UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30,OCTOBER 31, 2008 OR
oTRANSITION 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 filerx
Non-accelerated filero (Do not check if a smaller reporting company)		 Accelerated filero
Smaller reporting companyo

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:Common Stock, $5 Par Value – 77,845,52276,935,342 shares as of April 30,October 31, 2008.



PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

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

 Three Months Ended
April 30,		 Nine Months Ended
April 30,		  Three Months Ended
October 31,		 
   
 2008 2007 2008 2007  2008 2007 
      
Net sales  $587,760  $483,988  $1,625,099  $1,394,147   $573,260  $525,576 
Cost of sales 399,494 334,166 1,100,784 959,243  386,557 352,712 
      
Gross margin 188,266 149,822 524,315 434,904  186,703 172,864 
Operating expenses 124,744 99,649 346,379 288,163  117,016 109,084 
      
Operating income 63,522 50,173 177,936 146,741  69,687 63,780 
Other income, net (2,567) (1,889) (4,589) (5,796)
Other (income) expense, net (3,104) 132 
Interest expense 4,239 4,181 12,555 10,298  4,290 4,183 
      
Earnings before income taxes 61,850 47,881 169,970 142,239  68,501 59,465 
Income taxes 15,863 7,734 46,590 34,812  20,539 16,142 
      
Net earnings $45,987 $40,147 $123,380 $107,427  $47,962 $43,323 
      
Weighted average shares outstanding 78,633,945 79,922,357 79,406,931 80,672,942  77,903,194 79,846,911 
Diluted shares outstanding 80,525,835 81,826,193 81,398,771 82,671,646  79,631,886 81,882,599 
Basic earnings per share $.58 $.50 $1.55 $1.33  $0.62 $0.54 
Diluted earnings per share $.57 $.49 $1.52 $1.30  $0.60 $0.53 
Dividends paid per share $.11 $.09 $.31 $.27  $.11 $.10 

See Notes to Condensed Consolidated Financial Statements.



2


DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 April 30,
2008		 July 31,
2007		  October 31,
2008		 July 31,
2008		 
    
ASSETS              
Current Assets      
Cash and cash equivalents $53,277 $55,237  $69,067 $83,357 
Accounts receivable, less allowance of $7,992 and $6,768 419,849 357,341 
Accounts receivable, less allowance of $6,807 and $7,509 388,177 413,863 
Inventories 260,462 201,221  240,279 264,129 
Prepaids and other current assets 74,544 59,845  91,556 92,408 
    
Total current assets 808,132 673,644  789,079 853,757 
Property, plant and equipment, at cost 886,093 796,364  841,467 901,746 
Less accumulated depreciation (480,329) (431,931) (464,978) (486,587)
    
Property, plant and equipment, net 405,764 364,433  376,489 415,159 
Goodwill 133,270 124,607  163,507 134,162 
Intangible assets 47,291 46,301  68,436 46,317 
Other assets 119,088 110,032  97,370 99,227 
    
Total Assets $1,513,545 $1,319,017  $1,494,881 $1,548,622 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current Liabilities      
Short-term borrowings $108,737 $123,114  $206,882 $139,404 
Current maturities of long-term debt 32,899 33,667  5,380 5,669 
Trade accounts payable 196,874 173,862  188,264 200,967 
Other current liabilities 159,386 128,301  156,091 170,667 
    
Total current liabilities 497,896 458,944  556,617 516,707 
Long-term debt 177,362 129,004  173,689 176,475 
Deferred income taxes 35,179 37,624  32,907 35,738 
Other long-term liabilities 73,416 68,747  74,427 79,667 
    
Total Liabilities 783,853 694,319  837,640 808,587 
    
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  443,216 443,216 
Retained earnings 493,723 387,257  568,052 522,476 
Stock compensation plans 23,385 20,821  24,702 27,065 
Accumulated other comprehensive income 119,489 70,008  12,506 112,883 
Treasury stock, at cost – 10,704,214 and 9,500,372 shares at April 30, 2008 and July 31, 2007, respectively (350,121) (296,604)
Treasury stock, at cost – 11,612,644 and 11,021,619 shares at October 31, 2008 and July 31, 2008, respectively (391,235) (365,605)
    
Total Shareholders’ Equity 729,692 624,698  657,241 740,035 
    
Total Liabilities and Shareholders’ Equity $1,513,545 $1,319,017  $1,494,881 $1,548,622 
    

See Notes to Condensed Consolidated Financial Statements.



3


DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)
(Unaudited)

 Nine Months Ended
April 30,		  Three Months Ended
October 31,		 
  
 2008 2007  2008 2007 
    
OPERATING ACTIVITIES              
Net earnings $123,380 $107,427  $47,962 $43,323 
Adjustments to reconcile net earnings to net cash provided by operating activities:      
Depreciation and amortization 41,850 35,498  14,074 14,059 
Changes in operating assets and liabilities (53,541) (66,518) (10,436) (32,463)
Tax benefit of equity plans (6,588) (5,041) (1,590) (4,010)
Stock option expense 3,762 3,127 
Stock compensation plan expense 957 1,270 
Other, net (5,050) (27,665) 796 (344)
    
Net cash provided by operating activities 103,813 46,828  51,763 21,835 
INVESTING ACTIVITIES      
Net expenditures on property and equipment (52,109) (52,933) (11,459) (11,479)
Acquisitions, investments and divestitures, net (2,475) (40,299) (74,508) 1,000 
    
Net cash used in investing activities (54,584) (93,232) (85,967) (10,479)
FINANCING ACTIVITIES      
Purchase of treasury stock (69,284) (61,890) (32,773) (2,099)
Proceeds from long-term debt 50,140 1,036  89 25,139 
Repayments of long-term debt (5,785) (5,652) (5,261) (5,245)
Change in short-term borrowings (17,807) 125,641  75,129 (43,733)
Dividends paid (24,428) (21,659) (8,538) (7,917)
Tax benefit of equity plans 6,588 5,041  1,590 4,010 
Exercise of stock options 5,672 5,045  939 1,891 
    
Net cash provided by (used in) financing activities (54,904) 47,562  31,175 (27,954)
Effect of exchange rate changes on cash 3,715 1,584  (11,261) 1,253 
    
Increase (decrease) in cash and cash equivalents (1,960) 2,742 
Decrease in cash and cash equivalents (14,290) (15,345)
Cash and cash equivalents - beginning of year 55,237 45,467  83,357 55,237 
    
Cash and cash equivalents - end of period $53,277 $48,209  $69,067 $39,892 
    

See Notes to Condensed Consolidated Financial Statements.



4


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Donaldson Company, Inc. and subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Certain amounts in prior periods have been reclassified to conform to the current presentation. The reclassifications had no impact on the Company’s net earnings or shareholders’ equity as previously reported. Operating results for the three and nine month periodsmonths ended April 30,October 31, 2008 are not necessarily indicative of the results that may be expected for future periods. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.2008.

Note B – Inventories

The components of inventory as of April 30,October 31, 2008 and July 31, 20072008 are as follows (thousands of dollars):

 April 30,
2008		 July 31,
2007		  October 31,
2008		 July 31,
2008		 
    
Materials  $106,239  $87,490   $95,094  $110,135 
Work in process 29,046 19,793  28,429 23,728 
Finished products 125,177 93,938  116,756 130,266 
    
Total inventories $260,462 $201,221  $240,279 $264,129 
    

Note C – Accounting for Stock-Based Compensation

Under Statement of Financial Accounting Standards (SFAS) No. 123R,Share Based Payment – Revised 2004, stock-basedStock-based employee compensation cost is recognized using the fair-value based method for all new awards granted after August 1, 2005. Compensation costs for unvested stock options and awards that were outstanding at August 1, 2005, are recognized over the requisite service period based on the grant-date fair value of those options and awards as previously calculated under the pro-forma disclosures under SFAS 123.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 nine months ended April 30, 2008 (there were no options granted during the three months ended April 30, 2008): range of 3 months to 8October 31, 2008: 7 year expected life; expected volatility range of 15.223.0 percent to 21.723.1 percent; risk-free interest rate range of 2.93.6 percent to 4.23.7 percent and annual dividend yield of 1.0 percent. The expected life selected for options granted during the period represents the period of time that the options are expected to be outstanding based on historical data of option holder exercise and termination behavior. Expected volatilities are based upon historical volatility of the Company’s stock over a period at least equal to the expected life of each option grant. Option grants are priced at the fair market value of the Company’s stock on the date of grant. The weighted average fair value for options granted during the ninethree months ended April 30,October 31, 2008 and 2007 was $10.75$12.57 per share and $7.87$1.70 per share, respectively. The fair value of options granted was lower during the three months ended October 31, 2007 due to the fact that the only options granted during that quarter were a result of exercising reloadable grants with a short remaining maturity. For the three months and nine months ended April 30,October 31, 2008, the Company recorded pretax compensation expense associated with stock options of $0.4 million and $3.8 million, respectively, and recorded $0.2 million and $1.4 million of related tax benefit, respectively.benefit. For the three months and nine months ended April 30,October 31, 2007, the Company recorded pretax compensation expense associated with stock options of $0.3 million and $3.1 million, respectively, and recorded $0.1 million and $1.2 million of related tax benefit, respectively.benefit.



5


The following table summarizes stock option activity during the ninethree months ended April 30,October 31, 2008:

 Options
Outstanding		 Weighted
Average
Exercise Price		  Options
Outstanding		 Weighted
Average
Exercise Price		 
    
Outstanding at July 31, 2007   5,744,275  $23.09 
Outstanding at July 31, 2008   5,181,778  $25.62 
Granted 447,703 $42.88  3,500 $43.14 
Exercised (721,672) $20.73  (264,531) $19.45 
Canceled (10,781) $26.03  (8,598) $36.87 
  
Outstanding at April 30, 2008 5,459,525 $25.02 
Outstanding at October 31, 2008 4,912,149 $25.94 
  

The total intrinsic value of options exercised during the ninethree months ended April 30,October 31, 2008 and 2007 was $16.1$5.0 million and $17.4$6.8 million, respectively.

The following table summarizes information concerning outstanding and exercisable options as of April 30,October 31, 2008:

Range of Exercise PricesRange of Exercise Prices Number
Outstanding		 Weighted
Average
Remaining
Contractual
Life (Years)		 Weighted
Average
Exercise
Price		 Number
Exercisable		 Weighted
Average
Exercise
Price		 Range of Exercise Prices Number
Outstanding		 Weighted
Average
Remaining
Contractual
Life (Years)		 Weighted
Average
Exercise
Price		 Number
Exercisable		 Weighted
Average
Exercise
Price		 
           
$5 to $15   1,099,192   1.85  $11.69   1,099,192  $11.69 
$15 and below   752,642   1.62  $12.19   752,642  $12.19 
$15 to $25 1,366,773 4.05 $18.02 1,366,773 $18.02  1,335,580 3.55 $18.02 1,335,580 $18.02 
$25 to $35 2,359,038 5.94 $31.13 2,183,225 $30.91  2,176,709 5.65 $31.15 2,008,724 $30.92 
$35 and above 634,522 9.28 $40.48 368,738 $41.12  647,218 8.64 $40.78 380,500 $41.42 
    
 5,459,525 5.03 $25.02 5,017,928 $23.94  4,912,149 4.86 $25.94 4,477,446 $24.82 
    

At April 30,October 31, 2008, the aggregate intrinsic value of sharesoptions outstanding and exercisable was $101.6$48.9 million and $98.8$48.7 million, respectively.

The Company recorded $0.5 million and $1.0 million of compensation expense during the three months ended October 31, 2008 and 2007, respectively, related to other share based awards.

As of April 30,October 31, 2008, there was $3.2$2.4 million of total unrecognized compensation cost related to non-vested stock options granted under the 2001 Master Stock Incentive Plan. This unvested cost is expected to be recognized during the remainder of fiscal 2008, fiscalFiscal 2009, fiscalFiscal 2010, Fiscal 2011 and fiscal 2011.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 both the three and nine months ended April 30,October 31, 2008 and 2007 there were 228,548250,618 and 16,655 options excluded from the diluted net earnings per share calculation. For both the three months and nine months ended April 30, 2007 there were 10,000 options excluded from the diluted net earnings per share calculation.calculation, respectively.



6


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

 Three Months Ended
April 30,		 Nine Months Ended
April 30,		  Three Months Ended
October 31,		 
   
 2008 2007 2008 2007  2008 2007 
      
Weighted average shares outstanding basic   78,634   79,922   79,407   80,673    77,903   79,847 
Diluted share equivalents 1,892 1,904 1,992 1,999  1,729 2,036 
      
Weighted average shares outstanding – diluted 80,526 81,826 81,399 82,672  79,632 81,883 
      
Net earnings for basic and diluted earnings per share computation $45,987 $40,147 $123,380 $107,427  $47,962 $43,323 
Net earnings per share – basic $.58 $.50 $1.55 $1.33  $0.62 $0.54 
Net earnings per share – diluted $.57 $.49 $1.52 $1.30  $0.60 $0.53 

Note E – Shareholders’ Equity

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

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

  Three Months Ended
April 30,		  Nine Months Ended
April 30,		  
  
  2008  2007  2008  2007 
    
Net earnings   $45,987  $40,147  $123,380  $107,427 
Foreign currency translation gain    22,675   17,254   49,167   23,463 
Net gain (loss) on hedging derivatives, net of deferred taxes    291   (297)  69   192 
Reduction in pension liability, net of deferred taxes    56   —   245   — 
    
Total comprehensive income   $69,009  $57,104  $172,861  $131,082 
    
  Three Months Ended
October 31,		  
 
  2008  2007 
  
Net earnings   $47,962  $43,323 
Foreign currency translation gain (loss)    (101,791)  18,284 
Net gain (loss) on hedging derivatives, net of deferred taxes    1,048   (793)
Pension and postretirement liability adjustment, net of deferred taxes    366   79 
  
Total comprehensive income (loss)   $(52,415) $60,893 
  

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

 October 31,
2008		 July 31,
2008		 
 April 30,
2008		 July 31,
2007		   
         
Foreign currency translation adjustment  $130,556  $81,389  $36,749 $138,540 
Net loss on hedging derivatives, net of deferred taxes (138) (207)
Pension liability, net of deferred taxes (10,929) (11,174)
Net gain on hedging derivatives, net of deferred taxes 1,236 188 
Pension and postretirement liability, net of deferred taxes (25,479) (25,845)
    
Total accumulated other comprehensive income $119,489 $70,008  $12,506 $112,883 
    

During the thirdfirst quarter of fiscal 2008,Fiscal 2009, the Company repurchased 0.50.8 million shares for $20.7$32.8 million at an average price of $41.35$40.86 per share. The Company repurchased 1.7 million shares for $69.3 million at an average price of $40.67 per share during the first nine months of fiscal 2008. As of April 30,October 31, 2008 the Company had remaining authorization to repurchase up to 2.30.9 million shares pursuant to the current authorization.

At October 31, 2008, the fair market value of forward contract assets and liabilities was $5.4 million and $3.7 million, respectively.



7


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 and non-operating income and expenses.expense. Segment detail is summarized as follows (thousands of dollars):

 Engine
Products		 Industrial
Products		 Corporate and
Unallocated		 Total
Company		  Engine
Products		 Industrial
Products		 Corporate and
Unallocated		 Total
Company		 
        
Three Months Ended April 30, 2008:             
Net sales $324,992 $262,768 — $587,760 
Earnings before income taxes 43,456 25,997 (7,603) 61,850 
Three Months Ended April 30, 2007:     
Net sales $276,660 $207,328 — $483,988 
Earnings before income taxes 35,581 17,801 (5,501) 47,881 
Nine Months Ended April 30, 2008:     
Three Months Ended October 31, 2008:             
Net sales $902,488 $722,611 — $1,625,099  $308,777 $264,483 — $573,260 
Earnings before income taxes 115,279 70,429 (15,738) 169,970  36,145 34,568 (2,212) 68,501 
Assets 614,229 581,193 318,123 1,513,545  659,690 593,135 242,056 1,494,881 
Nine Months Ended April 30, 2007:     
Three Months Ended October 31, 2007:     
Net sales $793,924 $600,223 — $1,394,147  $293,155 $232,421 — $525,576 
Earnings before income taxes 102,125 51,135 (11,021) 142,239  42,389 24,015 (6,939) 59,465 
Assets 532,532 504,377 264,035 1,300,944  586,276 559,136 247,867 1,393,279 

There were no Customers overSales to one Customer accounted for 10 percent of net sales for the three and nine months ended April 30, 2008. There were no Customers that made up 10 percent or more of net sales for the three months ended April 30, 2007. Sales to one Customer accounted for 11 percent of net sales for the nine months ended April 30, 2007.October 31, 2008 and 2007, respectively. There were no Customers over 10 percent of gross accounts receivable as of April 30,October 31, 2008 and 2007.

Note G – Goodwill and Other Intangible Assets

The Company’s most recent annual impairment assessment for goodwill was completed during the third quarter of fiscalFiscal 2008. The results of this assessment showed that the fair values of the reporting units to which goodwill is assigned continue to be higher than the book values of the respective reporting units, resulting in no goodwill impairment. The Company has allocated goodwill to its Industrial Products and Engine Products segments. The current year addition to the IndustrialEngine Products segment is a result of the preliminary purchase price allocation for the acquisition of LMC West, Inc.100 percent of the stock of Western Filter Corporation on February 2,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 isare 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 ninethree months ending April 30,October 31, 2008 (thousands of dollars):

 Engine
Products		 Industrial
Products		 Total
Goodwill		  Engine
Products		 Industrial
Products		 Total
Goodwill		 
      
Balance as of August 1, 2007  $17,912  $106,695  $124,607 
Balance as of August 1, 2008  $19,126  $115,036  $134,162 
Acquisition activity — 723 723  43,741 — 43,741 
Disposition activity — (1,089) (1,089)
Foreign exchange translation 1,137 6,803 7,940  (1,802) (11,505) (13,307)
      
Balance as of April 30, 2008 $19,049 $114,221 $133,270 
   
Balance as of October 31, 2008 $61,065 $102,442 $163,507 

As of April 30,October 31, 2008, other intangible assets were $47.3$68.4 million, a $1.0$22.1 million increase from the balance of $46.3 million at July 31, 2007.2008. The increase in other intangible assets is due to the acquisition activity and foreign exchange translationof Western Filter Corporation partially offset by amortization.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., guaranteeguarantees certain debt of the joint venture. As of April 30,October 31, 2008, the joint venture had $18.0$21.7 million of outstanding debt of which the Company guarantees half.



8


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 ninethree months ended April 30,October 31, 2008 and 2007 (thousands of dollars):

 April 30,
2008		 April 30,
2007		  October 31,
2008		 October 31,
2007		 
    
Beginning balance  $8,545  $8,789   $11,523  $8,545 
Accruals for warranties (including changes in estimates) 5,983 5,811 
Accruals for warranties issued during the reporting period 1,011 2,433 
Accruals related to pre-existing warranties (including changes in estimates) 323 1,598 
Less settlements made during the period (2,151) (5,432) (480) (318)
    
Ending balance $12,377 $9,168  $12,377 $12,258 
    

At April 30,October 31, 2008, the Company had a contingent liability for standby letters of credit totaling $18.5 million that have been issued and are outstanding. The letters of credit guarantee payment to third parties in the event the Company is in breach of specified bond financing agreement and insurance contract terms as detailed in each letter of credit. At April 30,October 31, 2008, there were no amounts drawn upon these letters of credit.

Note I – Employee Benefit Plans

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

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

 Three Months Ended
April 30,		 Nine Months Ended
April 30,		  Three Months Ended
October 31,		 
   
 2008 2007 2008 2007  2008 2007 
      
Service cost  $3,703  $3,670  $11,027  $11,343   $3,913  $3,651 
Interest cost 3,656 3,499 10,910 10,625  4,649 3,619 
Expected return on assets (5,935) (5,098) (17,748) (15,370) (7,092) (5,899)
Transition amount amortization 43 32 120 490  38 37 
Prior service cost amortization 107 88 320 264  106 107 
Actuarial (gain)/loss amortization (22) 287 (70) 858  54 (25)
Settlement and curtailment gain — — — (1,949)
      
Total periodic benefit cost $1,552 $2,478 $4,559 $6,261  $1,668 $1,490 
      

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 ninethree months ended April 30,October 31, 2008, the Company made $9.4$1.0 million in contributions to its non-U.S. pension plans. The Company has not made and does not anticipate making any contributions to its U.S. pension plans in the current year and estimates that it will contribute up to an additional $0.6$4.0 million to its non-U.S. pension plans during the remainder of fiscal 2008.Fiscal 2009.

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 isbelieves the recorded reserves in its consolidated financial statements are adequate in light of the



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probable and estimable outcomes. Any recorded liabilities were not currently subject to pending litigation other than litigation which arises out of and is incidentalmaterial to the conductCompany’s financial position, results of the Company’s business. All such matters are subject to many uncertaintiesoperation and outcomes that are not predictable with assurance. Theliquidity and the Company does not considerbelieve that any of such proceedings which arethe currently pending to be likely to result in a material adverse effect on the Company’s consolidatedidentified claims or litigation will materially affect its financial position, or results of operation.operation and liquidity.



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Note K – Income Taxes

The Company adoptedeffective tax rate for the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48),Accountingquarter was 30.0 percent compared to 27.1 percent for Uncertaintythe prior year first quarter. The higher rate this quarter was primarily due to a $2.1 million decrease in Income Taxes, an Interpretation of FASB Statement No. 109, on August 1, 2007. The new standard defines the threshold for recognizing thediscrete tax benefits ofrecognized this quarter compared to $3.9 million in tax return positionsbenefits occurring in the financial statements as “more-likely-than-not”prior year related to be sustained byenacted foreign tax rate changes and the taxing authorities based solelyexpiration of statutes on unrecognized tax benefits. The current year tax rate benefited from $1.8 million related to the technical meritsreinstatement of the position. If the recognition threshold is met, theResearch and Experimentation Credit for Fiscal 2008 and an adjustment to an income tax benefit is measured and recognized as the largest amount of tax benefit that in the Company’s judgment is greater than 50 percent likely to be realized. As a result of the implementation of FIN 48, the Company recognized a $0.3 million increase in the liability for unrecognized tax benefits, which was accounted for as a reduction to the August 1, 2007 balance of retained earnings.

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

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 20072008
China 19981999 through 20072008
France 20032004 through 20072008
Germany 2004 through 20072008
Italy 2003 through 20072008
Japan 2006 through 20072008
Mexico 20022003 through 20072008
United Kingdom 20002007 through 20072008
United States 2004 through 20072008

At April 30,October 31, 2008 the total unrecognized tax benefits were $28.5$32.4 million, and accrued interest and penalties on these unrecognized tax benefits were $5.0$5.5 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. With an average statute of limitations of about 5 years, up to $4.5$4.4 million of the unrecognized tax benefits could potentially expire in the next 12 month period, unless extended by audit.

The effective tax rate for the three months and nine months ended April 30, 2008 was 25.6 percent and 27.4 percent, respectively. The effective tax rate for the three months and nine months ended April 30, 2007 was 16.2 percent and 24.5 percent, respectively. The nine months ended April 30, 2008 contains $9.3 million of tax benefits, which predominantly occurred It is reasonably possible that an additional reduction in the first and third quarters, primarily related to the expiration of the statute of limitations on previously unrecognized tax benefits may occur within the fiscal year due to settlement of several worldwide tax disputes; however, quantification of an estimated range and an increase in deferred tax benefits related to enacted foreign tax rate changes. The nine months ended April 30, 2007 contained $10.0 million of tax benefits related to the expiration of the statute of limitations on previously unrecognized tax benefits, the favorable resolution of certain foreign and state tax positions, dividends from foreign subsidiaries and the reinstatement of the Research and Experimentation Credit, most of which occurred in the third quarter.timing cannot be made at this time.

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



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Note L – New Accounting Standards

In September 2006, the FASBFinancial 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 fiscalFiscal 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 Company for its Fiscal 2009 year beginning August 1, 2008. The



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adoption 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 standard 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 yearyears beginning after November 15, 2007 and was adopted by the Company on August 1, 2008. The adoption of SFAS 159 did not have a material 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. The adoption of SFAS 141(R) is 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.

Note M – Subsequent Event

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 will be used to refinance existing debt or for general corporate purposes.

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 filtersfiltration systems and exhaust and emission control products for mobile equipment; in-plant air cleaning systems; compressed air purification systems; air intake systems for industrial gas turbines; and specialized filters for such diverse applications as computer disk drives and semiconductor processing.products. Products are manufactured at more than 3539 plants around the world and through three joint ventures.

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



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Overview

The Company reported record diluted net earnings per share of $0.57$0.60 for the thirdfirst quarter of fiscal 2008,Fiscal 2009, up from $0.49$0.53 in the thirdfirst quarter of the prior year. Net income for the quarter was $46.0$48.0 million, up 14.510.7 percent from $40.1$43.3 million in the thirdfirst quarter of the prior year. The impact of foreign currency translation increased reportedhad minimal impact on net earnings by 7.1 percent in the quarter. The Company reported record sales in the thirdfirst quarter of fiscal 2008Fiscal 2009 of $587.8$573.3 million, an increase of 21.49.1 percent from $484.0$525.6 million in the thirdfirst quarter of the prior year. The impact of foreign currency translation increased reported sales by 7.60.7 percent in the quarter.

Overall, the Company’s globally-diversified portfolio of filtration businesses provided the foundation to deliver another quarter of growth. All ofContinued strength in the Company’s product groups within the Industrial Productsaerospace and Engine Products segments, with the exception of Transportation Products, posted double-digit sales growth this quarter, both as reporteddefense, industrial filtration, and gas turbine businesses helped to offset weakness in local currency.our other end markets. Geographically, sales increased by more than 15grew 14 percent in Asia, 11 percent in the United StatesAmericas, and Asia, and by more than 254 percent in Europe. The strong sales growth helped liftCompany experienced higher raw material costs in the Company’sfirst quarter and worked to offset a portion of the impact through a combination of pricing actions with Customers and internal cost reduction efforts. The Company has been proactively managing its business and working aggressively to reduce expense levels to help offset the challenging global economic environment it expects to face this year, and the progress is evident as operating income as a percentageexpenses decreased to 20.4 percent of sales 40 basis pointsthis quarter compared to 22.0 percent in thefourth quarter driving a 27 percent increase in operating income. Net income for the quarter was also impacted by a $4.0 million net tax benefit due primarily to the expiration of the statute of limitations on matters previously reserved.

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



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by 9.0 percent. The Company reported diluted net earnings per share of $1.52 for the nine month period, up 16.9 percent from $1.30 in the prior year.Fiscal 2008.

Results of Operations

Sales in the United States increased $33.0$20.5 million or 15.89.5 percent for the thirdfirst quarter of fiscal 2008Fiscal 2009 compared to the thirdfirst quarter of the prior year. Total international sales in U.S. dollars increased $70.8$27.2 million or 25.78.8 percent in the thirdfirst quarter compared to the prior year. In U.S. dollars, Europe sales increased $44.6$6.9 million or 28.34.0 percent, Asia sales increased $19.1$16.1 million or 19.314.1 percent and other international sales increased $7.1$4.2 million or 37.316.9 percent for the thirdfirst quarter of fiscal 2008Fiscal 2009 as compared to the prior year period. Translated at constant exchange rates, total international sales increased 12.37.6 percent over the prior year quarter. For the nine month period ended April 30, 2008, sales in the United States increased $47.2 million or 7.7 percent from the prior year, and total international sales in U.S. dollars increased $183.8 million or 23.5 percent from the prior year.

The impact of foreign currency translation during the thirdfirst quarter of fiscal 2008Fiscal 2009 increased sales by $37.0$3.6 million, or 7.6 percent. This was primarily due to the weakening of the U.S. dollar against most other world currencies. The impact of foreign currency translation on the year-to-date results as of the third quarter of fiscal 2008 increased sales by $84.6 million, or 6.10.7 percent. Worldwide sales for the thirdfirst quarter of fiscal 2008,Fiscal 2009, excluding the impact of foreign currency translation, increased 13.88.4 percent from the thirdfirst quarter of the prior year. The impact of foreign currency translation increaseddecreased net income by $2.9 million and $9.6$0.3 million for the three month period of Fiscal 2009.

For the past several years the Company benefited from a positive impact from foreign exchange – more specifically the weaker U.S. Dollar versus the Euro. However, during the first quarter of Fiscal 2009, that changed dramatically with a resurgence in the strength of the U.S. Dollar. Based on exchange rate levels in effect in November 2008, the Company anticipates that the resurgence in the strength of the U.S. Dollar will decrease Fiscal 2009 full year sales by approximately $133 million, or 6 percent, from Fiscal 2008. Including this foreign currency translation assumption, the Company expects full year sales in both the Engine and nine month periods of fiscal 2008, respectively.Industrial Products’ segments to be flat or slightly down and for total Company sales to be between $2.15 billion and $2.23 billion for the full year. In local currency, the Company expects low single-digit percentage sales growth in both segments and for the total Company.

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.



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

 Three Months Ended
April 30,		 Nine Months Ended
April 30,		  Three Months Ended
October 31,		 
   
 2008 2007 2008 2007  2008 2007 
      
Net sales, excluding foreign currency translation  $550,798  $468,417  $1,540,451  $1,360,392   $569,669  $504,964 
Foreign currency translation 36,962 15,571 84,648 33,755  3,591 20,612 
      
Net sales $587,760 $483,988 $1,625,099 $1,394,147  $573,260 $525,576 
      
Net earnings, excluding foreign currency translation $43,136 $38,772 $113,761 $103,532  $48,304 $40,071 
Foreign currency translation 2,851 1,375 9,619 3,895  (342) 3,252 
      
Net earnings $45,987 $40,147 $123,380 $107,427  $47,962 $43,323 
      

Gross margin for the thirdfirst quarter of fiscal 2008Fiscal 2009 was 32.032.6 percent compared to 31.032.9 percent for the thirdfirst quarter in the prior year. As mentionedThe primary drivers for the change in the second quarter the Company began utilizinginclude a new warehouse management system at its main U.S. distribution center. The Company encountered start-up challenges during the transition$7.0 million unfavorable impact due to the new system. Although the Company has caught up on delayed shipments, there will continuedelay in recovery of material cost increases from several major Engine Customers, partially offset by a $1.3 million favorable impact due to be incremental expenses relatedhigher sales in our Industrial businesses (which deliver a higher gross margin) and a $3.4 million favorable impact due to refining the system which resulted in approximately $3.6 millionproduct cost reductions and $5.7 million in incremental charges for the three and nine months ended April 30, 2008, respectively. Gross margin for the third quarter of fiscal 2007 was negatively impacted by an unfavorable product mix in Gas Turbine Systems Products and Industrial Filtration Solutions Products. Offsetting the impact of this on gross margin, plantmanufacturing productivity improvements. Plant rationalization and start-up costs were $0.1$1.0 million in the thirdfirst quarter, which includes a loss associated with the sale of the air dryer business in Maryville, Tennessee, compared to prior year quarter costs of $2.5 million. Year-to-date plant rationalization and start-up costs in fiscal 2008 totaled $0.4 million compared to prior year costs of $4.7$0.3 million. Operating expenses during the thirdfirst quarter of fiscal 2008Fiscal 2009 were $124.7$117.0 million, or 21.2



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20.4 percent of sales, compared to $99.6$109.1 million, or 20.620.8 percent of sales, in the prior year periodperiod. This decrease as we continue to invest in essential product and market development initiatives in our global Customer support capabilities. Year-to-date operating expenses were 21.3a percent of sales up from 20.7 percent in the prior year.was driven by a focus on cost containment efforts, including a global hiring freeze, targeted restructuring within some businesses and functions, a reduction of contractors and temporary workers and other discretionary spending cuts.

Other income for the thirdfirst quarter of fiscal 2008Fiscal 2009 totaled $2.6$3.1 million, compared to $1.9$0.1 million of other incomeexpense in the thirdfirst quarter of the prior year. Other income for the thirdfirst quarter of fiscal 2008Fiscal 2009 consisted of income from unconsolidated affiliates of $0.4$0.7 million, royalty income of $2.7$2.0 million, interest income of $0.2$0.3 million, foreign exchange lossesgains of $0.5$0.2 million, and other expenses of $0.2$0.1 million. For the thirdfirst quarter of fiscal 2008,Fiscal 2009, interest expense was $4.2$4.3 million, a slight increase as compared to the thirdfirst quarter of the prior year, due to higher debt levels. Year-to-date, other income totaled $4.6 million compared to $5.8 million reported in the prior year. Year-to-date interest expense was $12.6 million, up from $10.3 million in the prior year.

The effective tax rate for the three months and nine months ended April 30, 2008quarter was 25.630.0 percent and 27.4compared to 27.1 percent respectively. The effective tax rate for the three months and nine months ended April 30, 2007prior year first quarter. The higher rate this quarter was 16.2 percent and 24.5 percent, respectively. The nine months ended April 30, 2008 contains $9.3primarily due to a $2.1 million ofdecrease in discrete tax benefits which predominantly occurredrecognized this quarter compared to $3.9 million in tax benefits occurring in the first and third quarters, primarily related to the expiration of the statute of limitations on previously unrecognized tax benefits and an increase in deferred tax benefitsprior year related to enacted foreign tax rate changes. The nine months ended April 30, 2007 contained $10.0 million of tax benefits related tochanges and the expiration of the statute of limitationsstatutes on previously unrecognized tax benefits, the favorable resolution of certain foreign and statebenefits. The current year tax positions, dividendsrate benefited from foreign subsidiaries and$1.8 million related to the reinstatement of the Research and Experimentation Credit most of which occurred in the third quarter. The average underlyingfor Fiscal 2008 and an adjustment to an income tax rate for the year-to-date period has increased from the prior year by 1.3 percent. The mix of earnings between entities, changesreserve related to foreign tax rates and incentives, the expiration of the Research and Experimentation Credit, and a reduced dividend received deduction all contributed to the increase.audit exposure.



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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 and non-operating income and expenses.expense. Segment detail is summarized as follows (thousands of dollars):

 Engine
Products		 Industrial
Products		 Corporate and
Unallocated		 Total
Company		  Engine
Products		 Industrial
Products		 Corporate and
Unallocated		 Total
Company		 
        
Three Months Ended April 30, 2008:             
Net sales $324,992 $262,768 — $587,760 
Earnings before income taxes 43,456 25,997 (7,603) 61,850 
Three Months Ended April 30, 2007:     
Net sales $276,660 $207,328 — $483,988 
Earnings before income taxes 35,581 17,801 (5,501) 47,881 
Nine Months Ended April 30, 2008:     
Three Months Ended October 31, 2008:             
Net sales $902,488 $722,611 — $1,625,099  $308,777 $264,483 — $573,260 
Earnings before income taxes 115,279 70,429 (15,738) 169,970  36,145 34,568 (2,212) 68,501 
Assets 614,229 581,193 318,123 1,513,545  659,690 593,135 242,056 1,494,881 
Nine Months Ended April 30, 2007:     
Three Months Ended October 31, 2007:     
Net sales $793,924 $600,223 — $1,394,147  $293,155 $232,421 — $525,576 
Earnings before income taxes 102,125 51,135 (11,021) 142,239  42,389 24,015 (6,939) 59,465 
Assets 532,532 504,377 264,035 1,300,944  586,276 559,136 247,867 1,393,279 


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

 Three Months Ended
April 30,		 Nine Months Ended
April 30,		  Three Months Ended
October 31,		 
   
 2008 2007 2008 2007  2008 2007 
      
Engine Products segment:                    
Off-road Products $120,932 $92,750 $332,398 $253,113 
Off-road Products* $114,824 $104,624 
Transportation Products 33,188 38,395 91,943 132,316  27,722 30,089 
Aftermarket Products 170,872 145,515 478,147 408,495 
Aftermarket Products** 166,231 158,442 
      
Total Engine Products segment $324,992 $276,660 $902,488 $793,924  $308,777 $293,155 
      
Industrial Products segment:        
Industrial Filtration Solutions Products $155,208 $125,756 $430,304 $371,328  $155,207 $136,294 
Gas Turbine Products 58,858 41,201 149,046 110,713  59,885 48,936 
Special Applications Products 48,702 40,371 143,261 118,182  49,391 47,191 
      
Total Industrial Products segment $262,768 $207,328 $722,611 $600,223  $264,483 $232,421 
      
Total Company $587,760 $483,988 $1,625,099 $1,394,147  $573,260 $525,576 
      
*Includes Aerospace and Defense products.
**Includes replacement part sales to the Company’s original equipment manufacturers Customers.

Engine Products Segment    For the thirdfirst quarter of fiscal 2008,Fiscal 2009, worldwide Engine Products sales were a record $325.0$308.8 million, an increase of 17.55.3 percent from $276.7$293.2 million in the thirdfirst quarter of the prior year. Total thirdfirst quarter Engine Products sales in the United States increased by 7.56.5 percent compared to the same period in the prior year and international sales increased by 28.74.2 percent as discussed below. Year-to-date, worldwide netEarnings before income taxes as a percentage of Engine Products segment sales were $902.5 million, an increase of 13.711.7 percent decreased from $793.9 million14.5 percent in the prior year. InternationalThe Engine Products sales increased 26.9 percent and salessegment has been negatively impacted by deteriorating global economic conditions, specifically in the United States increased 2.7 percent from the prior year on a year-to-date basis.Transportation Products.

Worldwide sales of Off-road Products in the thirdfirst quarter of fiscal 2008Fiscal 2009 were $120.9$114.8 million, an increase of 30.49.7 percent from $92.8$104.6 million in the thirdfirst quarter of the prior year. Domestic sales in Off-road Products increased 26.012.9 percent as strong aerospace and defense, agriculture and non-residential construction markets more than offset a decrease in residential construction. Spending in the U.S. residential construction markets. The percentage increase was also impacted by last year’s acquisition of Aerospace Filtration Systems, Inc. whichmarket is down more than 20 percent over prior year. Strong demand for replacement filters for Black Hawk helicopters, along with retrofit sales for these helicopters, increased sales by $4.7$6.5 million in the quarter compared to the prior year period.quarter. International sales were up 35.06.1 percent from the thirdfirst quarter of the prior year with increases in Europe and Asia of 32.14.6 percent and 43.211.0 percent, respectively. In additionSales to the benefit of foreign exchange on sales in Europe and Asia, the Company’s Off-road Products business continued to beEuropean agriculture end market were strong globally as production of heavy construction, mining and agricultural equipment by our OEM Customers remained high. Year-to-date, worldwide Off-road Products sales totaled $332.4 million, an increase of 31.3 percent from $253.1 million in the prior year. Year-to-datequarter, offset by a decline in sales of Off-road Products internationally and in the United States increased 28.1 percent and 34.6 percent, respectively, from the prior year.to construction end markets.



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Worldwide sales in Transportation Products in the thirdfirst quarter of fiscal 2008Fiscal 2009 were $33.2$27.7 million, a decrease of 13.67.9 percent from $38.4$30.1 million in the thirdfirst quarter of the prior year. International Transportation Products sales increased by 18.17.6 percent driven by increased sales in EuropeAsia of 33.2 percent.10.1 percent while other regions remained relatively flat. Sales decreased in the United States by 29.119.5 percent primarily as a result of the Environmental Protection Agency (“EPA”) emissions standards which has resulteda 31 percent drop in lower new truckmedium duty build rates at our Customers. Year-to-date, worldwide Transportation Products sales totaled $91.9 million, a decrease of 30.5 percent from $132.3 million inby the prior year. International Transportation Products sales increased 10.9 percent fromCompany’s Customers over the prior year on a year-to-date basis. As expected, Transportation Products sales in the United States decreased 46.4 percent from the prior year on a year-to-date basis as a result of EPA diesel emissions standards changes.quarter.

Worldwide sales of Aftermarket Products in the thirdfirst quarter were $170.9$166.2 million, an increase of 17.44.9 percent from $145.5$158.4 million in the thirdfirst quarter of the prior year. DomesticDespite U.S. truck utilization rates decreasing two percent over prior year, the Company’s U.S. Aftermarket Products sales grew 8.4 percent.7.6 percent driven by increases in retrofit emissions sales of $4.3 million in the quarter. International sales were up 26.62.5 percent from the prior year quarter, driven by a sales increasesincrease in Europe, Asia and other international of 22.4 percent, 22.6 percent and 49.4 percent respectively.9.5 percent. Sales volumes were highincreased in these regionsAsia as equipment utilization rates remained strong. In



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

Industrial Products Segment    For the thirdfirst quarter of fiscal 2008,Fiscal 2009, worldwide sales in the Industrial Products segment were $262.8$264.5 million, an increase of 26.713.8 percent from $207.3$232.4 million in the thirdfirst quarter of the prior year. Total thirdfirst quarter international Industrial Products sales were up 23.012.8 percent compared to the same period in the prior year, while sales in the United States increased by 35.716.1 percent. Year-to-date, worldwide netEarnings before income taxes as a percentage of Industrial Products segment sales were $722.6 million, an increase of 20.413.1 percent increased from $600.2 million10.3 percent in the prior year. International Industrial Products sales increased 20.5 percent and sales in the United States increased 20.0 percent fromThis earnings improvement over the prior year on a year-to-date basis.was driven by an increase in plant utilization due to higher volumes in the Industrial Filtration Solutions Products business, the impact of cost control measures and the non-recurrence of low margin large projects shipped in Fiscal 2008.

Worldwide sales of Industrial Filtration Solutions Products in the quarter were $155.2 million, an increase of 23.413.9 percent from $125.8$136.3 million in the prior year. International sales grew 24.115.4 percent over the prior year with sales in Europe and Asia showing increases of 28.49.7 percent and 11.930.8 percent, respectively. International sales growth was driven by continuedAlthough general economic conditions in Europe declined, demand remained strong global manufacturing investment and production utilization conditions. Europe, in particular, experienced anfor the Company’s Industrial Filtration Solutions products. The increase in Asia was partially due to the saleshipment of industrial dust collection systems.a large project in the quarter, which totaled $2.0 million. Domestic sales increased 22.111.0 percent over the prior year quarter includingquarter. Machine tool consumption in the U.S. increased over a year ago, which contributed to healthy demand for the Company’s products. The impact of the recent acquisition of LMC West, Inc., which also contributed to approximately fivethree percent of the increase. Year-to-date, worldwideCompany’s U.S. sales of Industrial Filtration Solutions products were $430.3 million, up 15.9 percent from $371.3 million in the prior year. International Industrial Filtration Solutions product sales increased 19.5 percent from the prior year on a year-to-date basis. Sales in the United States increased 9.3 percent from the prior year on a year-to-date basis.increase.

Worldwide sales of the Company’s Gas Turbine Products in the thirdfirst quarter were $58.9$59.9 million, an increase of 42.922.4 percent from sales of $41.2$48.9 million in the thirdfirst quarter of the prior year. Growth continued to be good in both the power generation and oil and gas end markets. The Gas Turbine Products sales are typically large systems and as a result the shipments and revenues fluctuate from quarter to quarter. Year-to-date, worldwide Gas Turbine Products sales were $149.0 million, up 34.6 percent from $110.7 million in the prior year.

Worldwide sales of Special Application Products in the quarter were $48.7$49.4 million, an increase of 20.64.7 percent from $40.4$47.2 million in the prior year.year period. Domestic Special Application Products sales increased 25.511.8 percent. International sales inof Special Application Products increased 19.83.7 percent over the prior year, with increasesprimarily in Europe and Asia of 20.5which increased 32.6 percent and 19.8 percent, respectively, asdue to sales of PTFE membranes, while sales in Asia decreased 1.0 percent due to a slowdown in demand for disk drive filters and PTFE membranes remained strong. Year-to-date, worldwide Special Application Products sales were $143.3 million, an increase of 21.2 percent from $118.2 million in the prior year. International Special Application Products sales increased 23.3 percent over the prior year and sales in the United States increased 8.3 percent over the prior year on a year-to-date basis.filters.

Liquidity and Capital Resources

The Company generated $103.8$51.8 million of cash and cash equivalents from operations during the first ninethree months of fiscal 2008.Fiscal 2009. Operating cash flows increased by $57.0$30.0 million from the same period in the prior year primarily as a result of an increase in net earnings of $16.0$4.6 million and a decreaseslower growth in pension contributionsaccounts receivable balances which resulted in $19.8 million of $13.3 millionadditional cash flow from operations as compared to the prior year. Operating cash flows, additional borrowings and cash on hand were used to support $52.1$11.5 million in capital additions, the acquisition of Western Filter Corporation for $78.5 million, the repurchase of 1.70.8 million outstanding shares of the Company’s common stock for $69.3$32.8 million and the payment of $24.4$8.5 million in dividends. For additional information regarding share repurchases see Part II Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”



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At the end of the thirdfirst quarter, the Company held $53.3$69.1 million in cash and cash equivalents, down from $55.2$83.4 million at July 31, 2007.2008. Short-term debt totaled $108.7$206.9 million, downup from $123.1$139.4 million at July 31, 2007,2008, primarily due to repaymentthe acquisition of short-term debt using proceeds from long-term debt, operating cash flows and cash on hand.Western Filter Corporation. The amount of unused lines of credit as of April 30,October 31, 2008 was approximately $558.9$373.0 million. Long-term debt of $177.4$173.7 million at April 30,October 31, 2008 increaseddecreased from $129.0$176.5 million at July 31, 2007,2008, due to the additional note issuances discussed below,payments made on long-term debt, and represented 19.6



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20.9 percent of total long-term capital, defined as long-term debt plus total shareholders’ equity, compared to 17.119.3 percent at July 31, 2007.2008. The Company has not made and does not anticipate making any contributions to its U.S. pension plans and estimates that it will contribute up to an additional $0.6$4.0 million to its non-U.S. pension plans during the remainder of fiscal 2008.Fiscal 2009.

The following table summarizes the Company’s contractual obligations as of April 30,October 31, 2008 (in thousands):

Contractual ObligationsContractual Obligations Payments Due by Period Contractual Obligations Payments Due by Period 
   
 Total Less than
1 year		 1 – 3
years		 3 – 5
Years		 More than
5 years		  Total Less than
1 year		 1 – 3
years		 3 – 5
Years		 More than
5 years		 
          
Long-term debt obligations  $209,022  $32,173  $10,478  $41,979  $124,392   $178,309  $5,120  $5,334  $42,598  $125,257 
Capital lease obligations 1,240 726 182 136 196  760 306 222 130 102 
Interest on long-term obligations 69,144 10,090 16,316 13,758 28,980  63,305 8,587 16,021 13,116 25,581 
Operating lease obligations 24,764 9,972 10,717 3,782 293  25,347 9,960 10,444 4,268 675 
Purchase obligations(1) 184,327 177,091 7,236 — —  161,726 154,472 6,237 1,017 — 
Pension and deferred compensation(2) 25,752 2,213 3,741 3,058 16,740  29,025 2,723 3,286 3,142 19,874 
          
Total(3) $514,249 $232,265 $48,670 $62,713 $170,601  $458,472 $181,168 $41,544 $64,271 $171,489 
          
(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 anddeferred compensation consists of long-term pension liabilities and salary and bonus deferrals elected by certain executives under the Company’s deferred compensation plan. Deferred compensation balances earn interest based on a treasury bond rate as defined by the plan and are payable at the election of the participants.
(3)In addition to the above contractual obligations, the Company may be obligated for additional cash outflows of $28.5$32.4 million of unrecognizedpotential tax benefits.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 April 30,October 31, 2008, the Company had a contingent liability for standby letters of credit totaling $18.5 million that have been issued and are outstanding. The letters of credit guarantee payment to beneficial third parties in the event the Company is in breach of specified financing agreement and insurance contract terms as detailed in each letter of credit. At April 30,October 31, 2008, there were no amounts drawn upon these letters of credit.

The Company has a five-year, multi-currency revolving facility with a group of banks under which the Company may borrow up to $250 million. This facility expires on April 2, 2013. As of April 30,October 31, 2008, there was $50.0$175.0 million of borrowings under these facilities. During the quarter, the Company extended the expiration date of the facility by one year to April 2, 2013. No other changes were made to thethis facility.

Certain note agreements contain debt covenants related to working capital levels and limitations on indebtedness. As of April 30,October 31, 2008, the Company was in compliance with all debt covenants.

On June 1, 2007,November 14, 2008, the Company issued $100an $80 million of senior unsecured notes.note. The first $50 million was funded on June 1, 2007, and the remaining two $25 million tranches were funded on September 28, 2007 and November 30, 2007. The three tranches arenote is due on June 1, 2017, September 28, 2017, and November 30, 2017, respectively.14, 2013. The debt was issued at face value and bears interest payable semi-annually at a rate of 5.486.59 percent. The proceeds from the notes werenote will be used to refinance existing debt andor 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



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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.

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



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Critical Accounting Policies

There have been no material changes to the Company’s critical accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.2008.

Outlook

Based on exchange rates in effect in November 2008, the Company anticipates that the resurgence in the strength of the U.S. Dollar will decrease Fiscal 2009 full year sales by approximately $133 million, or 6 percent, from Fiscal 2008. Including this foreign currency translation assumption, the Company expects full year sales in both the Engine and Industrial Products’ segments to be flat or slightly down and for total Company sales to be between $2.15 billion and $2.23 billion for the full year. In local currency, the Company expects low single-digit percentage sales growth in both segments and for the total company.

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

•In NAFTA Transportation Products, the Company no longer expects a pre-buy in advance of the 2010 diesel emission regulations and as a result anticipates NAFTA Class eight truck builds by its Customers will remain flat through the remainder of Fiscal 2009. The Company also expects a decline in NAFTA class five to seven build rates and for new truck build rates to decline in Europe and Japan.
•The Company expects the NAFTA and Western European residential construction markets to remain weak. However, demand for coal and farm commodities, along with global infrastructure projects, is expected to generate year-over-year sales growth in the Company’s mining, heavy construction, and agriculture equipment end markets. The Company expects demand in the aerospace and defense end markets to remain strong and also to benefit from the recent acquisition of Western Filter.
•Aftermarket sales are expected to continue growing due to the Company’s ongoing expansion into new geographies and solid off-road equipment utilization. The Company also expects to continue benefiting from the increasing amount of equipment in the field with its PowerCore™ technology as well as the Company’s other new proprietary filtration systems.

Industrial Products Segment

•The Company’s Industrial Filtration Solutions’ sales are now projected to decrease due to the impact of foreign currency translation. The Company expects growing demand for new products to offset softening global manufacturing investment conditions.
•The Gas Turbine industry is expecting demand for gas turbines to continue growing through the remainder of Fiscal 2009. While the Company still anticipates unit volume growth in its gas turbine business from the demand for new power generation projects, the Company expects its overall gas turbine filter sales to decrease due to the impact of foreign currency translation.
•Special Applications Products’ sales are also expected to decrease due to the impact of foreign currency translation. Excluding this impact, the Company expects flat unit sales with lower disk drive filter sales being offset by growth in its membrane products’ sales.


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

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

•The Company continues to expect to achieve its long-term gross margin target of 32.0 percent in Fiscal 2009 as we have seen lessening of the upward pressure in raw material costs and are benefiting from product cost reduction initiatives.
•The Company expects its operating margin will exceed the long-range target of 11 percent for the full year.
•The Company expects operating income to increase between 3 to 8 percent.
•The Company has several tax contingencies that may be concluded this fiscal year and could reduce its full year tax rate if resolved favorably. Due to the wide range of outcomes, the Company’s full year tax rate is now expected to be between 25 and 31 percent.
•The Company now expects capital expenditures to be between $60 and $70 million for the full year.

Forward-Looking Statements and Risk Factors

The Company, through its management, may make forward-looking statements reflecting the Company’s current views with respect to future events and financial performance. These forward-looking statements, which may be in reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), in press releases and in other documents and materials as well as in written or oral statements made by or on behalf of the Company, are subject to certain risks and uncertainties, including those discussed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended July 31, 2007,2008, 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 currency fluctuations, commodity prices, world economic factors, political factors, the company’s international operations, highly competitive markets, governmental laws and regulations, the implementation of our new warehouse management system in our U.S. distribution center,information systems, and other factors listed in our Annual Report on Form 10-K and our reports on Form 10-Q.

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in the reported market risk of the Company since July 31, 2007.2008. See further discussion of these market risks in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.2008.

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


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


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 (b)Changes in Internal Control over Financial Reporting: No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) identified in connection with such evaluation during the fiscal quarter ended April 30,October 31, 2008, has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

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 isbelieves the recorded reserves in its consolidated financial statements are adequate in light of the probable and estimable outcomes. Any recorded liabilities were not currently subject to pending litigation other than litigation which arises out of and is incidentalmaterial to the conductCompany’s financial position, results of the Company’s business. All such matters are subject to many uncertaintiesoperation and outcomes that are not predictable with assurance. Theliquidity and the Company does not considerbelieve that any of such proceedings that arethe currently pending to be likely to result in a material adverse effect on the Company’s consolidatedidentified claims or litigation will materially affect its financial position, or results of operation.operation and liquidity.

Item 1A.  Risk Factors

There are inherent risks and uncertainties associated with our global operations that involve manufacturing and sale of products for highly demanding Customer applications throughout the world. These risks and uncertainties could adversely affect our operating performances or financial condition. The “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended July 31, 20072008 includes a discussion of these risks and uncertainties. There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.2008.

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

Repurchases of Equity Securities

The following table sets forth information in connection with purchases made by, or on behalf of, the Company or any affiliated purchaser of the Company, of shares of the Company’s common stock during the quarterly period ended April 30,October 31, 2008.

Period  Total Number
of Shares
Purchased(1)		  Average Price
Paid per Share		  Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs		  Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
or Programs		 
     
February 1 – February 29, 2008    378,482  $41.82   377,700   2,396,600 shares 
March 1 – March 31, 2008    51,588  $40.01   49,879   2,346,721 shares 
April 1 – April 30, 2008    72,439  $39.87   72,439   2,274,282 shares 
Total    502,509  $41.36   500,018   2,274,282 shares 
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		 
     
August 1 – August 31, 2008    —   —   —   1,732,210 shares 
September 1 – September 30, 2008    859,718  $41.28   802,000   930,210 shares 
October 1 – October 31, 2008    18,465  $32.69   —   930,210 shares 
Total    878,183  $41.10   802,000   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 April 30,October 31, 2008. However, the “Total Number of Shares Purchased” column of the table above includes 2,491


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76,183 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 6.  Exhibits

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

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

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

*4 – **

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

10-A – 1980 Master Stock Compensation Plan as Amended

10-B – Form of Management SeverancePerformance Award Agreement under 1991 Master Stock Compensation Plan

10-C – Deferred Compensation Plan for Non-employee Directors as amended

10-D – Independent Director Retirement and Benefit Plan as amended

10-E – 1991 Master Stock Compensation Plan as amended

10-F – Form of Restricted Stock Award under 1991 Master Stock Compensation Plan

10-G – Form of Agreement to Defer Compensation for certain Executive Officers

10-H – Stock Option Program for Non-employee Directors

10-I – Note Purchase Agreement among Donaldson Company, Inc. and certain listed Insurance Companies Dated as of July 15, 1998

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

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

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

________________________

*Exhibit has previously been filed with the Securities and Exchange Commission and is incorporated herein by reference as an exhibit.
**Pursuant to the provisions of Regulation S-K Item 601(b)(4)(iii)(A) copies of instruments defining the rights of holders of certain long-term debts of the Company and its subsidiaries are not filed and in lieu thereof the Company agrees to furnish a copy thereof to the Securities and Exchange Commission upon request.









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SIGNATURES

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

 DONALDSON COMPANY, INC.
(Registrant)		 
Date: June 3,December 4, 2008 By: /s/ William M. Cook
  William M. Cook
Chairman, President and
Chief Executive Officer
(duly authorized officer)
Date: June 3,December 4, 2008 By: /s/ Thomas R. VerHage
  Thomas R. VerHage
Vice President,
Chief Financial Officer
(principal financial officer)
Date: June 3,December 4, 2008 By: /s/ James F. Shaw
  James F. Shaw
Controller
(principal accounting officer)




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