		47,881
Nine Months Ended April 30, 2008:
Net sales	$	902,488	$	722,611		—		$	1,625,099
Earnings before income taxes		115,279		70,429		(15,738	)		169,970
Assets		614,229		581,193		318,123			1,513,545
Nine Months Ended April 30, 2007:
Net sales	$	793,924	$	600,223		—		$	1,394,147
Earnings before income taxes		102,125		51,135		(11,021	)		142,239
Assets		532,532		504,377		264,035			1,300,944

There were no Customers over 10 percent of net sales for the three and nine months ended April 30, 2008. There were no Customers that made up 10 percent or more of net sales for the three months ended April 30, 2007. Sales to one Customer accounted for 11 percent of net sales for the nine months ended April 30, 2007. There were no Customers over 10 percent of gross accounts receivable as of April 30, 2008 and 2007.

Note G – Goodwill and Other Intangible Assets

The Company’s most recent annual impairment assessment for goodwill was completed during the third quarter of fiscal 2008. The results of this assessment showed that the fair values of the reporting units to which goodwill is assigned continue to be higher than the book values of the respective reporting units, resulting in no goodwill impairment. The Company has allocated goodwill to its Industrial Products and Engine Products segments. The current year addition to the Industrial Products segment is a result of the acquisition of LMC West, Inc. on February 2, 2008. Pro forma financial results are not presented as the acquisition is not material to the Company’s financial results. Following is a reconciliation of goodwill for the nine months ending April 30, 2008 (thousands of dollars):

	Engine Products		Industrial Products		Total Goodwill
Balance as of August 1, 2007	$	17,912	$	106,695	$	124,607
Acquisition activity		—		723		723
Foreign exchange translation		1,137		6,803		7,940
Balance as of April 30, 2008	$	19,049	$	114,221	$	133,270

As of April 30, 2008 other intangible assets were $47.3 million, a $1.0 million increase from the balance of $46.3 million at July 31, 2007. The increase in other intangible assets is due to acquisition activity and foreign exchange translation partially offset by amortization.

Note H – Guarantees

The Company and its partner, Caterpillar, Inc., in an unconsolidated joint venture, Advanced Filtration Systems Inc., guarantee certain debt of the joint venture. As of April 30, 2008, the joint venture had $18.0 million of outstanding debt of which the Company guarantees half.

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The Company estimates warranty costs using standard quantitative measures based on historical warranty claim experience and evaluation of specific Customer warranty issues. Following is a reconciliation of warranty reserves for the nine months ended April 30, 2008 and 2007 (thousands of dollars):

	April 30, 2008			April 30, 2007
Beginning balance	$	8,545		$	8,789
Accruals for warranties (including changes in estimates)		5,983			5,811
Less settlements made during the period		(2,151	)		(5,432	)
Ending balance	$	12,377		$	9,168

At April 30, 2008, the Company had a contingent liability for standby letters of credit totaling $18.5 million that have been issued and are outstanding. The letters of credit guarantee payment to third parties in the event the Company is in breach of specified bond financing agreement and insurance contract terms as detailed in each letter of credit. At April 30, 2008, there were no amounts drawn upon these letters of credit.

Note I – Employee Benefit Plans

The Company and certain of its subsidiaries have defined benefit pension plans for many of their hourly and salaried employees. The domestic plans include plans that provide defined benefits as well as a plan for salaried workers that provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit comprised of a percentage of current salary that varies with years of service, interest credits and transition credits. The international plans generally provide pension benefits based on years of service and compensation level.

Net periodic pension costs for the Company’s pension plans include the following components (thousands of dollars):

	Three Months Ended April 30,						Nine Months Ended April 30,
	2008			2007			2008			2007
Service cost	$	3,703		$	3,670		$	11,027		$	11,343
Interest cost		3,656			3,499			10,910			10,625
Expected return on assets		(5,935	)		(5,098	)		(17,748	)		(15,370	)
Transition amount amortization		43			32			120			490
Prior service cost amortization		107			88			320			264
Actuarial (gain)/loss amortization		(22	)		287			(70	)		858
Settlement and curtailment gain		—			—			—			(1,949	)
Total periodic benefit cost	$	1,552		$	2,478		$	4,559		$	6,261

The Company’s general funding policy for its pension plans is to make at least the minimum contributions as required by applicable regulations. Additionally, the Company may elect to make additional contributions up to the maximum tax deductible contribution. For the nine months ended April 30, 2008, the Company made $9.4 million in contributions to its non-U.S. pension plans. The Company has not made and does not anticipate making any contributions to its U.S. pension plans in the current year and estimates that it will contribute up to an additional $0.6 million to its non-U.S. pension plans during the remainder of fiscal 2008.

Note J – Commitments and Contingencies

The Company is not currently subject to pending litigation other than litigation which arises out of and is incidental to the conduct of the Company’s business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. The Company does not consider any of such proceedings which are currently pending to be likely to result in a material adverse effect on the Company’s consolidated financial position or results of operation.

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Note K – Income Taxes

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109, on August 1, 2007. The new standard defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that in the Company’s judgment is greater than 50 percent likely to be realized. As a result of the implementation of FIN 48, the Company recognized a $0.3 million increase in the liability for unrecognized tax benefits, which was accounted for as a reduction to the August 1, 2007 balance of retained earnings.

As of the FIN 48 adoption date of August 1, 2007, the total unrecognized tax benefits were $28.2 million, and accrued interest and penalties on these unrecognized tax benefits totaled $4.8 million. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

The Company’s uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. The following tax years, in addition to the current year, remain subject to examination, at least for certain issues, by the major tax jurisdictions indicated:

Major Jurisdictions	Open Tax Years
Belgium	2005 through 2007
China	1998 through 2007
France	2003 through 2007
Germany	2004 through 2007
Italy	2003 through 2007
Japan	2006 through 2007
Mexico	2002 through 2007
United Kingdom	2000 through 2007
United States	2004 through 2007

At April 30, 2008 the total unrecognized tax benefits were $28.5 million, and accrued interest and penalties on these unrecognized tax benefits were $5.0 million. If the Company were to prevail on all unrecognized tax benefits recorded, substantially all of the unrecognized tax benefits would benefit the effective tax rate. With an average statute of limitations of about 5 years, up to $4.5 million of the unrecognized tax benefits could potentially expire in the next 12 month period, unless extended by audit.

The effective tax rate for the three months and nine months ended April 30, 2008 was 25.6 percent and 27.4 percent, respectively. The effective tax rate for the three months and nine months ended April 30, 2007 was 16.2 percent and 24.5 percent, respectively. The nine months ended April 30, 2008 contains $9.3 million of tax benefits, which predominantly occurred in the first and third quarters, primarily related to the expiration of the statute of limitations on previously unrecognized tax benefits and an increase in deferred tax benefits related to enacted foreign tax rate changes. The nine months ended April 30, 2007 contained $10.0 million of tax benefits related to the expiration of the statute of limitations on previously unrecognized tax benefits, the favorable resolution of certain foreign and state tax positions, dividends from foreign subsidiaries and the reinstatement of the Research and Experimentation Credit, most of which occurred in the third quarter.

The average underlying tax rate for the year-to-date period has increased from the prior year by 1.3 percent. The mix of earnings between entities, changes to foreign tax rates and incentives, the expiration of the Research and Experimentation Credit, and a reduced dividend received deduction all contributed to the increase.

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Note L – New Accounting Standards

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). The portion of the statement that requires recognition of the overfunded or underfunded status of defined benefit postretirement plans as an asset or liability in the statement of financial position was adopted in fiscal 2007 with minimal impact. SFAS 158 also requires measurement of the funded status of a plan as of the date of the statement of financial position. That provision will require the Company to change its measurement date from April 30 to July 31 beginning with fiscal year 2009.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company is a worldwide manufacturer of filtration systems and replacement parts. The Company’s product mix includes air and liquid filters and exhaust and emission control products for mobile equipment; in-plant air cleaning systems; compressed air purification systems; air intake systems for industrial gas turbines; and specialized filters for such diverse applications as computer disk drives and semiconductor processing. Products are manufactured at more than 35 plants around the world and through three joint ventures.

The Company has two reporting segments engaged in the design, manufacture and sale of systems to filter air and liquid and other complementary products. The two segments are Engine Products and Industrial Products. Products in the Engine Products segment consist of air intake systems, exhaust and emissions systems, liquid filtration systems and replacement parts. The Engine Products segment sells to original equipment manufacturers (OEMs) in the construction, mining, agriculture, defense, aerospace and transportation markets and to independent distributors, OEM dealer networks, private label accounts and large equipment fleets. Products in the Industrial Products segment consist of dust, fume and mist collectors, compressed air purification systems, liquid filters and parts, static and pulse-clean air filter systems for gas turbines, and specialized air filtration systems for diverse applications including computer disk drives. The Industrial Products segment sells to various industrial end-users, OEMs of gas-fired turbines and OEMs and end users requiring highly purified air and liquids.

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto and other financial information included elsewhere in this report.

Overview

The Company reported record diluted net earnings per share of $0.57 for the third quarter of fiscal 2008, up from $0.49 in the third quarter of the prior year. Net income for the quarter was $46.0 million, up 14.5 percent from $40.1 million in the third quarter of the prior year. The impact of foreign currency translation increased reported net earnings by 7.1 percent in the quarter. The Company reported record sales in the third quarter of fiscal 2008 of $587.8 million, an increase of 21.4 percent from $484.0 million in the third quarter of the prior year. The impact of foreign currency translation increased reported sales by 7.6 percent in the quarter.

Overall, the Company’s globally-diversified portfolio of filtration businesses provided the foundation to deliver another quarter of growth. All of the Company’s product groups within the Industrial Products and Engine Products segments, with the exception of Transportation Products, posted double-digit sales growth this quarter, both as reported and in local currency. Geographically, sales increased by more than 15 percent in the United States and Asia, and by more than 25 percent in Europe. The strong sales growth helped lift the Company’s operating income as a percentage of sales 40 basis points in the quarter, driving a 27 percent increase in operating income. Net income for the quarter was also impacted by a $4.0 million net tax benefit due primarily to the expiration of the statute of limitations on matters previously reserved.

For the nine month period, the Company reported net sales of $1.625 billion, an increase of 16.6 percent from $1.394 billion in the prior year. The impact of foreign currency translation increased reported sales by 6.1 percent. Net income for the nine month period was $123.4 million, up 14.9 percent from $107.4 million in the prior year. The impact of foreign currency translation increased net earnings

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by 9.0 percent. The Company reported diluted net earnings per share of $1.52 for the nine month period, up 16.9 percent from $1.30 in the prior year.

Results of Operations

Sales in the United States increased $33.0 million or 15.8 percent for the third quarter of fiscal 2008 compared to the third quarter of the prior year. Total international sales in U.S. dollars increased $70.8 million or 25.7 percent in the third quarter compared to the prior year. In U.S. dollars, Europe sales increased $44.6 million or 28.3 percent, Asia sales increased $19.1 million or 19.3 percent and other international sales increased $7.1 million or 37.3 percent for the third quarter of fiscal 2008 as compared to the prior year period. Translated at constant exchange rates, total international sales increased 12.3 percent over the prior year quarter. For the nine month period ended April 30, 2008, sales in the United States increased $47.2 million or 7.7 percent from the prior year, and total international sales in U.S. dollars increased $183.8 million or 23.5 percent from the prior year.

The impact of foreign currency translation during the third quarter of fiscal 2008 increased sales by $37.0 million, or 7.6 percent. This was primarily due to the weakening of the U.S. dollar against most other world currencies. The impact of foreign currency translation on the year-to-date results as of the third quarter of fiscal 2008 increased sales by $84.6 million, or 6.1 percent. Worldwide sales for the third quarter of fiscal 2008, excluding the impact of foreign currency translation, increased 13.8 percent from the third quarter of the prior year. The impact of foreign currency translation increased net income by $2.9 million and $9.6 million for the three and nine month periods of fiscal 2008, respectively.

Although net sales excluding foreign currency translation and net earnings excluding foreign currency translation are not measures of financial performance under GAAP, the Company believes they are useful in understanding its financial results. Both measures enable the Company to obtain a clearer understanding of the operating results of its foreign entities without the varying effects that changes in foreign currency exchange rates may have on those results. A shortcoming of these financial measures is that they do not reflect the Company’s actual results under GAAP. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures.

Following is a reconciliation to the most comparable GAAP financial measure of this non-GAAP financial measure (thousands of dollars):

	Three Months Ended April 30,				Nine Months Ended April 30,
	2008		2007		2008		2007
Net sales, excluding foreign currency translation	$	550,798	$	468,417	$	1,540,451	$	1,360,392
Foreign currency translation		36,962		15,571		84,648		33,755
Net sales	$	587,760	$	483,988	$	1,625,099	$	1,394,147
Net earnings, excluding foreign currency translation	$	43,136	$	38,772	$	113,761	$	103,532
Foreign currency translation		2,851		1,375		9,619		3,895
Net earnings	$	45,987	$	40,147	$	123,380	$	107,427

Gross margin for the third quarter of fiscal 2008 was 32.0 percent compared to 31.0 percent for the third quarter in the prior year. As mentioned in the second quarter, the Company began utilizing a new warehouse management system at its main U.S. distribution center. The Company encountered start-up challenges during the transition to the new system. Although the Company has caught up on delayed shipments, there will continue to be incremental expenses related to refining the system which resulted in approximately $3.6 million and $5.7 million in incremental charges for the three and nine months ended April 30, 2008, respectively. Gross margin for the third quarter of fiscal 2007 was negatively impacted by an unfavorable product mix in Gas Turbine Systems Products and Industrial Filtration Solutions Products. Offsetting the impact of this on gross margin, plant rationalization and start-up costs were $0.1 million in the third quarter compared to prior year quarter costs of $2.5 million. Year-to-date plant rationalization and start-up costs in fiscal 2008 totaled $0.4 million compared to prior year costs of $4.7 million. Operating expenses during the third quarter of fiscal 2008 were $124.7 million, or 21.2

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percent of sales, compared to $99.6 million, or 20.6 percent of sales, in the prior year period as we continue to invest in essential product and market development initiatives in our global Customer support capabilities. Year-to-date operating expenses were 21.3 percent of sales, up from 20.7 percent in the prior year.

Other income for the third quarter of fiscal 2008 totaled $2.6 million, compared to $1.9 million of other income in the third quarter of the prior year. Other income for the third quarter of fiscal 2008 consisted of income from unconsolidated affiliates of $0.4 million, royalty income of $2.7 million, interest income of $0.2 million, foreign exchange losses of $0.5 million, and other expenses of $0.2 million. For the third quarter of fiscal 2008, interest expense was $4.2 million, a slight increase as compared to the third quarter of the prior year, due to higher debt levels. Year-to-date, other income totaled $4.6 million compared to $5.8 million reported in the prior year. Year-to-date interest expense was $12.6 million, up from $10.3 million in the prior year.

The effective tax rate for the three months and nine months ended April 30, 2008 was 25.6 percent and 27.4 percent, respectively. The effective tax rate for the three months and nine months ended April 30, 2007 was 16.2 percent and 24.5 percent, respectively. The nine months ended April 30, 2008 contains $9.3 million of tax benefits, which predominantly occurred in the first and third quarters, primarily related to the expiration of the statute of limitations on previously unrecognized tax benefits and an increase in deferred tax benefits related to enacted foreign tax rate changes. The nine months ended April 30, 2007 contained $10.0 million of tax benefits related to the expiration of the statute of limitations on previously unrecognized tax benefits, the favorable resolution of certain foreign and state tax positions, dividends from foreign subsidiaries and the reinstatement of the Research and Experimentation Credit, most of which occurred in the third quarter. The average underlying tax rate for the year-to-date period has increased from the prior year by 1.3 percent. The mix of earnings between entities, changes to foreign tax rates and incentives, the expiration of the Research and Experimentation Credit, and a reduced dividend received deduction all contributed to the increase.

Operations by Segment

Following is financial information for the Company’s Engine Products and Industrial Products segments. Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments, interest income and expense and non-operating income and expenses. Segment detail is summarized as follows (thousands of dollars):

	Engine Products		Industrial Products		Corporate and Unallocated			Total Company
Three Months Ended April 30, 2008:
Net sales	$	324,992	$	262,768		—		$	587,760
Earnings before income taxes		43,456		25,997		(7,603	)		61,850
Three Months Ended April 30, 2007:
Net sales	$	276,660	$	207,328		—		$	483,988
Earnings before income taxes		35,581		17,801		(5,501	)		47,881
Nine Months Ended April 30, 2008:
Net sales	$	902,488	$	722,611		—		$	1,625,099
Earnings before income taxes		115,279		70,429		(15,738	)		169,970
Assets		614,229		581,193		318,123			1,513,545
Nine Months Ended April 30, 2007:
Net sales	$	793,924	$	600,223		—		$	1,394,147
Earnings before income taxes		102,125		51,135		(11,021	)		142,239
Assets		532,532		504,377		264,035			1,300,944

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Following are net sales by product category within the Engine Products and Industrial Products segments (thousands of dollars):

	Three Months Ended April 30,				Nine Months Ended April 30,
	2008		2007		2008		2007
Engine Products segment:
Off-road Products	$	120,932	$	92,750	$	332,398	$	253,113
Transportation Products		33,188		38,395		91,943		132,316
Aftermarket Products		170,872		145,515		478,147		408,495
Total Engine Products segment	$	324,992	$	276,660	$	902,488	$	793,924
Industrial Products segment:
Industrial Filtration Solutions Products	$	155,208	$	125,756	$	430,304	$	371,328
Gas Turbine Products		58,858		41,201		149,046		110,713
Special Applications Products		48,702		40,371		143,261		118,182
Total Industrial Products segment	$	262,768	$	207,328	$	722,611	$	600,223
Total Company	$	587,760	$	483,988	$	1,625,099	$	1,394,147

Engine Products Segment    For the third quarter of fiscal 2008, worldwide Engine Products sales were a record $325.0 million, an increase of 17.5 percent from $276.7 million in the third quarter of the prior year. Total third quarter Engine Products sales in the United States increased by 7.5 percent compared to the same period in the prior year and international sales increased by 28.7 percent as discussed below. Year-to-date, worldwide net sales were $902.5 million, an increase of 13.7 percent from $793.9 million in the prior year. International Engine Products sales increased 26.9 percent and sales in the United States increased 2.7 percent from the prior year on a year-to-date basis.

Worldwide sales of Off-road Products in the third quarter of fiscal 2008 were $120.9 million, an increase of 30.4 percent from $92.8 million in the third quarter of the prior year. Domestic sales in Off-road Products increased 26.0 percent as strong defense, agriculture and non-residential construction markets more than offset a decrease in the residential construction markets. The percentage increase was also impacted by last year’s acquisition of Aerospace Filtration Systems, Inc. which increased sales by $4.7 million in the quarter compared to the prior year period. International sales were up 35.0 percent from the third quarter of the prior year with increases in Europe and Asia of 32.1 percent and 43.2 percent, respectively. In addition to the benefit of foreign exchange on sales in Europe and Asia, the Company’s Off-road Products business continued to be strong globally as production of heavy construction, mining and agricultural equipment by our OEM Customers remained high. Year-to-date, worldwide Off-road Products sales totaled $332.4 million, an increase of 31.3 percent from $253.1 million in the prior year. Year-to-date sales of Off-road Products internationally and in the United States increased 28.1 percent and 34.6 percent, respectively, from the prior year.

Worldwide sales in Transportation Products in the third quarter of fiscal 2008 were $33.2 million, a decrease of 13.6 percent from $38.4 million in the third quarter of the prior year. International Transportation Products sales increased by 18.1 percent driven by increased sales in Europe of 33.2 percent. Sales decreased in the United States by 29.1 percent as a result of the Environmental Protection Agency (“EPA”) emissions standards which has resulted in lower new truck build rates at our Customers. Year-to-date, worldwide Transportation Products sales totaled $91.9 million, a decrease of 30.5 percent from $132.3 million in the prior year. International Transportation Products sales increased 10.9 percent from the prior year on a year-to-date basis. As expected, Transportation Products sales in the United States decreased 46.4 percent from the prior year on a year-to-date basis as a result of EPA diesel emissions standards changes.

Worldwide sales of Aftermarket Products in the third quarter were $170.9 million, an increase of 17.4 percent from $145.5 million in the third quarter of the prior year. Domestic Aftermarket Products sales grew 8.4 percent. International sales were up 26.6 percent from the prior year quarter, driven by sales increases in Europe, Asia and other international of 22.4 percent, 22.6 percent and 49.4 percent respectively. Sales volumes were high in these regions as equipment utilization rates remained strong. In

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addition, sales continue to benefit from the increasing amount of equipment in the field with the Company’s PowerCore™ filtration systems. Sales of PowerCore™ replacement filters increased 44.6 percent in the quarter. Year-to-date, worldwide Aftermarket Products sales totaled $478.1 million, an increase of 17.1 percent from $408.5 million in the prior year. Year-to-date Aftermarket Products sales internationally and in the United States increased 29.2 percent and 5.7 percent, respectively.

Industrial Products Segment    For the third quarter of fiscal 2008, worldwide sales in the Industrial Products segment were $262.8 million, an increase of 26.7 percent from $207.3 million in the third quarter of the prior year. Total third quarter international Industrial Products sales were up 23.0 percent compared to the same period in the prior year, while sales in the United States increased by 35.7 percent. Year-to-date, worldwide net sales were $722.6 million, an increase of 20.4 percent from $600.2 million in the prior year. International Industrial Products sales increased 20.5 percent and sales in the United States increased 20.0 percent from the prior year on a year-to-date basis.

Worldwide sales of Industrial Filtration Solutions Products in the quarter were $155.2 million, an increase of 23.4 percent from $125.8 million in the prior year. International sales grew 24.1 percent over the prior year with sales in Europe and Asia showing increases of 28.4 percent and 11.9 percent, respectively. International sales growth was driven by continued strong global manufacturing investment and production utilization conditions. Europe, in particular, experienced an increase in the sale of industrial dust collection systems. Domestic sales increased 22.1 percent over the prior year quarter including the impact of the recent acquisition of LMC West, Inc., which contributed to approximately five percent of the increase. Year-to-date, worldwide sales of Industrial Filtration Solutions products were $430.3 million, up 15.9 percent from $371.3 million in the prior year. International Industrial Filtration Solutions product sales increased 19.5 percent from the prior year on a year-to-date basis. Sales in the United States increased 9.3 percent from the prior year on a year-to-date basis.

Worldwide sales of Gas Turbine Products in the third quarter were $58.9 million, an increase of 42.9 percent from sales of $41.2 million in the third quarter of the prior year. The Gas Turbine Products sales are typically large systems and as a result the shipments and revenues fluctuate from quarter to quarter. Year-to-date, worldwide Gas Turbine Products sales were $149.0 million, up 34.6 percent from $110.7 million in the prior year.

Worldwide sales of Special Application Products in the quarter were $48.7 million, an increase of 20.6 percent from $40.4 million in the prior year. Domestic Special Application Products sales increased 25.5 percent. International sales in Special Application Products increased 19.8 percent over the prior year, with increases in Europe and Asia of 20.5 percent and 19.8 percent, respectively, as sales of disk drive filters and PTFE membranes remained strong. Year-to-date, worldwide Special Application Products sales were $143.3 million, an increase of 21.2 percent from $118.2 million in the prior year. International Special Application Products sales increased 23.3 percent over the prior year and sales in the United States increased 8.3 percent over the prior year on a year-to-date basis.

Liquidity and Capital Resources

The Company generated $103.8 million of cash and cash equivalents from operations during the first nine months of fiscal 2008. Operating cash flows increased by $57.0 million from the same period in the prior year primarily as a result of an increase in net earnings of $16.0 million and a decrease in pension contributions of $13.3 million as compared to the prior year. Operating cash flows and cash on hand were used to support $52.1 million in capital additions, the repurchase of 1.7 million outstanding shares of the Company’s common stock for $69.3 million and the payment of $24.4 million in dividends. For additional information regarding share repurchases see Part II Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

At the end of the third quarter, the Company held $53.3 million in cash and cash equivalents, down from $55.2 million at July 31, 2007. Short-term debt totaled $108.7 million, down from $123.1 million at July 31, 2007, primarily due to repayment of short-term debt using proceeds from long-term debt, operating cash flows and cash on hand. The amount of unused lines of credit as of April 30, 2008 was approximately $558.9 million. Long-term debt of $177.4 million at April 30, 2008 increased from $129.0 million at July 31, 2007, due to the additional note issuances discussed below, and represented 19.6

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percent of total long-term capital, defined as long-term debt plus total shareholders’ equity, compared to 17.1 percent at July 31, 2007. The Company has not made and does not anticipate making any contributions to its U.S. pension plans and estimates that it will contribute up to an additional $0.6 million to its non-U.S. pension plans during the remainder of fiscal 2008.

The following table summarizes the Company’s contractual obligations as of April 30, 2008 (in thousands):

Contractual Obligations	Payments Due by Period
	Total		Less than 1 year		1 – 3 years		3 – 5 Years		More than 5 years
Long-term debt obligations	$	209,022	$	32,173	$	10,478	$	41,979	$	124,392
Capital lease obligations		1,240		726		182		136		196
Interest on long-term obligations		69,144		10,090		16,316		13,758		28,980
Operating lease obligations		24,764		9,972		10,717		3,782		293
Purchase obligations(1)		184,327		177,091		7,236		—		—
Pension and deferred compensation(2)		25,752		2,213		3,741		3,058		16,740
Total(3)	$	514,249	$	232,265	$	48,670	$	62,713	$	170,601

(1) Purchase obligations consist primarily of inventory, tooling, contract employment services and capital expenditures. The Company’s purchase orders for inventory are based on expected Customer demand, and quantities and dollar volumes are subject to change.

(2) Pension and deferred compensation consists of long-term pension liabilities and salary and bonus deferrals elected by certain executives under the Company’s deferred compensation plan. Deferred compensation balances earn interest based on a treasury bond rate as defined by the plan and are payable at the election of the participants.

(3) In addition to the above contractual obligations, the Company may be obligated for additional cash outflows of $28.5 million of unrecognized tax benefits. The payment and timing of any such payments is affected by the ultimate resolution of the tax years that are under audit or remain subject to examination by the relevant taxing authorities.

At April 30, 2008, the Company had a contingent liability for standby letters of credit totaling $18.5 million that have been issued and are outstanding. The letters of credit guarantee payment to beneficial third parties in the event the Company is in breach of specified financing agreement and insurance contract terms as detailed in each letter of credit. At April 30, 2008, there were no amounts drawn upon these letters of credit.

The Company has a five-year, multi-currency revolving facility with a group of banks under which the Company may borrow up to $250 million. As of April 30, 2008, there was $50.0 million of borrowings under these facilities. During the quarter, the Company extended the expiration date of the facility by one year to April 2, 2013. No other changes were made to the facility.

Certain note agreements contain debt covenants related to working capital levels and limitations on indebtedness. As of April 30, 2008, the Company was in compliance with all debt covenants.

On June 1, 2007, the Company issued $100 million of senior unsecured notes. The first $50 million was funded on June 1, 2007, and the remaining two $25 million tranches were funded on September 28, 2007 and November 30, 2007. The three tranches are due on June 1, 2017, September 28, 2017, and November 30, 2017, respectively. The debt was issued at face value and bears interest payable semi-annually at a rate of 5.48 percent. The proceeds from the notes were used to refinance existing debt and for general corporate purposes.

The Company believes that the combination of present capital resources, internally generated funds and unused financing sources are adequate to meet cash requirements for the next twelve-month period.

The Company does not have any off-balance sheet arrangements, with the exception of the guarantee of 50 percent of certain debt of its joint venture, Advanced Filtration Systems, Inc., as further discussed in Note H of the Company’s Notes to Condensed Consolidated Financial Statements.

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Critical Accounting Policies

There have been no material changes to the Company’s critical accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.

Outlook

Engine Products Segment    Overall, the Company expects 11 to 13 percent full year sales growth for the Engine Products segment in fiscal 2008. The Company expects its NAFTA Transportation Products sales to begin growing again in the fourth quarter. NAFTA residential construction markets are expected to remain weak. However, high commodity prices and global infrastructure projects are expected to keep global demand strong for new mining, heavy construction and agriculture equipment. The Company’s Aftermarket Products sales are expected to continue growing due to ongoing expansion into new markets and strong equipment utilization internationally. The Company expects to continue benefiting from the increasing amount of equipment in the field with PowerCore™ technology as well as other new proprietary filtration systems.

Industrial Products Segment    The Company expects 17 to 19 percent full year sales growth for its Industrial Products segment. Full year Industrial Filtration Solutions Products sales are projected to grow 15 to 20 percent due to continued strong global manufacturing investment and production utilization conditions. Gas Turbine Products sales are expected to increase 25 to 30 percent for the full year. Continued strength is expected from both the international power generation and the oil and gas markets. Special Applications Products sales are expected to grow 15 to 20 percent for the full year.

Other    The Company expects a minimum full year operating income as a percentage of sales of 11 percent, including the impact from the new warehouse management system implementation and commodity cost increases. Operating income is projected to be up 17 to 19 percent over the prior year. The full year tax rate is expected to be between 28 and 31 percent.

Forward-Looking Statements and Risk Factors

The Company, through its management, may make forward-looking statements reflecting the Company’s current views with respect to future events and financial performance. These forward-looking statements, which may be in reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), in press releases and in other documents and materials as well as in written or oral statements made by or on behalf of the Company, are subject to certain risks and uncertainties, including those discussed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended July 31, 2007, which could cause actual results to differ materially from historical results or those anticipated. These uncertainties and other risk factors include, but are not limited to risks associated with currency fluctuations, commodity prices, world economic factors, political factors, the company’s international operations, highly competitive markets, governmental laws and regulations, the implementation of our new warehouse management system in our U.S. distribution center, and other factors listed in our Annual Report on Form 10-K and our reports on Form 10-Q.

In particular the Company desires to take advantage of the protections of the Private Securities Litigation Reform Act of 1995 in connection with the forward-looking statements made in this Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in the reported market risk of the Company since July 31, 2007. See further discussion of these market risks in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.

Item 4.  Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures: As of the end of the period covered by this report (the Evaluation Date), the Company carried out an evaluation, under the supervision

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and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Control over Financial Reporting: No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) identified in connection with such evaluation during the fiscal quarter ended April 30, 2008, has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is not currently subject to pending litigation other than litigation which arises out of and is incidental to the conduct of the Company’s business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. The Company does not consider any of such proceedings that are currently pending to be likely to result in a material adverse effect on the Company’s consolidated financial position or results of operation.

Item 1A.  Risk Factors

There are inherent risks and uncertainties associated with our global operations that involve manufacturing and sale of products for highly demanding Customer applications throughout the world. These risks and uncertainties could adversely affect our operating performances or financial condition. The “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007 includes a discussion of these risks and uncertainties. There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

The following table sets forth information in connection with purchases made by, or on behalf of, the Company or any affiliated purchaser of the Company, of shares of the Company’s common stock during the quarterly period ended April 30, 2008.

Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
February 1 – February 29, 2008		378,482	$	41.82		377,700		2,396,600 shares
March 1 – March 31, 2008		51,588	$	40.01		49,879		2,346,721 shares
April 1 – April 30, 2008		72,439	$	39.87		72,439		2,274,282 shares
Total		502,509	$	41.36		500,018		2,274,282 shares

(1) On March 31, 2006, the Company announced that the Board of Directors authorized the repurchase of up to 8.0 million common shares. This repurchase authorization, which is effective until terminated by the Board of Directors, replaced the existing authority that was authorized on January 17, 2003. There were no repurchases of common stock made outside of the Company’s current repurchase authorization during the quarter ended April 30, 2008. However, the “Total Number of Shares Purchased” column of the table above includes 2,491

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previously owned shares tendered by option holders in payment of the exercise price of options during the quarter. While not considered repurchases of shares, the Company does at times withhold shares that would otherwise be issued under equity-based awards to cover the withholding taxes due as a result of exercising stock options or payment of equity-based awards.

Item 6.  Exhibits

*3-A – Restated Certificate of Incorporation of Registrant as currently in effect (Filed as Exhibit 3-A to Form 10-Q Report for the First Quarter ended October 31, 2004)

*3-B – Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Registrant, dated as of March 3, 2006 (Filed as Exhibit 3-B to Form 10-Q Report for the First Quarter ended October 31, 2006)

*3-C – Amended and Restated Bylaws of Registrant (as of January 25, 2008) (Filed as Exhibit 3.1 to Form 8-K Report filed January 31, 2008)

*4 – **

*4-A – Preferred Stock Amended and Restated Rights Agreement between Registrant and Wells Fargo Bank, N.A., as Rights Agent, dated as of January 27, 2006 (Filed as Exhibit 4.1 to Form 8-K Report filed February 1, 2006)

10-A – Form of Management Severance Agreement for Executive Officers

31-A – Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31-B – Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 – Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Exhibit has previously been filed with the Securities and Exchange Commission and is incorporated herein by reference as an exhibit.

** Pursuant to the provisions of Regulation S-K Item 601(b)(4)(iii)(A) copies of instruments defining the rights of holders of certain long-term debts of the Company and its subsidiaries are not filed and in lieu thereof the Company agrees to furnish a copy thereof to the Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DONALDSON COMPANY, INC. (Registrant)
Date: June 3, 2008	By:	/s/ William M. Cook
		William M. Cook Chairman, President and Chief Executive Officer (duly authorized officer)
Date: June 3, 2008	By:	/s/ Thomas R. VerHage
		Thomas R. VerHage Vice President, Chief Financial Officer (principal financial officer)
Date: June 3, 2008	By:	/s/ James F. Shaw
		James F. Shaw Controller (principal accounting officer)

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EX-10.A

Exhibit 10a

MANAGEMENT SEVERANCE AGREEMENT

THIS AGREEMENT, dated as of [__________], 2008, is made by and between Donaldson Company, Inc., a Delaware corporation (the “Company”), and [__________] (the “Executive”).

WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

WHEREAS, the Executive and the Company have entered into a management severance agreement effective as of [       ] [, as amended [                  ]] (the “Prior Agreement’);

WHEREAS, the Company and the Executive intend that the Prior Agreement shall terminate as of July 31, 2008 and that all applicable notice requirements with respect to the termination of the Prior Agreement have been met or waived; and

WHEREAS, the Executive acknowledges that the Company’s notice of its intent to not renew the Prior Agreement complies with Section 2 of the Prior Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.         Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2.         Term of Agreement. The Prior Agreement shall terminate as of July 31, 2008 and the Term of this Agreement shall commence on August 1, 2008 and shall continue in effect through July 31, 2010; provided, however, that commencing on August 1, 2009 and each August 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than April 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and furtherprovided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.

3.         Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the

Severance Payments and the other payments and benefits described herein. Except as provided in Section 10.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive’s employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4.         The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5.         Compensation Other Than Severance Payments.

5.1       Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than the Company’s short- or long-term disability plan, as applicable), until the Executive’s employment is terminated by the Company for Disability.

5.2       If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

5.3       If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

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6.         Severance Payments.

6.1       If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. Notwithstanding anything in this Agreement to the contrary, the Executive shall not be entitled to the payments and benefits provided in this Section 6 unless the Executive has incurred a “separation from service” under Section 409A of the Code.

(A)       In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to [CEO ONLY three (3) times the sum of] [SVPs ONLY two (2) times the sum of] [VPs ONLY the sum of] (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the Executive’s target incentive opportunity pursuant to the Company’s Officer Annual Cash Incentive Plan or any successor thereto in respect of the fiscal year in which occurs the Date of Termination or, if higher, the fiscal year in which occurs the first event or circumstance constituting Good Reason.

(B)       For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method [CEO ONLY (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof)], such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1 (B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the thirty-six (36) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

(C)       In addition to the retirement benefits to which the Executive is entitled under each Pension Plan or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the excess of (i) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the third anniversary of the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive would have accrued under the terms of all Pension Plans (without regard to any amendment to any Pension Plan made subsequent to a Change in Control and on or

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prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated (after the Date of Termination) thirty-six (36) additional months of service credit thereunder and had been credited under each Pension Plan during such period with compensation equal to the Executive’s compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, over (ii) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive had accrued pursuant to the provisions of the Pension Plans as of the Date of Termination. For purposes of this Section 6.1(C), “actuarial equivalent” shall be determined using the same assumptions utilized under the Company’s Salaried Employees’ Pension Plan immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

(D)       The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of three (3) years or, if earlier, until the first acceptance by the Executive of an offer of employment.

[SECTION 6.2 FOR CEO ONLY]

6.2       (A)         Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments.

(B)       For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and

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(iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(C)       In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive) to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

[ALTERNATE SECTION 6.2 – FOR SVPs and VPs]

6.2         (A)         Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (such payments or benefits being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, then the payments hereunder (or, if no payments are being made hereunder, payments and benefits pursuant to any other plans and arrangements) shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive

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would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

(B)         Subject to the provisions of this Section 6.2, all determinations required to be made under this Section 6.2, including whether and the extent to which the Total Payments will be subject to the Excise Tax and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized accounting firm selected by the Executive that is not then serving as accountant or auditor for the individual, entity or group effecting the Change in Control of the Company (the “Auditor”), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Auditor shall be borne solely by the Company.

(C)         For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax under this Section 6.2, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which in the opinion of the Auditor (or tax counsel selected by the Auditor) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code), and in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any noncash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of this Section 6.2, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the applicable Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence in the calendar year in which the applicable Payment is to be made, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes.

(D)         The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

6.3       Subject to Section 6.5, the payments provided in subsections (A) and (C) of Section 6.1 hereof [CEO ONLY and in Section 6.2 hereof] shall be made not later than the fifth (5^th) day following the Date of Termination; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive [CEO ONLY or, in the case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof], of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate

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provided in Section 1274(b)(2)(B) of the Code). At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

6.4       The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive’s employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that in no event shall any such payments be made later than the last day of the Executive’s taxable year following the taxable year in which the fee or expense was incurred.

6.5       Section 409A. Notwithstanding anything in this Agreement to the contrary, if any payments or benefits due to the Executive hereunder would cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or benefits shall be restructured in a manner which does not cause such an accelerated or additional tax. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service shall instead be paid on the first (1^st) business day after the date that is six (6) months following the Executive’s date of termination (or death, if earlier), with interest from the date such amounts would otherwise have been paid at the short-term applicable federal rate, compounded semi-annually, as determined under Section 1274 of the Code, for the month in which payment would have been made but for the delay in payment required to avoid the imposition of an additional rate of tax on the Executive under Section 409A of the Code.

7.         Termination Procedures.

7.1       Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances

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claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. A Notice of Termination for Good Reason must specify the particular events or conditions which constitute Good Reason and the specific cure requested by the Executive; provided that such Notice of Termination must be provided to the Company within ninety (90) days of the initial existence of the event or condition which constitutes Good Reason.

7.2       Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), (ii) if the Executive’s employment is terminated by the Company, thirty (30) days after Notice of Termination is given (except in the case of a termination for Cause), (iii) in the case of a termination by the Executive other than for Good Reason, the date specified in the Notice of Termination, provided that such date shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given, and (iii) in the case of a termination by the Executive for Good Reason, thirty (30) days after Notice of Termination is given, provided the particular events or conditions constituting Good Reason have not been cured by the Company during such thirty (30) day period (if susceptible to cure by the Company).

8.         Restrictive Covenants.

8.1       Acknowledgements. The Executive represents and agrees that: (i) the obligations set forth in this Section 8are supported by the payments which may be made under this Agreement; (ii) the Company’s business is highly competitive; (iii) the Executive’s employment by the Company requires that the Executivehave access to and knowledge of confidential information of the Company; (iv) the Executive has access to customers and has and will continue to develop good will with such customers at the expense of the Company; (v) the direct and indirect disclosure of any confidential information to existing or potential competitors of the Company would place the Company at a competitive disadvantage and would do damage to it; (vi) the Company conducts business throughout the world; (vii) the Executive’sduties involve operations throughout the world; (viii) the restrictions contained in this Section 8 are necessary and appropriate for the protection of the Company’s confidential information and goodwill; and (viii) the restrictions contained in this Section 8are reasonable with respect to time, geographic scope and protected activity.

8.2       Non-Disclosure of Confidential Information. The Executive agrees, during Executive’s employment and at all times thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person without written authorization of the Board, any Confidential Information (as defined below) which the Executive may develop

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or obtain. “Confidential Information” means any information about the Company, its affiliates, their clients, customers, vendors or employees which is not known by or generally available to the public, including, but not limited to, proprietary information, technical data, trade secrets or know-how, research, product plans, products, services, suppliers, customer lists and customers (including, but not limited to, customers of the Company with, whom, or which the Executivebecame acquainted during employment with the Company), prices and costs, markets, developments, inventions, technology, designs, drawings, engineering, hardware configuration information, marketing, licenses, finances, budgets or other business information disclosed to the Executiveby the Company either directly or indirectly in writing, orally or by drawings or observation of parts or equipment; provided, however, that Confidential Information does not include any information which has become publicly and widely known and made generally available through no wrongful act of the Executiveor of others who were under confidentiality obligations as to the item or items involved.

8.3       Non-Competition. The Executive agrees that, during Executive’s employment with the Company, and for one (1) year following the termination of the Executive’s employment for any reason, including resignation, whether such termination occurs prior to or following a Change in Control, the Executive shall not, directly or indirectly, accept employment with or otherwise provide services to (whether as an employee or a consultant, with or without pay), own, manage, operate, join, control, participate in, or be connected with (as a stockholder, partner, or otherwise), any business, individual, partnership, firm, corporation, or other entity (collectively, “Entities”) that is engaged or intends to engage in an Applicable Business (as defined below) anywhere in the world. “Applicable Business” means any business, a significant component of which is engaged, directly or indirectly, in the manufacture or sale of products or components, or the performance of services, that are in competition with the products and components manufactured or sold or the services performed by the Company or any of its subsidiaries. Notwithstanding anything to the contrary contained herein, the “beneficial ownership” by the Executive, either individually or as a member of a “group,” as such terms are used in the General Rules and Regulations under the Exchange Act, of not more than five percent (5%) of the voting stock of any publicly held corporation shall not alone constitute a violation of this Section 8.

8.4       Non-Solicitation of Customers and Suppliers. The Executiveagrees that, during Executive’s employment with the Company and for a period of one (1) year following the Executive’stermination of employment for any reason, including resignation, the Executiveshall not, directly or indirectly, influence or attempt to influence current customers or suppliers of the Company or any of its affiliates or any customers or suppliers of the Company or any of its affiliates at the time of Executive’s termination of employment with the Company, to (i) divert their business to any other business, individual, partner, firm, corporation, or other entity; or (ii) terminate, cancel or reduce their business with the Company or its affiliates.

8.5       Non-Solicitation of Employees. The Executiveagrees that, during Executive’s employment with the Company and for a period of one (1) year following the Executive’stermination of employment for any reason, including resignation, the Executive shall not, directly or indirectly, (i) solicit, recruit, hire or attempt to solicit, recruit or hire any current employee or any individual employed by the Company or its affiliates at the time of the Executive’stermination for the purpose of being employed by the Executive or by any Entity

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other than the Company; or (ii) induce or encourage the voluntary resignation of any employee of the Company or its affiliates for any purpose.

8.6       Injunctive Relief. It is expressly agreed that the Company shall or would suffer irreparable injury if the Executivewere to violate of any of the provisions of this Section 8 and that the Company would by reason of such competition be entitled to injunctive relief in a court of appropriate jurisdiction, without the need to post any bond, and the Executivefurther consents and stipulates to the entry of such injunctive relief in such a court prohibiting the Executivefrom violating the Executive’s obligations under this Section 8.

8.7       Blue Penciling and Reformation. In the event that any provision of this Agreement is adjudicated to be invalid or unenforceable under applicable law, the validity or enforceability of the remaining provisions shall be unaffected. If, at the time of enforcement of any provision of this Agreement, a court shall hold that the duration, scope or other restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope or other restrictions and that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and other restrictions permitted by law.

9.         No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Section 6.1(B) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. Notwithstanding the foregoing, if the Company is obligated by law or contract to pay the Executive other severance pay, a termination indemnity, notice pay, or the like, of if the Company is obligated by law to provide advance notice of separation, then any cash payment otherwise payable to the Executive hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable.

10.        Successors; Binding Agreement.

10.1      In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

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10.2      This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

11.       Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

Donaldson Company, Inc.

P.O. Box 1299

Minneapolis

Minnesota 55440-1299

Attention: General Counsel

12.       Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party, including, as of July 31, 2008, the Prior Agreement; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive other than for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6, 7 and 8 hereof) shall survive such expiration.

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13.       Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14.       Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

15.        Settlement of Disputes; Arbitration.

15.1      All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

15.2      Except as otherwise provided in Section 8.6, any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Minneapolis, Minnesota in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

16.        Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)       “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)       “Auditor” shall have the meaning set forth in Section 6.2 hereof.

(C)        [CEO ONLY “Base Amount” shall have the meaning set forth in Section 280G(b)(3) of the Code.]

(D)       “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(E)       “Board” shall mean the Board of Directors of the Company.

(F)        “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the

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issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

(G)        A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I)        any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (III) below; or

(II)       the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

(III)      there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the

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Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(IV)      the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

(H)        “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(I)         “Company” shall mean Donaldson Company, Inc. and, except in determining under Section 16(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(J)         “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(K)        “Disability” shall mean disability as defined in Section 409A of the Code.

(L)         “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(M)        “Excise Tax” shall mean any excise tax imposed under Section 4999 of the Code.

(N)        “Executive” shall mean the individual named in the first paragraph of this Agreement.

(O)        “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent) after any Change in Control of any one of the following acts by the Company, or failures by the Company to act, unless such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(I)        the assignment to the Executive of any duties materially inconsistent with the Executive’s status as a senior executive officer of the Company or a substantial adverse alteration in the nature or status of the

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Executive’s responsibilities from those in effect immediately prior to the Change in Control, including without limitation (if the Executive is an executive officer of the Company immediately prior to the Change in Control) ceasing to be an executive officer of a public company;

(II)       a material reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time;

(III)      the relocation of the Executive’s principal place of employment to a location more than twenty-five (25) miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) if such relocation is materially adverse to the Executive, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(IV)      the failure by the Company to pay to the Executive any portion of the Executive’s current compensation except pursuant to an across-the-board compensation deferral similarly affecting all senior executives of the Company and all senior executives of any Person in control of the Company, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

(V)       the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, including but not limited to the Company’s equity compensation plans, annual incentive bonus plan, long-term compensation plan, 401(k) excess plan, excess pension plan, supplemental executive pension plan, and deferred stock option gain plan or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

(VI)      the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control (except for across the board changes similarly affecting all senior executives of the Company and all senior executives of any Person in

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control of the Company), the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control; or

(VII)     any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective.

The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

(P)        [CEO ONLY “Gross-Up Payment” shall have the meaning set forth in Section 6.2 hereof.]

(Q)       “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(R)       “Pension Plan” shall mean any tax-qualified, supplemental or excess benefit pension plan maintained by the Company and any other plan or agreement entered into between the Executive and the Company which is designed to provide the Executive with supplemental retirement benefits.

(S)        “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(T)       “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I)        the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II)       the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(III)      any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then

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outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

(IV)      the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(U)       “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(V)       “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(W)       [CEO ONLY “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.]

(X)       “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(Y)       “Total Payments” shall mean those payments so described in Section 6.2 hereof.

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DONALDSON COMPANY, INC.

By:
Name: Title:	William M. Cook Chairman, President and Chief Executive Officer	[EXECUTIVE NAME] Address

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EX-31.A

Exhibit 31A

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William M. Cook, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Donaldson Company, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 3, 2008	/s/ William M. Cook
	William M. Cook Chief Executive Officer

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EX-31.B

Exhibit 31B

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas R. VerHage, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Donaldson Company, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 3, 2008	/s/ Thomas R. VerHage
	Thomas R. VerHage Chief Financial Officer

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EX-32

Exhibit 32

Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the following certifications are being made to accompany the Form 10-Q for the quarter ended April 30, 2008 for Donaldson Company, Inc.:

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, William M. Cook, Chief Executive Officer of Donaldson Company, Inc., certify, that:

1.	The Form 10-Q of Donaldson Company, Inc. for the quarter ended April 30, 2008 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Donaldson Company, Inc.

Date: June 3, 2008	/s/ William M. Cook
	William M. Cook Chief Executive Officer

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Thomas R. VerHage, Chief Financial Officer of Donaldson Company, Inc., certify, that:

1.	The Form 10-Q of Donaldson Company, Inc. for the quarter ended April 30, 2008 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Donaldson Company, Inc.

Date: June 3, 2008	/s/ Thomas R. VerHage
	Thomas R. VerHage Chief Financial Officer

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