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NOTE 3 - RETIREMENT AND BENEFITS PLANS:

The Company has noncontributory trusteed defined benefit retirement plans for sales, administrative, supervisory and certain other employees. The benefits under these plans are primarily based on years of service and compensation levels. The Company's funding policy is to contribute annually the maximum amount deductible for federal income tax purposes.

Net pension cost consisted of the following (in thousands):

The transition asset is being amortized using the straight-line method over 17.63 years, the average remaining service periods of active plan participants. The discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.5% and 6%, respectively. The expected long-term rate of return on assets for all fiscal years was 7.5%.

Plan assets are primarily invested in marketable equity securities, corporate and government debt securities and real estate and are administered by a life insurance company.

The funded status of the plan is as follows (in thousands):

In fiscal year 1991, the Company adopted a non-qualified supplemental retirement plan for certain key employees. Benefits provided under the plan are equal to 60% of the employee's final average earnings, less amounts provided by the Company's defined benefit pension plan and amounts available through Social Security. Total annual benefits are limited to $120,000 for each participant In the plan. Effective January 1, 1991 the Company adopted a deferred compensation savings plan for certain key employees. Under this arrangement, selected employees contributed a portion of their annual compensation to the plan. The Company contributes an amount to each participant's account by computing an investment return equal to Moody's Average Seasoned Bond Rate plus 2%. Employees receive vested amounts upon death, termination or retirement. Total benefit expense recorded under these plans for fiscal years 1996, 1995 and 1994 was $405,000, $470,000 and $358,000, respectively. Benefits payable related to these plans and included in accrued payroll in the accompanying financial statements were $2,480,000 and $1,872,000 at November 1, 1996 and November 3, 1995, respectively. In connection with this arrangement the Company is the beneficiary of life insurance policies on the lives of certain key employees. The aggregate cash surrender value of these policies, included in prepaid expenses, was $3,341,000 and $2,763,000 at November 1, 1996 and November 3, 1995, respectively. The total (income) expense recorded related to these policies was approximately ($46,000), (20,000) and $6,000 for fiscal years 1996, 1995 and 1994, respectively.

Effective for fiscal year 1994, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions." This statement focuses principally on postreitrement health care benefits and requires accrual of the expected cost of providing those benefits over the service lives of the employees. Adoption of this statement did not materially impact the Company's consolidated financial statements.