Donaldson Company (DCI) as of January 31, 2026 presents a balance sheet with total assets of $3.06B against total liabilities of $1.49B, yielding book equity of $1.58B. Under the liquidation lens, the recovery picture is meaningfully negative to equity once haircuts are applied to assets. MFFAIS pegs the cash liquidation value (CLV) at negative $472M, liquid liquidation value (LLV) at positive $176M, and operating liquidation value (OLV) at positive $732M. The CLV figure is consistent with this analysis: cash at $194M (100% recovery), AR net of $648M at 90-95% gives roughly $582-615M, inventory of $556M at 60% gives $334M, and PP&E net of $645M at 50-70% gives $323-452M. Against this, liabilities at face include current liabilities of $666M, long-term debt and lease obligations of $674M, and other noncurrent liabilities of $144M plus $20M accrued noncurrent taxes, totaling approximately $1.50B. Goodwill of $504M and intangibles net of $95M are zeroed out under the lens, destroying approximately $599M of book value. The aggregate liquidation asset recovery is approximately $1.43-1.60B versus liabilities of $1.50B, leaving equity recovery near zero to modestly negative before transaction costs, consistent with CLV. The primary drivers of the negative CLV are the large goodwill and intangibles stack ($599M, ~20% of total assets) that recover nothing, combined with the full face-value liability treatment of $674M in long-term debt and lease obligations. Since the prior filing (October 31, 2025), the balance sheet has evolved modestly: long-term debt increased from $678M to $680M (effectively flat), inventory increased from $533M to $556M (+$22M, a deterioration in liquidation asset quality given the 60% haircut), and cash declined from $211M to $194M. The Facet acquisition (Securities Purchase Agreement signed January 31, 2026) is disclosed in the filing as a subsequent event. The Company states it expects to finance Facet with cash on hand and new debt; no purchase price is disclosed in this 10-Q text, but the commitment to layer additional debt on top of the existing $680M long-term debt stack is directly adverse to the liquidation recovery posture. The pending Facet debt load is discussed in MD&A but is not XBRL-tagged in this filing with a specific amount. Restructuring reserve declined from $7.1M to $2.9M as charges were disbursed, indicating the footprint optimization program is winding down on its reserve line, though the Company discloses $10-15M of remaining expected charges through fiscal 2026. Operating lease ROU assets of $62M create a corresponding liability obligation that survives windup; the lease stack is modest relative to the total balance sheet. The AOCI deficit of $144M is a non-cash adjustment not affecting liquidation cash flows. The defined benefit plan had net periodic cost of $0.8M; plan obligations are discussed in MD&A referencing the 10-K but are not separately tagged in this XBRL filing beyond periodic cost components.
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