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 The Company has contingent liabilities, which have arisen in  the course of its business, including pending litigation, preferential  payment claims in customer bankruptcies, environmental remediation,  taxes, and other claims. The Company currently has a claim for approx- imately $7.6 million pending against it, arising out of the bankruptcy of  a customer filed in 2001. The Company was named a critical vendor by  the bankruptcy court and, accordingly, was paid in full for all out- standing receivables. The claim alleges that the Company received  preferential payments from the customer during the ninety days before  the customer filed for bankruptcy protection. The claim was brought in  February 2003. The Company has recorded an accrual with respect to  this contingency, in an amount substantially less than the full amount  of the claim, which represents the best estimate within the range of  likely exposure, and intends to vigorously defend against the claim.  Given the nature of this claim, it is possible that the ultimate outcome  could differ from the recorded amount. One office furniture customer accounted for approximately 13% of con- solidated net sales in 2003 and 14% in 2002 and 2001. In accordance with SFAS No. 131, “Disclosures about Segments of an  Enterprise and Related Information,” management views the Company  as being in two operating segments: office furniture and hearth prod- ucts, with the former being the principal segment. The office furniture  segment manufactures and markets a broad line of metal and wood  commercial and home office furniture, which includes storage prod- ucts, desks, credenzas, chairs, tables, bookcases, freestanding office  partitions and panel systems, and other related products. The hearth  products segment manufactures and markets a broad line of manufac- tured gas-, pellet-, and wood-burning fireplaces and stoves, fireplace  inserts, gas logs, and chimney systems, principally for the home. The Company’s hearth products segment is somewhat sea- sonal, with the third (July-September) and fourth (October-December)  fiscal quarters historically having higher sales than the prior quarters.  In fiscal 2003, 56% of consolidated net sales of hearth products were  generated in the third and fourth quarters. For purposes of segment reporting, intercompany sales  transfers between segments are not material, and operating profit is  income before income taxes exclusive of certain unallocated corporate  expenses. These unallocated corporate expenses include the net costs of  the Company’s corporate operations, interest income, and interest  expense. Management views interest income and expense as corporate  financing costs and not as an operating segment cost. In addition, man- agement applies an effective income tax rate to its consolidated income  before income taxes so income taxes are not reported or viewed inter- nally on a segment basis. Identifiable assets by segment are those assets  applicable to the respective industry segments. Corporate assets consist  principally of cash and cash equivalents, short-term investments, and  corporate office real estate and related equipment. No geographic information for revenues from external cus- tomers or for long-lived assets is disclosed, since the Company’s primary  market and capital investments are concentrated in the United States. Reportable segment data reconciled to the consolidated finan- cial statements for the years ended 2003, 2002, and 2001 is as follows: (a) Included in operating profit for the office furniture segment are pretax charges of  $8.5 million, $3.0 million, and $22.5 million for closing of facilities and impairment  charges in 2003, 2002, and 2001, respectively. Included in operating profit for the  hearth products segment is a pretax charge of $1.5 million for closing of facilities  and impairment charges in 2001. (b) In 2002 the Company’s information technologies departments became a shared  service at the corporate level. The costs continue to be charged out to the segments;  however, the assets and related depreciation are now classified as general corporate. 53 (In thousands) 2003 2002  2001 Net sales: Office furniture  $ 1,304,054 $ 1,279,059  $ 1,366,312 Hearth products  451,674 413,563  426,126 $ 1,755,728 $ 1,692,622  $ 1,792,438 Operating profit: Office furniture (a) $  130,080 $  130,014  $  112,405 Hearth products (a) 54,433 44,852  39,282 Total operating profit 184,513 174,866  151,687 Unallocated corporate  expenses  (33,582) (34,312)  (35,426) Income before income taxes $  150,931 $  140,554  $  116,261 Depreciation and  amortization expense: Office furniture  $  54,121 $  48,546  $  58,658 Hearth products  13,599 13,993  20,389 General corporate (b) 5,052 6,216  2,338 $  72,772 $  68,755  $  81,385 Capital expenditures: Office furniture  $  17,619 $  17,183  $  29,785 Hearth products  12,577 6,132  7,149 General corporate  7,312 2,570  (83) $  37,508 $  25,885  $  36,851 Identifiable assets: Office furniture  $  452,350 $  494,559  $  526,712 Hearth products  303,811 305,326  320,199 General corporate (b) 265,665 220,667  114,980 $ 1,021,826 $ 1,020,552  $  961,891 Significant Customer Operating Segment Information