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 JANUARY 31, 2009 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 (or for such shorter period that the registrant was required to file such reports), 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 – 77,106,375 shares as of January 31, 2009.

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 January 31,						Six Months Ended January 31,
	2009			2008			2009			2008
Net sales	$	460,601		$	511,763		$	1,033,861		$	1,037,339
Cost of sales		326,589			348,578			713,146			701,290
Gross margin		134,012			163,185			320,715			336,049
Operating expenses		106,165			112,551			223,181			221,635
Operating income		27,847			50,634			97,534			114,414
Other income, net		(2,574	)		(2,154	)		(5,678	)		(2,022	)
Interest expense		4,728			4,133			9,018			8,316
Earnings before income taxes		25,693			48,655			94,194			108,120
Income taxes		(8,100	)		14,585			12,439			30,727
Net earnings	$	33,793		$	34,070		$	81,755		$	77,393
Weighted average shares outstanding		77,765,961			79,739,919			77,834,578			79,793,419
Diluted shares outstanding		78,870,019			81,702,900			79,337,198			81,811,985
Basic earnings per share	$	0.43		$	0.43		$	1.05		$	.97
Diluted earnings per share	$	0.43		$	0.42		$	1.03		$	.95
Dividends paid per share	$	0.115		$	0.100		$	0.225		$	0.200

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)

	January 31, 2009			July 31, 2008
ASSETS
Current Assets
Cash and cash equivalents	$	76,029		$	83,357
Accounts receivable, less allowance of $6,607 and $7,509		326,871			413,863
Inventories		210,142			264,129
Prepaids and other current assets		85,178			92,408
Total current assets		698,220			853,757
Property, plant and equipment, at cost		840,192			901,746
Less accumulated depreciation		(473,554	)		(486,587	)
Property, plant and equipment, net		366,638			415,159
Goodwill		162,814			134,162
Intangible assets		66,888			46,317
Other assets		95,531			99,227
Total Assets	$	1,390,091		$	1,548,622
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	111,472		$	139,404
Current maturities of long-term debt		5,565			5,669
Trade accounts payable		130,654			200,967
Other current liabilities		130,953			170,667
Total current liabilities		378,644			516,707
Long-term debt		256,681			176,475
Deferred income taxes		32,285			35,738
Other long-term liabilities		58,992			79,667
Total Liabilities		726,602			808,587
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		585,229			522,476
Stock compensation plans		23,323			27,065
Accumulated other comprehensive income (loss)		(2,723	)		112,883
Treasury stock, at cost – 11,441,111 and 11,021,619 shares at January 31, 2009 and July 31, 2008, respectively		(385,556	)		(365,605	)
Total Shareholders’ Equity		663,489			740,035
Total Liabilities and Shareholders’ Equity	$	1,390,091		$	1,548,622

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)

	Six Months Ended January 31,
	2009			2008
OPERATING ACTIVITIES
Net earnings	$	81,755		$	77,393
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		29,101			27,967
Changes in operating assets and liabilities		(4,242	)		(53,222	)
Tax benefit of equity plans		(2,182	)		(5,894	)
Stock compensation plan expense		3,379			5,435
Other, net		(13,993	)		(5,402	)
Net cash provided by operating activities		93,818			46,277
INVESTING ACTIVITIES
Net expenditures on property and equipment		(23,251	)		(28,345	)
Acquisitions, investments and divestitures, net		(74,626	)		1,000
Net cash used in investing activities		(97,877	)		(27,345	)
FINANCING ACTIVITIES
Purchase of treasury stock		(32,773	)		(46,160	)
Proceeds from long-term debt		80,560			50,127
Repayments of long-term debt		(5,854	)		(5,496	)
Change in short-term borrowings		(18,817	)		(20,856	)
Dividends paid		(17,411	)		(15,838	)
Tax benefit of equity plans		2,182			5,894
Exercise of stock options		2,494			4,715
Net cash provided by (used in) financing activities		10,381			(27,614	)
Effect of exchange rate changes on cash		(13,650	)		2,451
Decrease in cash and cash equivalents		(7,328	)		(6,231	)
Cash and cash equivalents - beginning of year		83,357			55,237
Cash and cash equivalents - end of period	$	76,029		$	49,006

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 the prior period 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 six month periods ended January 31, 2009 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, 2008.

Note B – Inventories

The components of inventory as of January 31, 2009 and July 31, 2008 are as follows (thousands of dollars):

	January 31, 2009		July 31, 2008
Materials	$	81,786	$	110,135
Work in process		25,935		23,728
Finished products		102,421		130,266
Total inventories	$	210,142	$	264,129

Note C – Accounting for Stock-Based Compensation

Stock-based employee compensation cost is recognized using the fair-value based method for all awards. 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 six months ended January 31, 2009: range of 4 to 8 year expected life; expected volatility range of 21.6 percent to 23.5 percent; risk-free interest rate range of 1.4 percent to 4.0 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 the contractual life and 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 six months ended January 31, 2009 and 2008 was $8.54 per share and $10.75 per share, respectively. For the three months and six months ended January 31, 2009, the Company recorded pretax compensation expense associated with stock options of $2.8 million and $3.2 million, respectively, and recorded $1.0 million and $1.2 million of related tax benefit, respectively. For the three months and six months ended January 31, 2008, the Company recorded pretax compensation expense associated with stock options of $3.0 million and $3.3 million, respectively, and recorded $1.1 million and $1.2 million of related tax benefit, respectively.

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The following table summarizes stock option activity during the six months ended January 31, 2009:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at July 31, 2008		5,181,778		$	25.62
Granted		345,875		$	34.11
Exercised		(350,118	)	$	18.20
Canceled		(26,112	)	$	42.97
Outstanding at January 31, 2009		5,151,423		$	26.61

The total intrinsic value of options exercised during the six months ended January 31, 2009 and 2008 was $6.5 million and $14.1 million, respectively.

The following table summarizes information concerning outstanding and exercisable options as of January 31, 2009:

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$15 and below		697,142		1.47	$	12.33		697,142	$	12.33
$15 to $25		1,313,372		3.34	$	18.02		1,313,372	$	18.02
$25 to $35		2,508,789		6.02	$	31.54		2,378,858	$	31.44
$35 and above		632,120		8.55	$	40.61		450,797	$	40.88
		5,151,423		5.03	$	26.61		4,840,169	$	25.93

At January 31, 2009, the aggregate intrinsic value of options outstanding and exercisable was $31.9 million.

As of January 31, 2009, there was $2.5 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 2009, Fiscal 2010, Fiscal 2011 and Fiscal 2012.

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 the three and six months ended January 31, 2009 there were 1,725,001 and 440,020 options excluded from the diluted net earnings per share calculation, respectively. For both the three months and six months ended January 31, 2008 there were 228,548 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 January 31,				Six Months Ended January 31,
	2009		2008		2009		2008
Weighted average shares outstanding basic		77,766		79,740		77,835		79,793
Diluted share equivalents		1,104		1,963		1,502		2,019
Weighted average shares outstanding – diluted		78,870		81,703		79,337		81,812
Net earnings for basic and diluted earnings per share computation	$	33,793	$	34,070	$	81,755	$	77,393
Net earnings per share – basic	$	0.43	$	0.43	$	1.05	$	0.97
Net earnings per share – diluted	$	0.43	$	0.42	$	1.03	$	0.95

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 January 31,					Six Months Ended January 31,
	2009			2008		2009			2008
Net earnings	$	33,793		$	34,070	$	81,755		$	77,393
Foreign currency translation gain (loss)		(14,581	)		8,208		(116,372	)		26,492
Net gain (loss) on hedging derivatives, net of deferred taxes		(396	)		571		652			(222	)
Pension and postretirement liability adjustment, net of deferred taxes		(252	)		110		114			189
Total comprehensive income (loss)	$	18,564		$	42,959	$	(33,851	)	$	103,852

Total accumulated other comprehensive income and its components at January 31, 2009 and July 31, 2008 are as follows (thousands of dollars):

	January 31, 2009			July 31, 2008
Foreign currency translation adjustment	$	22,168		$	138,540
Net gain on hedging derivatives, net of deferred taxes		840			188
Pension and postretirement liability, net of deferred taxes		(25,731	)		(25,845	)
Total accumulated other comprehensive income (loss)	$	(2,723	)	$	112,883

The Company repurchased no shares during the three months ended January 31, 2009. The Company repurchased 802,000 shares for $32.8 million at an average price of $40.86 per share during the six months ended January 31, 2009. As of January 31, 2009 the Company had remaining authorization to repurchase up to 0.9 million shares pursuant to the current authorization.

At January 31, 2009, the fair market value of forward contract assets and liabilities was $3.5 million and $3.0 million, respectively.

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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 and interest income and expense. Segment detail is summarized as follows (thousands of dollars):

	Engine Products		Industrial Products		Corporate and Unallocated			Total Company
Three Months Ended January 31, 2009:
Net sales	$	242,090	$	218,511		—		$	460,601
Earnings before income taxes		10,399		17,423		(2,129	)		25,693
Three Months Ended January 31, 2008:
Net sales	$	284,341	$	227,422		—		$	511,763
Earnings before income taxes		29,434		20,417		(1,196	)		48,655
Six Months Ended January 31, 2009:
Net sales	$	550,867	$	482,994		—		$	1,033,861
Earnings before income taxes		46,544		51,991		(4,341	)		94,194
Assets		643,692		524,260		222,139			1,390,091
Six Months Ended January 31, 2008:
Net sales	$	577,496	$	459,843		—		$	1,037,339
Earnings before income taxes		71,823		44,432		(8,135	)		108,120
Assets		596,373		567,794		263,111			1,427,278

There were no Customers over 10 percent of net sales for the three and six months ended January 31, 2009 and 2008, respectively. There were no Customers over 10 percent of gross accounts receivable as of January 31, 2009 and 2008.

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. Goodwill is assessed for impairment between annual assessments whenever events or circumstances make it more likely than not that an impairment may have occurred. No goodwill was impaired during the six months ended January 31, 2009 or 2008. The Company did not consider there to be any triggering events that would require an interim impairment assessment. The Company has allocated goodwill to its Industrial Products and Engine Products segments. The current year addition to the Engine Products segment is a result of the acquisition of 100 percent of the stock of Western Filter Corporation on October 15, 2008. The allocation is preliminary until the working capital adjustment is finalized. Goodwill associated with this acquisition is tax deductible. Pro forma financial results are not presented as the results of the acquisition are not material to the Company’s financial results. The current year disposition in the Industrial Products segment is a result of the sale of the air dryer business in Maryville, Tennessee on October 31, 2008. Following is a reconciliation of goodwill for the six months ending January 31, 2009 (thousands of dollars):

	Engine Products			Industrial Products			Total Goodwill
Balance as of August 1, 2008	$	19,126		$	115,036		$	134,162
Acquisition activity		44,004			—			44,004
Disposition activity		—			(1,089	)		(1,089	)
Foreign exchange translation		(1,737	)		(12,526	)		(14,263	)
Balance as of January 31, 2009	$	61,393		$	101,421		$	162,814

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As of January 31, 2009, other intangible assets were $66.9 million, a $20.6 million increase from the balance of $46.3 million at July 31, 2008. The increase in other intangible assets is due to the acquisition of Western Filter Corporation partially offset by amortization, foreign exchange and disposition activity.

Note H – Guarantees

The Company and its partner, Caterpillar, Inc., in an unconsolidated joint venture, Advanced Filtration Systems Inc., guarantees certain debt of the joint venture. As of January 31, 2009, the joint venture had $20.0 million of outstanding debt of which the Company guarantees half.

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 six months ended January 31, 2009 and 2008 (thousands of dollars):

	January 31, 2009			January 31, 2008
Beginning balance	$	11,523		$	8,545
Accruals for warranties issued during the reporting period		1,478			2,786
Accruals related to pre-existing warranties (including changes in estimates)		(758	)		1,985
Less settlements made during the period		(1,970	)		(896	)
Ending balance	$	10,273		$	12,420

At January 31, 2009, 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 January 31, 2009, 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 January 31,						Six Months Ended January 31,
	2009			2008			2009			2008
Service cost	$	3,643		$	3,673		$	7,556		$	7,324
Interest cost		4,689			3,635			9,338			7,254
Expected return on assets		(7,491	)		(5,914	)		(14,583	)		(11,813	)
Transition amount amortization		59			40			97			77
Prior service cost amortization		112			106			218			213
Actuarial loss amortization		511			(23	)		565			(48	)
Total periodic benefit cost	$	1,523		$	1,517		$	3,191		$	3,007

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 six months ended January 31, 2009, the Company made $2.1 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 $2.9 million to its non-U.S. pension plans during the remainder of Fiscal 2009.

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The recent drops in the fair value of our plan assets may result in significant charges to other comprehensive income and a potential increase in Fiscal 2010 pension expense to the extent the effects are not offset by a change in discount rate at the time of our annual pension measurement on July 31, 2009.

During the three months ended January 31, 2009, the Company recorded $4.3 million in restructuring costs as a result of global workforce reductions that were communicated during the quarter.

Note J – Commitments and Contingencies

In accordance with SFAS No. 5, “Accounting for Contingencies,” (SFAS No. 5), the Company records provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the recorded reserves in its consolidated financial statements are adequate in light of the probable and estimable outcomes. Any recorded liabilities were not material to the Company’s financial position, results of operation and liquidity and the Company does not believe that any of the currently identified claims or litigation will materially affect its financial position, results of operation and liquidity.

Note K – Income Taxes

The effective tax rate for the three months ended January 31, 2009 was a benefit of (31.5) percent, compared to a prior year rate of 30.0 percent. The effective tax rate for the six months ended January 31, 2009 and 2008 was 13.2 percent and 28.4 percent, respectively. The six months ended January 31, 2009 contains $16.7 million of discrete tax benefits, $15.0 million of which occurred in the second quarter. Second quarter benefits from the effective settlements of long-standing court cases and examinations in various jurisdictions for tax years 2003 to 2006 totaled $6.2 million. The remaining $8.8 million of benefits were primarily the result of the reassessment of the corresponding unrecognized tax benefits for the subsequent open years. The prior year six month period contained $4.0 million of discrete tax reductions, primarily related to the expiration of statutes on unrecognized tax benefits and the reduction in beginning of the year deferred tax liabilities related to enacted foreign tax rate changes, nearly all of which occurred in the first quarter. Absent these items, the average underlying tax rate for the year-to-date period has decreased from the prior year by 1.2 points to approximately 31 percent. The reinstatement of the Research and Experimentation credit, the mix of earnings between entities, and an increased domestic manufacturing deduction all contributed to the reduction.

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 2008
China	1999 through 2008
France	2004 through 2008
Germany	2004 through 2008
Italy	2003 through 2008
Japan	2006 through 2008
Mexico	2003 through 2008
United Kingdom	2007 through 2008
United States	2004 through 2008

At January 31, 2009 the total unrecognized tax benefits were $18.6 million, and accrued interest and penalties on these unrecognized tax benefits were $2.1 million. The Company recognizes interest accrued related to unrecognized tax benefits in income tax expense. 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. After the large amount of effectively settled issues in the second quarter, only

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$1.1 million of the unrecognized tax benefits could potentially expire through statute of limitations in the next 12 month period, unless extended by audit. It is reasonably possible that additional reductions in unrecognized tax benefits may occur within the fiscal year due to settlement of tax disputes; however, quantification of an estimated range and timing cannot be made at this time.

Note L – New Accounting Standards

In September 2006, the Financial Accounting Standards Board (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 2009.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). This statement defines fair value, establishes a framework for measuring fair value in U.S. generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies whenever another standard requires (or permits) assets or liabilities to be measured at fair value, except for the measurement of share-based payments. SFAS 157 does not expand the use of fair value to any new circumstances, and was effective for the majority of the Company’s assets and liabilities for its Fiscal 2009 year beginning August 1, 2008. The adoption of this portion of SFAS 157 in Fiscal 2009 did not have a material impact on the Company’s financial statements. On February 12, 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2, Effective Date of FASB Statement No. 157 (FSP FAS 157-2). FSP FAS 157-2 delays by one year the effective date of SFAS 157 for certain non-financial assets and non-financial liabilities. The Company is currently evaluating the impact the FSP FAS 157-2 will have on the determination of fair value related to non-financial assets and non-financial liabilities in Fiscal 2010.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and was adopted by the Company on August 1, 2008. The Company did not elect the fair value option and therefore the adoption of SFAS 159 did not have an impact on the Company’s financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS 141(R)), which changes the accounting for business combinations and their effects on the financial statements. SFAS 141(R) will be effective for the Company at the beginning of Fiscal 2010. In February 2009, the FASB issued FASB Staff Position 141(R)-a, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (FSP FAS 141(R)-a), which will amend certain provisions of SFAS 141(R). The adoptions of SFAS 141(R) and FSP FAS 141(R)-a are not expected to have a material impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities, including (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for the Company beginning in the third quarter of Fiscal 2009. The adoption of SFAS 161 only requires additional disclosures about the Company’s derivatives and thus will not affect the Company’s consolidated financial statements.

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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 filtration systems and exhaust and emission control products. Products are manufactured at 40 plants around the world and through three joint ventures.

The Company has two reporting segments: Engine Products and Industrial Products. Products in the Engine Products segment consist of air filtration 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 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 filtration systems, intake air filtration 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 clean 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 diluted net earnings per share of $0.43 for the second quarter of Fiscal 2009, up from $0.42 in the second quarter of the prior year. Net income for the quarter was $33.8 million, compared to $34.1 million in the second quarter of the prior year. The impact of foreign currency translation decreased reported net earnings by 4.8 percent in the quarter. The Company reported sales in the second quarter of Fiscal 2009 of $460.6 million, a decrease of 10.0 percent from $511.8 million in the second quarter of the prior year. The impact of foreign currency translation decreased reported sales by 4.7 percent in the quarter.

The global recession impacted the Company significantly in the second quarter. The drop in sales volume was widespread, particularly in the Engine Products segment. Continued strong sales in the aerospace and defense, retrofit emissions and gas turbine businesses helped offset weaknesses in the other end markets. Conditions were also generally weak internationally, as local currency sales decreased 14 percent in Asia and 7 percent in Europe, while sales in the Americas were flat as compared to last year.

The drop in production volumes caused under absorption of fixed manufacturing and operating expenses. In addition to the Company’s continued focus on operating expense controls and product cost reductions, the Company completed workforce reductions within many of its businesses as it balanced staffing with its Customers’ current order levels. Consequently, the Company has already reduced its global workforce by approximately 1,850 temporary, contract and regular employees since the beginning of this fiscal year and incurred $4.3 million of related costs during the current quarter. As a result of the combination of the under absorption of fixed costs and restructuring related expenses, the Company’s operating margin in the second quarter was 6.0 percent and below last year’s margin of 9.9 percent.

The Company’s balance sheet remains strong, and it expects to continue generating free cash flow to fund its operations. For the six-month period, the Company generated $70.6 million in free cash flow, a $52.6 million increase over the prior year.

The Company is planning additional restructuring actions in the third quarter and expects to incur approximately $2.9 million of related costs in the third quarter as a result of these actions. The Company expects that the combination of its restructuring actions to date, together with restructuring actions still planned, will generate approximately $85 million of ongoing annualized cost savings when completed.

While the Company does not have visibility of either the length or depth of this recession, it is now planning for this global downturn to continue at least through the balance of calendar 2009.

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Results of Operations

Almost all regions in which the Company operates have been impacted by the global recession. Sales in the United States decreased $4.7 million or 2.4 percent for the second quarter of Fiscal 2009 compared to the second quarter of the prior year. Total international sales in U.S. dollars decreased $46.4 million or 14.9 percent in the second quarter compared to the prior year. In U.S. dollars, Europe sales decreased $29.8 million or 16.9 percent, Asia sales decreased $15.8 million or 14.2 percent and other international sales decreased $0.8 million or 3.3 percent for the second quarter of Fiscal 2009 as compared to the prior year period. Translated at constant exchange rates, total international sales decreased 7.2 percent over the prior year quarter. For the six month period ended January 31, 2009, sales in the United States increased $15.8 million or 3.8 percent from the prior year, and total international sales in U.S. dollars decreased $19.3 million or 3.1 percent from the prior year.

The impact of foreign currency translation during the second quarter of Fiscal 2009 decreased sales by $24.2 million, or 4.7 percent. The impact of foreign currency translation on the year-to-date results as of the second quarter of Fiscal 2009 decreased sales by $20.6 million. Worldwide sales for the second quarter of Fiscal 2009, excluding the impact of foreign currency translation, decreased 5.3 percent from the second quarter of the prior year. The impact of foreign currency translation decreased net income by $1.6 million and $2.0 million for the three and six month periods of Fiscal 2009, 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 January 31,					Six Months Ended January 31,
	2009			2008		2009			2008
Net sales, excluding foreign currency translation	$	484,770		$	484,689	$	1,054,437		$	989,653
Foreign currency translation		(24,169	)		27,074		(20,576	)		47,686
Net sales	$	460,601		$	511,763	$	1,033,861		$	1,037,339
Net earnings, excluding foreign currency translation	$	35,420		$	30,554	$	83,724		$	70,625
Foreign currency translation.		(1,627	)		3,516		(1,969	)		6,768
Net earnings	$	33,793		$	34,070	$	81,755		$	77,393

Gross margin for the second quarter of Fiscal 2009 was 29.1 percent compared to 31.9 percent for the second quarter in the prior year. Higher under absorption of fixed costs due to the drop in production volumes negatively impacted gross margin by $9.7 million. The Company also had $2.4 million in restructuring costs which reduced gross margin in the quarter. Purchased material costs remained higher than last year’s levels and have mostly been offset by a combination of internal cost reduction efforts and selective price increases to our Customers. During the second quarter of Fiscal 2008, the Company began utilizing a new warehouse management system at its main U.S. distribution center. The Company encountered issues during the transition to the new system which resulted in approximately $2.1 million in incremental distribution charges for the three months ended January 31, 2008. In addition, sales were impacted by approximately $5.5 million as the Company experienced delays in processing Customer orders for the three months ended January 31, 2008.

Operating expenses during the second quarter of Fiscal 2009 were $106.2 million, or 23.0 percent of sales, compared to $112.6 million, or 22.0 percent of sales, in the prior year period. The second quarter of Fiscal 2009 included $2.8 million for the majority of the Company’s annual stock option expense

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(compared to $3.0 million in the prior year quarter) and $1.9 million in headcount reduction costs. Year-to-date operating expenses were 21.6 percent of sales, up from 21.4 percent in the prior year, due to the decline in sales.

Other income for the second quarter of Fiscal 2009 totaled $2.6 million, compared to $2.2 million of other income in the second quarter of the prior year. Other income for the second quarter of Fiscal 2009 consisted of royalty income of $1.7 million, interest income of $0.6 million, foreign exchange gains of $0.5 million and other miscellaneous income of $0.5 million partially offset by losses in equity method investments of $0.7 million. For the second quarter of Fiscal 2009, interest expense was $4.7 million, up from $4.1 million in the second quarter of the prior year, due to higher debt levels. Year-to-date, other income totaled $5.7 million compared to $2.0 million reported in the prior year. Year-to-date interest expense was $9.0 million, up from $8.3 million in the prior year.

The effective tax rate for the three months ended January 31, 2009 was a benefit of (31.5) percent, compared to a prior year rate of 30.0 percent. The effective tax rate for the six months ended January 31, 2009 and 2008 was 13.2 percent and 28.4 percent, respectively. The six months ended January 31, 2009 contains $16.7 million of discrete tax benefits, $15.0 million of which occurred in the second quarter. Second quarter benefits from the effective settlements of long-standing court cases and examinations in various jurisdictions for tax years 2003 to 2006 totaled $6.2 million. The remaining $8.8 million of benefits were primarily the result of the reassessment of the corresponding unrecognized tax benefits for the subsequent open years. The prior year six month period contained $4.0 million of discrete tax reductions, primarily related to the expiration of statutes on unrecognized tax benefits and the reduction in beginning of the year deferred tax liabilities related to enacted foreign tax rate changes, nearly all of which occurred in the first quarter. Absent these items, the average underlying tax rate for the year-to-date period has decreased from the prior year by 1.2 points to approximately 31 percent. The reinstatement of the Research and Experimentation credit, the mix of earnings between entities, and an increased domestic manufacturing deduction all contributed to the reduction.

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 and interest income and expense. Segment detail is summarized as follows (thousands of dollars):

	Engine Products		Industrial Products		Corporate and Unallocated			Total Company
Three Months Ended January 31, 2009:
Net sales	$	242,090	$	218,511		—		$	460,601
Earnings before income taxes		10,399		17,423		(2,129	)		25,693
Three Months Ended January 31, 2008:
Net sales	$	284,341	$	227,422		—		$	511,763
Earnings before income taxes		29,434		20,417		(1,196	)		48,655
Six Months Ended January 31, 2009:
Net sales	$	550,867	$	482,994		—		$	1,033,861
Earnings before income taxes		46,544		51,991		(4,341	)		94,194
Assets		643,692		524,260		222,139			1,390,091
Six Months Ended January 31, 2008:
Net sales	$	577,496	$	459,843		—		$	1,037,339
Earnings before income taxes		71,823		44,432		(8,135	)		108,120
Assets		596,373		567,794		263,111			1,427,278

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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 January 31,				Six Months Ended January 31,
	2009		2008		2009		2008
Engine Products segment:
Off-road Products*	$	93,871	$	106,842	$	208,695	$	211,466
Transportation Products		16,422		28,666		44,144		58,755
Aftermarket Products**		131,797		148,833		298,028		307,275
Total Engine Products segment	$	242,090	$	284,341	$	550,867	$	577,496
Industrial Products segment:
Industrial Filtration Solutions Products	$	127,397	$	138,802	$	282,604	$	275,096
Gas Turbine Products		56,995		41,252		116,880		90,188
Special Applications Products		34,119		47,368		83,510		94,559
Total Industrial Products segment	$	218,511	$	227,422	$	482,994	$	459,843
Total Company	$	460,601	$	511,763	$	1,033,861	$	1,037,339

* Includes Aerospace and Defense products.

** Includes replacement part sales to the Company’s original equipment manufacturer Customers.

Engine Products Segment    For the second quarter of Fiscal 2009, worldwide Engine Products sales were $242.1 million, a decrease of 14.9 percent from $284.3 million in the second quarter of the prior year. Total second quarter Engine Products sales in the United States decreased by 5.8 percent compared to the same period in the prior year and international sales decreased by 23.6 percent as discussed below. The impact of foreign currency translation during the second quarter of Fiscal 2009 decreased sales by $11.1 million, or 3.9 percent. Earnings before income taxes as a percentage of Engine Products segment sales of 4.3 percent decreased from 10.4 percent in the prior year. The Engine Products segment has been negatively impacted by under absorption of fixed manufacturing costs and operating expenses due to the drop in sales volumes and increased costs of $2.5 million related to restructuring. Year-to-date, worldwide net sales were $550.9 million, a decrease of 4.6 percent from $577.5 million in the prior year. International Engine Products sales decreased 9.7 percent and sales in the United States increased 0.5 percent from the prior year on a year-to-date basis. The impact of foreign currency translation on the year-to-date results as of the second quarter of Fiscal 2009 decreased sales by $9.5 million, or 1.6 percent. Year-to-date, earnings before income taxes as a percentage of Engine Products segment sales of 8.4 percent decreased from 12.4 percent in the prior year.

Worldwide sales of Off-road Products in the second quarter of Fiscal 2009 were $93.9 million, a decrease of 12.1 percent from $106.8 million in the second quarter of the prior year. Domestic sales in Off-road Products increased 0.7 percent due to strong aerospace and defense sales and the acquisition of Western Filter Corporation, which contributed to $6.2 million of the increase. Strong demand for filters for Black Hawk helicopters and other military equipment increased sales by $2.1 million in the quarter. Spending in U.S. residential construction markets is down more than 20 percent over prior year, resulting in a decrease in the sales of the Company’s products into those markets. In addition, mining activity has slowed due to decreased commodity prices. International sales were down 26.0 percent from the second quarter of the prior year with decreases in Europe and Asia of 28.5 percent and 22.6 percent, respectively. Sales to the European agricultural end market were slightly favorable over the prior year quarter, but were offset by significant declines in the construction equipment end market associated with decreased construction activity due to the economic downturn. In Asia, sales have declined significantly in Japan in the construction end markets, offset slightly by foreign exchange gains. Year-to-date, worldwide Off-road Products sales totaled $208.7 million, a decrease of 1.3 percent from $211.5 million in the prior year. Year-to-date sales of Off-road Products increased 6.8 percent in the United States and decreased 10.4 percent internationally over the prior year.

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Worldwide sales of Transportation Products in the second quarter of Fiscal 2009 were $16.4 million, a decrease of 42.7 percent from $28.7 million in the second quarter of the prior year. International Transportation Products sales decreased by 38.1 percent driven by decreased sales in Europe and Asia of 58.7 percent and 20.4 percent, respectively, reflecting the current economic downturn for freight activity and transportation equipment build rates. Sales decreased in the United States by 46.5 percent primarily as a result of a 19 percent decrease in Class 8 truck build rates and a 32 percent decrease in medium duty truck build rates by the Company’s Customers over the prior year quarter. Year-to-date, worldwide Transportation Products sales totaled $44.1 million, a decrease of 24.9 percent from $58.8 million in the prior year. International Transportation Products sales decreased 15.2 percent from the prior year on a year-to-date basis. Transportation Products sales in the United States decreased 32.5 percent from the prior year on a year-to-date basis as a result of the rapid deceleration of economic conditions and low build rates. No prebuy is expected for Transportation Products in advance of the Environmental Protection Agency’s 2010 diesel emissions regulations.

Worldwide sales of Aftermarket Products in the second quarter were $131.8 million, a decrease of 11.4 percent from $148.8 million in the second quarter of the prior year. U.S. Aftermarket Products sales decreased 1.8 percent driven by decreases in utilization rates in the mining, construction and transportation industries, partially offset by increases in retrofit emission sales of $1.5 million in the quarter. International sales were down 19.7 percent from the prior year quarter, primarily driven by a sales decrease in Europe of 29.8 percent, due to the worsening economic conditions in Europe. Year-to-date, worldwide Aftermarket Products sales totaled $298.0 million, a decrease of 3.0 percent from $307.3 million in the prior year. Year-to-date Aftermarket Products sales increased 3.1 percent in the United States and decreased 8.4 percent internationally over the prior year.

Industrial Products Segment    For the second quarter of Fiscal 2009, worldwide sales in the Industrial Products segment were $218.5 million, a decrease of 3.9 percent from $227.4 million in the second quarter of the prior year. Total second quarter international Industrial Products sales were down 7.4 percent compared to the same period in the prior year, while sales in the United States increased by 5.7 percent. The impact of foreign currency translation during the second quarter of Fiscal 2009 decreased sales by $13.1 million, or 5.7 percent. Earnings before income taxes as a percentage of Industrial Products segment sales of 8.0 percent decreased from 9.0 percent in the prior year. This earnings weakening over the prior year was driven by an unfavorable product mix, increased costs of $1.8 million related to restructuring, and under absorption of fixed manufacturing costs and operating expenses due to the drop in sales volumes. Year-to-date, worldwide net sales were $483.0 million, an increase of 5.0 percent from $459.8 million in the prior year. International Industrial Products sales increased 2.7 percent and sales in the United States increased 11.2 percent from the prior year on a year-to-date basis. The impact of foreign currency translation on the year-to-date results as of the second quarter of Fiscal 2009 decreased sales by $11.1 million, or 2.4 percent. Year-to-date, earnings before income taxes as a percentage of Industrial Products segment sales of 10.8 percent increased from 9.7 percent in the prior year. This earnings improvement over the prior year was driven by an increase in plant utilization due to higher volumes in the Industrial Filtration Solutions Products business during the first quarter, the impact of cost control measures and the non-recurrence of large low margin projects shipped in Fiscal 2008.

Worldwide sales of Industrial Filtration Solutions Products in the second quarter were $127.4 million, a decrease of 8.2 percent from $138.8 million in the prior year. International sales decreased 8.6 percent over the prior year with sales in Europe showing a decrease of 18.2 percent while Asia sales showed an increase of 21.3 percent. Excluding foreign currency, international sales increased 0.6 percent. The decline in Europe was due to reduced demand for industrial dust collectors and compressed air filtration equipment which fell with the dramatic downturn in general manufacturing activity during the quarter. The increase in Asia was due to several large industrial dust collection systems that were shipped in the quarter. Domestic sales decreased 7.5 percent over the prior year quarter. In addition to the sale of the air dryer business in Maryville, Tennessee, which decreased sales $2.3 million over last year, machine tool consumption decreased approximately 50 percent over the prior year, which contributed to the decline in demand for the Company’s products in the United States. The impact of the February 4, 2008 acquisition of LMC West, Inc. increased the Company’s U.S. sales by approximately

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$1.5 million over the prior year quarter. Year-to-date, worldwide sales of Industrial Filtration Solutions products were $282.6 million, up 2.7 percent from $275.1 million in the prior year. International Industrial Filtration Solutions product sales increased 3.0 percent from the prior year on a year-to-date basis. Sales in the United States increased 2.1 percent from the prior year on a year-to-date basis.

Worldwide sales of the Company’s Gas Turbine Products in the second quarter were $57.0 million, an increase of 38.2 percent from sales of $41.3 million in the second quarter of the prior year. Sales were strong compared to the prior year as a significant number of projects shipped in the quarter. The Gas Turbine Products sales include large systems and as a result the shipments and revenues can fluctuate from quarter to quarter. Year-to-date, worldwide Gas Turbine Products sales were $116.9 million, up 29.6 percent from $90.2 million in the prior year.

Worldwide sales of Special Application Products in the second quarter were $34.1 million, a decrease of 28.0 percent from $47.4 million in the prior year period. Domestic Special Application Products sales decreased 1.0 percent. International sales of Special Application Products decreased 31.0 percent over the prior year. The primary decreases internationally were in Asia and Europe, which decreased 34.1 and 14.3 percent, respectively, due to a significant reduction in demand for filters for hard disk drives and semiconductor fabrications based on a worldwide contraction in the end markets for computers, data storage devices and other electronic products only partially offset by sales growth from the Company’s PTFE membrane filtration products. Year-to-date, worldwide Special Application Products sales were $83.5 million, a decrease of 11.7 percent from $94.6 million in the prior year, driven by an international Special Application Products sales decrease of 13.9 percent over the prior year.

Liquidity and Capital Resources

The Company generated $93.8 million of cash and cash equivalents from operations during the first six months of Fiscal 2009. Operating cash flows increased by $47.5 million from the same period in the prior year, primarily as a result of decreases in accounts receivable and inventory balances which resulted in $50.1 million and $61.1 million of additional cash flow from operations as compared to the prior year, respectively. Operating cash flows, additional borrowings and cash on hand were used to support $23.3 million in capital additions, the acquisition of Western Filter Corporation for $78.5 million, the repurchase of 0.8 million outstanding shares of the Company’s common stock for $32.8 million and the payment of $17.4 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 second quarter, the Company held $76.0 million in cash and cash equivalents, down from $83.4 million at July 31, 2008. Short-term debt totaled $111.5 million, down from $139.4 million at July 31, 2008, primarily due to cash generated from operations The amount of unused lines of credit as of January 31, 2009 was approximately $484.7 million. Long-term debt of $256.7 million at January 31, 2009 increased from $176.5 million at July 31, 2008. The increase in long-term debt is a result of the issuance of an $80.0 million senior unsecured note on November 14, 2008 at an interest rate of 6.59 percent due November 14, 2013. Long-term debt represented 27.9 percent of total long-term capital, defined as long-term debt plus total shareholders’ equity, compared to 19.3 percent at July 31, 2008. The Company has not made and does not anticipate making any contributions to its U.S. pension plans for the remainder of Fiscal 2009, and estimates that it will contribute up to an additional $2.9 million to its non-U.S. pension plans during the remainder of Fiscal 2009.

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The following table summarizes the Company’s contractual obligations as of January 31, 2009 (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	$	260,704	$	5,075	$	49,211	$	80,305	$	126,113
Capital lease obligations		1,542		490		886		166		—
Interest on long-term obligations		86,765		14,407		26,405		22,735		23,218
Operating lease obligations		20,879		8,191		8,936		3,658		94
Purchase obligations(1)		124,383		119,407		4,961		15		—
Pension and deferred compensation (2)		28,854		2,588		3,273		3,121		19,872
Total (3)	$	523,127	$	150,158	$	93,672	$	110,000	$	169,297

(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 $18.6 million of potential tax obligations. 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 January 31, 2009, 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 January 31, 2009, 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. This facility expires on April 2, 2013. As of January 31, 2009, there was $80.0 million of borrowings under this facility.

Certain note agreements contain debt covenants related to limitations on indebtedness and interest expense. As of January 31, 2009, the Company was in compliance with all such covenants. The Company currently expects to remain in compliance with these covenants in the foreseeable future, even in spite of the global economic downturn.

On November 14, 2008, the Company issued an $80 million senior unsecured note. The note is due on November 14, 2013. The debt was issued at face value and bears interest payable semi-annually at a rate of 6.59 percent. The proceeds from the note were used to refinance existing debt and for general corporate purposes.

During the first quarter of Fiscal 2009, the global credit market began to experience a significant tightening of credit availability and interest rate volatility. This crisis resulted in reduced funding available for commercial banks and corporate debt issuers. As a result, capital market financing became more expensive and less available. The Company has assessed the implications of these factors on its current business and believes that its current financial resources are sufficient to continue financing its operations. There can be no assurance, however, that the cost or availability of future borrowings will not be impacted by ongoing capital market disruptions.

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, as the Company expects to continue to generate positive cash flows from operations.

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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.

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, 2008.

Outlook

The global recession impacted the Company significantly during the quarter. The Company saw a widespread decrease in sales volume, particularly in the Engine Products segment. As a result of this, along with updates from its Customers, the Company has revised its full year guidance to the levels discussed below.

Engine Products Segment    The Company expects forecasted full year sales to decrease 11 to 16 percent, inclusive of the impact of foreign currency translation.

• In NAFTA Transportation Products, the Company is not expecting a prebuy in advance of the 2010 diesel emission regulations and believes that build rates for heavy- and medium-duty trucks will be down 20 to 30 percent from last year. Build rates are also forecast to be down similarly in Europe and Japan.

• Demand in the Company’s aerospace and defense end markets is projected to begin to moderate, but it should benefit from the recent acquisition of Western Filter.

• The Company expects global construction, mining and light industrial markets to remain weak. Based on recent Customer announcements, the Company also believes that the global farm equipment market will soften.

• The Company’s Aftermarket sales are expected to continue to decline due to the drop in economic activity that has negatively impacted utilization rates for both trucks and off-road equipment. The Company believes the increasing amount of equipment in the field with its PowerCore® technology as well as its other proprietary filtration systems will partially offset the weak utilization rates.

Industrial Products Segment    The Company now forecasts full year sales to decrease 10 to 15 percent, inclusive of the impact of foreign currency translation.

• The Company’s Industrial Filtration Solutions’ sales are projected to decrease 10 to 15 percent. The Company expects the rapidly weakening global manufacturing environment to be partially offset by the growing demand for its new products, such as Torit^® PowerCore.

• While the Company anticipates full year unit volume to be flat in its Gas Turbine Systems business, it forecasts full year gas turbine filter sales to decrease 2 to 7 percent due to the impact of foreign currency translation.

• Special Applications Products’ sales are projected to decrease 15 to 20 percent due to weak conditions in the hard disk drive market.

Other

• The Company forecasts total sales to be between $1.9 and $2.0 billion, or down 10 to 15 percent for the year. Foreign currency translation is expected to account for about 40 percent of this decrease. This assumes conversion rates for the Euro at $1.28 and 91 Yen to the US Dollar.

• Due to the Company’s lower sales outlook, it believes that under absorption of fixed costs will continue and has reduced its full year operating margin guidance to between 9.5 to 10.0 percent.

• Following the favorable resolution of several tax contingencies in the second quarter, the full year tax rate should be between 21 and 23 percent.

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SAFE HARBOR STATEMENT UNDER THE SECURITIES REFORM ACT OF 1995

The Company desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”) in connection with this Quarterly Report on Form 10-Q and is making this cautionary statement in connection with such safe harbor legislation. This announcement contains forward-looking statements, including forecasts, plans, and projections relating to our business and financial performance and global economic conditions, which involve uncertainties that could materially impact results. 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.

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, 2008, 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: world economic factors and the ongoing and deepening economic downturn that is negatively impacting all regions of the world, the recent significant reduction in sales volume and orders, our Customers’ financial condition, currency fluctuations, commodity prices, political factors, the company’s international operations, highly competitive markets, governmental laws and regulations, including the impact of the unprecedented economic stimulus measures being implemented by governments around the world, the implementation of our new information systems, and other factors included in Item 1A of the Company’s Annual Report on Form 10-K.

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, 2008. See further discussion of these market risks in the Company’s Annual Report on Form 10-K for the year ended July 31, 2008.

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 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 January 31, 2009, has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

In accordance with SFAS No. 5, “Accounting for Contingencies,” (SFAS No. 5), the Company records provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the recorded reserves in its consolidated financial statements are adequate in light of the probable and estimable outcomes. Any recorded liabilities were not material to the Company’s financial position, results of operation and liquidity and the Company does not believe that any of the currently identified claims or litigation will materially affect its financial position, results of operation and liquidity.

Item 1A.  Risk Factors

There are inherent risks and uncertainties associated with our global operations that involve the 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, 2008 includes a discussion of these risks and uncertainties. In light of the current global economic slowdown and the unprecedented volatility in the world’s financial markets, we want to further highlight risks and uncertainties associated with: world economic factors, the recent significant reduction in sales volume and orders, our Customers’ financial condition, currency fluctuations, commodity prices, political factors, the company’s international operations, highly competitive markets, governmental laws and regulations, including the impact of the unprecedented economic stimulus measures being implemented by governments around the world, the implementation of our new information systems, and other factors included in Item 1A of the Company’s Annual Report on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements.

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 January 31, 2009.

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
November 1 – November 30, 2008		3,096	$	30.16		—		930,210 shares
December 1 – December 31, 2008		8,227	$	34.22		—		930,210 shares
January 1 – January 31, 2009		1,543	$	34.07		—		930,210 shares
Total		12,866	$	33.22		—		930,210 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 January 31, 2009. However, the “Total Number of Shares Purchased” column of the table above includes 12,866 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.

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Item 4.  Submission of Matters to a Vote of Security Holders

(a)	The Annual Meeting of Shareholders of the Company was held on November 21, 2008. A total of 76,917,375 shares were outstanding and entitled to vote at the meeting. A total of 68,891,531 shares were present at the meeting.
(b)	Not Applicable.
(c)	Matters Submitted and Voting Results:

(i) Election of Directors

Name of Nominee	Vote Tabulation
	For	Withheld
F. Guillaume Bastiaens	67,424,059	1,467,472
Janet M. Dolan	67,419,408	1,472,123
Jeffrey Noddle	67,280,881	1,610,650

(ii) Ratified appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending July 31, 2009 with the following: For – 68,635,819; Against – 98,021; Abstaining – 157,691.

(a) Not Applicable.

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 30, 2009)

*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)

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: March 3, 2009	By:	/s/ William M. Cook
		William M. Cook Chairman, President and Chief Executive Officer (duly authorized officer)
Date: March 3, 2009	By:	/s/ Thomas R. VerHage
		Thomas R. VerHage Vice President, Chief Financial Officer (principal financial officer)
Date: March 3, 2009	By:	/s/ James F. Shaw
		James F. Shaw Controller (principal accounting officer)

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EX-3.C

Exhibit 3-C

AMENDED AND RESTATED

BYLAWS

OF

DONALDSON COMPANY, INC.

(as of January 30, 2009)

Offices

1. The principal office of the Company shall be in Wilmington, Delaware, and the resident agent in charge thereof shall be The Corporation Trust Company. The registered agent of the Company may be changed from time to time by action of the Board of Directors. The Company may also have an office or offices at such place or places, within or without the State of Delaware as the Board of Directors may from time to time designate or the business of the Company may require.

Corporate Seal

2. The corporate seal shall have inscribed thereon the name of the Company, the year of its incorporation, and the words “Incorporated Delaware.”

Meetings of Stockholders

3. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the third Friday in November of each year or on such other date as may be fixed by resolution of the Board of Directors.

Special meetings of the stockholders may only be called at any time by (i) the chairman of the Board of Directors or the president or (ii) by vote of a majority of the directors.

All meetings of the stockholders, including meetings for the election of directors, shall be held at such place or places within or without the State of Delaware as may from time to time be fixed by the Board of Directors or shall be specified and fixed in the respective notices or waivers of notices thereof.

No business may be transacted at an annual meeting or special meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the meeting by any stockholder of record on the date of the giving of the notice provided for in this Bylaw 3 and on the record date for the determination of stockholders entitled to vote at such meeting.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting or special meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the Company.

For notice to be timely for an annual meeting, a stockholder’s notice to the secretary must be delivered to or mailed and received at the principal executive offices of the Company not less than ninety days nor more than one-hundred twenty days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be received no later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs. In no event shall the public disclosure of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described in these Bylaws.

For all matters other than the election of directors, to be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting a brief description of the business desired to be brought before the annualmeeting and the reasons for conducting such business at the annual meeting and as to the stockholder giving notice and any “Stockholder Associated Person” (which for purposes of these Bylaws shall mean (i) any person acting in concert, directly or indirectly, with such stockholder and (ii) any person controlling, controlled by or under common control with such stockholder or any Stockholder Associated Person), (a) the name and record address of such person, (b) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such person, (c) the nominee holder for, and number of, shares beneficially owned but not of record by such person, (d) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any derivative or short positions, profits interests, options or borrowed or loaned shares) has been made, the effect or intent of which is to mitigate loss or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such person with respect to any share of stock of the Company, (e) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the proposal of business on the date of such stockholder’s notice, (f) a description of all arrangements or understandings between or among such persons in connection with the proposal of such business by such stockholder and any material interest in such business, (g) notice whether such person intends to solicit proxies in connection with the proposal and (h) a representation that the stockholder giving the notice intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. Any information required pursuant to this paragraph shall be supplemented by the stockholder giving the notice to speak as of the record date, such supplement to be received by the Company not later than ten days after the record date for the meeting. Nothing in this paragraph shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For all nominations of persons for election to the Board of Directors at any annual meeting or special meeting of stockholders, to be in proper written form, a stockholder’s notice to the secretary must set forth as to each person whom the stockholder proposes to nominate for election or reelection as a director and as to the stockholder giving the notice and any Stockholder Associated Person (a) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations

promulgated thereunder, (b) the name and record address of such person, (c) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such person, (d) the nominee holder for, and number of, shares beneficially owned but not of record by such person, (e) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any derivative or short positions, profit interests, options or borrowed or loaned shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such person with respect to any share of stock of the Company, (f) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director on the date of such stockholder’s notice, (g) a description of all arrangements or understandings between or among such persons pursuant to which the nomination(s) are to be made by the stockholder and any relationship between or among the stockholder giving notice and any Stockholder Associated Person, on the one hand, and each proposed nominee, on the other hand, (h) notice whether such person intends to solicit proxies in connection with the nominations and (i) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in the notice. Any information required pursuant to this paragraph shall be supplemented by the stockholder giving the notice to speak as of the record date, such supplement to be received by the Company not later than ten days after the record date for the meeting. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Company’s notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Company who is a stockholder of record at the time of giving of notice provided for in this Bylaw 3, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Bylaw 3. In the event the Company calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Company’s notice of meeting, if the stockholder’s notice required by this Bylaw 3 shall be delivered to the secretary at the principle executive offices of the Company not earlier than one-hundred twenty days prior to such special meeting and not later than the later of ninety days prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder’s notice as described in this Bylaw 3.

A complete list of stockholders entitled to vote, arranged in alphabetical order, shall be prepared by the secretary and shall be open to the examination of any stockholder at the place of election, for ten days prior thereto, and during the whole time of the election.

No business shall be conducted at an annual meeting or special meeting of stockholders except business brought before the meeting in accordance with the procedures set forth in this Bylaw 3; provided, however, that, once business has been properly brought before such meeting in accordance with such procedures, nothing in this Bylaw 3 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting or special meeting determines that business was not properly brought before such meeting in accordance with the foregoing procedures (including the provisions for information required to be furnished pursuant to this Bylaw 3), the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Except as otherwise provided by statute or by the Certificate of Incorporation, at each meeting of the stockholders each stockholder having the right to vote thereat shall be entitled to (i) one vote, in person or by proxy signed by such stockholder, for each share of common stock of the Company standing in such stockholder’s name, and (ii) such voting rights, if any, as are provided in the applicable Certificate of Designation, Preferences and Rights with respect to any series of preferred stock of the Company standing in such stockholder’s name, which voting rights may be exercised in person or by proxy signed by such stockholder, and in all such instances on the date fixed by the Board of Directors as the record date for the determination of the stockholders who shall be entitled to notice of and vote at such meeting; or if no record date shall have been fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given. Such right to vote shall be subject to the right of the Board of Directors to close the transfer books or to fix a record date for voting stockholders as hereinafter provided and if the directors shall not have exercised such right, no share of stock shall be voted on at any election for directors which shall have been transferred on the books of the Company within twenty days next preceding such election.

Written notice of all meetings shall be given by the secretary not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting.

The holders of a majority of the Common Stock outstanding present in person or represented by proxy shall be requisite to and shall constitute a quorum for the transaction of business except as otherwise provided by law or by the Certificate of Incorporation as amended or by these Bylaws. Whether or not there is such a quorum present at any meeting, the chairman of the meeting shall have power to adjourn the meeting from time to time. No notice of the time and place of adjourned meetings need be given except as required by law. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted that might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Directors

4. The property and business of the Company shall be managed and controlled by its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be such number, not less than three nor more than fifteen, as may be determined from time to time by the Board of Directors by a vote of not less than a majority

of all of the directors then in office. All directors to be elected shall be elected for three-year terms (except as hereinafter provided with respect to directors to fill certain vacancies) so that approximately one-third of the directors will be elected to each annual meeting of the stockholders. Each director shall continue in office until the annual meeting in the year in which such director’s term expires and until such director’s successor shall have been elected and qualified, or until such director’s death, or until such director shall resign or have been removed by the vote of the holders of a majority of the outstanding shares of capital stock of all classes of the Company entitled to vote in the election of directors at a special meeting of the stockholders called for that purpose.

A nominee for director shall be elected to the Board of Directors by the vote of the majority of the votes cast at any meeting for the election of directors at which a quorum is present; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the secretary of the Company receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Bylaw 3 and (ii) such nomination has not been withdrawn by such stockholder on or prior to the tenth (10th) day preceding the date the Company first mails its notice of meeting for such meeting to the stockholders. For purposes of this Bylaw 4, a majority of votes cast shall mean that the number of shares voted “for” a nominee exceeds fifty percent (50%) of the number of votes cast with respect to such nominee. Votes cast with respect to a nominee shall include votes to withhold authority and exclude abstentions with respect to such nominee.

Any vacancies in the Board of Directors from any cause, including vacancies created by increase in the number of directors, may be filled by a majority of the then qualified directors, even though less than a quorum. Each director so chosen shall hold office for the unexpired term of the director whose place shall be vacant, providing that each director so chosen to fill a vacancy created by increase in the number of directors shall be elected for an appropriate term so that approximately one-third of the directors will be elected at each annual meeting of the stockholders thereafter.

Powers of Directors

5. The business and affairs of the Company shall be managed under the direction of the Board of Directors. In addition to the powers and authorities expressly conferred upon them by these Bylaws, the Board of Directors may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.

Meetings of Directors

6. Immediately after each annual election of directors, the directors shall meet for the purpose of organization, the election of officers and the transaction of other business at such place as shall be specified in the notice of such meeting provided as hereinafter established for either regular or special meetings.

The Board of Directors may provide by resolution, the time and place, either at the general office of the Company or elsewhere, for the holding of regular meetings without other notice than such resolution.

Special meetings of the directors may be called at any time by the chairman of the Board of Directors or the president and shall be called on the written request of any two directors. Notice of special meeting of the directors shall be given to each director at such director’s residence or usual place of business in writing by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least twenty-four hours before such meeting. If by facsimile transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve hours before such meeting. If by telephone or by hand delivery, the notice shall be given at least twelve hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purposes of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws in accordance with Bylaw 25. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Bylaw 24.

Special meetings of the directors may be held within or without the State of Delaware at such place as is indicated in the notice or waiver of notice thereof.

A majority of the directors shall constitute a quorum, but a smaller number may adjourn from time to time, without further notice, until a quorum is secured.

Executive and Other Committees

7. The Board of Directors may by resolution or resolutions passed by a majority of the whole Board of Directors designate one or more committees, each committee to consist of one or more of the directors of the Company. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matter: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law (the “DGCL”) to be submitted to stockholders for approval or (ii) adopting, amending or releasing these Bylaws.

Compensation of Directors and Members of Committees

8. Directors and members of standing committees shall receive such compensation for attendance at each regular or special meeting as the Board of Directors shall from time to time prescribe.

Officers of the Company

9. The officers of the Company shall be the chairman of the Board of Directors (if one is elected by the Board of Directors), the president, one or more vice presidents, a secretary, a treasurer and such other officers as may from time to time be elected by the Board of Directors.

The officers of the Company shall hold office until their successors are elected and qualify. An officer elected by the Board of Directors may be removed either with or without cause at any time by the affirmative vote of a majority of the whole Board of Directors. Such removal, however, shall be without prejudice of the contract rights of the person so removed. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the affirmative vote of a majority of the whole Board of Directors.

Duties of the Chairman of the Board of Directors and the President

10. The chairman of the Board of Directors, if one is elected, shall preside at all meetings of the stockholders and directors and shall have such other duties as may be prescribed from time to time by the Board of Directors.

In the absence of the chairman of the Board of Directors, the president shall preside at all meetings of the stockholders and directors and shall have such other duties as may be prescribed from time to time by the Board of Directors.

If the chairman of the Board of Directors is not the president, the Board of Directors shall designate which of the chairman of the Board of Directors or the president is the chief executive officer of the Company, and shall provide for the division of executive duties and responsibilities between those two officers. If the chairman of the Board of Directors is also president, the chairman shall be the chief executive officer of the Company and shall have general and active management of the business of the Company.

Vice President

11. The vice president or vice presidents, in the order designated by the Board of Directors, shall be vested with all the powers and required to perform all the duties of the president in the case of the president’s absence or disability and shall perform such other duties as may be prescribed by the Board of Directors.

President Pro Tem

12. In the absence or disability of the chairman of the Board of Directors, the president and the vice presidents, the Board of Directors may appoint from their own number a president pro tem.

Secretary

13. The secretary shall attend all meetings of the Company, the Board of Directors, the executive committee and standing committees. The secretary shall act as clerk thereof and shall record all of the proceedings of such meetings in a book kept for that purpose. The secretary shall give proper notice of meetings of stockholders and directors and shall perform such other duties as shall be assigned to the secretary by the chief executive officer or the Board of Directors.

Financial Officers

14. The vice president-chief financial officer shall have such authority and responsibility as specified herein for both the treasurer and the controller.

The treasurer, vice president-finance or such other similar title shall be the financial officer, shall have custody of, and be responsible for, all funds of the Company; shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board of Directors; shall render to the chief executive officer and directors, whenever they may require it, an account of all transactions as treasurer and of the financial condition of the Company; shall keep an account of stock registered and transferred in such manner and subject to such regulations as the Board of Directors may prescribe; and shall perform all of the duties incident to the office of the treasurer and such other duties as from time to time may be assigned by the chief financial officer, chief executive officer or Board of Directors.

The controller shall be the chief accounting officer, shall keep full and accurate accounts of all assets, liabilities, receipts, disbursements and other financial transactions in books belonging to the Company; shall cause regular audits of such books and records to be made; shall see that all expenditures are made in accordance with procedures duly established by the Company; shall render to the chief executive officer and Board of Directors, whenever requested, financial statements of the Company; and shall perform all the duties incident to the office of controller and such other duties as, from time to time, may be assigned by the chief financial officer, chief executive officer or Board of Directors.

Financial officers may be required to furnish bond in such amount as shall be determined by the Board of Directors.

Duties of Officers May Be Delegated

15. In case of the absence or disability of any officer of the Company or for any other reason deemed sufficient by a majority of the Board of Directors, the Board of Directors may delegate such officer’s powers or duties to any other officer or to any director for the time being.

Certificates of Stock

16. Certificates of stock shall be signed by the president or a vice president and the treasurer, assistant treasurer, secretary or assistant secretary. Any or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall thereafter have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Company with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. If a certificate of stock be lost, mutilated or destroyed, another may be issued in its stead upon proof of such loss, mutilation or destruction, and the giving of a bond of indemnity in form, substance and amount satisfactory to the Company and to the transfer agent and registrar, if any, of such stock, provided that, if there be no transfer agent or registrar for the class of stock of which the certificate be lost, mutilated or destroyed, the Board of Directors may waive the requirement of a bond indemnity if in its judgment such waiver is warranted by the circumstances.

Transfer of Stock

17. All transfers of stock of the Company shall be made upon its books by the holder of the shares in person or by such stockholder’s lawfully constituted representative, upon surrender of certificates of stock for cancellation. Provided, however, that, with respect to stock which has been presumed abandoned under an applicable state law, appropriate officers of the Company may effect cancellation of the certificate representing the abandoned shares and cause transfer thereof to such state by means of delivery of a new certificate in the name of such state.

Record Date

18. The Board of Directors shall fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of any meeting of stockholders, nor more than sixty days prior to any other action, for the determination of stockholders entitled to notice of, and to vote, at any such meeting or any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of stock or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Company after such record date fixed as aforesaid.

Stockholders of Record

19. The Company shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof and accordingly shall not be bound to recognize any

equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware.

Fiscal Year

20. The fiscal year of the Company shall begin on the first day of August in each year.

Dividends

21. Dividends upon the capital stock may be declared by the Board of Directors at any regular or special meeting and may be paid in cash or in property or in shares of the capital stock. Before paying any dividend or making any distribution of profits, the directors may set apart out of any of the funds of the Company available for dividends a reserve or reserves for any proper purpose and may alter or abolish any such reserve or reserves.

Checks for Money

22. All checks, drafts or orders for the payment of money shall be signed by the treasurer or by such other officer or officers as the Board of Directors may from time to time designate. No check shall be signed in blank.

Books and Records

23. The books, accounts and records of the Company, except as otherwise required by the laws of the State of Delaware, may be kept within or without the State of Delaware, at such place or places as may from time to time be designated by the Bylaws or by resolution of the directors.

Notices

24. Except as specifically set forth herein, notice required to be given under the provisions of these Bylaws to any director, officer or stockholder shall not be construed to mean personal notice, but may be given in writing by depositing the same in a post office or letter-box, in a post-paid sealed wrapper, addressed to such stockholder, officer or director at such address as appears on the books of the Company, and such notice shall be deemed to be given at the time when the same shall be thus mailed. Any stockholder, officer or director may waive, in writing, any notice required to be given under these Bylaws, whether before or after the time stated therein.

Amendments of Bylaws

25. Except as hereinafter stated, these Bylaws may be amended, altered, repealed or added to by the stockholders by the affirmative vote of a majority of the outstanding shares entitled to vote on the matter, or by the Board of Directors by a majority of the directors then in office, at any regular meeting or at any special meeting called for that

purpose. Provided that any amendment, alteration or repeal of, or addition to, the first paragraph of Bylaw 4 or this sentence of Bylaw 25 by stockholders shall require the affirmative vote of 66 2/3% of the outstanding shares of capital stock of all classes of the Company entitled to vote generally for the election of directors, considered for this purpose as one class.

Indemnification of Directors and Officers

26. Each person who was or is made a party or is threatened to be made a party to or is involved in or called as a witness in any action, suit or proceeding, whether civil, criminal, administrative or investigative, and any appeal therefrom (hereinafter, collectively a “proceeding”), by reason of the fact that he or she is, was or had agreed to become a director of the Company or is, was or had agreed to become an officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless by the Company to the fullest extent permitted under the DGCL as the same now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than the DGCL permitted the Company to provide prior to such amendment), against all expenses, liabilities and losses (including attorneys’ fees, judgments, fines, excise taxes or penalties pursuant to the Employee Retirement Income Security Act of 1974, as amended, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, that except as explicitly provided herein, prior to a Change in Control of the Company, as defined herein, a person seeking indemnity in connection with a proceeding (or part thereof) initiated by such person against the Company or any director, officer, employee or agent of the Company shall not be entitled thereto unless the Company has joined in or consented to such proceeding (or part thereof); provided, further, that, prior to a Change in Control of the Company, no indemnification shall be made in respect of any claim, issue or matter as to which a person seeking indemnity shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. For purposes of this Bylaw 26, a “Change in Control of the Company” shall be deemed to have occurred if (i) any “Person” (as used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes (except in a transaction approved in advance by the Board of Directors of the Company) the beneficial owner (as defined in Rule 13d-3 the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding securities or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof unless the election of each director who was not a director at the beginning of the period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

Any indemnification under this Bylaw 26 (unless ordered by a court) shall be paid by the Company unless within sixty days of such request for indemnification a determination is made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such proceeding, (ii) if such quorum is not obtainable, or even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (who may be the regular counsel of the Company) in a written opinion or (iii) by the stockholders, that indemnification of such person is not proper under the circumstances because such person has not met the necessary standard of conduct under the DGCL, provided, however, that following a Change of Control of the Company, with respect to all matters thereafter arising out of acts, omissions or events prior to the Change of Control of the Company concerning the rights of any person seeking indemnification under this Bylaw 26, such determination shall be made by special independent counsel selected by such person and approved by the Company (which approval shall not be unreasonably withheld), which counsel has not otherwise performed services (other than in connection with similar matters) within the five years preceding its engagement to render such opinion for such person or for the Company or any affiliates (as such term is defined in Rule 405 under the Securities Act of 1933, as amended) of the Company (whether or not they were affiliates when services were so performed) (“Independent Counsel”). Unless such person has theretofore selected Independent Counsel pursuant to this Bylaw 26 and such Independent Counsel has been approved by the Company, legal counsel approved by a resolution or resolutions of the Board of Directors prior to a Change in Control of the Company shall be deemed to have been approved by the Company as required. Such Independent Counsel shall determine as promptly as practicable whether and to what extent such person would be permitted to be indemnified under applicable law and shall render its written opinion to the Company and such person to such effect. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Bylaw 26 or its engagement pursuant hereto.

Expenses, including attorneys’ fees, incurred by a person referred to in this Bylaw 26 in defending or otherwise being involved in a proceeding shall be paid by the Company in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking (the “Undertaking”) by or on behalf of such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company as authorized in this Bylaw 26.

If a claim under this Bylaw 26 hereof is not paid in full by the Company within sixty days after a written claim has been received by the Company or if expenses pursuant to this Bylaw 26 have not been advanced within ten days after a written request for such advancement accompanied by the Undertaking has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim or the advancement or expenses. (If the claimant is successful, in whole or in part, in such suit or any other suit to enforce a right for expenses for indemnification against the Company or any other party under any other agreement, such claimant shall also be entitled to be paid the reasonable expense of prosecuting such claim.) It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required Undertaking has been tendered to the Company) that the claimant has not met the standards to conduct which make it permissible under the DGCL for the Company to indemnify the claimant for the amount claimed. After a Change in Control, the burden of proving such

defense shall be on the Company, and any determination by the Company (including its Board of Directors, independent legal counsel to its stockholders) that the claimant had not met the applicable standard of conduct required under the DGCL shall not be a defense to the action nor create a presumption that claimant had not met such applicable standard of conduct.

The rights conferred on any person by this Bylaw 26 shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise. The Board of Directors shall have the authority, by resolution, to provide for such other indemnification of directors, officers, employees or agents as it shall deem appropriate.

The Company may purchase and maintain insurance to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expenses, liabilities or losses, whether or not the Company would have the power to indemnify such expenses, liabilities or losses under the DGCL.

The provisions of this Bylaw 26 shall be applicable to all proceedings commenced after its adoption, whether such arise out of events, acts, omissions or circumstances which occurred or existed prior or subsequent to such adoption, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person. This Bylaw 26 shall be deemed to grant each person who, at any time that this Bylaw 26 is in effect, serves or agrees to serve in any capacity which entitles her or him to indemnification hereunder rights against the Company to enforce the provisions of this Bylaw 26, and any repeal or other modification of this Bylaw 26 or any repeal or modification of the DGCL or any other applicable law shall not limit any rights of indemnification then existing or arising out of events, acts, omissions, circumstances occurring or arising out of events, acts, omissions, circumstances occurring out or existing prior to such repeal or modification, including, without limitation, the right to indemnification for proceedings commenced after such repeal or modification to enforce this Bylaw 26 with regard to acts, omissions, events or circumstances occurring or existing prior to such repeal or modification.

If this Bylaw 26 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify such director and officer of the Company as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Company, to the full extent permitted by any applicable portion of this Bylaw 26 that shall not have been invalidated and to the full extent permitted by applicable law.

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EX-31.A

Exhibit 31-A

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: March 3, 2009	/s/ William M. Cook
	William M. Cook Chief Executive Officer

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EX-31.B

Exhibit 31-B

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: March 3, 2009	/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 January 31, 2009 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 January 31, 2009 (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: March 3, 2009	/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 January 31, 2009 (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: March 3, 2009	/s/ Thomas R. VerHage
	Thomas R. VerHage Chief Financial Officer

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