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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 16.41 years, the average remaining service periods of active plan participants. The discount rate and expected long-term rate of return used in determining the projected benefit obligation for fiscal years 1998 and 1997 was 7.75%. The assumed rate of future compensation increases for fiscal years 1998 and 1997 were 4% and 6%, respectively.

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 contribute 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 1998, 1997 and 1996 was $303,000, $348,000 and $405,000 respectively. Benefits payable related to these plans and included in other non-current liabilities in the accompanying financial statements were $3,594,000 and $2,988,000 at October 30, 1998 and October 31, 1997, 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 non-current assets was $5,298,000 and $4,571,000 at October 30, 1998 and October 31, 1997, respectively.

The Company provides a deferred compensation plan for certain key executives, which is based upon the Company’s pretax income and return on shareholders’ equity. The payment of these bonuses is generally deferred over a five-year period. The total amount payable related to this arrangement was $4,598,000 and $3,574,000 at October 30, 1998 and October 31, 1997, respectively. Future payments are approximately $1,252,000, $1,162,000, $925,000, $717,000 and $542,000 for fiscal years 1999 through 2003, respectively.

Postretirement health care benefits in the approximate amount of $345,000 and $340,000 are included in non-current liabilities at October 30, 1998 and October 31, 1997, respectively.