HON INDUSTRIES 2003 T O O U R S H A R E H O L D E R S : LEFT: Stan A. Askren, PRESIDENT RIGHT: Jack D. Michaels, CHAIRMAN AND CHIEF EXECUTIVE OFFICER As we celebrate our 60th year, HON INDUSTRIES has seen  much change. The industry has changed. The world has  changed. Our business has changed. What has not changed  are the culture and values on which we were founded: integ- rity, fairness, and respect — in the treatment of others,  continuous improvement, and responsiveness to those who  buy our products and services. In our unique and powerful  member-owner culture, throughout our history, every member  has had an opportunity to participate in making the business  better. We did so again in 2003.  We outperformed our peers. We grew our sales and  profits. We gained market share by providing strong brands,  innovative products and services, and greater value to our end- users. We continued to increase our gross margins, a direct  result of our ongoing commitment to lean initiatives. We used  our strong, positive cash flow to invest in our business for the  long term and returned profits to shareholders. We accom- plished all of this in a very challenging economy and market.  Although we are proud of what we achieved, our phi- losophy of constructive discontent drives us to continue to  challenge ourselves to do better. We believe to succeed in a  business environment of ongoing change and continuous trans- formation we also must continue to change. Today, we are  leaner, more focused, and have more clearly defined brands  than ever before. Our challenge is to grow, aggressively and  profitably, through market-driven solutions while maintain- ing focus on what we do best — operational excellence. Our  transformation continues: We are investing significantly in our brands and increasing our  understanding of our diverse range of end-users and the solu- tions they want. We are building market power through several  initiatives: focused selling models; clear brand identity; tar- geted advertising; expanded channel presence; and aggressive  products and solutions development. We are strengthening our  ability to be the “perfect match” with end-users in every seg- ment we serve. “Best total cost” means more than being a low-cost manufac- turer. It requires us to think about the entire value stream —  where and how to manufacture, ship, install, outsource,  assemble, service, procure, and sell — all to provide the best  total value to our end-users. We implemented lean initiatives,  13 ACHIEVING BEST TOTAL COST AND  LEAN ENTERPRISE  BUILDING BRAND MARKET POWER 