36 37
H O N  I N D U S T R I E S  I n c .  a n d  S U B S I D I A R I E S
included in the Cash, Cash Equivalents, and Investments note included 
in the Notes to Consolidated Financial Statements.
C A P I T A L  E X P E N D I T U R E  I N V E S T M E N T S
Capital expenditures were $34.8 million in 2003, $25.9 million in 
2002, and $36.9 million in 2001. Expenditures during 2003, 2002, 
and 2001 have been consistently focused on machinery and equipment 
needed to support new products, process improvements, and cost 
savings initiatives. Expenditures in 2003 also included the purchase 
from a related party of a previously leased hearth products plant for 
$3.6 million. 
A C Q U I S I T I O N S
During 2001, the Company completed the acquisition of three small 
hearth products distributors for a total purchase price of approximately 
$7.6 million. The acquisitions were accounted for using the purchase 
method, and the results of the three distributors have been included in 
the Company’s financial statements since the date of acquisition. On 
January 5, 2004, the Company completed the acquisition of Paoli Inc., 
a provider of wood case goods and seating, for approximately $80 mil-
lion. The acquisition will be accounted for using the purchase method.
L O N G - T E R M  D E B T
Long-term debt, including capital lease obligations, was 1% of total 
capitalization at January 3, 2004, 2% at December 28, 2002, and 12% 
at December 29, 2001. The reductions in long-term debt during 2003 
and 2002 were due to the retirement of Industrial Revenue Bonds. 
The Company does not expect future capital resources to be a constraint 
on planned growth. Additional borrowing capacity of $136 million, 
less amounts used for designated letters of credit, is available through 
a revolving bank credit agreement in the event cash generated from 
operations should be inadequate to meet future needs. Certain of the 
Company’s credit agreements include covenants that limit the assump-
tion of additional debt and lease obligations. The Company has been, 
and currently is, in compliance with the covenants related to the debt 
agreements.
C O N T R A C T U A L  O B L I G A T I O N S
The following table discloses the Company’s obligations and commit -
ments to make future payments under contracts: 
P A Y M E N T S  D U E  B Y  P E R I O D
    Less than 1 – 3 4 – 5  After
(In thousands) Total 1 year years years 5 years
Long-term debt $ 28,933 26,243 212 95 2,383
Capital lease obligations  2,338 523 799 426 590
Operating leases  50,750 13,012 19,166 9,510 9,062
Transportation service 
 contract  9,650 4,794 4,856 – –
Other long-term 
 obligations  11,893 4,289 1,430 914 5,260
Total   $ 103,564 48,861 26,463 10,945 17,295
Other long-term obligations includes $2,959,000 earn-out on convert-
ible debentures included in current liabilities, $69,000 of financial 
guarantees with customers, and $8,865,000 of payments included in 
long-term liabilities, due to members who are participants in the 
Company’s salary deferral program.
C A S H  D I V I D E N D S
Cash dividends were $0.52 per common share for 2003, $0.50 for 
2002, and $0.48 for 2001. Further, the Board of Directors announced 
a 7.7% increase in the quarterly dividend from $0.13 to $0.14 per com-
mon share effective with the March 1, 2004, dividend payment for 
shareholders of record at the close of business February 20, 2004. The 
previous quarterly dividend increase was from $0.125 to $0.13, effec -
tive with the February 28, 2003, dividend payment for shareholders of 
record at the close of business on February 21, 2003. A cash dividend 
has been paid every quarter since April 15, 1955, and quarterly divi -
dends are expected to continue. The average dividend payout 
percentage for the most recent three-year period has been 32% of 
prior year earnings.
C O M M O N  S H A R E  R E P U R C H A S E S
During 2003, the Company repurchased 762,300 shares of its com -