Letter to the Shareholders From James "Jake" Gosa, President and CEO of Timberlake's parent company. We once again set new levels for overall performance during fiscal 2003. After ending fiscal 2002 with record sales and earnings, we began our year with high expectations. I am pleased to report that we once again set new levels for overall performance during fiscal 2003. Net sales increased 13% to $563.5 million. This marks the first year in our history with over half a billion dollars in net sales. Net income reached $32.7 million or $3.89 per diluted share, both new records. These numbers, as good as they are, only tell part of the story. During fiscal 2002, our Company was extremely fortunate. In addition to our hard work on elements of the business that were under our control, we were favorably impacted by several external factors. Driven in large measure by low interest rates, the new construction and remodeling markets remained strong while many other industries struggled in uncertain economic times. In this environment, all of our strategic business partners benefited from increasing demand for products and services. Based on our relationship with these partners, American Woodmark was able to run our manufacturing facilities at full capacity. In addition, tough conditions experienced in other sectors, such as the furniture industry, resulted in excess supply and favorable pricing on many of our primary raw materials. The combination of all these events resulted in a breakout year with net income increasing 85% over the previous record. The story during fiscal 2003 was different. Unlike fiscal 2002, our last year has been full of challenges and obstacles. While overall demand in the industry remained strong during the year, the rate of growth in certain sectors was weaker than last year due in large measure to uncertainty surrounding the economic recovery and concerns about the impact of war in the Middle East. In addition, we experienced a temporary decline in business with The Home Depot as we supported their efforts to reformat many of their existing stores. External forces also had a negative impact on some of our costs. We experienced pricing pressure on certain raw materials, most notably hardwood lumber, as mills closed operations and market supply dropped below demand. During the spring, fuel costs increased sharply with a brief but dramatic rise in the market price of oil. From an internal perspective, we experienced higher costs associated with our aggressive increases in capacity. In the fall of 2002, we brought two brand new facilities and a major expansion on-line to accommodate both increasing volume and more product variety in our lines. As we integrated this capacity into our existing operations, we were required to adjust many of our material flows. We absorbed duplicate costs during this period in order to isolate our customers from the impact of these changes. In addition, fixed costs associated with the new capacity reduced margins as our incremental utilization of these facilities during the start-up period was below that of our other operations. As a result of all these factors, fiscal 2003 was a year of two halves. During the first six months of the fiscal year, the Company was efficiently and effectively running at full capacity. In this environment, we produced outstanding results with sales growth of 16% and net income growth of 20%. In the second half of the year, however, external and internal events resulted in a reduced sales growth rate of 10% and a 15% decline in net income. I am not satisfied with our performance during the second half of the year. Our focus during the first six months of fiscal 2004 will be to return the Company to a higher level of performance. As we complete the second year covered by our current six-year Vision, I am optimistic about our future. First and foremost, we remain a growth company. Since 1998, demand for our products and services has grown from $231 million to over $563 million. The $332 million in additional market position represents a compound annual growth rate of almost 20%. The combination of our strategic partnerships with the leading home centers, builders and distributors, and the value of our products to the end consumer provides continuing opportunities for growth. We continue to invest heavily in our future. This commitment to investment continues in our people and our facilities. During fiscal 2003, we achieved our goal of 40 hours of training for every employee. With over 200,000 total training hours, we are actively building the collective skills of the organization. With the completion of our latest capital expansion, we have invested almost $150 million over the past five years in new capacity. We will continue to use our expanded capability to support our business partners in their growth efforts. We will continue to invest in new resources as we pursue the 2007 Vision. Our financial position is simply outstanding. Since 1998 the Company has effectively funded our growth, including our capital spending program, out of cash flow. Total debt as a percent of total capital has dropped from 14.6% in April 1998 to 10.5% in April 2003. Including cash on hand at the end of the year, net debt was less than $4.5 million against shareholder equity of $160 million. The strength of our balance sheet continues to provide a strong foundation on which we can implement our strategy. Throughout the last year, the investment markets have remained extremely volatile and the bears have generally ruled the day. For the third consecutive year, many of the leading indices of market performance showed a loss. In this environment and with quarterly results in the third quarter below analyst expectations, the daily trading price of American Woodmark shares declined as well. From a longer term perspective, the view is very different. Over the past three years, from May 2000 to April 2003, the Russell 2000 Index was down 6%. During the same period, the total return to shareholders of American Woodmark stock was over 150%. The reality of the short-term thinking on Wall Street will not deter us from making long-term decisions in the best interest of our shareholders. In those periods where the investment markets overreact to immediate events or results, we will continue to enhance shareholder value through our stock repurchase program. Over the past two years, we have used excess cash to purchase over 4% of our outstanding shares. At the annual meeting in August of last year, Albert Prillaman retired from the Board. As the President and Chief Executive Officer of Stanley Furniture, Albert provided valuable experience in the woodworking industry. We will miss his counsel and his many contributions. During the year we added Tom McKane and Neil DeFeo to the Board. Tom is the President and Chief Executive Officer of A.M. Castle & Company. Neil is the President and Chief Executive Officer of Remington Products Company. Both Tom and Neil bring a wealth of practical experience in business strategy and the management of manufacturing operations. I look forward to their contributions in the years ahead. As we begin another fiscal year, I believe our strategy is sound and our future is bright. While we do not hold any illusions about the challenges ahead, the men and women of American Woodmark welcome the opportunities these challenges present to our organization. Our goal remains to build the biggest, the best and the most profitable cabinet company in North America. We are building a Great Company. To all our employees, customers, vendors and shareholders, we thank you for your continuing support of American Woodmark. I look forward to reporting our progress towards the 2007 Vision throughout fiscal 2004. James J. Gosa President and Chief Executive Officer © 2009 American Woodmark Corporation  All Rights Reserved.