Sunbeam 2002 Annual Report Download - page 47

Jarden Corporation
Notes to Consolidated Financial Statements (Continued)
The Company also grants restricted stock to key employees. During 2002, restricted shares of common
stock in the aggregate amount of 143,500 were issued to certain officers and key employees of the Company
under its 1998 Long-Term Equity Incentive Plan, as amended and restated. The restrictions on 140,000 of these
shares shall lapse upon the Company’s common stock achieving a set price, currently $35 per share, or on a
change in control. The restrictions on the remaining 3,500 shares will lapse ratably over five years of
employment with the Company. In addition, the Company granted 1,000 and 6,500 restricted shares in 2001
and 2000, respectively.
During 2002, shares of common stock in the aggregate amount of 30,006 were issued to certain employees
of the Company under its 1998 Performance Share Plan. In connection with these stock issuances, the Company
recorded a non-cash compensation expense charge of approximately $0.6 million.
The Company also maintains an employee stock purchase plan whereby the Company matches 20% of
each participating employee’s monthly payroll deduction, up to $500. The Company thereby contributed $0.1
million to the plan in each of 2002, 2001 and 2000.
13. Lease Commitments
The Company has commitments under operating leases, certain of which extend through 2007. These
commitments total $5.6 million in 2003, $4.8 million in 2004, $3.6 million in 2005, $2.0 million in 2006, and
$0.1 million in 2007. Total lease expense was $5.1 million, $4.8 million and $4.1 million in 2002, 2001 and
2000, respectively.
14. Contingencies
The Company is involved in various legal disputes in the ordinary course of business. In addition, the
Environmental Protection Agency has designated the Company as a potentially responsible party, along with
numerous other companies, for the clean up of several hazardous waste sites. Based on currently available
information, the Company does not believe that the disposition of any of the legal or environmental disputes
the Company is currently involved in will have a material adverse effect upon the financial condition, results
of operations, cash flows or competitive position of the Company. It is possible, that as additional information
becomes available, the impact on the Company of an adverse determination could have a different effect.
15. Executive Loan Program
On January 24, 2002, Martin E. Franklin, Chairman and Chief Executive Officer, and Ian G.H. Ashken, Vice
Chairman, Chief Financial Officer and Secretary exercised 600,000 and 300,000 non-qualified stock options,
respectively, which had been granted under the Company’s 2001 Stock Option Plan. The Company issued these
shares out of its treasury stock account. The exercises were accomplished via loans from the Company under
its Executive Loan Program. The principal amounts of the loans are $3.3 million and $1.6 million, respectively,
and bear interest at 4.125% per annum. The loans are due on January 23, 2007 and are classified within the
Stockholders’ Equity section of the Consolidated Balance Sheet. The loans may be repaid in cash, shares of the
Company’s common stock, or a combination thereof.
16. Derivative Financial Instruments
The Company’s derivative activities do not create additional risk because gains and losses on derivative
contracts offset losses and gains on the assets, liabilities and transactions being hedged. As derivative contracts
are initiated, the Company designates the instruments individually as either a fair value hedge or a cash flow
hedge. Management reviews the correlation and effectiveness of its derivatives on a periodic basis.
In conjunction with the Notes (see Notes 3 and 9), on April 24, 2002, the Company entered into a $75
million interest rate swap (‘‘Initial Swap’’) to receive a fixed rate of interest and pay a variable rate of interest
based upon LIBOR. The Initial Swap had a maturity date that was the same as the Notes.Interest was payable
semi-annually in arrears on May 1 and November 1, commencing on November 1, 2002. The Company
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