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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts related to accrued promotions were also reclassified as an offset to accounts receivable from accounts payable and accrued liabilities to conform to the current presentation.

Recent accounting pronouncements

On April 30, 2002, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. In rescinding FASB SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and FASB SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. SFAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. The Company does not believe that the adoption of SFAS No. 145 will have a material impact on the Company’s financial statements.

On June 28, 2002, the Board voted to issue FASB SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses significant issues relating to the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities, and nullifies the guidance in Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 does not apply to (1) costs associated with the restructuring of an entity newly acquired in a business combination, which will continue to be accounted for under EITF Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination, (2) termination benefits that are provided to employees under the terms of an ongoing benefit arrangement (or enhancements to an ongoing benefit arrangement) or an individual deferred compensation contract covered by other accounting pronouncements, (3) costs to terminate a capital lease which continue to be accounted for in accordance with FASB Statement No. 13, Accounting for Leases, or (4) a disposal activity covered by SFAS No. 144.

SFAS No. 146 requires that the initial liability for costs associated with exit and disposal activities be measured at fair value. Additionally, the liability must be evaluated each reporting period and subsequent changes in the fair value of the liability be measured using an interest allocation approach. SFAS No. 146 prohibits the recognition of a liability based solely on an entity’s commitment to a plan, which, in turn, nullifies Issue 94-3. Requires that all other costs associated with an exit or disposal activity be expensed as incurred, even if those costs are incremental to other operating costs and will be incurred as a direct result of the plan.

The provisions of FAS No. 146 are effective for exit or disposal activities initiated after December 31, 2002. Earlier application is encouraged. Management does not believe that the adoption of SFAS No. 146 will have a material impact on the Company’s financial statements.

NOTE 2 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS:

			(in thousands)
			2002		2001
Inventories:
Meat, ingredients and supplies			$4,187		$3,757
Work in progress			1,940		1,324
Finished goods			11,435		14,084
			$17,562		$19,165
Property, plant and equipment:
Land			$1,807		$1,614
Buildings and improvements			13,059		12,649
Machinery and equipment			34,350		31,718
Transportation equipment			9,187		8,868
			58,403		54,849
Accumulated depreciation			(39,373)		(35,378)
			$19,030		$19,471
Projects in process totaled $985 and $1,786 at Nov. 1, 2002 and Nov. 2, 2001, respectively.
Other non-current assets:
Cash surrender value benefits			$8,541		$7,649
Intangible asset			199		—
			$8,740		$7,649
Accrued payroll, advertising and other expenses:
Payroll, vacation, payroll taxes
	and employee benefits		$3,073		$3,553
Accrued advertising and
	broker commissions		707		669
Income taxes payable					330
Property taxes			381		328
Others			487		320
			$4,648		$5,200
Non-current liabilities:
Incentive compensation			2,038		3,438
Accrued pension			1,835		2,465
Accrued supplemental retirement			4,214		5,018
Accrued employee benefits			320		330
Additional minimum pension liability			2,585		—
			$10,992		$11,251

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.

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