Sunbeam 2001 Annual Report Download - page 25

The assumed discount rate used to measure
the benefit obligation was 7.0% and 7.5% as of
December 31, 2001 and 2000, respectively. In-
creases in health care costs would not materi-
ally impact the benefit obligation or the annual
service and interest costs recognized as benefits
under the medical plan consist of a defined
dollar monthly subsidy toward the retiree’s pur-
chase of medical insurance for the majority of
employees covered.
Through December 31, 2001, the Com-
pany had a deferred compensation plan that
permitted eligible employees to defer a speci-
fied portion of their compensation. The de-
ferred compensation earned rates of return as
specified in the plan. As of December 31, 2001
and 2000, the Company had accrued $2.2 mil-
lion and $6.4 million, respectively, for its obli-
gations under this plan. Interest expense on
this obligation was $0.2 million, $0.3 million
and $0.7 million in 2001, 2000 and 1999, re-
spectively. Effective January 1, 2002 the de-
ferred compensation plan has been terminated.
Participants may elect to keep their existing
balances in the plan, and if so those balances
will earn a rate of return equal to the federal
funds overnight repurchase rate.
To effectively fund the deferred compensa-
tion obligation, the Company had purchased
variable rate life insurance contracts. These in-
surance contracts were surrendered in
June 2001 and therefore the obligation at De-
cember 31, 2001 is unfunded. The cash surren-
der value of the contracts included in Other
Assets at December 31, 2000 was $6.6 million.
During 2001, certain participants in the
Company’s deferred compensation plans
agreed to forego balances in those plans in
exchange for loans from the Company in the
same amounts. The loans, which were com-
pleted during 2001, bear interest at the appli-
cable federal rate and require the individuals to
secure a life insurance policy having the death
benefit equivalent to the amount of the loan
payable to the Company. All accrued interest
and principal on the loans are payable upon
the death of the participant and their spouse.
The Company recognized $4.1 million of pre-
tax income during 2001 related to the dis-
charge of the deferred compensation obliga-
tions. These amounts are included in Special
Charges (Credits) and Reorganization Expenses
on the Consolidated Statements of Operations.
10. Stock Plans
The Company maintains the 1998 Long-
Term Equity Incentive Plan that allows for
grants of stock options, restricted stock, stock
equivalent units, stock appreciation rights and
other stock-related forms of incentive compen-
sation. As of December 31, 2001, there were
383,490 shares available for grant under this
long-term equity incentive plan.
Effective September 24, 2001, the Com-
pany established the 2001 Stock Option Plan
for the purpose of granting options for the
purchase of common shares to the Company’s
executive officers and independent directors.
Options vest to, and are exercisable by, partici-
pants on the earlier of 1) the date the Compa-
ny’s closing stock price equals or exceeds $17
per share or 2) the seventh anniversary of the
grant date. During September, 570,000 options
were granted to participants under this new
plan. Because the options granted under this
new plan were still subject to stockholder ap-
proval at the time of grant, the options resulted
in a one-time charge of $2.4 million which was
recorded in the fourth quarter of 2001. The
charge represents the difference between the
exercise price of the options of $10.95 (the fair
value at the date of grant) and the fair value of
the Company’s stock at the time of stockholder
approval on December 18, 2001 which was
$15.20. This charge is included in Special
Charges (Credits) and Reorganization Expenses
on the Consolidated Statements of Operations.
As of December 31, 2001, there were 80,000
shares available for grant under the 2001 Stock
Option Plan.
The Company also maintains the 1993
Stock Option Plan and the 1993 and 1996 Stock
Option Plans for Nonemployee Directors
whereby stock options are granted to key em-
ployees and non-employee directors. As of De-
cember 31, 2001, there were 222,042 shares
available for grant under these stock option
plans. New stock option issuances are generally
made under the 1998 and 2001 plans.
Alltrista
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