NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Postretirement benefit costs included the following components: Note 10 Shareholders' Equity  Other —  The Company has established nonqualified deferred compensation programs which permit officers, directors and certain management employees annually to elect to defer a portion of their compensation, on a pre-tax basis, until their retirement. The retirement benefit to be provided is based on the amount of compensation deferred, Company match, and earnings on the deferrals. Deferred compensation expense was $3,374, $17,157 and $17,849 in 2001, 2000 and 1999, respectively. The Company has invested in corporate-owned life insurance policies to assist in funding these programs. The cash surrender values of these policies are in a rabbi trust and are recorded as assets of the Company. 32 2001 2000 1999 Service cost $ 4,690 $ 4,499 $ 4,301 Interest cost 12,283 10,762 11,158 Net amortization and deferral (3,047) (2,758) (1,683) Net periodic benefit cost  $ 13,926 $ 12,503  $ 13,776 Change in benefit obligation 2001 2000 Benefit obligation at beginning of year $ 170,587 $ 155,282 Service cost 4,690 4,499 Interest cost 12,283 10,762 Actuarial loss (gain) 11,882 (13,838) Benefits paid (11,414) (7,923) Acquisitions and other (5,478) 21,805 Liability transferred to defined benefit pension plans (117,645) Benefit obligation at end of year $ 64,905 $ 170,587 Funded status Benefit obligation in excess of plan assets $ (64,905) $(170,587) Unrecognized net actuarial (gain) (9,596) (22,472) Unrecognized prior service cost (16,858) (12,224) Net amount recognized $ (91,359) $(205,283) Amounts recognized on the Consolidated Balance Sheet Accrued benefit liability $ (91,359) $(205,283) 2001 2000 1999 Discount rate 7.25% 7.5% 7.5% Current medical cost trend rate 8.5% 9% 9.5% Ultimate medical cost trend rate 5.5% 5.5% 5.5% Medical cost trend rate  decreases to ultimate in year 2007 2007 2007 1% Increase 1% Decrease Effect on total of service and interest cost components $ 2,579 $ (1,991) Effect on postretirement benefit obligation $ 9,146 $ (7,387) Common Shares 2001 2000 1999 Balance July 1 $ 58,301 $ 55,973 $ 55,906 Shares issued under stock  option plans (2001 - 807,293;  2000 - 331,421; 1999 - 133,514) 404 164 67 Shares issued for purchase  acquisition 2,164 Balance June 30 $ 58,705 $ 58,301 $ 55,973 Additional Capital Balance July 1 $ 328,938 $ 132,227 $ 139,726 Net increase (decrease) for  common shares issued under stock option  plans 17,818 3,760 (2,194) Shares issued for purchase  acquisition 190,379 35 Restricted stock (surrendered)  (104) (24) Shares related to ESOP (424) 2,572 (5,316) Balance June 30 $ 346,228 $ 328,938 $ 132,227 Retained Earnings Balance July 1 $ 2,165,625 $ 1,872,356 $ 1,631,316 Net income 340,792 368,232 310,501 Cash dividends paid on  common shares, net of  tax benefit of ESOP shares  (79,921) (74,963) (69,461) Balance June 30 $ 2,426,496 $ 2,165,625 $ 1,872,356 Unearned Compensation Related to ESOP Balance July 1 $ (110,818) $ (112,000) $ Unearned compensation  related to ESOP  debt guarantee  14,420 13,747 (112,000) ESOP shares related  to acquisition (12,565) Balance June 30 $ (96,398) $ (110,818) $ (112,000) Deferred Compensation Related to Stock Options Balance July 1 $ 1,304 $ $ Deferred compensation related to stock options  1,043 1,304 Balance June 30 $ 2,347 $ 1,304 $ Accumulated Other Comprehensive (Loss) Balance July 1 $ (125,458) $ (92,858) $  (60,026) Foreign currency translation  (89,659) (32,600) (32,832) Unrealized gain on marketable securities (net of tax of  $7,768) 12,919 Realized (gain) on marketable securities (net of tax of  $1,406) (2,333) Balance June 30 $ (204,531) $ (125,458) $ (92,858) The assumptions used to measure the postretirement benefit obligations are: A one percentage point change in assumed health care cost trend rates would have the following effects: