NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (con't)

The funded status of the plan is as follows:

			(in thousands)
			2003		2002		2001
Plan assets at
	fair market value		$16,296		$13,898		$14,464
Actuarial present value of
	benefit obligations:
	Accumulated benefits based
	on current salary levels,
	including vested benefits of
	$19,492, $17,770 and $15,272		22,635		19,259		16,523
Additional benefits based on
	estimated future salary levels		4,855		2,766		2,321
Projected benefit obligation			27,490		22,025		18,844
Projected benefit obligation
	in excess of plan assets		(11,194)		(8,127)		(4,380)
Unrecognized prior service costs			159		199		162
Unrecognized loss (gain) on
	plan assets		7,544		5,295		1,972
Unrecognized net transition asset			(68)		(143)		(219)
Additional accrued minimum liability			(2,780)		(2,584)		—
Accrued pension cost			$(6,339)		$(5,360)		$(2,465)

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. 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 attainment of retirement age. Total benefit expense recorded under these plans for fiscal years 2003, 2002 and 2001 were $71, $377 and $393 respectively. Benefits payable related to these plans and included in other non-current liabilities in the accompanying financial statements were $4,326 and $4,214 at October 31, 2003 and November 1, 2002, 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 $9,316 and $8,541 at October 31, 2003 and November 1, 2002, respectively. The Company provides an incentive compensation plan for certain key executives, which is based upon the Company's pretax income and return on shareholders' equity. The payment of these amounts is generally deferred over a five-year period. The total amount payable related to this arrangement was $2,468 and $3,718 at October 31, 2003 and November 1, 2002, respectively. Future payments are approximately $1,212, $691, $364, $135 and $66 for fiscal years 2004 through 2008, respectively.

Postretirement health care benefits in the approximate amount of $320 are included in non-current liabilities at October 31, 2003 and November 1, 2002.

The Company's 1999 Stock Incentive Plan (“the Plan”) was approved by the Board of Directors on January 11, 1999 and 275,000 options were granted on April 29, 1999. Under the Plan, the maximum aggregate number of shares which may be optioned and sold is 900,000 shares of common stock, subject to adjustment upon changes in capitalization or merger. Generally, options granted under the plan vest in annual installments over four years following the date of grant (as determined by the Board of Directors) subject to the optionee's continuous service. Options expire ten years from the date of grant with the exception of an incentive stock option granted to an optionee who owns stock representing more than 10% of the voting power of all classes of stock of the Company, in which case the term of the option is five years. Options generally terminate three months after termination of employment or one year after termination due to permanent disability or death. Options are generally granted at a fair market value determined by the Board of Directors subject to the following:

With respect to options granted to an employee or service provider who, at the time of grant owns stock representing more than 10% of the voting power of all classes of stock of the Company; the per share exercise price shall be no less than 110% of the fair market value on the date of grant.

With respect to options granted to an employee or service provider other than described in the preceding paragraph, the exercise price shall be no less than 100% for incentive stock options and 85% for non-statutory stock options of the fair market value on the date of grant.

As of October 29, 1999, 275,000 options were outstanding at an exercise price of $10.00 per share. During fiscal year 2000, 25,000 options with a weighted average exercise price of $10.00 were cancelled. As of October 31, 2003, 250,000 options were outstanding at an exercise price of $10.00 per share.

NOTE 4 - INCOME TAXES:
The provision for taxes on income includes the following:

		(in thousands)
		2003		2002		2001
Current:
Federal		$(1,137)		$1,073		$2,830
State		(92)		145		671
		(1,229)		1,218		3,501
Deferred:
Federal		1,930		(398)		292
State		40		313		35
		1,970		(85)		327
		$741		$1,133		$3,828

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