46 47
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
    Facility Asset 
  Severance Termination & Impairment  
(In thousands) Costs Other Costs Write-downs Total
Restructuring reserve
 at December 31, 2000 $ – $ – $ – $ –
Restructuring charge  3,090   4,710  16,200   24,000
Cash payments  (2,322)  (2,761)  –   (5,083)
Charge against assets  –  –  (16,200)  (16,200)
Restructuring reserve
 at December 29, 2001 $ 768 $  1,949 $ –   $ 2,717
Restructuring charge  737  3,328  1,300  5,365
Restructuring credit   (852)  (1,513)  –   (2,365)
Cash payments   (653)  (1,577)  –   (2,230)
Charge against assets  –  –  (1,300)  (1,300)
Restructuring reserve   
 at December 28, 2002 $ – $ 2,187 $ – $ 2,187
Restructuring charges  3,438  5,622  –   9,060
Restructuring credit  –  (550)  –  (550)
Cash payments  (3,104)  (6,159)  –  (9,263)
Restructuring reserve 
  at January 3, 2004 $ 334 $ 1,100 $ – $ 1,434
Business Combinations
During 2001, the Company completed the acquisition of three small 
hearth product 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.
Inventories
(In thousands) 2003 2002 2001 
Finished products $ 31,407 $ 30,747 $ 33,280
Materials and work in process  28,287  26,266  26,469 
LIFO reserve  (9,864)  (10,190)  (9,609)
     $ 49,830 $ 46,823 $ 50,140
Property, Plant, and Equipment
(In thousands) 2003 2002 2001 
Land and land improvements $ 23,065 $ 21,566 $ 21,678
Buildings   211,005  208,124  212,352
Machinery and equipment  495,901  494,354  494,458
Construction and equipment  
 installation in progress  9,865  10,227    14,247
        739,836   734,271   742,735
Less: allowances for 
 depreciation   427,468   381,001   337,764
     $ 312,368 $ 353,270 $ 404,971
Goodwill and Other Intangible Assets
The Company adopted Statement of Financial Accounting Stan-
dards (SFAS) No. 142, “Goodwill and Other Intangible Assets” on 
December 30, 2001, the beginning of its 2002 fiscal year. Pursuant to 
this standard, the Company evaluates its goodwill for impairment on an 
annual basis based on values at the end of third quarter, or whenever 
indicators of impairment exist. The Company has evaluated its goodwill 
for impairment and has determined that the fair value of its reporting 
units exceeds the carrying values and therefore, no impairment of 
goodwill was recorded. Also pursuant to the standard, the Company has 
ceased recording of goodwill and indefinite-lived intangibles amortiza-
tion in 2002.
The Company also owns a trademark having a net value 
of $8.1 million as of January 3, 2004, December 28, 2002, and 
December 29, 2001. The fair value of the trademark exceeds the car -
rying value of the trademark and thus, no impairment was recorded. 
The trademark is deemed to have an indefinite useful life because it 
is expected to generate cash flows indefinitely. The Company ceased 
amortizing the trademark in 2002.
The table below summarizes amortizable definite-lived 
intangible assets, which are reflected in Other Assets in the Company’s 
consolidated balance sheets:
(In thousands)  2003 2002
Patents     $ 16,450 $ 16,450
Customer lists and other    26,076  26,076
Less: accumulated amortization    16,671   13,980
Net intangible assets   $ 25,855 $ 28,546
Amortization expense for definite-lived intangibles for 2003, 2002, and 
2001 was $2,690,100, $2,690,100, and $2,200,200, respectively. 
Amortization expense is estimated to be approximately $2.7 million per 
year through 2005, $2.4 million in 2006, $1.2 million in 2007, and 
$1.0 million in 2008.
The goodwill at December 29, 2001, included other intangi-
ble assets that are required to be accounted for as assets apart from 
goodwill under SFAS No. 142. The following table summarizes the 
reclassification:
    Net Book Value