(Thousands of dollars) Year ended July 31, 2001 2000 1999 OPERATING ACTIVITIES Net earnings $ 75,548 $ 70,233 $ 62,447 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization  38,577 34,326 27,686 Equity in (earnings) loss of affiliates (635) 74 (2,187) Deferred income taxes  7,093 (449) 489 Other (12,949) 3,121 10,344 Changes in operating assets and liabilities, net of acquired businesses Accounts receivable (35,220) (5,704) (13,244) Inventories  2,816 (26,227) 21,382 Prepaids and other current assets  2,838 (3,316) (3,095) Trade accounts payable and other accrued expenses 4,731 16,437 (2,960) Net Cash Provided by Operating Activities  82,799 88,495 100,862 INVESTING ACTIVITIES Purchases of property and equipment, net  (38,924) (36,417) (29,539) Acquisitions and investments in affiliates – (88,220) (230) Net Cash Used in Investing Activities  (38,924) (124,637) (29,769) FINANCING ACTIVITIES Proceeds from long-term debt  9,462 5,752 35,546 Repayments of long-term debt (1,136) (4,522) (404) Change in short-term borrowings  (24,417) 66,328 (24,422) Purchase of treasury stock (10,297) (35,923) (44,535) Dividends paid  (13,092) (12,384) (10,830) Exercise of stock options  525 326 1,617 Net Cash (Used in) Provided by Financing Activities (38,955) 19,577 (43,028) Effect of exchange rate changes on cash  (801) (1,053) (1,084) Increase (Decrease) in Cash and Cash Equivalents 4,119 (17,618) 26,981 Cash and Cash Equivalents, Beginning of Year 32,017 49,635 22,654 Cash and Cash Equivalents, End of Year  $ 36,136 $ 32,017 $ 49,635 The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Donaldson Company, Inc. and Subsidiaries 18