FORM 11-K
Securities and Exchange Commission
Washington, D.C. 20549
(X) Annual Report Pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1996
OR
( ) Transition Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from to_____________
Commission File Number 33-54180
A. Full title of the Plan and address of the Plan; if different
from that of the issuer named below:
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
B. Name of the issuer of the securities held pursuant to the
Plan and the address of its principal executive office:
Tops Appliance City, Inc.
45 Brunswick Avenue
Edison, New Jersey 08818
<PAGE>
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
Index to Financial Statements and Supplemental Schedules
Report of Independent Auditors . . . . . . . . . . . . . . . .F-1
Statements of Net Assets Available for Plan
Benefits - December 31, 1996 and December 31, 1995 . . . . . .F-2
Statements of Changes in Net Assets Available for
Plan Benefits - Years Ended December 31, 1996,
1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . F-3
Notes to Financial Statements. . . . . . . . . . . . . . . . .F-4
Supplemental Schedules:
Assets Held for Investment Purposes. . . . . . . . . . . . F-11
Reportable Transactions. . . . . . . . . . . . . . . . . . F-12
Consent of Independent Auditors. . . . . . . . . . . . . . F-13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . F-14
<PAGE>
Report of Independent Auditors
To the Plan Administrator
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
We have audited the accompanying statements of net assets
available for plan benefits of the Amended and Restated Section
401(k) Salary Savings Plan and Trust of Tops Appliance City, Inc.
(the "Plan") as of December 31, 1996 and 1995, and the related
statements of changes in net assets available for plan benefits
for each of the three years in the period ended December 31,
1996. These financial statements are the responsibility of the
Administrative Committee. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for plan benefits of the Plan at December 31, 1996 and
1995, and the changes in net assets available for plan benefits
for each of the three years in the period ended December 31, 1996
in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment purposes as
of December 31, 1996, and reportable transactions for the year
then ended, are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974, and are not a required part of the financial statements.
The supplemental schedules have been subjected to the auditing
procedures applied in our audit of the 1996 financial statements
and, in our opinion, are fairly stated in all material respects
in relation to the financial statements taken as a whole.
MetroPark, New Jersey /s/Ernst & Young LLP
June 18, 1997
<PAGE>
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
Statements of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
December 31
1996 1995
<S> <C> <C>
Assets
Investments, at current value
(Note 3):
AIM Value Fund - Class A $4,057,060 $3,625,772
Automated Government Money Trust Fund 2,351,392
Fidelity Advisors - Income & Growth Fund 2,739,012
PIMCO Advisors Total Return Income Fund 2,852,206
Scudder U.S. Treasury Money Fund 1,986,587
Scudder Managed Retirement Trust -
Balanced Fund 2,959,854
Scudder Income Fund 2,728,096
Tops Stock Fund 40,790 76,409
---------- ---------
Total investments 11,772,387 11,644,791
Loans receivable from plan participants
(Note 1) 544,752 658,888
Contributions receivable:
Employer 28,617 15,528
Employees 53,669 35,401
---------- ---------
Net assets available for plan benefits $12,399,425 $12,354,608
=========== ===========
See accompanying notes.
</TABLE>
<PAGE>
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
Statements of Changes in Net Assets
Available for Plan Benefits
<TABLE>
<CAPTION>
Year
ended December 31
1996 1995 1994
<S> <C> <C> <C>
Net assets available for plan benefits,
beginning of year $12,354,608 $10,830,298 $9,927,211
Investment income (loss) (Note 3) 953,220 1,345,414 (357,511)
Contributions (Note 1):
Employer 707,086 854,659 930,776
Employees 1,271,869 1,752,173 1,834,805
---------- ---------- ----------
Total additions 2,932,175 3,952,246 2,408,070
Less distributions (Note 1) 2,887,358 2,427,936 1,504,983
--------- --------- ----------
Net increase 44,817 1,524,310 903,087
--------- --------- ----------
Net assets available for plan
benefits, end of year $12,399,425 $12,354,608 $10,830,298
========== ========== ==========
See accompanying notes.
</TABLE>
<PAGE>
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
1. Description of the Plan
The following brief description of the Amended and Restated
Section 401(k) Salary Savings Plan and Trust of Tops Appliance
City, Inc. (the Plan) is provided for general information
purposes only. More complete information concerning the Plan and
its provisions can be found in the Plan document.
General
The Plan is a defined contribution plan covering all eligible
employees of Tops Appliance City, Inc. (the Company) who are not
subject to a collective bargaining agreement. Employees are
eligible to participate when they have completed 1,000 hours of
service and have reached age twenty-one. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
Administration of Plan Assets
The assets of the Plan are administered under a trust agreement
between the Plan and a trustee designated by the Company.
Effective December 1, 1996, the Plan administrator was changed
from ADP Benefit Services to the Scudder Trust Company.
Administrative expenses of the Plan may be paid from plan assets
and charged to participants' accounts. However, during the years
ended December 31, 1996, 1995 and 1994, all administrative
expenses of the Plan were paid by the Company.
Contributions
Employee contributions are made in the form of a salary reduction
by withholding an elected percentage from the employee's salary
each pay period. Participants may elect to contribute up to
fifteen percent of their gross annual compensation subject to the
dollar deferral and non-discrimination limitations as prescribed
by the Internal Revenue Code. Such deferrals were limited to
$9,500, $9,240 and $9,240 for the years ended December 31, 1996,
1995 and 1994, respectively.
The Company contributed an amount equal to 2-1/2% of the total
compensation of the eligible participants and may contribute a
discretionary amount as determined by the Company. Effective
January 29, 1997, the Plan was amended so that the Company
contributes 25% of the participant's contribution up to 10% of
that participant's total compensation. Such employer
contributions are subject to the provisions and limitations
prescribed by the Plan. For the year ended December 31, 1995 and
the period from January 1, 1996 to November 30, 1996, all Company
contributions were invested into three funds (33% in the PIMCO
Advisors Total Return Income Fund, 34% in the Fidelity Advisors -
Income & Growth Fund and 33% in the AIM Value Fund - Class A).
Effective December 1, 1996, the PIMCO and Fidelity Advisors Funds
were replaced by the Scudder Income Fund and the Scudder Managed
Retirement Trust - Balanced Fund, respectively. Prior to 1995,
all Company contributions were invested in the Safety Fund.
Participants' Accounts
Participants may elect to invest contributions in one or any
combination of the following five funds: Scudder U.S. Treasury
Money Fund, AIM Value Fund - Class A, Scudder Managed Retirement
Trust - Balanced Fund, Scudder Income Fund and the Tops Stock
Fund. Each participant's account is credited with the
participant's and the Company's contributions (as defined).
Prior to 1996, the Company allocated the forfeitures of
terminated participants' nonvested amounts to the remaining
eligible participants based on the proportion of each eligible
participant's compensation and length of service to the aggregate
compensation and length of service of all participants during the
fiscal year. Effective January 1, 1996, the Plan was amended so
that forfeitures of terminated participants' nonvested amounts
will first be utilized to reinstate accounts of formerly
terminated participants' who have been reinstated, with any
remainder used to offset future employer contributions.
At December 31, 1996, unallocated forfeitures included in net
assets available for plan benefits were approximately $367,000.
Income, profits and administrative expenses (if any),
attributable to the assets of the Plan are allocated among the
participants' accounts in relation to total account balances.
Vesting
Participants are immediately vested in their salary reduction
contributions plus actual earnings thereon. Vesting in the
employer contributions plus earnings thereon is based on years of
service as follows:
Years of Rate of
Credited Service Vesting
Less than 3 years -
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 years or more 100%
Payment of Benefits
The distribution of plan benefits, as defined, is permitted upon
the earlier of retirement, death, disability, separation of
service with the Company or attainment of age 65. Withdrawal
will also be available in certain hardship situations, as defined
in the Plan document. Distribution of account balances may be
made in either a lump-sum amount, life annuity contracts or in
installments over the life expectancy of the participant.
Distributions must commence at age 70 1/2 even if the participant
does not retire.
Loans Receivable from Plan Participants
Loans receivable from plan participants consist of promissory
notes bearing interest at rates ranging from 7% to 12% maturing
through July 7, 2006. A participant of the Plan who needs
temporary financial assistance may request a loan from the Plan
up to one-half of the present value of the non-forfeitable
accrued benefit of the participant to a maximum of $50,000, with
the vested portion of a participant's account serving as
collateral for the loan.
Plan Termination
Although it has not expressed any intent to do so, the Company
has the right to terminate the Plan at any time. In the event of
plan termination, the time and manner of distribution of vested
benefits shall be subject to the discretion of the Plan
Administrator. If the Plan is terminated by the Company, all
employer contributions plus earnings become vested.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared on the
accrual basis of accounting. Purchases and sales of securities
are recorded on trade dates on a first-in, first-out basis.
Amounts reported on Form 5500 differ from the financial
statements since the Plan's Form 5500 includes distributions
payable of approximately $210,000 and $320,000 at December
31,1996 and 1995, respectively.
Investment Valuation
Investments are valued at current value based upon current market
quotations.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates.
3. Investments
The following presents information regarding changes in net
assets by investment alternative for the years ended December 31,
1996, 1995 and 1994. The information provided by the investment
manager and recordkeeper does not indicate the amounts of
dividends, interest, or realized or unrealized gains or losses
that make up investment income.
<TABLE>
<CAPTION>
Automated
Government
Fixed Stock Tops Money
Safety Income Equity Stock Trust
Fund Fund Fund Fund Fund
---------- ---------- --------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net assets available
for plan benefits,
1/1/94 $6,268,034 $1,264,784 $1,368,886 $563,800 --
Investment Income
(loss) 238,392 (69,950) (66,292) (459,661)
Contributions:
Employer 930,776
Employees 730,849 422,099 461,807 220,050
--------------------------------------------------
Total additions
(deductions) 1,900,017 352,149 393,515 (239,611)
Less distributions (1,014,819) (213,885) (206,524) (69,755)
Transfers 331,656 (274,395) (69,044) 11,783
Loan activity - net 99,667 (75,046) (105,318)
--------------------------------------------------
Net increase (decrease) 1,316,521 (211,177) 14,629 (297,583)
--------------------------------------------------------------
Net assets available
for plan benefits
12/31/94 7,584,555 1,053,607 1,383,515 266,217
Investment income (loss) (94,286) 236,554
Contributions:
Employer
Employees 49,485 426,383
--------------------------------------------------------------
Total additions
(deductions) (44,801) 662,937
Less distributions (403,433) (79,633) (117,349) (15,881) (273,803)
Transfers - net (7,181,122) (973,974) (1,266,166) (133,726) 1,984,340
Less activity - net 5,345 (12,170)
---------------------------------------------------------------
Net increase (decrease) (7,584,555) (1,053,607) (1,383,515) (189,063) 2,261,304
---------------------------------------------------------------
Net assets available for
plan benefits, 12/31/95 --- --- --- 77,154 2,361,304
Investment income (loss) --- --- --- (46,160) 83,277
Contributions:
Employer
Employees 32,721 291,393
--------------------------------------------------------------
Total additions (deductions) (13,439) 374,670
Less distributions (26,067) (770,424)
Transfers - net 2,444 (1,957,898)
Loan activity - net 2,036 (7,652)
--------------------------------------------------------------
Net increase (decrease) (35,026) (2,361,304)
Net assets available for
plan benefits, 12/31/96 $ --- $ --- $ --- $42,128 $ ---
=============================================================
PIMCO Scudder
Fidelity Advisors Scudder Managed
Advisors- Total AIM U.S. Retirement
Income Return Value Treasury Trust -
& Growth Income Fund Money Balanced
Fund Fund Class A Fund Fund
---------- --------- ------- -------- ----------
Net assets available
for plan benefits,
1/1/94 $ -- $ -- $ -- $ --- $ ---
Investment Income
(loss)
Contributions:
Employer
Employees
Total additions
(deductions)
Less distributions
Transfers
Loan activity - net
Net increase (decrease)
---------------------------------------------------------------
Net assets available
for plan benefits
12/31/94 -- -- --
Investment income (loss) 274,072 284,428 644,646 --- ---
Contributions:
Employer 284,887 284,886 284,886
Employees 369,425 330,740 576,140
------------------------------------------------------------
Total additions (deductions) 928,384 900,054 1,505,672
Less distributions (496,931) (455,118) (506,660)
Transfers - net 2,348,808 2,507,135 2,714,705
Less activity - net (29,019) (88,539) (71,229)
------------------------------------
Net increase (decrease) 2,751,242 2,863,532 3,642,488 --- ---
------------------------------------------------------------
Net assets available for
plan benefits, 12/31/95 2,751,242 2,863,532 3,642,488 --- ---
Investment income (loss) 244,534 105,078 513,659 13,905 10,556
Contributions:
Employer 207,286 201,190 233,339 33,122
Employees 197,295 180,399 454,319 26,088 69,154
--------------------------------------------------------------
Total additions (deductions) 649,115 486,667 1,201,317 39,993 112,832
Less distributions (549,002) (580,441) (803,451) (224)
Transfers - net (2,856,527) (2,762,804) 38,824 1,954,074 2,877,579
Loan activity - net 5,172 (6,954) 5,539
--------------------------------------------------------------
Net increase (decrease) (2,751,242) (2,863,532) 442,229 1,994,067 2,990,187
--------------------------------------------------------------
Net assets available for
plan benefits, 12/31/96 $ -- $ -- $4,084,717 $1,994,067 $2,990,187
===============================================================
</TABLE>
<TABLE>
<CAPTION>
Scudder
Income Loans
Fund Receivable Total
-------- ---------- -----
<S> <C> <C> <C>
Net assets available
for plan benefits,
1/1/94 $ --- $461,707 $9,927,211
Investment Income
(loss) (357,511)
Contributions:
Employer 930,776
Employees 1,834,805
----------
Total additions
(deductions) 2,408,070
Less distributions (1,504,983)
Transfers ---
Loan activity - net 80,697 ---
------------------------------------------------------
Net increase (decrease) 80,697 903,087
------------------------------------------------------
Net assets available
for plan benefits 12/31/94 --- 542,404 10,830,298
Investment income (loss) 1,345,414
Contributions:
Employer 854,659
Employees 1,752,173
----------------------------------------------------
Total additions (deductions) 3,952,246
Less distributions (79,128) (2,427,936)
Transfers - net ---
----------------------------------
Less activity - net 195,612 ---
Net increase (decrease) 116,484 1,524,310
---------------------------------------------------
Net assets available for
plan benefits, 12/31/95 --- 658,888 12,354,608
Investment income (loss) (13,166) 41,537 953,220
Contributions:
Employer 32,149 707,086
Employees 20,500 1,271,869
---------------------------------------------------
Total additions (deductions) 39,483 41,537 2,932,175
Less distributions (217) (157,532) (2,887,358)
Transfers - net 2,704,308 --
---------------------------------------------------
Loan activity - net 1,859 --
---------------------------------------------------
Net increase (decrease) 2,743,574 (114,136) 44,817
Net assets available for
plan benefits, 12/31/96 $2,743,574 $544,752 $12,399,425
====================================================
</TABLE>
The current value of individual investments that represent 5% or
more of the Plan's net assets are as follows:
<TABLE>
1996 1995
<S> <C> <C>
AIM Value Fund - Class A $4,057,060 $3,625,772
Automated Government Money
Trust Fund 2,351,392
Fidelity Advisors - Income
& Growth Fund 2,739,012
PIMCO Advisors Total Return
Income Fund 2,852,206
Loans receivable from plan
participants 658,888
Scudder U.S. Treasury Money Fund 1,986,587
Scudder Managed Retirement Trust -
Balanced Fund 2,959,854
Scudder Income Fund 2,728,096
</TABLE>
4. Tax Status
The Plan has received a favorable determination letter from the
IRS dated July 27, 1995 that the Plan as amended is qualified
under Section 401(a) of the Internal Revenue Code (IRC) and its
related trust is tax exempt under Section 501(a) of the IRC. The
Plan is required to operate in accordance with the provisions of
the IRC. The Plan Administrator is not aware of any series of
events that would adversely affect the qualification of the Plan.
5. Party-in-Interest Transactions
All expenses incurred in the operation and administration of the
Plan were borne by the Plan sponsor, Tops Appliance City, Inc.
The Plan purchased 25,105, 17,684 and 22,325 shares of Tops
Appliance City, Inc. common stock in the public market at an
average price of $2.20, $4.88 and $9.08 per share during the
years ended December 31, 1996, 1995 and 1994, respectively. The
Plan sold 24,797, 33,794 and 4,200 shares of Tops Appliance City,
Inc. common stock at an average price of $1.42, $4.43 and
$8.03 per share during the years ended December 31, 1996, 1995
and 1994, respectively.
<PAGE>
Amended and Restated Section 401(k) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Shares
or Face Current
Amount Cost Value
<S> <C> <C> <C>
Mutual Funds
AIM Value Fund - Class A 139,191 $4,146,736 $ 4,057,060
Scudder U.S. Treasury Money Fund 1,986,587 1,986,587 1,986,587
Scudder Managed Retirement Trust
- Balanced Fund 167,096 2,948,720 2,959,854
Scudder Income Fund 207,460 2,801,195 2,728,096
Tops Stock Fund
Tops Stock (1) 30,723 51,673 40,247
Money Market 543 543 543
------
40,790
Loans receivable from plan
participants 544,752
-----------
$12,317,139
===========
(1) Tops Appliance City, Inc. is the Plan sponsor.
</TABLE>
<PAGE>
Amended and Restated Section 401(K) Salary Savings Plan
and Trust of Tops Appliance City, Inc.
Reportable Transactions
Year ended December 31, 1996
<TABLE>
<CAPTION>
Shares Net
or Purchase Selling Gain
Description of Assets Units Price* Price* (Loss)
______________________________ _______ ________ ________ _______
<S> <C> <C> <C> <C>
Category (i)--Individual transactions
in excess of 5% of Plan assets
Automated Government Money Trust 1,954,074 $1,954,074 $1,954,074
Fidelity Advisor -
Income & Growth Fund 171,688 2,682,803 2,875,767 $192,964
PIMCO Advisors Total Return
Income Fund 252,505 2,642,535 2,704,309 61,774
Scudder Income Fund 200,171 2,704,309
Scudder Managed Retirement Trust -
Balanced 163,003 2,877,001
Scudder U.S. Treasury Money Fund 1,954,074 1,954,074
Category (iii)--Series of
transactions in excess
of 5% of Plan assets
AIM Value Fund - Class A 53,912 1,501,885
AIM Value Fund - Class A 50,396 1,397,628 1,724,651 327,023
Automated Government Money Trust Fund 776,950 776,950
Automated Government Money Trust Fund 3,126,010 3,126,010 3,126,010
Fidelity Advisor - Income & Growth Fund 67,322 1,036,124
Fidelity Advisor - Income & Growth Fund 239,752 3,929,862 4,084,588 154,726
PIMCO Advisors Total Return Income Fund 103,170 1,071,622
PIMCO Advisors Total Return Income Fund 367,410 3,892,562 3,861,298 (31,264)
Scudder Income Fund 207,476 2,801,413
Scudder Income Fund 16 218 218
Scudder Managed Retirement Trust -
Balanced 167,109 2,948,944
Scudder Managed Retirement Trust -
Balanced 13 224 224
Scudder U.S. Treasury Money Fund 1,986,587 1,986,587
</TABLE>
* Current value of asset on transaction date was equal to the
purchase price/selling price.
There were no category (ii) or (iv) reportable transactions
during 1996.
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-54180) pertaining to the Amended and
Restated Section 401(k) Salary Savings Plan and Trust of Tops
Appliance City, Inc. of our report dated June 18, 1997 with
respect to the financial statements and supplemental schedules of
the Amended and Restated Section 401(k) Salary Savings Plan and
Trust of Tops Appliance City, Inc. included in this Annual Report
(Form 11-K) for the year ended December 31, 1996.
/s/Ernst & Young LLP
MetroPark, New Jersey
June 23, 1997
<PAGE>
Signatures
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the Plan Administrators have duly caused
this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Amended and Restated Section
401(k) Salary Savings Plan
and Trust of Tops Appliance
City, Inc.
By: Tops Appliance City, Inc.,
Administrator
Date: June 30, 1997 /s/Thomas L. Zambelli
_____________________________
Thomas L. Zambelli
Senior Vice President and
Chief Financial Officer
<PAGE>
