the original plan.
O P E R A T I N G  I N C O M E
Operating income increased 5% in 2003 and 16% in 2002, respectively. 
The increase in 2003 is due to the additional week, strong sales volume 
in the hearth segment, and improved gross margins in both segments, 
offset by increased restructuring charges due to additional plant clo -
sures and consolidations, increased investment in brand building and 
selling initiatives, and increased freight costs. The increase in 2002 
was due to a $24 million restructuring charge in 2001 compared to a 
$3 million restructuring charge in 2002 and goodwill and indefinite-
lived intangibles amortization of $9 million incurred in 2001 that is 
not included in 2002 due to a change in accounting standards.
N E T  I N C O M E
Net income increased 7% in 2003 and 23% in 2002, respectively. Net 
income in 2003 was favorably impacted by increased interest income due 
to increased investments and decreased interest expense due to reduc-
tion in debt. Net income in 2002 was favorably impacted by a decrease in 
interest expense and a decrease in the effective tax rate to 35% in 2002 
from 36% in 2001 mainly due to tax benefits associated with various 
federal and state tax credits. The Company anticipates that its tax rate 
will increase to 36% in 2004 due to increased state taxes and a reduced 
benefit from federal and state tax credits. Net income per diluted share 
increased by 8% to $1.68 in 2003 and by 23% to $1.55 in 2002, respec-
tively. Due to the appreciation in the Company’s stock price, 
outstanding options had a dilutive impact of $0.01 per share in 2003.