reflects the impact of the merger where the Company has been able to utilize its existing administrative infra- structure and thus allocate costs over a broader revenue base. The reduction in SD&A as a percent of sales was in- line with the Company’s expectations from the merger. Marketing expenses increased at a greater rate than sales as the Company implemented its strategic plans to increase support against both the  Jif and  Crisco brands and to accelerate its rollout of  Uncrustables . As of May 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142,  Goodwill and Other Intangible Assets , and in accordance with this pro- nouncement, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed at least annually for impairment. The adoption of this standard resulted in a decrease in SD&A costs of approximately $3.5 million compared to 2002. Interest expense decreased $0.5 million from 2002 due to the effect of favorable interest rate swaps, that reduced interest expense by $1.4 million. Interest income also decreased slightly despite an overall increase in invest- ment balances due to lower interest rates throughout  the year.  During the fourth quarter of 2003, the Company announced its plan to restructure certain operations as part of its ongoing efforts to optimize its production capacity, improve productivity and operating efficiencies, and lower the Company’s overall cost base. These initia- tives include reducing the Company’s involvement in fruit processing, centralizing production and distribution of the fast growing  Uncrustables product line, and signif- icantly reducing the number of items available for sale. The program calls for the closing of three of the Company’s plants —Watsonville, California; Woodburn, Oregon; and West Fargo, North Dakota. The Company will continue to process the majority of its requirements for strawberries and grapes, its two most significant fruit raw materials. The Company is confident that its decision to reduce its involvement in fresh fruit processing will not materially impact its ability to source fruit raw materials. The Company expects to record a restructuring charge of approximately $18 million, of which approximately  $2.5 million was recorded in the fourth quarter of 2003. The balance of the charge will be incurred over the next two fiscal years, with approximately $12 million to be recorded in fiscal 2004. Included in the restructuring charge are cash outlays of approximately $12 million that relate primarily to employee separation costs and equipment relocation expenses. The Company estimates that the annual pretax benefit from the plan will be Sales in the special markets segment were up eight per- cent due primarily to increases in the foodservice and industrial business areas. In the foodservice area, sales were up nine percent as sales and distribution of Smucker’s Uncrustables to schools continued to increase. This new business helped offset a general softness in traditional foodservice sales, which were impacted during most of the year by the weak economy and declines in the travel and leisure industry following the events of September 11, 2001. Despite those events, the traditional foodservice business area realized an overall increase, up one percent over 2001.  Sales in the U.S. retail market segment were up three percent due primarily to increases in the grocery, club store, and mass retail business areas. These increases were offset by modest decreases in the military and con- sumer direct business areas. The Company’s retail busi- ness increase was due mostly to new products and growth in  Sugar Free fruit spreads, natural peanut but- ters, and  Goober  products. During the year, the Company discontinued selling its low-margin, value-priced Sunberry Farms  brand. The Company’s share of market in the fruit spreads category continued to grow, reaching an all-time high at the time, in excess of 40 percent across all retail segments. Sales in fiscal 2002 were $687.1 million, up six percent over the $651.2 million in sales in fiscal 2001. Excluding the impact of acquisitions, sales were up approximately  $21 million or three percent. Sales in the U.S. retail market segment were $323.6 million, up three percent, while spe- cial markets segment sales were $363.5 million, an eight percent increase. Fiscal 2002 net income was $30.9 mil- lion, or $1.31 per share, compared to $27.2 million, or $1.12 per share, in 2001. Net income includes merger and inte- gration costs of $5.0 million, or $0.14 per share, in 2002 and restructuring costs of $2.1 million, or $0.06 per share, and the cumulative effect of an accounting change of  $1.6 million, or $0.04 per share, in 2001. During the fourth quarter of 2002, the Company elected to change the method of accounting for certain inventory from the last- in, first-out method to the first-in, first-out method. As a result, the Company restated its 2001 financial results, resulting in a reduction in net income of $3.5 million, or $0.14 per share. approximately $10 million upon full implementation in fiscal 2006. These benefits represent a combination of a reduction in overhead related to the closed facilities and a reduction in  Uncrustables operating costs. Comparison of fiscal 2002 with fiscal 2001 13