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ticable to determine the amount of unrecognized deferred taxes with respect to these earnings; however, foreign tax credits should be available to reduce U.S. income taxes in the event of a distribution. 

Deferred tax assets and liabilities consist of the following at December 31: 

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## NOTE 7 OPERATING LEASE COMMITMENTS 

The Company leases equipment, vehicles and buildings from third parties under operating lease agreements. 

The Company also leases some of its facilities from cer- tain related parties. The leases are accounted for as oper- ating leases and are for various terms with additional renewal options. The Company is generally responsible for repairs and maintenance, taxes and insurance. 

For the years ended December 31, 2001, 2000 and 1999, lease expense totaled $5,713, $4,098 and $3,620, under these agreements including related party lease expense of $538, $575 and $465, respectively. 

Future minimum operating lease commitments at December 31, 2001 are as follows: 

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## NOTE 8 SHARE OPTION PLANS 

In October 1997, the Company adopted a Long-Term Incentive Plan (Incentive Plan). The Company has reserved 1,000,000 Common Shares for issuance under the Incentive Plan. In May 2001, the number of common shares reserved under the Incentive Plan was increased to 2,500,000. Under the Incentive Plan, the Company has granted cumulative options to purchase 1,025,500 Common Shares to management with exercise prices equal to the fair market value of the Company’s Common Shares at the date of grant. The options vest from one to five years after the date of grant. 

Information relating to the Company’s outstanding options is as follows: 

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Of the options issued and outstanding under the Incentive Plan, 488,000, 434,000, and 484,000 were exer- cisable as of December 31, 2001, 2000 and 1999, respec- tively. The weighted average exercise price of options exercisable at the end of year was $17.14, $17.44 and $17.48 per share at December 31, 2001, 2000 and 1999, respectively. 

The following pro forma information regarding net income and net income per share is required by SFAS 123, and has been determined as if the Company had accounted for its share options under the fair value method of that Statement. The fair value for these 

options was estimated at the date of grant using a Black- Scholes option pricing model with the following weighted average assumptions: 

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The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected share price volatility. Because the Company’s share options have characteristics significantly different from traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its share options. 

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. The Company’s pro forma net earnings per share is as follows: 

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## NOTE 9 EMPLOYEE BENEFIT PLANS 

The Company has certain defined contribution profit sharing and 401(k) plans covering substantially all employees. Company contributions are generally discre- tionary; however, a portion of these contributions is based upon a percentage of employee compensation, as defined in the plans. The Company’s policy is to fund all 

benefit costs accrued. There are no unfunded prior service costs. For the years ended December 31, 2001, 2000 and 1999, contributions amounted to $3,555, $3,479 and $6,310, respectively. 

The Company does not provide any other material retire- ment, post-retirement or post-employment benefits to its employees. 

## NOTE 10 FAIR VALUE OF FINANCIAL INSTRUMENTS 

A financial instrument is cash or a contract that imposes an obligation to deliver, or conveys a right to receive cash or another financial instrument. The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of fair value because of the short maturity of these instru- ments. In management’s opinion, the estimated fair value of the Company’s long-term debt approximates book value, as under the terms of the borrowing arrangements, a significant portion of the obligations are subject to fluc- tuating market rates of interest. 

The Company uses derivative financial instruments to reduce exposures to market risks resulting from fluctua- tions in interest rates and currency rates. The Company does not enter into financial instruments for trading pur- poses. Management believes that its use of these instru- ments to reduce risk is in the Company’s best interest. 

Derivative financial instruments as of December 31, 2001 and 2000 include the following interest rate swap agree- ments: 

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The fair market value of these interest rate swap agree- ments, which was estimated based on quoted market sources, approximated a net payable of $6,700 and $2,500, at December 31, 2001 and 2000, respectively. As a result of the adoption of SFAS 133 in 2001, the Company has reflected the net of tax offset to this liability as a sep- arate component of shareholders’ equity, due to these swaps being deemed effective hedges. 

