Recent Years

Financial Overview

(in million USD)

	FY ended July 31, 2014	FY ended July 31, 2013	Rate of Change (%)	Factors
Overall
Sales	2,473.5	2,436.9	1.5	-
Earnings before income taxes	360.7	348.2	3.6	-
Engine Products
Sales	1,584.0	1,504.2	5.3	1)
Earnings before income taxes	233.9	220.9	5.9	-

Factors
1) Engine Products
-Sales in the fiscal year ended July 31, 2014 increased by 5.3% to USD 1,584.0 million. On-Road Products sales rose by 1.2% to USD 130.0 million. Sales increases of 37.5% in Europe were partially offset by a decrease in sales in the Americas and Asia. The increase in Europe was due primarily to growth after the Euro6 diesel emission regulations went into effect on January 1, 2014.

Outlook

-The Company is planning its total sales for the fiscal year ending in July 31, 2015 to be between USD 2.57 and 2.67 billion. The operating margin in the fiscal year ending July 31, 2015 is forecast to be 14.1 to 14.9%.

Awards

-In 2013, the Company's Frankfort, Indiana facility received the 2012 Master of Quality Award from Daimler Trucks North America (DTNA). This is the third year that the Frankfort plant has received this award. The Frankfort facility supplies a wide range of air intake systems, elements and components to DTNA, including the air elements for the Freightliner "Cascadia" model. (From a press release on September 18, 2013)

-In 2010, the Company has been recognized as a "Best in Class" Premium Supplier by the Volvo Group for 2009. (From a press release on August 19, 2010)

-In 2010, the Company's Baldwin facility, located in Wisconsin, U.S., is the recipient of the 2009 Masters of Quality Award from Daimler Trucks North America LLC (DTNA). This is the second time that the Baldwin facility has won the award and the fifth time for the Company overall. (From a press release on August 2, 2010)

Contracts

-In 2011, the Company announced that its PowerCore G2 air filtration is gaining wide acceptance across a broad spectrum of applications, including on-road trucks, heavy-duty haulers, crawlers and more. Furthermore, to serve its growing list of applications in European markets, the Company intends to expand its PowerCore G2 manufacturing capability to Hull, U.K. beginning in April 2011. (From a press release on March 21, 2011)

R&D Expenditure

(in million USD)

	FY ended July 31, 2014	FY ended July 31, 2013	FY ended July 31, 2012
Overall	61.8	62.6	59.6

 

R&D Structure

-The Company's main global R&D center is in Bloomington, Minnesota, U.S. The Company also has an engineering center in Leuven, Belgium.

-As of the end of July 2014, the Company has expanded a R&D lab on its Bloomington, Minnesota. U.S. facility, spending USD 10 million as capital expenditure. This expansion enhances its testing capabilities, which advances its air and liquid filtration technology.

-In 2011, the Company announced the opening of three new test labs in China, India and the U.S. At the Company's regional headquarters in Wuxi, Jiangsu province, China, the Company added a new testing lab in the Greater China R&D Center to support the expansion of the Company's Engine Products business. At its regional headquarters and manufacturing plant in Gurgaon, India, the Company expanded its facility to include a new air intake testing lab. Donaldson Torit, a division of its Industrial Filtration Solutions business, opened a new test lab for filtration products in Bloomington, Minnesota, U.S. (From a press release on August 17, 2011)

Product Development

Air cleaner
-In 2013, the Company announced that its PowerCore product line now covers even more on- and off- road applications with the recent additions of the PCD family and the PSD14. The new Donaldson PowerCore PCD air cleaner offers single-stage filtration in a compact unit and is ideal for on-highway trucks and other applications operating in light dust conditions. The PCD family – which includes the PCD09, PCD10 – offers performance for engine airflow ranges up to 974 cfm (cubic feet per minute). The PSD14 Air Cleaner expands the PSD family of air cleaners into a larger size and airflow range – now up to 1,450 cfm. The PowerCore PSD family – which also includes the PSD08, PSD09, PSD10, PSD12 – offers the trusted features and benefits of two-stage filtration (with a built-in pre-cleaner) in a single, compact unit. (From a press release on August 28, 2013)

High temperature Synteq XP media technology
-In March 2011, the Company developed Spiracle crankcase ventilation systems which uses high temperature Synteq XP media technology. This improvement to Synteq technology was developed to meet emissions compliant engine requirements for heavy duty vehicles. The Company's Spiracle crankcase blow-by filtration with Synteq XP media technology takes filtration performance to a higher level by providing higher filtration efficiency by up to 95 percent, higher operating temperature with continuous media function at 140 degrees Celsius, and a longer filter life of up to 2,000 hours. (From a press release on March 17, 2011)

Capital Expenditure

(in million USD)

	FY ended July 31, 2014	FY ended July 31, 2013	FY ended July 31, 2012
Overall	96.8	94.3	77.2

-Capital expenditure for the fiscal year ending July 31, 2015 is estimated to be between USD 90 and 100 million. The Company's capital spending in the fiscal year ending July 31, 2015 will be allocated as follows;

• Tooling for new products: 30%
• Automation or cost reduction projects: 30%
• Research and development: 25%
• Capacity expansion: 15%

Investments outside U.S.

<Poland>
-In 2013, the Company announced the construction of a new filter manufacturing plant in Skarbimierz, Poland to serve the filtration needs of its European and Russian customers. The new plant will be 108,000 square feet (10,000 square meters) with additional capacity for future expansion. The facility will be dedicated to the production of heavy duty air filters for both the on-road and off-road equipment markets. This new Polish plant, expected to open in 2015, represents the Company's third manufacturing presence in Central and Eastern Europe. (From a press release on July 8, 2013)

<Mexico>
-In 2011, the Company announced that construction will begin on another manufacturing facility in Aguascalientes, Mexico. This new 140,000-square-foot facility will manufacture air filters for the Americas. The Company's existing plant in Aguascalientes, which currently manufactures both air and liquid filters, will specialize in liquid filters upon the completion of this new plant. (From a press release on March 4, 2011)

<Belgium>
-In September 2010, the Company expanded its facility in Leuven, Belgium. The Company first opened the Belgium-based Technical Center in 1976 to support sales and operations in the European, Middle East and North African markets. Additionally, the facility provides engineering and testing expertise for the Company's industrial and engine product lines. The new 3,700-square-meter (40,000 square feet) addition more than doubles the capacity of the existing test facility. The expanded facility broadens the testing capabilities to support the Company's engine filtration technologies for liquid, crankcase and air filtration, along with noise vibration and exhaust aftertreatment. (From a press release on September 27, 2010)