NOTES TO FINANCIAL STATEMENTS 19 2001 STRATTEC Annual Report The following tables summarize the pension and postretirement plans’ income and expense, funded status, and actuarial assumptions for the years indicated (thousands of dollars): SHAREHOLDERS’ EQUITY The health care cost trend assumption has a significant effect on the postretirement benefit amounts reported. A 1% change in the health care cost trend rates would have the following effects (thousands of dollars): All U.S. associates of the Company may participate in a 401(k) Plan. The Company contributes a fixed percentage of up to the  first 6 percent of eligible compensation that a participant contributes to the plan. The Company’s contributions totaled approximately $679,000 in 2001, $679,000 in 2000, and $635,000 in 1999. The Company has 12,000,000 shares of authorized common stock, par value $.01 per share, with 4,046,089 and 4,452,609 shares issued and outstanding at July 1, 2001, and July 2, 2000, respectively. Holders of Company common stock are entitled to one vote for each share on all matters voted on by shareholders. On February 27, 1995, one common stock purchase right (a “right”) was distributed for each share of the Company’s common stock outstanding. The rights are not currently exercisable, but would entitle shareholders to buy one-half of one share of the Company’s common stock at an exercise price of $30 per share if certain events occurred relating to the acquisition or attempted acquisition of  20 percent or more of the outstanding shares. The rights expire in the year 2005, unless redeemed or exchanged by the Company earlier. For measurement purposes, a 7 percent annual rate of increase in the per capita cost of covered health care benefits was assumed for 2001; the rate was assumed to remain at that level thereafter.  Pension Postretirement Benefits Benefits 2001 2000 2001 2000 CHANGE IN BENEFIT  OBLIGATION: Benefit obligation  at beginning  of year $31,320 $29,187 $3,729 $4,500 Service cost 1,614 1,535 184 220 Interest cost 2,403 2,097 286 293 Settlement of postretirement Life benefit - - - (419) Plan amendments 389 - (78) - Actuarial (gain) loss 3,233 (830) 508 (711) Benefits paid (862) (669) (242)  (154) Benefit obligation  at end of year $38,097 $31,320 $4,387 $3,729 ) CHANGE IN  PLAN ASSETS: Fair value of plan assets at  beginning of year $34,612 $29,177 - - Actual return on  plan assets (2,753) 6,104 - - Employer contributions 306 - 242  154 Benefits paid (862) (669) (242) (154) Fair value of plan  assets at end of year 31,303 34,612 - - Funded status (6,794) 3,292 (4,387) (3,729) Unrecognized net gain (3,696) (12,478) (280) (813) Unrecognized prior  service cost 372 (5) 139 249 Unrecognized net  transition asset (499) (648) - - Accrued benefit cost $(10,617) $(9,839) $(4,528) $(4,293) July 1, July 2, July 1, July 2, 2001 2000 2001 2000 WEIGHTED-AVERAGE  ASSUMPTIONS Discount rate 7.5% 7.75% 7.5% 7.75% Expected return on  plan assets 8.5% 8.5% n/a n/a Rate of compensation  increases 4.0% 4.0% n/a n/a Pension Postretirement Benefits Benefits 2001 2000 2001 2000 COMPONENTS OF  NET PERIODIC  BENEFIT COST: Service cost $1,614 $1,535 $184 $220 Interest cost 2,403 2,097 286 293 Expected return  on plan assets (2,491) (2,193) - - Amortization of  prior service cost 12 12 16 16 Amortization of  unrecognized  net gain (304) (132) (25) - Amortization of  net transition asset (150) (150) - - Net periodic  benefit cost $1,084 $1,169 $461 $529 1% Increase 1% Decrease Effect on total of  service and interest cost components $94 ($78) Effect on postretirement  benefit obligation $665 ($564)