H O N I N D U S T R I E S I n c . a n d S U B S I D I A R I E S Postretirement Health Care Retirement Benefits The Company has defined contribution profit-sharing plans cover- ing substantially all employees who are not participants in certain  defined benefit plans. The Company’s annual contribution to the de- fined contribution plans is based on employee eligible earnings and  results of operations and amounted to $26,489,000, $23,524,000,  and $24,826,000 in 2003, 2002, and 2001, respectively. The Company sponsors defined benefit plans which include  a limited number of salaried and hourly employees at certain subsidiar- ies. The Company’s funding policy is generally to contribute annually  the minimum actuarially computed amount. Net pension costs relating  to these plans were $176,000; $0; and $0 for 2003, 2002, and 2001,  respectively. The actuarial present value of obligations, less related plan  assets at fair value, is not significant. The Company also participates in a multiemployer plan,  which provides defined benefits to certain of the Company’s union  51 The following table summarizes information about fixed stock options  outstanding at January 3, 2004: employees. Pension expense for this plan amounted to $309,000,  $309,000, and $310,000 in 2003, 2002, and 2001, respectively. In accordance with the guidelines of revised SFAS No. 132, “Employers’  Disclosures about Pensions and other Postretirement Benefits,” the fol- lowing table sets forth the funded status of the plan, reconciled to the  accrued postretirement benefits cost recognized in the Company’s bal- ance sheet at: Number of  Weighted-Average Shares  Exercise Price Outstanding at December 30, 2000 918,250  $ 21.89 Granted  266,500  23.39 Exercised (17,500)  18.31 Forfeited (37,000)  21.57 Outstanding at December 29, 2001 1,130,250  $ 22.32 Granted  290,000  25.77 Exercised –  – Forfeited (17,000)  21.69 Outstanding at December 28, 2002 1,403,250  $ 23.03 Granted  446,500 26.78  Exercised (362,000) 23.10  Forfeited (18,500) 23.57  Outstanding at January 3, 2004 1,469,250  $ 24.15 Options exercisable at: January 3, 2004  202,250  $ 25.47 December 28, 2002  156,250   25.02 December 29, 2001  105,000   24.86 Options  Options Outstanding  Exercisable Weighted-  Weighted-  Number Average  Average  Exercisable Range of  Number  Remaining  Exercise at January 3, Exercise Prices  Outstanding  Contractual Life  Price  2004 $24.50–$28.25  31,000  2.9 years  $ 25.71   31,000 $32.22 20,000  4.1 years  $ 32.22   20,000 $23.47 101,250  5.1 years  $ 23.47   101,250 $18.31–$26.69  411,000  6.6 years  $ 20.42   50,000 $23.32–$25.27  223,500  7.1 years  $ 23.41  – $25.75–$25.77  261,000  8.1 years  $ 25.77  – $25.50–$42.98  421,500  9.2 years $ 26.83  – (In thousands) 2003 2002  2001  Change in benefit obligation Benefit obligation at beginning  of year  $ 17,617 $ 17,351  $ 12,229 Service cost  249 398  278 Interest cost  1,105 1,091  941 Benefits paid   (1,206) (1,356)  (952) Actuarial (gain) or loss  566 133  3,042 Current year prior service cost  – –  1,813 Benefit obligation at end of year  $ 18,331 $ 17,617  $ 17,351 Change in plan assets Fair value at beginning of year  $  – $  –  $  – Employer contributions  11,456 1,356  952 Benefits paid   (1,206) (1,356)  (952) Fair value at end of year  $10,250 $  –  $  – Reconciliation of funded status Funded status  $ (8,081) $ (17,617)  $ (17,351) Unrecognized actuarial (gain)  or loss  1,105 539  364 Unrecognized transition  obligation or (asset)  5,361 5,942  6,523 Unrecognized prior service cost  1,122 1,352  1,582 Net amount recognized at  year-end $  (493) $ (9,784)  $ (8,882) Amounts recognized in the  statement of financial position  consist of: Accrued benefit liability $ (493) $ (9,784)  $ (8,882) Net amount recognized at  year-end, included in  Other Liabilities  $  (493) $ (9,784)  $ (8,882) Estimated Future Benefit Payments (In thousands) Fiscal 2004  $  1,133 Fiscal 2005  1,189 Fiscal 2006  1,195 Fiscal 2007  1,217 Fiscal 2008  1,265 Fiscal 2009 – 2013  6,874 Expected Contributions During Fiscal 2004  Total $ 12,873 Plan Assets – Percentage of Fair Value by Category 2003 Equity 0% Debit  0% Other  100% Total 100%