C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S 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 accompanying notes are an integral part of the consolidated financial statements. 42 (Amounts in thousands) For the Years  2003 2002 2001 NET CASH FLOWS FROM (TO) OPERATING ACTIVITIES: Net income  $ 98,105 $ 91,360  $ 74,407 Noncash items included in net income: Depreciation and amortization  72,772 68,755  81,385 Other postretirement and postemployment benefits  2,166 2,246  1,757 Deferred income taxes  (3,314) 2,321  6,962 Loss on sales, retirements and impairments of property,  plant and equipment  5,415 8,976  16,200 Stock issued to retirement plan  4,678 5,750  — Other — net  391 2,613  109 Changes in working capital, excluding acquisition and disposition: Receivables  1,006  (19,414)  47,897 Inventories  (3,004) 2,348  35,048 Prepaid expenses and other current assets  1,508 2,431  (1,661) Accounts payable and accrued expenses  (35,288) 37,857   (26,149) Income taxes  2,218 (2,370)  (5,957) Increase (decrease) in other liabilities  (5,379) (482)  (2,198) Net cash flows from (to) operating activities  141,274  202,391   227,800 NET CASH FLOWS FROM (TO) INVESTING ACTIVITIES: Capital expenditures  (34,842)  (25,885)   (36,851) Proceeds from sale of property, plant and equipment  1,808 —  — Capitalized software  (2,666) (65)  (1,757) Additional purchase consideration  (5,710) —  (8,748) Short-term investments — net  (49,326)  (16,377)  — Purchase of long-term investments (5,742)  (22,493)  — Sales or maturities of long-term investments 15,000 —  — Other — net  – 924  343 Net cash flows from (to) investing activities  (81,478)  (63,896)   (47,013) NET CASH FLOWS FROM (TO) FINANCING ACTIVITIES: Purchase of HON INDUSTRIES common stock  (21,512)  (15,736)   (35,059) Proceeds from long-term debt  761 825  36,218 Payments of note and long-term debt  (20,992)  (35,967)   (87,365) Proceeds from sale of HON INDUSTRIES common stock 12,063 2,096  9,449 Dividends paid  (30,299)  (29,386)   (28,373)  Net cash flows from (to) financing activities  (59,979) (78,168)  (105,130) Net increase (decrease) in cash and cash equivalents  (183) 60,327  75,657 Cash and cash equivalents at beginning of year  139,165 78,838  3,181 Cash and cash equivalents at end of year  138,982  139,165  78,838 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest  $ 3,408  $  5,062  $  8,646 Income taxes  $ 53,855 $ 48,598  $ 40,916