Sunbeam 2002 Annual Report Download - page 45

Jarden Corporation
Notes to Consolidated Financial Statements (Continued)
The status of the Company’s unfunded postretirement benefit obligation at December 31, 2002 and 2001
was as follows:
(in thousands) 2002 2001
Change in benefit obligation:
Benefit obligation at beginning of year ..................................... $1,775 $1,553
Service cost ........................................................... 72 62
Interest cost ........................................................... 119 112
Actuarial (gain) loss ..................................................... (124) 109
Benefits paid ........................................................... (76) (61)
Benefit obligation at end of year .......................................... 1,766 1,775
Unrecognized prior service cost ........................................... (30) (46)
Unrecognized net gain .................................................. 242 339
Accrued benefit cost .................................................... $1,978 $2,068
The assumed discount rate used to measure the benefit obligation was 6.75% and 7.00% as of December
31, 2002 and 2001, respectively. Increases in health care costs would not materially 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 purchase of medical insurance for the majority of
employees covered.
Through December 31, 2001, the Company had a deferred compensation plan that permitted eligible
employees to defer a specified portion of their compensation. The deferred compensation earned rates of return
as specified in the plan. Effective January 1, 2002, the deferred compensation plan was terminated. Participants
had the option to elect to keep their existing balances in the plan. Those balances that remained in the plan in
2002, earned a rate of return equal to the average federal funds overnight repurchase rate. As of December 31,
2002 and 2001, the Company had accrued $0.7 million and $2.9 million, respectively, for its obligations under
this plan. Interest expense on this obligation was $0.2 million and $0.3 million in 2001 and 2000, respectively.
In 2002, the interest expense on this obligation was less than $0.1 million. The residual deferred compensation
balance at December 31, 2002 was paid in its entirety to participants in January 2003.
Prior to the termination of the deferred compensation plan, in order to effectively fund the deferred
compensation obligation, the Company had purchased variable rate life insurance contracts. These insurance
contracts were surrendered in June 2001 and therefore the obligation at December 31, 2002 was unfunded.
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 completed
during 2001, bear interest at the applicable 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 discharge of the deferred compensation
obligations. These amounts are included in Special Charges (Credits) and Reorganization Expenses on the
Consolidated Statement of Operations.
12. Stock Plans
The Company maintains the 1998 Long-Term Equity Incentive Plan, as amended and restated, that allows
for grants of stock options, restricted stock, stock equivalent units, stock appreciation rights and other
stock-related forms of incentive compensation. As of December 31, 2002, there were 32,513 shares available for
grant under this long-term equity incentive plan.
Effective September 24, 2001, the Company established the 2001 Stock Option Plan, as amended, primarily
for the purpose of granting options for the purchase of common shares to the Company’s executive officers and
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