CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Donaldson Company, Inc. and Subsidiaries The accompanying notes are an integral part of these consolidated financial statements. Accumulated  Additional Other Common Paid-in Retained Comprehensive Treasury (Thousands of dollars, except per share amounts) Stock Capital Earnings Income (Loss) Stock Total BALANCE JULY 31, 1998 $248,280  $ 1,570 $ 39,594 $ (5,135) $ (28,638) $255,671 Comprehensive income Net earnings 62,447 62,447 Foreign currency translation (535) (535) Comprehensive income 61,912 Treasury stock acquired (44,535) (44,535) Stock options exercised (3,350) 3,004 (346) Performance awards (1,071) (174) 802 (443) Tax reduction – employee plans 1,334 1,334 Cash dividends ($.23 per share) (10,830) (10,830) BALANCE JULY 31, 1999 248,280 1,833 87,687 (5,670) (69,367) 262,763 Comprehensive income Net earnings 70,233 70,233 Foreign currency translation (4,853) (4,853) Comprehensive income 65,380 Treasury stock acquired (35,923) (35,923) Stock options exercised (3,360) 2,555 (805) Tax reduction – employee plans 1,134 1,134 Cash dividends ($.27 per share) (12,384) (12,384) BALANCE JULY 31, 2000 248,280 2,967 142,176  (10,523) (102,735) 280,165 Comprehensive income Net earnings 75,548 75,548 Foreign currency translation (13,717) (13,717) Additional minimum pension liability (341) (341) Net gain on cash flow hedging derivatives  346 346 Comprehensive income 61,836 Treasury stock acquired (10,297) (10,297) Stock options exercised (6,196) (1,124) 4,262 (3,058) Performance awards (9) 319 310 Tax reduction – employee plans 3,229 3,229 Cash dividends ($.295 per share) (13,092) (13,092) BALANCE JULY 31, 2001 $248,280  $ – $203,499 $(24,235) $(108,451) $319,093 19