HON INDUSTRIES 2003 our rapid continuous improvement (RCI) programs, in 1992. It  is not only a process to drive out cost, it is a powerful tool to  engage every member every day in making choices to improve  the value we provide to our customers. Our values are simple yet powerful. They are as relevant today  as they were when the company was founded 60 years ago.  Our member-owner culture of shared responsibility and shared  reward engages all members in the ongoing business improve- ment process and allows us to embrace change. As we continue  to add and develop talent to support our growth strategies, we  become more diverse in our perspectives, strengthening our  ability to understand and meet the needs of our customers and  end-users. ENHANCING CULTURE AND CAPABILITIES  On January 5, 2004, we completed the acquisition of  Paoli Inc., a leading provider of wood case goods and seating.  The acquisition reflects our commitment to achieving profit- able growth. With annual sales in excess of $80 million, Paoli  has well-known brands, a broad product offering, and strong  independent representative sales and dealer networks. This  acquisition supports our operating philosophy to work through  autonomous, decentralized businesses with strong brands  focused on distinct markets.  Important to our company’s success, is a strong Board  of Directors who bring their individual skills, knowledge, and  experience to our company. Their involvement, independence,  and integrity provide the ongoing foundation for effective gov- ernance and corporate oversight for you, our shareholders.  This year we recognize retiring directors Lorne R.  Waxlax, Robert W. Cox, and M. Farooq Kathwari. We thank  them for their dedication. We are also pleased to welcome  Joseph Scalzo, President, Personal Care Products, The Gillette  Company, to our board.  Our CEO succession process is progressing smoothly.  The appointment of Stan Askren as President of HON  INDUSTRIES and as a member of the Board of Directors,  14 announced in February 2003, was an important part of  this process.  Our office furniture and hearth businesses are healthy  and well-positioned for growth; still we continue to face a com- petitive business environment. We are confident of our financial  security, and certain that our transition to becoming a market- driven, operationally excellent company will continue to en- hance shareholder value. The transformation continues. We will  be seeking shareholder approval, in early May 2004, to change  the name of HON INDUSTRIES to HNI Corporation, drawing  on our heritage while remaining true to our culture and values.  The new name will serve to better align the corporate identity  with the direction of the company, as a strategic manager of  multiple, distinct, and independent brands. We thank our member-owners for their continued  dedication, and look forward to the challenges and opportuni- ties of 2004. Jack D. Michaels CHAIRMAN AND CHIEF EXECUTIVE OFFICER Stan A. Askren PRESIDENT