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 ENDING January 31, 2001 OR
[ ] 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
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DONALDSON COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 41-0222640
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 West 94th Street
Minneapolis, Minnesota 55431
----------------------------
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code (952) 887-3131
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes __X__ No _____
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 - 44,313,893 shares as of February 28, 2001
- ----------------------------------------------------------------------
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
DONALDSON COMPANY, INC. AND SUBSIDIARIES
(Thousands of Dollars Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
January 31 January 31
------------------------------ ------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales $ 279,631 $ 259,256 $ 569,500 $ 505,806
Cost of sales 193,315 179,661 397,228 352,330
------------ ------------ ------------ ------------
Gross margin 86,316 79,595 172,272 153,476
Operating expenses 58,843 53,431 116,890 102,147
------------ ------------ ------------ ------------
Operating income 27,473 26,164 55,382 51,329
Other (income) expense (1,590) (489) (785) (1,239)
Interest expense 3,199 1,787 6,297 3,405
------------ ------------ ------------ ------------
Earnings before income taxes 25,864 24,866 49,870 49,163
Income taxes 7,759 7,460 14,961 14,749
------------ ------------ ------------ ------------
Net earnings $ 18,105 $ 17,406 $ 34,909 $ 34,414
============ ============ ============ ============
Weighted average shares
outstanding 44,273,159 46,035,692 44,422,165 46,061,422
Diluted shares outstanding 45,212,000 46,823,032 45,413,550 46,948,225
Net earnings per share $ .41 $ .38 $ .79 $ .75
Net earnings per share
assuming dilution $ .40 $ .37 $ .77 $ .73
Dividends paid per share $ .075 $ .070 $ .145 $ .130
2
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
January 31 July 31
2001 2000
---------- ----------
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ 27,427 $ 24,149
Accounts Receivable 217,039 202,361
Inventories
Materials 42,876 45,064
Work in process 19,169 20,171
Finished products 51,383 54,128
---------- ----------
Total inventories 113,428 119,363
Prepaid and other current assets 32,384 29,606
---------- ----------
TOTAL CURRENT ASSETS 390,278 375,479
Property, plant and equipment, at cost 478,404 469,701
Less accumulated depreciation (276,979) (265,156)
---------- ----------
Property, plant and equipment, net 201,425 204,545
Other assets 88,257 89,633
---------- ----------
TOTAL ASSETS $ 679,960 $ 669,657
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Short-term debt $ 92,195 $ 85,034
Current maturities of long-term debt 255 279
Trade accounts payable 76,044 82,320
Accrued employee compensation and related taxes 24,903 29,759
Income taxes payable 2,180 58
Warranty and accrued liabilities 21,938 27,974
Other current liabilities 9,732 10,298
---------- ----------
TOTAL CURRENT LIABILITIES 227,247 235,722
Long-term debt 92,170 92,645
Other long-term liabilities 68,114 61,125
SHAREHOLDERS' EQUITY
- --------------------
Preferred stock, $1 par value,
1,000,000 shares authorized, no shares issued -- --
Common stock, $5 par value, 80,000,000 shares authorized,
49,655,954 issued 248,280 248,280
Additional paid-in capital -- 2,967
Retained earnings 171,507 142,176
Accumulated other comprehensive income (17,233) (10,523)
Treasury stock - 5,343,861 and 4,998,342 shares at
January 31, 2001 and July 31, 2000, respectively (110,125) (102,735)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 292,429 280,165
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 679,960 $ 669,657
========== ==========
See Notes to Condensed Consolidated Financial Statements
3
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Six Months Ended
January 31
--------------------------
2001 2000
---------- ----------
OPERATING ACTIVITIES
Net earnings $ 34,909 $ 34,414
Adjustments to reconcile net earnings to
Net cash provided by operating activities:
Depreciation and amortization 18,631 15,318
Changes in operating assets and liabilities (28,866) 169
Other 1,680 (8,349)
---------- ----------
Net Cash Provided by Operating Activities 26,354 41,552
INVESTING ACTIVITIES
Net expenditures on property and equipment (15,255) (20,112)
Acquisitions and investments in unconsolidated affiliates,
net of cash acquired and distributions 750 (30,099)
---------- ----------
Net Cash Used in Investing Activities (14,505) (50,211)
FINANCING ACTIVITIES
Purchase of treasury stock (10,297) (4,186)
Increase in long-term debt 1,089 5,085
Decrease in long-term debt (883) (4,678)
Change in short-term debt 7,871 26,485
Dividends paid (6,444) (5,988)
Other 807 (260)
---------- ----------
Net Cash Provided by (Used in) Financing Activities (7,857) 16,458
Effect of exchange rate changes on cash (714) (296)
---------- ----------
Increase in cash and cash equivalents 3,278 7,503
Cash and Cash Equivalents-Beginning of Year 24,149 41,944
---------- ----------
Cash and Cash Equivalents-End of Period $ 27,427 $ 49,447
========== ==========
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. (the Company) have been prepared in accordance with
accounting principles generally accepted in the United States 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 footnotes required for complete financial
statements. In the opinion of management, all adjustments (consisting of only
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended January 31, 2001
are not necessarily indicative of the results that may be expected for the year
ending July 31, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in Donaldson Company, Inc.
and subsidiaries' Annual Report on Form 10-K for the year ended July 31, 2000.
Certain amounts in prior periods have been reclassified to conform to the
current presentation. The reclassifications had no impact on the net earnings as
previously reported.
Note B - 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.
The following table presents information necessary to calculate basic and
diluted net earnings per common share:
Three Months Ended Six Months Ended
January 31 January 31
------------------------- -------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Weighted average shares outstanding - Basic 44,273,159 46,035,692 44,422,165 46,061,422
Dilutive share equivalents 938,841 787,340 991,385 886,803
---------- ---------- ---------- ----------
Weighted average shares outstanding - Diluted 45,212,000 46,823,032 45,413,550 46,948,225
========== ========== ========== ==========
Net earnings for basic and diluted
earnings per share computation $18,105,000 $17,406,000 $34,909,000 $34,414,000
=========== =========== =========== ===========
Net earnings per share - Basic $ .41 $ .38 $ .79 $ .75
=========== =========== =========== ===========
Net earnings per share - Diluted $ .40 $ .37 $ .77 $ .73
=========== =========== =========== ===========
Note C - Comprehensive Income
The Company reports accumulated other comprehensive income as a separate item in
the shareholders' equity section of the balance sheet. Other comprehensive
income consists of foreign currency translation adjustments and net gains or
losses on cash flow hedging derivatives.
5
Total comprehensive income and its components are as follows (in thousands):
Three Months Ended Six Months Ended
January 31 January 31
--------------------- ---------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net earnings $ 18,105 $ 17,406 $ 34,909 $ 34,414
Foreign currency translation adjustment 6,548 (3,388) (7,118) (73)
Net gain(loss) on cash flow hedging derivatives (341) 0 408 0
-------- -------- -------- --------
Total other comprehensive income $ 24,312 $ 14,018 $ 28,199 $ 34,341
======== ======== ======== ========
Total accumulated other comprehensive income and its components are as follows
(in thousands):
January 31 July 31
2001 2000
-------- --------
Foreign currency translation adjustment $(17,641) $(10,523)
Net gain on cash flow hedging derivatives 408 0
-------- --------
Total accumulated other comprehensive income $(17,233) $(10,523)
======== ========
Note D - 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. Segment detail
is summarized as follows (in thousands):
Engine Industrial Corporate & Total
Products Products Unallocated Company
-------- -------- ----------- -------
Three Months Ended
January 31, 2001:
Net sales $138,638 $140,993 -- $279,631
Earnings before income taxes 7,794 22,957 $ (4,887) 25,864
January 31, 2000:
Net sales 160,212 99,044 -- 259,256
Earnings before income taxes 14,357 15,952 (5,443) 24,866
Six Months Ended
January 31, 2001:
Net Sales 305,774 263,726 -- 569,500
Earnings before income taxes 22,957 35,731 (8,818) 49,870
January 31, 2000
Net Sales 321,378 184,428 -- 505,806
Earnings Before income taxes $ 33,375 $ 27,700 $(11,912) $ 49,163
6
Note E - New Accounting Standards
The Company adopted Statement of Financial Accounting Standard (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities" as amended by
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of FASB Statement No. 133 in the first quarter of
fiscal 2001. SFAS 133 and SFAS 138 require a company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not hedges
must be adjusted to fair value through income. If the derivative is designated
as a hedge, depending on the nature of the hedge, changes in the fair value of
the hedged assets, liabilities, or firm commitments are recognized through
earnings or in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value is
immediately recognized in earnings. The Company enters into foreign exchange
contracts and other hedging activities to mitigate potential foreign currency
gains and losses relative to local currencies in the markets to which it sells.
As a result of the implementation of SFAS 133 and SFAS 138, the Company has
recorded an asset and other comprehensive income of $0.4 million at January 31,
2001. There has been no impact on the earnings of the Company for the second
quarter ended fiscal 2001.
Note F - Acquisitions
The Company completed the purchase of all of the outstanding shares of AirMaze
Corporation for $31.9 million in cash effective November 1, 1999. AirMaze
Corporation was merged into Donaldson Company, Inc. effective April 1, 2000.
AirMaze products include heavy-duty air and liquid filters, air/oil separators
and high purity air filter products. AirMaze manufacturing facilities are
located in Stow, Ohio and Greenville, Tennessee. The excess of purchase price
over the fair values of the net assets acquired was $27.2 million and has been
recorded as goodwill which is being amortized on a straight-line basis over 20
years. AirMaze operations are a part of the Company's Engine Products segment.
As of January 31, 2001, the balance of purchase liabilities recorded in
conjunction with the acquisition was approximately $1.0 million of costs
associated with the closure and sale of acquired facilities as well as
termination and relocation of employees. Costs incurred and charged to the
reserves through the second quarter of fiscal 2001 amounted to $0.2 million
related to the termination and relocation of employees.
The Company acquired the DCE dust control business of Invensys, plc for $56.4
million effective February 1, 2000. DCE, headquartered in Leicester, England
(UK) with smaller facilities in Germany and the United States and assembly
operations in South Africa, Australia and Japan, is a major participant in the
global dust collection industry. The excess of purchase price over the fair
values of the net assets acquired was $33.2 million and has been recorded as
goodwill which is being amortized on a straight-line basis over 20 years. DCE
operations are a part of the Company's Industrial Products segment. The purchase
price allocation is final as of the second quarter of fiscal 2001. As of January
31, 2001, the balance of purchase liabilities recorded in conjunction with the
acquisition was approximately $3.3 million of costs associated with the closure
and sale of acquired facilities as well as termination and relocation of
employees. Adjustments to the reserves recorded during the six months ended,
January 31, 2001 included a net increase of $1.3 million for costs related to
the closure and sale of acquired facilities and $0.3 million for costs related
to the termination and relocation of employees. All adjustments were reflected
as an adjustment to goodwill. Costs incurred and charged to the reserves through
the second quarter of fiscal 2001 amounted to $0.6 million related to the
closure and sale of acquired facilities and $0.5 million related to the
termination and relocation of employees.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
The Company generated $26.4 million of cash and cash equivalents from operations
during the first six months of fiscal 2001. Operating cash flows decreased by
$15.2 million from the prior year period primarily due to an increase in
accounts receivable in addition to decreases in accounts payable and other
current liabilities compared to the same period in the prior year. These cash
flows, plus borrowings from the Company's credit facility, were used primarily
to support $15.3 million in capital additions, repurchase $10.3 million of
treasury stock and for the payment of $6.4 million in dividends during the first
six months of fiscal 2001. At the end of the second quarter, the Company had
remaining authority to purchase approximately 1.5 million shares of common stock
under the share repurchase program authorized in November 1998.
At the end of the second quarter, the Company held $27.4 million in cash and
cash equivalents. Short-term debt totaled $92.2 million, up from $85.0 million
at July 31, 2000. The amount of unused lines of credit as of January 31, 2001
was approximately $48.9. Long-term debt of $92.2 million at January 31, 2001
(down slightly from July 31, 2000), represented 24.0 percent of total long-term
capital, down slightly from 24.9 percent at July 31, 2000.
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.
Results of Operations
The Company is a leading worldwide manufacturer of filtration systems and
replacement parts. The Company's product mix includes air and liquid filters and
exhaust and emission control products for mobile equipment; in-plant air
cleaning systems; air intake systems and exhaust products for industrial gas
turbines; and specialized filters for such diverse applications as computer disk
drives, aircraft passenger cabins and semiconductor processing. Products are
manufactured at more than three dozen plants around the world and through five
joint ventures. The Company has two reporting segments engaged in the design,
manufacture and sale of systems to filter air and liquid and other complementary
products. The two segments are Engine Products and Industrial Products. Products
in the Engine Products segment consist of air intake systems, exhaust systems,
liquid filtration systems and replacement parts. The Engine Products segment
sells to original equipment manufacturers (OEMs) in the construction,
industrial, mining, agriculture and transportation markets and to independent
distributors, OEM dealer networks, private label accounts and large private
fleets. Products in the Industrial Products segment consist of dust, fume and
mist collectors, static and pulse-clean air filter systems for industrial gas
turbines, computer disk drive filter products and other specialized air
filtration systems. The Industrial Products segment sells to various industrial
end-users, OEMs of gas-fired turbines, OEMs and end users requiring highly
purified air.
8
The Company reported net earnings for the second quarter ended January 31, 2001
of $18.1 million, up from the $17.4 million recorded in the second quarter of
the prior year. Total net sales for the three months ended January 31, 2001 of
$279.6 million were up 7.9 percent from prior year sales of $259.3 million. The
business acquired after the second quarter in fiscal 2000 contributed $16.4
million of revenue in the second quarter of fiscal 2001. Excluding the impact of
this acquisition in the prior year, sales were up 1.5 percent from the
comparable quarter last year. The increase in net earnings resulted from an
increase in sales as well as an improved gross margin. Operating expenses as a
percent of sales remained flat as compared to second quarter in the prior year.
Diluted net earnings per share were 40 cents, up 8.1 percent from prior year
diluted net earnings per share of 37 cents as the average number of shares
outstanding decreased 3.4 percent compared to the prior year period.
For the six months ended January 31, 2001, net earnings were $34.9 million, up
1.4 percent from the $34.4 million recorded in the same period in the prior
year. Total net sales for the six months ended January 31, 2001 of $569.5
million were up 12.6 percent from the prior year sales of $505.8 million.
Diluted net earnings per share were 77 cents, up 5.5 percent from the prior
year's diluted net earnings per share of 73 cents.
For the second quarter, net sales in the Industrial Products segment increased
42.4 percent from $99.0 million in the prior year, to a record $141.0 million in
fiscal 2001. Excluding the acquisition of DCE, sales were $124.6 million, up
25.8 percent from the second quarter in the prior year. For the six months
ended, net sales were a record $263.7 million, an increase of 43.0 percent from
$184.4 million for the same period in the prior year. Excluding the acquisition
of DCE, net sales for the six months ended were up 25.3 percent to $231.1
million.
Within the Industrial Products segment, gas turbine products net sales continued
to show extraordinary growth with sales up 60.0 percent for the quarter and 61.6
percent for the six month period, compared to the prior year. This growth can be
partially attributed to the California power crisis and the need throughout the
United States to bring additional power generation resources on line. For the
quarter, sales of dust collection products increased 47.3 percent from the same
period in the prior year and were up 52.3 percent for the six month period as
compared to the prior year. Excluding the acquisition of DCE, net sales in dust
collection products increased 4.4 percent and 9.4 percent for the quarter and
six month period, respectively. Geographically, growth in domestic sales of dust
collection products slowed in the second quarter of fiscal 2001 as U.S.
industrial production softened especially in the automotive sector. Sales growth
of dust collection products in the Asia-Pacific region, particularly Japan and
Hong Kong remained strong. Sales of special application products posted a 15.7
percent increase from the same period in the prior year primarily due to
continued strength in the disk drive market and strong U.S. and European
lithography product sales. For the six month period, net sales of special
application products increased 12.0 percent from the same period in the prior
year.
For the second quarter, net sales in the Engine Products segment of $138.6
million decreased 13.5 percent from $160.2 million in the prior year. For the
six months ended, net sales were $305.8, a decrease of 4.9 percent from $321.4
million for the same period in the prior year. The decrease in revenue reflects
an overall slowing in the U.S. economy and difficult market conditions with
customers having excess inventory and exerting price pressures on suppliers.
9
Within the Engine Products segment, net sales of medium and heavy-duty truck
products declined 58.1 percent in the quarter and were down 51.6 percent for the
six month period as compared to the prior year. This drop is primarily a result
of the dramatic downturn in the North American truck market as well as the
effect of the Company's decision to discontinue a block of business with a major
customer due to unfavorable commercial terms. Net sales of off-road products
also declined for the second quarter posting a decrease of 5.0 percent over the
same period in the prior year but for the six month period, showed a modest
increase of 1.9 percent. The decrease in net sales in products throughout the
Engine Products segment was somewhat offset by an increase in aftermarket
product sales of 2.3 percent for the quarter and 11.8 percent for the six month
period.
Consolidated gross margin for the second quarter of fiscal 2001 was 30.9
percent, up slightly from 30.7 percent in the same quarter of the prior year.
The slight improvement was driven by higher margins in the Industrial Products
segment offset by lower margins in the Engine Products segment.
Operating expenses during the first quarter of fiscal 2001 were $58.8 million
(21.0 percent of sales), compared to $53.4 million (20.6 percent of sales) in
the same quarter of fiscal 2000. The increase in the operating expense
percentage was driven by last year's DCE acquisition, which has a higher
operating expense percentage than the Company's base business. Excluding DCE,
the operating expense percentage was in line with prior year results.
Other income for the first quarter of $1.6 million increased $1.1 million from
$0.5 million in the same period in the prior year. Other income for the second
quarter consisted of income from unconsolidated affiliates of $0.8 million,
interest income of $0.3 million and other income of $0.5 million including a
gain on the sale of the laminar flow product line. For the quarter, interest
expense increased to $3.2 million, up $1.4 million from the second quarter in
the prior year, reflecting higher short-term debt levels related to last year's
acquisitions. For the year, other income decreased $0.5 million and interest
expense increased $2.9 million from the same period in the prior year.
The income tax rate of 30 percent was unchanged from fiscal 2000.
Total backlog of $352 million was up 21 percent from the same period in the
prior year and up 12 percent from the prior quarter end. In the Industrial
Products segment, total backlog increased 61 percent from the same period last
year and 23 percent from the prior quarter end. In the Engine Products segment,
total backlog decreased 6 percent from the same period last year but increased 2
percent from the prior quarter end.
Hard order backlogs - goods scheduled for delivery in 90 days - of $173 million
for the first quarter of fiscal 2001 were up 4 percent from the same period in
the prior year but down 6 percent from the prior quarter end. In the Industrial
Products segment, hard order backlog increased 25 percent from the same period
in the prior year but decreased 13 percent from the prior quarter end. The 13
percent drop reflects exceptionally strong second quarter sales compared to the
same quarter last year and the first quarter sales this year (sales were up 42
percent and 15 percent respectively). In the Engine Products segment, hard order
backlog decreased 9 percent from the same period last year but increased 2
percent from the prior quarter end.
10
The impact of foreign currency translation, resulted in a decrease in net sales
of $9.9 million and a decrease in net earnings of $0.8 million for the second
quarter. This decrease in net sales was a direct result of the weakness of
currencies against the U.S. dollar in several of the Company's operating
locations throughout the world. The currency that impacted the Company's sales
results the most was the Euro, which in Europe resulted in a decrease in net
sales of $6.8 million. The Japanese Yen also had a negative impact on the
Company's second quarter net sales with a decrease in net sales of $1.5 million.
The South African Rand and Australian Dollar also negatively impacted the
Company's results for the second quarter with a decrease in net sales of $0.8
and $0.6 million, respectively. The decrease in net earnings from foreign
currency translation resulted mainly from the Company's operations in Europe.
The majority of the decrease in net earnings of $0.8 million for the second
quarter was due to the continued weakness of the Euro against the U.S. dollar.
For the second quarter, local currency revenues outside the U.S. increased
almost 31 percent, excluding the effect of foreign currency translation. The
Company expects revenue to remain strong in local currencies, partially offset
by the stronger dollar particularly relative to the Euro and the Yen. However,
as the Euro has regained some of its strength towards the end of the second
quarter, we expect the negative impact of the Euro on the Company's results to
lessen as long as significant negative fluctuations do not occur the remainder
of the current fiscal year.
Outlook
Many of the business conditions present in the first half of fiscal 2001 are
expected to influence the Company's results in the second half of the year. The
Company expects continued strength in gas turbine product sales and special
application product sales within the Industrial Products segment. Within the
Engine Products segment, the Company expects continued weakness in North
American transportation products but expects the rate of decrease to begin to
level off. Much of the plant and product rationalizations costs have been
incurred; consequently, future expense levels will begin to moderate. The
Company expects the current difficult economic conditions, including the strong
U.S. dollar and softer U.S. industrial production, to persist throughout the
remainder of fiscal 2001.
Forward-Looking Statements
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is making this cautionary
statement in connection with such safe harbor legislation. This Form 10-Q,
earnings releases or other press releases, the Company's Annual Report to
Shareholders, any Form 10-K, 10-Q or Form 8-K of the Company or any other
written or oral statements made by or on behalf of the Company may include
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance. The words "believe,"
"expect," "anticipate," "intends," "estimate," "forecast," "plan," "project,"
"should" and similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All forecasts and projections are "forward-looking statements" and are
based on management's current expectations of the Company's near-term results,
based on current information available pertaining to the Company.
11
The Company wishes to caution investors that any forward-looking statements made
by or on behalf of the Company are subject to uncertainties and other factors
that could cause actual results to differ materially from such statements. These
uncertainties and other risk factors include, but are not limited to: risks
associated with currency fluctuations, commodity prices, world economic factors,
political factors, international operations, highly competitive markets, changes
in product demand and changes in the geographic and product mix of sales,
acquisition opportunities and integration of recent acquisitions, facility and
product line rationalization, research and development expenditures, including
ongoing information technology improvements, and governmental laws and
regulations, including diesel emissions controls. For a more detailed
explanation of the foregoing and other risks, see Exhibit 99, which is filed
with the Securities and Exchange Commission. The Company wishes to caution
investors that other factors may in the future prove to be important in
affecting the Company's results of operations. New factors emerge from time to
time and it is not possible for management to predict all such factors, nor can
it assess the impact of each such factor on the business or the extent to which
any factor, or a combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
Investors are further cautioned not to place undue reliance on such
forward-looking statements as they speak only to the Company's views as of the
date the statement is made. 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.
12
Item 3. Quantitative and Qualitative Disclosure about Market Risk
The Company does not enter into market risk-sensitive instruments for
trading purposes to generate revenues. There have been no material
changes in the reported market risk of the Company since July 31, 2000.
See further discussion of these market risks in the Donaldson Company,
Inc. Annual Report on Form 10-K for the year ended July 31, 2000.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
None
(b) Reports on Form 8-K.
(1) The Company filed Form 8-K on November 17, 2000,
filing the Company's press release dated November 17,
2000 as exhibit 99.1 of the Form 8-K.
(2) The Company filed Form 8-K on November 28, 2000,
filing the Company's press release dated November 28,
2000 as exhibit 99.1 of the Form 8-K.
(3) The Company filed Form 8-K on January 3, 2001, filing
the Company's press release dated January 2, 2001 as
exhibit 99.1 of the Form 8-K.
(4) The Company filed Form 8-K on January 19, 2001,
filing the Company's press release dated January 19,
2001 as exhibit 99.1 of the Form 8-K.
(5) The Company filed Form 8-K on February 22, 2001,
filing the Company's press release dated February 22,
2001 as exhibit 99.1 of the Form 8-K.
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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 19, 2001 By /s/ William G. Van Dyke
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William G. Van Dyke
Chairman, President and
Chief Executive Officer
Date March 19, 2001 By /s/ Thomas A. Windfeldt
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Thomas A. Windfeldt
Vice President,
Controller and Treasurer,
Chief Accounting Officer
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