gas turbine products of 81.1 percent and 45.6 percent, respectively, followed by a more modest increase in special application products of 6.6 percent. In addition to cash generated from operating activities, the company decreased its outstanding short-term debt  by $24.4 million while net long-term debt increased by $8.3 million. Cash flow generated by operations was used primarily to support $38.9 million for capital expenditures, $10.3 million for stock repurchases and $13.1 million for dividend payments. Cash and cash equivalents increased $4.1 million during 2001. Capital expenditures for property, plant and equipment totaled $38.9 million in 2001, compared to $36.4 million in 2000 and $29.5 million in 1999. Capital expenditures primarily related to productivity enhancing investments  at various plants worldwide and continuing upgrades to the U.S. information systems. Financial Condition At July 31, 2001, the company’s capital structure was comprised of $59.4 million of current debt, $99.3 million of long-term debt and $319.1 million of shareholders’ equity. The ratio of long-term debt to total long-term capital was 23.7 percent and 24.9 percent  at July 31, 2001 and 2000, respectively. Total debt outstanding decreased $19.3 million to $158.7 million outstanding at July 31, 2001. The decrease resulted from a reduction in short-term borrowings out- standing at the end of the year of $25.6 million as com- pared to the prior year, offset by an increase in long-term debt of $6.6 million from the prior year. The increase in long-term debt is primarily due to the addition of a guar- anteed note of $6.4 million in our Japan operations. The company has a multi-currency revolving credit facility totaling $100.0 million with a group of banks  and an additional $35.0 million available for use under uncommitted facilities which provide unsecured borrow- ings for general corporate purposes. There was $57.7 mil- lion outstanding under these facilities at July 31, 2001. The company believes that the combination of present capital resources, internally generated funds, and unused financing sources are adequate to meet cash requirements for 2002. Shareholders’ equity increased $38.9 million in 2001  to $319.1 million. The increase was primarily due to  current year earnings of $75.5 million offset primarily  by $10.3 million of treasury stock repurchases and  $13.1 million of dividend payments as well as a foreign currency translation adjustment in other comprehensive income of $13.7 million. Capital spending in 2002 is planned to be $45.1 mil- lion. Significant planned expenditures include the further upgrade of U.S. information systems and investment in manufacturing equipment and tooling. It is anticipated that 2002 capital expenditures will be financed primarily by cash generated from operations. Dividends The company’s dividend policy is to maintain a payout ratio which allows dividends to increase with the long-term growth of earnings per share, while sustaining dividends in down years. The company’s dividend payout ratio target is 20.0 percent to 25.0 percent of the average earnings per share of the last three years. The current quar- terly dividend of 7.5 cents per share equates to 20.1 percent of the 1999 through 2001 average net earnings per share. Share Repurchase Plan In January 2001, the Board of Directors authorized the company to repurchase 4.5 mil- lion shares of common stock of which no shares had been repurchased as of July 31, 2001. Management and the Board of Directors believe the share repurchase program is an excellent means of returning value to the shareholders. Cash Flows During fiscal 2001, $82.8 million of cash  was generated from operating activities, compared with  $88.5 million in 2000 and $100.9 million in 1999.  The decrease in 2001 was primarily due to an increase  in accounts receivable of $35.2 million during the year and contribution to employee pension plans offsetting increased earnings. In fiscal 2001, the company repurchased 0.5 million shares of common stock on the open market for $10.3 million under the share repurchase plan authorized in November 1998, at an average price of $21.16 per share. The company repurchased 1.7 million shares for $35.9 million in 2000 and 2.4 million shares for $44.5 million  in 1999. Environmental Matters The company has established reserves for potential environmental liabilities and plans to continue to accrue reserves in appropriate amounts. While uncertainties exist with respect to the amounts and timing 13 Liquidity and Capital Resources