Compressed Air Best Practices - May 2008 - (Page 48)

| 05/08 Compressed Air Industry AUTOMOTIVE ASSEMBLY | WALL STREET WATCH Chris Kearney, Chairman, President and CEO said, “In 2007 SPX continued to grow and deliver strong financial results. Revenues for 2007 were $4.82 billion, an increase of 15.7% over 2006. Organic revenue growth was almost 10%, driven by strong demand in our infrastructure and energy markets. "Our strategy of aligning the company around our three strategic growth markets of global infrastructure, process equipment and diagnostic tools are working. We have strong momentum and are well positioned for continued growth in 2008,” Kearney concluded. Flow Technology Revenues for the fourth quarter of 2007 were $323.1 million compared to $244.1 million in the fourth quarter of 2006, an increase of $79.0 million, or 32.4%. The increase was due primarily to organic revenue growth of 18.0% and the acquisition of Johnson Pump. The organic revenue growth related primarily to strong demand in the power, oil and gas, chemical, sanitary and dehydration markets, as well as pricing improvements and new product introductions. The impact of currency fluctuations increased revenues by 3.1% from the year-ago quarter. Segment income was $49.9 million, or 15.4% of revenues, in the fourth quarter of 2007 compared to $37.1 million, or 15.2% of revenues, in the fourth quarter of 2006. The increase in segment income and margins was due primarily to the strong level of organic growth and manufacturing efficiencies achieved from continuous improvement initiatives, offset partially by the acquisition of Johnson Pump, which performed at lower margins than the segment. Minneapolis, MN, February 25, 2008 — Donaldson Company, Inc. (NYSE: DCI) announced second quarter-diluted earnings per share (“EPS”) of $0.42, an 11% increase from $0.38 last year. Net income was $34.1 million, up from $31.3 million last year. Sales were $511.8 million, a 10% increase from $463.7 million in the second quarter of 2007. For the six-month period, EPS was $0.95, an increase of 17 % from $0.81 last year. Net income increased 15% to $77.4 million versus $67.3 million last year. Sales were $1.037 billion, up 14% from $910.2 million in fiscal 2007. “Our globally-diversified portfolio of filtration businesses provided the foundation to deliver another record quarter of sales and earnings,” said Bill Cook, Chairman, President and CEO. “Strength in our Engine Products businesses internationally plus continued growth in our international Industrial Products businesses, including Industrial Filtration Solutions and Special Applications Products, helped offset some of our weaker NAFTA markets.” 48 www.airbestpractices.com “Overall, we are on track with our business plan for the balance of fiscal 2008. We see sufficient strength across our Engine Products and Industrial Products businesses to increase our sales forecast for both segments and anticipate achieving our first $2 billion revenue year. In addition, we remain confident that we will deliver our 19th consecutive year of record earnings.” Financial Statement Discussion The impact of foreign currency translation increased reported sales by $27.1 million in the quarter and $47.7 million year-to-date. The impact of foreign currency translation increased reported net earnings by $3.5 million in the quarter and $6.8 million year-to-date. Gross margins of 31.9% for the quarter and 32.4% year-to-date compare to prior year margins of 30.5% and 31.3% for the same periods. During the quarter, the implementation of our new warehouse management system in our main U.S. distribution center caused delays in processing Customer orders. This resulted in approximately $2.1 million of unplanned higher distribution and operating costs and delayed sales of $5.5 million. We are making progress and anticipate catching up on these delayed shipments in our third quarter. Operating expenses for the quarter were 22.0% of sales, up from 21.2% last year. Our second quarter included $3.0 million for the majority of our annual stock option expense, compared to $2.5 million last year. Year-to-date operating expenses were 21.4% of sales, up from 20.7% last year. The effective tax rates of 30.0% for the quarter and 28.4% year-to-date compare to 25.6% and 28.7% for the same periods last year. Last year’s second quarter rate included a $2 million benefit, primarily from the Research and Experimentation Tax Credit reinstatement. As part of our ongoing share repurchase program, we repurchased 1,151,000 shares during the quarter for $46.5 million. Year-to-date, we have repurchased 1,203,700 shares for $48.6 million. Fiscal 2008 Outlook Engine Products: We increased our outlook and now expect 10 to 12% full year sales growth. p We expect our NAFTA Transportation Products sales to decrease slightly in the third quarter before growth returns in our fourth quarter We expect the NAFTA residential construction market to remain weak. However, production of new agriculture equipment by our customers is projected to remain strong globally. p http://www.airbestpractices.com

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Compressed Air Best Practices - May 2008 Contents From the Editor Utility-Air News The Compressed Air Audit of the Month Pneumatics Real World Best Practices Delta Industries: Doing What is Right for Customers Delta Industries: Six Truths You Need to Know about Really Putting the Customer First Power Supply Industries Resources for Energy Engineers Wall Street Watch Advertiser Index Job Market

Compressed Air Best Practices - May 2008

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