DEAR SHAREHOLDERS, High-quality earnings came the old-fashioned way – strong revenue, lower costs and tight expense control. We maintained ROI in the 19 to 20 percent range and ROE above 25 percent – levels that com- pare favorably with our long-term performance. We kept the operations growing and delivered year 12 – the consistent, above-average perfor- mance that creates shareholder value, and security and opportunity for our people. If there is beauty in watching a complex organiza- tion run well in rough water, then Donaldson’s fiscal 2001 was an artwork. Together, the people who operate the many, disparate parts of this  filtration portfolio turned in what might be their finest performance ever. Numerically, the results were perhaps less than eye-popping – a 10 per- cent earnings increase is the slowest progress we’ve made in years. The beauty was that this occurred in the face of a strong and sometimes dispiriting headwind that many expected would deny us our 12th consecutive double-digit growth year. Overcoming the obstacles and delivering the results speak volumes about the people who did the work and about the strength of the company’s strategy. Twelve consecutive years, despite the economic dips of ’91, ’96 and ’01, belie the indict- ment that as an industrial manufacturer, we have to be a cyclical performer. Over this 12-year period, we have averaged 16 percent EPS growth, but each year have delivered at least 10 percent. This year’s results reaffirm that our long-term, focused investment in filtration technology deployed into leadership positions in distinct  and divergent end markets will drive consistent, superior results. Our heroes have been different every year, as various pieces of this filtration  portfolio have compensated for others that were having a difficult time. This year, the North American heavy truck market experienced a truly breathtaking plunge. Donaldson experienced a drop in truck and automotive rev- enue of almost 50 percent. But, our portfolio structure meant the drop in these applications would slow, but not cripple, the company. The transportation revenue loss was washed away by the continuing boom in our gas turbine busi- ness, where sales grew by more than 66 percent 2 Pictured from left to right: WILLIAM G. VAN DYKE JAMES R. GIERTZ Senior Vice President, International and  Chief Financial Officer WILLIAM M. COOK NICKOLAS PRIADKA LOWELL F. SCHWAB Chairman, President and Chief Executive Officer Senior Vice President, Commercial and Industrial Senior Vice President, Operations Senior Vice President, Engine Systems and Parts