CONSOLIDATED STATEMENTS OF EARNINGS Donaldson Company, Inc. and Subsidiaries (Thousands of dollars, except share and per share amounts) Year ended July 31,  2001 2000 1999 Net sales  $1,137,015 $1,092,294 $944,139 Cost of sales 795,281 764,773 668,458 Gross Margin 341,734 327,521 275,681 Selling, general and administrative 201,201 194,623 163,688 Research and development 28,425 27,304 23,603 Operating Income 112,108 105,594 88,390 Interest expense 11,608 9,880 6,993 Other (income) expense, net (4,428) (4,619) (7,813) Earnings Before Income Taxes  104,928 100,333 89,210 Income taxes  29,380  30,100 26,763 Net Earnings $ 75,548 $ 70,233 $ 62,447 Weighted Average Shares – Basic 44,381,082 45,716,482 46,899,127 Weighted Average Shares – Diluted  45,612,165 46,664,196 47,793,180 Net Earnings Per Share – Basic $ 1.70 $ 1.54 $ 1.33 Net Earnings Per Share – Diluted $ 1.66 $ 1.51 $ 1.31 The accompanying notes are an integral part of these consolidated financial statements. 16