42 43
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
Nature of Operations
HON INDUSTRIES Inc., with its subsidiaries (the “Company”), is a 
provider of office furniture and hearth products. Both industries are 
reportable segments; however, the Company’s office furniture business 
is its principal line of business. Refer to the Operating Segment 
Information note for further information. Office furniture products are 
sold through a national system of dealers, wholesalers, mass merchan-
disers, warehouse clubs, retail superstores, end-user customers, and to 
federal and state governments. Dealer, wholesaler, and retail super -
stores are the major channels based on sales. Hearth products include 
electric, wood-, pellet-, and gas-burning factory-built fireplaces, fire -
place inserts, stoves, and gas logs. These products are sold through a 
national system of dealers, wholesalers, large regional contractors, and 
Company-owned retail outlets. The Company’s products are marketed 
predominantly in the United States and Canada. The Company exports 
select products to a limited number of markets outside North America, 
principally Latin America and the Caribbean, through its export subsid-
iary; however, based on sales, these activities are not significant.
Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION AND FISCAL YEAR-END
The consolidated financial statements include the accounts and trans-
actions of the Company and its subsidiaries. Intercompany accounts 
and transactions have been eliminated in consolidation.
The Company follows a 52/53-week fiscal year which ends 
on the Saturday nearest December 31. Fiscal year 2003 ended on 
January 3, 2004; 2002 ended on December 28, 2002; and 2001 ended 
on December 29, 2001. The financial statements for fiscal year 2003 
are based on a 53-week period; fiscal years 2002 and 2001 are on a 
52-week basis.
C A S H ,  C A S H  E Q U I V A L E N T S ,  A N D  I N V E S T M E N T S
Cash and cash equivalents generally consist of cash, money market 
accounts, and debt securities. These securities have original maturity 
dates not exceeding three months from date of purchase. The Company 
has short-term investments with maturities of less than one year 
and also has investments with maturities greater than one year that 
are included in Other Assets on the consolidated balance sheet. 
Management classifies investments in marketable securities at the time 
of purchase and reevaluates such classification at each balance sheet 
date. Equity securities are classified as available-for-sale and are stated 
at current market value with unrealized gains and losses included as a 
separate component of equity, net of any related tax effect. Debt securi-
ties are classified as held-to-maturity and are stated at amortized cost. 
The specific identification method is used to determine realized gains 
and losses on the trade date. Short-term investments include municipal 
bonds, money market preferred stock, and U.S. treasury notes. Long-
term investments include U.S. government securities, municipal bonds, 
certificates of deposit, and asset- and mortgage-backed securities.
At January 3, 2004, and December 28, 2002, cash, cash 
equivalents and investments consisted of the following (cost approxi -
mates market value):
  Cash and Short- Long- 
  cash  term  term
(In thousands) equivalents investments investments
Y E A R - E N D  2 0 0 3
Held-to-maturity securities      
Municipal bonds $ 31,000 $ – $ 2,396
U.S. government securities  –  –  –
Certificates of deposit  –  –  400
Available-for-sale securities      
U.S. treasury notes  –  4,259  –
Money market preferred stock  –  –  –
Asset- and mortgage-backed securities –  60,949  12,835
Cash and money market accounts  107,982  –  –
 Total   $ 138,982 $ 65,208 $ 15,631 
Y E A R - E N D  2 0 0 2
Held-to-maturity securities      
Municipal bonds $ 82,300 $ 1,900 $ 5,396
U.S. government securities  –  –  11,995