UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended May 30, 2008
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-4339
GOLDEN ENTERPRISES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0250005
-------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Golden Flake Drive
Birmingham, Alabama 35205
-------------------------------- ------------------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number including area code (205) 458-7316
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Capital Stock, Par Value $0.66 2/3
(Title of Class)
Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ( ) No (X)
Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ( ) No (X)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K. ( )
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company (as
defined in Rule 1 2b-2 of the Act). (Check One) Large accelerated filer ( )
Accelerated filer ( ) Non-accelerated filer ( ) Smaller reporting company (X)
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 1 2b-2 of the Exchange Act). Yes ( ) No (X)
State the aggregate market value of the voting common stock held by
non-affiliates of the registrant as of August 1, 2008.
Common Stock, Par Value $0.66 2/3 -- $10,301,386
Indicate the number of shares outstanding of each of the Registrant's Classes of
Common Stock, as of August 1, 2008.
Class Outstanding at August 1, 2008
----- -----------------------------
Common Stock, Par Value $0.66 2/3 11,779,001 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the Annual Meeting of Stockholders to
be held on September 25, 2008 are incorporated by reference into Part III.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -2008
GOLDEN ENTERPRISES, INC.
Page
----
PART I.
Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 6
Item 2. Properties 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II.
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 8
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 7A. Quantitative and Qualitative Disclosure About Market Risk 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 35
Item 9A. Controls and Procedures 36
Item 9B. Other Information 37
PART III.
Item 10. Directors and Executive Officers and Corporate Governance 37
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters 38
Item 13. Certain Relationships and Related Transactions and
Director Independence 38
Item 14. Principal Accountant Fees and Services 38
PART IV.
Item 15. Exhibits and Financial Statement Schedules 38
2
PART I
ITEM 1. - BUSINESS
Golden Enterprises, Inc. (the "Company") is a holding company which owns all of
the issued and outstanding capital stock of Golden Flake Snack Foods, Inc., a
wholly-owned operating subsidiary company ("Golden Flake"). Golden Enterprises
is paid a fee by Golden Flake for providing management services for it.
The Company was originally organized under the laws of the State of Alabama as
Magic City Food Products, Inc. on June 11, 1946. On March 11, 1958, it adopted
the name Golden Flake, Inc. On June 15, 1963, the Company purchased Don's Foods,
Inc. a Tennessee corporation which was merged into the Company on December 10,
1966. The Company was reorganized December 31, 1967 as a Delaware corporation
without changing any of its assets, liabilities or business. On January 1, 1977,
the Company, which had been engaged in the business of manufacturing and
distributing potato chips, fried pork skins, cheese curls and other snack foods,
spun off its operating division into a separate Delaware corporation known as
Golden Flake Snack Foods, Inc. and adopted its present name of Golden
Enterprises, Inc.
The Company owns all of the issued and outstanding capital stock of Golden Flake
Snack Foods, Inc.
Golden Flake Snack Foods, Inc.
General
Golden Flake Snack Foods, Inc. ("Golden Flake") is a Delaware corporation with
its principal place of business and home office located at One Golden Flake
Drive, Birmingham, Alabama. Golden Flake manufactures and distributes a full
line of salted snack items, such as potato chips, tortilla chips, corn chips,
fried pork skins, baked and fried cheese curls, onion rings and puff corn. These
products are all packaged in flexible bags or other suitable wrapping material.
Golden Flake also sells a line of cakes and cookie items, canned dips, pretzels,
peanut butter crackers, cheese crackers, dried meat products and nuts packaged
by other manufacturers using the Golden Flake label. No single product accounts
for more than 50% of Golden Flake's sales, which affords some protection against
loss of volume due to a crop failure of major agricultural raw materials.
Raw Materials
Golden Flake purchases raw materials used in manufacturing and processing its
snack food products on the open market and under contract through brokers and
directly from growers. A large part of the raw materials used by Golden Flake
consists of farm commodities which are subject to precipitous change in supply
and price. Weather varies from season to season and directly affects both the
quality and quantity of supply available. Golden Flake has no control over the
agricultural aspects and its profits are affected accordingly.
Distribution
Golden Flake sells its products through its own sales organization and
independent distributors to commercial establishments which sell food products
in Alabama and in parts of Tennessee, Kentucky, Georgia, Florida, Mississippi,
Louisiana, North Carolina, South Carolina, Arkansas, Missouri and Texas. The
products are distributed by approximately 470 route salesmen and independent
distributors who are supplied with selling inventory by the Company's trucking
fleet which operates out of Birmingham, Alabama, Nashville, Tennessee, and
Ocala, Florida. All of the route salesmen are employees of Golden Flake and use
the direct-store delivery system. Golden Flake is not dependent upon any single
3
customer, or a few customers, the loss of any one or more of which would have a
material adverse effect on its business. No single customer accounts for more
than 10% of its total sales. Golden Flake has a fleet of 799 company owned
vehicles to support the route sales system, including 34 tractors and 124
trailers for long haul delivery to the various company warehouses located
throughout its distribution areas, 574 store delivery vehicles and 67 cars and
miscellaneous vehicles.
Competition
The snack foods business is highly competitive. In the area in which Golden
Flake operates, many companies engage in the production and distribution of food
products similar to those produced and sold by Golden Flake. Most, if not all,
of Golden Flake's products are in direct competition with similar products of
several local and regional companies and at least one national company, the
Frito Lay Division of Pepsi Co., Inc., which are larger in terms of capital and
sales volume than is Golden Flake. Golden Flake is unable to state its relative
position in the industry. Golden Flake's marketing thrust is aimed at selling
the highest quality product possible and giving good service to its customers,
while being competitive with its prices. Golden Flake constantly tests the
quality of its products for comparison with other similar products of
competitors and maintains tight quality controls over its products.
Employees
Golden Flake employs approximately 822 employees. Approximately 448 employees
are involved in route sales and sales supervision, approximately 260 are in
production and production supervision, and approximately 114 are management and
administrative personnel.
Golden Flake believes that the performance and loyalty of its employees are two
of the most important factors in the growth and profitability of its business.
Since labor costs represent a significant portion of Golden Flake's expenses,
employee productivity is important to profitability. Golden Flake considers its
relations with its employees to be excellent.
Golden Flake has a 401(k) Profit Sharing Plan and an Employee Stock Ownership
Plan designed to reward the long term employee for his/her loyalty. In addition,
the employees are provided medical insurance, life insurance, and an accident
and sickness salary continuance plan. Golden Flake believes that its employee
wage rates are competitive with those of its industry and with prevailing rates
in its area of operations.
Other Matters
The Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, and amendments to these reports, are available via
the Company's website. The website address is www.goldenflake.com. All required
reports are made available on the website as soon as reasonably practicable
after they are electronically filed with the Securities and Exchange Commission.
Environmental Matters
There have been no material effects of compliance with government provisions
regulating discharge of materials into the environment.
Significant Event
On May 2, 2008, the Company re-acquired the property located at 2930 Kraft Drive
in Nashville, TN for $1,715,985. In consideration, the Company cancelled the
remaining notes and interest receivable of $1,675,454 due from Tennessee Chips,
LLC and paid $40,531 in cash for closing costs.
4
Recent Developments
The Company continues to make changes in its distribution system to offset
escalating fuel and commodity costs. The Company is increasing its distribution
through independent operators and distributors and re-aligning Company owned
routes.
Executive Officers Of Registrant
And Its Subsidiary
Name and Age Position and Offices with Management
------------ ------------------------------------
John S. Stein, 71 Mr. Stein is Chairman of the Board. He was elected
Chairman on June 1, 1996. He served as Chief
Executive Officer from 1991 to April 4, 2001, and as
President from 1985 to 1998 and from June 1, 2000 to
April 4, 2001. Mr. Stein also served as President of
Golden Flake Snack Foods, Inc. from 1976 to 1991. Mr.
Stein retired as an employee with the Company on May
31, 2002. Mr. Stein is elected Chairman annually, and
his present term will expire on June 5, 2009.
Mark W. McCutcheon, 53 Mr. McCutcheon is Chief Executive Officer and President
of the Company and President of Golden Flake Snack
Foods, Inc., a wholly owned subsidiary of the
Company. He was elected President and Chief Executive
Officer of the Company on April 4, 2001 and President
of Golden Flake on November 1, 1998. He has been
employed by Golden Flake since 1980. Mr. McCutcheon
is elected Chief Executive Officer and President of
the Company and President of Golden Flake annually,
and his present terms will expire on June 5, 2009.
Patty Townsend, 50 Ms. Townsend is Chief Financial Officer, Vice President
and Secretary of Golden Enterprises, Inc. She was
elected Chief Financial Officer, Vice-President and
Secretary of the Company on March 1, 2004. She has
been employed with the Company since 1988. Ms.
Townsend is elected to her positions on an annual
basis, and her present term of office will expire on
June 5, 2009.
Randy Bates, 54 Mr. Bates is Executive, Vice-President of Sales,
Marketing and Transportation for Golden Flake. He has
held these positions since October 26, 1998. Mr.
Bates was Vice-President of Sales from October 1,
1994 to 1998. Mr. Bates has been employed by Golden
Flake since March 1979. Mr. Bates is elected to his
positions on an annual basis, and his present term of
office will expire on June 5, 2009.
David Jones, 56 Mr. Jones is Executive Vice-President of Operations,
Human Resources and Quality Control for Golden Flake.
He has held these positions since May 20, 2002. Mr.
Jones was Vice-President of Manufacturing from 1998
to 2002 and Vice-President of Operations from 2000 to
2002. Mr. Jones has been employed by Golden Flake
since 1984. Mr. Jones is elected to his positions on
an annual basis, and his present term of office will
expire on June 5, 2009.
5
ITEM 1A. - RISK FACTORS
Important factors that could cause the Company's actual business results,
performance or achievements to differ materially from any forward looking
statements or other projections contained in this Annual Form 10-K Report
include, but are not limited to the principal risk factors set forth below.
Additional risks and uncertainties, including risks not presently known to the
Company, or that it currently deems immaterial, may also impair the Company's
business and or operations. If the events, discussed in these risk factors
occur, the Company's business, financial condition, results of operations or
cash flow could be adversely affected in a material way and the market value of
the Company's common stock could decline.
Competition
Price competition and consolidation within the Snack Food industry could
adversely impact the Company's performance. The Company's business requires
significant marketing and sales effort to compete with larger companies. These
larger competitors sell a significant portion of their products through
discounting and other price cutting techniques. This intense competition
increases the possibility that the Company could lose one or more customers,
lose market share and/or be forced to increase discounts and reduce pricing, any
of which could have an adverse impact on the Company's business, financial
condition, results of operation and/or cash flow.
Commodity and Energy Cost Fluctuations
Significant commodity price fluctuations for certain commodities purchased by
the Company, particularly potatoes, could have a material impact on results of
operations. In an attempt to manage commodity price risk, the Company, in the
normal course of business, enters into contracts to purchase pre-established
quantities of various types of raw materials, at contracted prices based on
expected short term needs. The Company can also be adversely impacted by changes
in the cost of natural gas and other fuel costs. Long term increases in the cost
of natural gas and fuel costs could adversely impact the Company's cost of sales
and selling, marketing and delivery expenses.
There are other risks and factors not described above that could also cause
actual results to differ materially from those in any forward looking statement
made by the Company.
ITEM 1B. - UNRESOLVED STAFF COMMENTS
Not Applicable.
6
ITEM 2. - PROPERTIES
The headquarters of the Company are located at One Golden Flake Drive,
Birmingham, Alabama 35205. The properties of the subsidiary are described below.
Golden Flake
Manufacturing Plants and Office Headquarters
The main plant and office headquarters of Golden Flake are located at One Golden
Flake Drive, Birmingham, Alabama, and are situated on approximately 40 acres of
land which is serviced by a railroad spur track. This facility consists of three
buildings which have a total of approximately 300,000 square feet of floor area.
The plant manufactures a full line of Golden Flake products. Golden Flake
maintains a garage and vehicle maintenance service center from which it
services, maintains, repairs and rebuilds its fleet and delivery trucks. Golden
Flake has adequate employee and fleet parking.
Golden Flake also has a manufacturing plant in Ocala, Florida. This plant was
placed in service in November 1984. The plant consists of approximately 100,000
square feet, with allowance for future expansion, and is located on a 28-acre
site on Silver Springs Boulevard. The Company manufactures tortilla chips and
potato chips from this facility.
The manufacturing plants, office headquarters and additional lands are owned by
Golden Flake free and clear of any debts.
Distribution Warehouses
Golden Flake owns branch warehouses in Birmingham, Montgomery, Midfield,
Demopolis, Fort Payne, Muscle Shoals, Huntsville, Phenix City, Tuscaloosa,
Mobile, Dothan and Oxford, Alabama; Gulfport and Jackson, Mississippi; Knoxville
and Memphis, Tennessee; Decatur, Marietta and Macon, Georgia; Jacksonville,
Panama City, Tallahassee and Pensacola, Florida and New Orleans, Louisiana. The
warehouses vary in size from 2,400 to 8,000 square feet. All distribution
warehouses are owned free and clear of any debts.
Vehicles
Golden Flake owns a fleet of 799 vehicles which includes 574 route trucks, 34
tractors, 124 trailers and 67 cars and miscellaneous vehicles. Golden Flake also
owns a 1987 Cessna Citation II aircraft. There are no liens or encumbrances on
Golden Flake's vehicle fleet or aircraft.
ITEM 3. - LEGAL PROCEEDINGS
There are no material pending legal proceedings against the Company or its
subsidiary other than ordinary routine litigation incidental to the business of
the Company and its subsidiary.
7
ITEM 4. - SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Golden Enterprises, Inc. and Subsidiary
Market and Dividend Information
The Company's common stock is traded in the over-the-counter market under the
"NASDAQ" symbol, GLDC, and transactions are reported through the National
Association of Securities Dealers Automated Quotation (NASDAQ) National Market
System. The following tabulation sets forth the high and low sale prices for the
common stock during each quarter of the fiscal years ended May 30, 2008 and June
1, 2007 and the amount of dividends paid per share in each quarter. The Company
currently expects that comparable regular cash dividends will be paid in the
future.
Market Price
High Low Dividend
Quarter Price Price Paid
Year Ended 2008 Per share
--------------------------------------------------- --------- --------- ---------
First quarter (13 weeks ended August 31, 2007) $3.25 $2.83 $.0313
Second quarter (13 weeks ended November 30, 2007) 3.49 2.65 .0313
Third quarter (13 weeks ended February 29, 2008) 3.23 2.45 .0313
Fourth quarter (13 weeks ended May 30, 2008) 2.95 2.21 .0313
High Low Dividend
Quarter Price Price Paid
Year Ended 2007 Per share
--------------------------------------------------- --------- --------- ---------
First quarter (13 weeks ended September 1, 2006) $3.25 $2.61 $.0313
Second quarter (13 weeks ended December 1, 2006) 3.65 2.95 .0313
Third quarter (13 weeks ended March 2, 2007) 3.25 2.77 .0313
Fourth quarter (13 weeks ended June 1, 2007) 3.21 2.81 .0313
As of August 1, 2008, there were approximately 1,130 shareholders of record.
Shareholder Return Performance Graph
The following graph illustrates, for the period commencing May 31, 2003, and
ending May 30, 2008, the yearly percentage change in the cumulative total
shareholder return on the Company's common stock as compared with the cumulative
total returns of other companies included within the NASDAQ Stock Market (U.S.
Companies) Index and the Company's Peer Group.
The Company has selected a Peer Group consisting of the four publicly-traded
companies named below which are in the snack food industry. Most of the
Company's direct competitors and peers are privately-held companies or
subsidiaries or divisions of larger publicly-held companies so that the
available members of the Peer Group are limited.
8
[PLEASE SEE ATTACHED PDF FOR GRAPH]
This graph assumes that $100 was invested in the Company's common stock on May
31, 2003, in the NASDAQ Stock Market (U.S. Companies) Index and in the Peer
Group, which consisted of Lance, Inc., J & J Snack Foods Corp., Tasty Baking Co.
and Ralcorp Holdings, Inc. and that dividends were re-invested.
Securities Authorized For Issuance Under Equity Compensation Plans
The following table provides Equity Compensation Plan information under which
equity securities of the Registrant are authorized for issuance:
9
EQUITY COMPENSATION PLAN INFORMATION
--------------------------------------------------------------------------------------------------------
Number of securities
Plan category Number of securities Weighted-average remaining available
to be issued upon exercise price of for future issuance
exercise of out- outstanding options, under equity compensation
standing options, warrants and rights plans (excluding
warrants and rights securities reflected
in column (a))
(a) (b) (c)
--------------------------------------------------------------------------------------------------------
Equity compensation plans 369,000 $3.776 130,000
approved by security holders
--------------------------------------------------------------------------------------------------------
Equity compensation plans 0 0 0
not approved by security
holders
--------------------------------------------------------------------------------------------------------
Total 369,000 $3.776 130,000
--------------------------------------------------------------------------------------------------------
Issuer Purchases Of Equity Securities
The Company purchased 46,423 shares of its common stock during the fiscal year
ended May 30, 2008.
ITEM 6. - SELECTED FINANCIAL DATA
Not required due to Smaller Reporting Company status.
10
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion provides an assessment of the Company's financial
condition, results of operations, liquidity and capital resources and should be
read in conjunction with the accompanying consolidated financial statements and
notes.
Overview
The Company manufactures and distributes a full line of snack items, such as
potato chips, tortilla chips, corn chips, fried pork skins, baked and fried
cheese curls, onion rings and puff corn. The products are all packaged in
flexible bags or other suitable wrapping material. The Company also sells a line
of cakes and cookie items, canned dips, pretzels, popcorn, peanut butter
crackers, cheese crackers, dried meat products and nuts packaged by other
manufacturers using the Golden Flake label.
No single product or product line accounts for more than 50% of the Company's
sales, which affords some protection against loss of volume due to a crop
failure of major agricultural raw materials. Raw materials used in manufacturing
and processing the Company's snack food products are purchased on the open
market and under contract through brokers and directly from growers. A large
part of the raw materials used by the Company consists of farm commodities which
are subject to precipitous changes in supply and price. Weather varies from
season to season and directly affects both the quality and quantity of supply
available. The Company has no control of the agricultural aspects and its
profits are affected accordingly.
The Company sells its products through its own sales organization and
independent distributors to commercial establishments that sell food products
primarily in the Southeastern United States. The products are distributed by
route representatives and independent distributors who are supplied with selling
inventory by the Company's trucking fleet. All of the route representatives are
employees of the Company and use the Company's direct-store delivery system.
Critical Accounting Policies And Estimates
The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, the
preparation of which in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that in certain circumstances affect amounts reported in the
consolidated financial statements. In preparing these financial statements,
management has made its best estimates and judgments of certain amounts included
in the financial statements, giving due considerations to materiality. The
Company does not believe there is a great likelihood that materially different
amounts would be reported under different conditions or using different
assumptions related to the accounting policies described below. However,
application of these accounting policies involves the exercise of judgment and
use of assumptions as to future uncertainties and, as a result, actual results
could differ materially from these estimates.
11
Revenue Recognition
The Company recognizes sales and related costs upon delivery or shipment of
products to its customers. Sales are reduced by returns and allowances to
customers.
Accounts Receivable
The Company records accounts receivable at the time revenue is recognized.
Amounts for bad debt expense are recorded in selling, general and administrative
expenses on the Consolidated Statements of Operations. The amount of the
allowance for doubtful accounts is based on management's estimate of the
accounts receivable amount that is uncollectible. The Company records a general
reserve based on analysis of historical data. In addition, the Company records
specific reserves for receivable balances that are considered high-risk due to
known facts regarding the customer. The allowance for bad debts is reviewed
quarterly, and it is determined whether the amount should be changed. Failure of
a major customer to pay the Company amounts owed could have a material impact on
the financial statements of the Company. At May 30, 2008 and June 1, 2007, the
Company had accounts receivables in the amount of $7.9 million and $8.5 million,
net of an allowance for doubtful accounts of $0.1 million and $0.1 million,
respectively. The Company purchased credit insurance during the year which
reduced the allowance for doubtful accounts to $70,000. Without credit
insurance, the allowance for doubtful accounts would have been $88,835 compared
to $112,915 last year.
The following table summarizes the Company's customer accounts receivable
profile as of May 30, 2008:
Amount Range No. of Customers
------------ ----------------
Less than $1,000.00 1,118
$1,001 .00-$10,000.00 558
$10,001 .00-$100,000.00 113
$100,001 .00-$500,000.00 8
$500,001 .00-$1 ,000,000.00 1
$1,000,001 .00-$2,500,000.00 0
-
Total All Accounts 1,798
=====
Inventories
Inventories are stated at the lower of cost or market. Cost is computed on the
first-in, first out method.
Accrued Expenses
Management estimates certain expenses in an effort to record those expenses in
the period incurred. The Company's significant estimates relate to
insurance-related expenses. The Company is self-insured for certain casualty
losses relating to automobile liability, general liability, workers'
compensation, property losses and medical claims. The Company also has stop loss
coverage to limit the exposure arising from these claims. Automobile liability,
general liability, workers' compensation, and property losses costs are covered
by letters of credit with the company's claim administrators.
The Company uses a third-party actuary to estimate the casualty insurance
obligations on an annual basis. In determining the ultimate loss and reserve
requirements, the third-party uses various actuarial assumptions including
compensation trends, health care cost trends and discount rates. The third-party
12
actuary also uses historical information for claims frequency and severity in
order to establish loss development factors.
The actuarial calculation includes a margin of error to account for changes in
inflation; health care costs, compensation and litigation cost trends as well as
estimated future incurred claims. The Company utilized a 75% confidence level
for estimating the ultimate outstanding casualty liability. Approximately 75% of
each claim should be equal to or less than the ultimate liability recorded based
on the historical trends experienced by the Company. If the Company chose a 50%
factor, the liability would have been reduced by approximate $0.3 million. If
the Company chose a 90% factor, the liability would have increased by
approximately $0.3 million.
The Company used a 5% investment rate to discount the estimated claims based on
the historical payout pattern during 2008 and 2007. A one percentage point
change in the discount rate would have impacted the liability by approximately
$49,800.
Actual ultimate losses could vary from those estimated by the third-party
actuary. The Company believes the reserves established are reasonable estimates
of the ultimate liability based on historical trends.
As of May 30, 2008, the Company's casualty reserve was $1.9 million and at June
1, 2007 the casualty reserve was $1.9 million.
Employee medical insurance accruals are recorded based on medical claims
processed as well as historical medical claims experienced for claims incurred
but not yet reported. Differences in estimates and assumptions could result in
an accrual requirement materially different from the calculated accrual.
Other Matters
Transactions with related parties, included in Note 12 of the Notes to
Consolidated Financial Statements, are conducted on an arm's-length basis in the
ordinary course of business.
Liquidity And Capital Resources
Working capital was $3.9 and $4.3 million at May 30, 2008 and June 1, 2007,
respectively. Net cash provided by operations amounted to $3.4 and $4.6 million
in fiscal years May 30, 2008 and June 1, 2007, respectively. During 2008, the
principal source of liquidity for the Company's operating needs was provided
from operating activities, credit facilities and cash on hand.
Additions to property, plant and equipment are expected to be about $1.8 million
in 2009.
Cash dividends of $1.5 million were paid in 2008 and 2007, respectively.
Cash was used to purchase 46,423 shares of treasury stock in fiscal 2008 and no
cash was used to purchase treasury shares in 2007.
During fiscal 2008, the Company's debt proceeds net of re-paid debt was $0.6
million.
Other Commitments
The Company had letters of credit in the amount of $2.3 million outstanding at
May 30, 2008 to support the Company's commercial self-insurance program.
The Company has a line-of-credit agreement with a local bank that permits
borrowing up to $2 million. The line-of-credit is subject to the Company's
continued credit worthiness and compliance with the terms and conditions of the
advance application. The Company's line of credit debt at May 30, 2008 was $1.5
million with an interest rate of 7.75%.
13
The Company's current ratio was 1.35 to 1.00 and 1.37 to 1.00 at May 30, 2008
and June 1, 2007, respectively.
Available cash, cash from operations and available credit under the line of
credit are expected to be sufficient to meet anticipated cash expenditures and
normal operating requirements for the foreseeable future.
Operating Results
Net sales increased by 2.3% in fiscal year 2008 and 4.0% in fiscal year 2007.
Cost of sales as a percentage of net sales amounted to 5 1.8% and 52.3% in 2008
and 2007, respectively.
Selling, general and administrative expenses were 46.8% of net sales in 2008 and
46.5% of net sales in 2007.
The Company's effective tax rates for 2008 and 2007 were 40.5% and 39.8%,
respectively. Note 7 to the Consolidated Financial Statements provides
additional information about the provision for income taxes.
The following tables compare manufactured products to resale products for the
fiscal years ended May 30, 2008 and June 1, 2007:
Manufactured Products-Resale Products
2008 2007
---------------------- ----------------------
Sales % %
Manufactured Products $ 91,864,474 81.0% $ 88,827,471 80.1%
Resale Products 21,515,358 19.0% 21,999,454 19.9%
------------- ----- ------------- -----
Total $ 113,379,832 100.0% $ 110,826,925 100.0%
Gross Margin % %
Manufactured Products $ 47,571,929 51.8% $ 45,757,596 51.5%
Resale Products 7,042,636 32.7% 7,091,931 32.2%
------------- ----- ------------- -----
Total $ 54,614,565 48.2% $ 52,849,527 47.7%
Market Risk
The principal market risks (i.e. the risk of loss arising from adverse changes
in market rates and prices) to which the Company is exposed are interest rates
on its cash equivalents and bank loans, fuel costs and commodity prices
affecting the cost of its raw materials.
The Company is subject to market risk with respect to commodities because its
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which it operates. The Company purchases its raw
materials on the open market, under contract through brokers and directly from
growers. Futures contracts have been used occasionally to hedge immaterial
amounts of commodity purchases, but none are presently being used.
14
Inflation
Certain costs and expenses of the Company are affected by inflation. While, the
Company's prices for its products over the past several years have remained
relatively flat, the Company has been able to increase prices during the fiscal
year. The Company will contend with the effect of further inflation through
efficient purchasing, improved manufacturing methods, pricing, and by monitoring
and controlling expenses.
Higher fuel and commodity costs continue to be a challenge.
Environmental Matters
There have been no material effects of compliance with government provisions
regulating discharge of materials into the environment.
Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those forward-looking statements. Factors that may cause
actual results to differ materially include price competition, industry
consolidation, raw material costs, fuel costs and effectiveness of sales and
marketing activities, as described in the Company's filings with Securities and
Exchange Commission. You are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date which they are made.
Recent Developments
The Company, in compliance with Section 404 of the Sarbanes-Oxley Act of 2002
has completed the management assessment of its internal controls. See Item 9A
for further details.
Recently Issued Accounting Pronouncements
See Note 1 to the consolidated financial statements included in Item 8 for a
summary of recently issued accounting pronouncements.
ITEM 7 A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable as Company is a Smaller Reporting Company.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and its subsidiary for
the year ended May 30, 2008, consisting of the following, are contained herein:
Consolidated Balance Sheets - As of May 30, 2008 and June 1, 2007
Consolidated Statements of Operations - Fiscal years ended 2008 and 2007
Consolidated Statements of Changes in
Stockholders' Equity - Fiscal years ended 2008 and 2007
Consolidated Statements of Cash Flows - Fiscal years ended 2008 and 2007
Notes to Consolidated Financial Statements - Fiscal years ended 2008 and 2007
Quarterly Results of Operations - Fiscal years ended 2008 and 2007
15
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board
of Directors of Golden
Enterprises, Inc.
We have audited the accompanying consolidated balance sheets of Golden
Enterprises, Inc. and subsidiary as of May 30, 2008 and June 1, 2007, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the years then ended. Our audits also included the financial
statement schedule listed at Item 15(a) Schedule II. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Golden
Enterprises, Inc. and subsidiary as of May 30, 2008 and June 1, 2007, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We were not engaged to examine management's assertion about the effectiveness of
Golden Enterprises, Inc. and subsidiary's internal control over financial
reporting as of May 30, 2008 included in the Company's Item 9A "Controls and
Procedures" in the Annual Report on Form 10-K and, accordingly, we do not
express an opinion thereon.
DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
Birmingham, Alabama
July 30, 2008
16
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17
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of May 30, 2008 and June 1, 2007
ASSETS
2008 2007
---- ----
CURRENT ASSETS
Cash and cash equivalents $ 442,756 $ 706,852
Receivables:
Trade accounts 8,009,482 8,559,984
Other 1,065 11,358
-------------- --------------
8,010,547 8,571,342
Less: Allowance for doubtful accounts 70,000 112,915
-------------- --------------
7,940,547 8,458,427
Notes receivable, current - 58,126
-------------- --------------
7,940,547 8,516,553
-------------- --------------
Inventories:
Raw materials 1,467,400 1,340,389
Finished goods 2,870,698 3,035,285
-------------- --------------
4,338,098 4,375,674
-------------- --------------
Prepaid expenses 1,642,959 1,622,900
Deferred income taxes 649,420 583,179
-------------- --------------
Total current assets 15,013,780 15,805,158
-------------- --------------
PROPERTY, PLANT AND EQUIPMENT
Land 3,048,284 2,962,283
Buildings 18,452,583 16,641,960
Machinery and equipment 39,246,446 37,563,985
Transportation equipment 12,566,732 15,112,873
-------------- --------------
73,314,045 72,281,101
Less: Accumulated depreciation 58,684,709 59,324,468
-------------- --------------
14,629,336 12,956,633
-------------- --------------
OTHER ASSETS
Notes receivable, long-term - 1,658,630
Cash surrender value of life insurance 1,805,982 2,253,412
Other 786,947 651,595
-------------- --------------
Total other assets 2,592,929 4,563,637
-------------- --------------
TOTAL $ 32,236,045 $ 33,325,428
============== ==============
See Accompanying Notes to Consolidated Financial Statements
18
LIABILITIES AND STOCKHOLDERS' EQUITY
2008 2007
---- ----
CURRENT LIABILITIES
Checks outstanding in excess of bank balances $ 817,370 $ 1,385,663
Accounts payable 3,567,939 3,760,499
Accrued income taxes 160,619 318,198
Current portion of long-term debt - 270,625
Line of credit outstanding 1,484,368 622,950
Other accrued expenses 4,989,684 5,060,758
Salary continuation plan 131,993 121,877
-------------- --------------
Total current liabilities 11,151,973 11,540,570
-------------- --------------
LONG-TERM LIABILITIES
Salary continuation plan 1,499,421 1,582,437
Deferred income taxes 620,077 752,298
-------------- --------------
Total long-term liabilities 2,119,498 2,334,735
-------------- --------------
STOCKHOLDERS' EQUITY
Common stock - $.66 2/3 par value:
Authorized 35,000,000 shares;
issued 13,828,793 shares 9,219,195 9,219,195
Additional paid-in capital 6,497,954 6,497,954
Retained earnings 14,060,942 14,410,568
Treasury shares - at cost (2,039,886 shares
in 2008 and 1,993,463 in 2007) (10,813,517) (10,677,594)
-------------- --------------
Total stockholders' equity 18,964,574 19,450,123
-------------- --------------
TOTAL $ 32,236,045 $ 33,325,428
============== ==============
19
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
2008 2007
---- ----
Net sales $ 113,379,832 $ 110,826,925
Cost of sales 58,765,267 57,977,398
-------------- --------------
Gross margin 54,614,565 52,849,527
Selling, general and administrative
expenses 53,056,631 51,481,437
-------------- --------------
Operating income 1,557,934 1,368,090
-------------- --------------
Other income (expenses):
Gain on sale of assets 133,654 488,174
Interest expense (223,683) (273,209)
Other income 426,895 432,084
-------------- --------------
Total other income (expenses) 336,866 647,049
-------------- --------------
Income before income tax 1,894,800 2,015,139
-------------- --------------
Provision for income taxes 767,232 801,905
-------------- --------------
Net income $ 1,127,568 $ 1,213,234
============== ==============
PER SHARE OF COMMON STOCK
Basic earnings $ 0.10 $ 0.10
Diluted earnings $ 0.10 $ 0.10
See Accompanying Notes to Consolidated Financial Statements
20
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
Additional Total
Common Paid-in Retained Treasury Stockholders'
Stock Capital Earnings Shares Equity
----- ------- -------- ------ ------
Balance - June 3, 2006 $ 9,219,195 $ 6,497,954 $ 14,676,759 $ (10,677,594) $ 19,716,314
Net income - 2007 - - 1,213,234 - 1,213,234
Cash dividends paid - - (1,479,425) - (1,479,425)
------------- ------------- ------------- ------------- -------------
Balance - June 1, 2007 9,219,195 6,497,954 14,410,568 (10,677,594) 19,450,123
Net income - 2008 - - 1,127,568 - 1,127,568
Cash dividends paid - - (1,477,194) - (1,477,194)
Treasury shares purchased (135,923) (135,923)
------------- ------------- ------------- ------------- -------------
Balance - May 30, 2008 $ 9,219,195 $ 6,497,954 $ 14,060,942 $ (10,813,517) $ 18,964,574
============= ============= ============= ============= =============
See Accompanying Notes to Consolidated Financial Statements
21
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
2008 2007
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 113,897,712 $ 110,731,854
Interest income 134,799 144,687
Rental income 39,411 31,974
Other operating cash payments/receipts 252,685 255,423
Cash paid to suppliers and employees for
cost of goods sold (57,303,625) (54,923,539)
Cash paid for suppliers and employees for
selling, general and administrative (52,238,187) (50,336,873)
Income taxes (1,123,273) (1,007,958)
Interest expense (223,683) (273,209)
-------------- --------------
Net cash provided by operating activities 3,435,839 4,622,359
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (2,303,219) (1,731,230)
Proceeds from sale of property, plant and
equipment 140,795 577,355
Collection of notes receivable 53,107 53,672
-------------- --------------
Net cash used in investing activities (2,109,317) (1,100,203)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt proceeds 21,356,450 23,163,475
Debt repayments (20,765,658) (23,587,618)
Decrease in checks outstanding in excess of
bank balances (568,293) (1,233,363)
Purchases of treasury shares (135,923) -
Cash dividends paid (1,477,194) (1,479,425)
-------------- --------------
Net cash used in financing activities (1,590,618) (3,136,931)
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (264,096) 385,225
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 706,852 321,627
-------------- --------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 442,756 $ 706,852
============== ==============
See Accompanying Notes to Consolidated Financial Statements
22
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
2008 2007
---- ----
Net income $ 1,127,568 $ 1,213,234
Adjustment to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 2,287,025 2,268,468
Deferred income taxes (198,462) (14,933)
Gain on sale of property and equipment (133,654) (488,174)
Change in receivables - net 517,880 (95,071)
Change in inventories 37,576 (99,603)
Change in prepaid expenses (20,059) (14,441)
Change in cash surrender value of insurance 447,430 178,214
Change in other assets (135,352) 51,892
Change in accounts payable (192,560) 1,550,473
Change in accrued expenses (71,074) 333,005
Change in salary continuation plan (72,900) (69,585)
Change in accrued income taxes (157,579) (191,120)
-------------- --------------
Net cash provided by operating activities $ 3,435,839 $ 4,622,359
============== ==============
Non-cash portion of property plant and
equipment transactions $ 1,675,454 $ -
============== ==============
(Notes and interest receivable from
Tennessee Chips
As part of Nashville plant re-purchase
(See Note 2))
See Accompanying Notes to Consolidated Financial Statements
23
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
The accounting and reporting policies of Golden Enterprises, Inc. and subsidiary
("Company") conform to accounting principles generally accepted in the United
States of America and to general practices within the snack foods industry. The
following is a description of the more significant accounting policies:
Nature of the Business
----------------------
The Company manufactures and distributes a full line of snack items that are
sold through its own sales organization and independent distributors to
commercial establishments that sell food products primarily in the Southeastern
United States.
Consolidation
-------------
The consolidated financial statements include the accounts of Golden
Enterprises, Inc. and its wholly-owned subsidiary, Golden Flake Snack Foods,
Inc., (the "Company"). All significant inter-company transactions and balances
have been eliminated.
Revenue Recognition
-------------------
The Company recognizes sales and related costs upon delivery or shipment of
products to its customers. Sales are reduced by returns and allowances to
customers.
Accounts Receivable
-------------------
The Company records accounts receivable at the time revenue is recognized.
Amounts for bad debt expense are recorded in selling, general and administrative
expenses on the consolidated statements of income. The determination of the
allowance for doubtful accounts is based on management's estimate of
uncollectible accounts receivables. The Company records a general reserve based
on analysis of historical data. In addition, management records specific
reserves for receivable balances that are considered at higher risk due to known
facts regarding the customer.
Fiscal Year
-----------
The Company ends its fiscal year on the Friday closest to the last day in May.
The years ended May 30, 2008 and June 1, 2007 included 52 weeks.
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts of cash and cash equivalents, receivables, accounts payable
and short-term debt approximate fair value.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
Inventories
-----------
Inventories are stated at the lower of cost or market. Cost is computed on the
first-in, first-out method.
Property, Plant and Equipment
-----------------------------
Property, plant and equipment are stated at cost. For financial reporting
purposes, depreciation and amortization have been provided principally on the
straight-line method over the estimated useful lives of the respective assets.
Accelerated methods are used for tax purposes.
24
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
Expenditures for maintenance and repairs are charged to operations as incurred;
expenditures for renewals and betterments are capitalized and written off by
depreciation and amortization charges. Property retired or sold is removed from
the asset and related accumulated depreciation accounts and any profit or loss
resulting therefrom is reflected in the statements of operations.
Self-Insurance
--------------
The Company is self-insured for certain casualty losses relating to automobile
liability, general liability, workers' compensation, property losses and medical
claims. The Company also has stop loss coverage to limit the exposure arising
from these claims. Automobile liability, general liability, workers'
compensation, and property losses costs are covered by letters of credit with
the company's claim administrators.
The Company uses a third-party actuary to estimate the casualty insurance
obligations on an annual basis. In determining the ultimate loss and reserve
requirements, the third-party uses various actuarial assumptions including
compensation trends, health care cost trends and discount rates. The third-party
actuary also uses historical information for claims frequency and severity in
order to establish loss development factors. The actuarial calculation includes
a margin of error to account for changes in inflation, health care costs,
compensation and litigation cost trends as well as estimated future incurred
claims.
Advertising
-----------
The Company expenses advertising costs as incurred. These costs are included in
selling, general and administrative expenses in the Consolidated Statement of
Operations. Advertising expense amounted to $5.4 million and $6.0 million for
the fiscal years 2008 and 2007, respectively.
Income Taxes
------------
Deferred income taxes are provided using the liability method to measure tax
consequences resulting from differences between financial accounting standards
and applicable income tax laws. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
Segment Information
-------------------
The Company does not identify separate operating segments for management
reporting purposes. The results of operations are the basis on which management
evaluates operations and makes business decisions. The Company's sales are
generated primarily within the Southeastern United States.
Stock Options
-------------
The Company has granted stock options to management in previous years, though
none were granted during fiscal years ended May 30, 2008 or June 1, 2007. See
Note 9 for further discussion of our stock option awards.
25
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 30, 2008 and June 1, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
Shipping and Handling Costs
---------------------------
Shipping and handling costs, which include salaries and vehicle operations
expenses relating to the delivery of products to customers by the Company are
classified as Selling, General and Administrative (SG&A) expenses. Shipping and
handling costs classified as SG&A amounted to $3.4 million and $3.3 million for
the fiscal years 2008 and 2007, respectively.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements
-----------------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS
No. 157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 157
is not expected to have a material impact on our financial condition, results of
operations or cash flows.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities: Including an amendment of FASB
Statement No. 115." SFAS No. 159 permits entities to measure many financial
instruments and certain other items at fair value with changes in fair value
reported in earnings. The FASB issued SFAS No. 159 to mitigate earnings
volatility that arises when financial assets and liabilities are measured
differently, and to expand the use of fair value measurement for financial
instruments. SFAS No. 159 is effective for our fiscal year beginning May 31,
2008. The adoption of SFAS No. 159 is not expected to have a material impact on
our financial condition, results of operations or cash flows.
26
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 2 - NOTES RECEIVABLE
-------------------------
Notes receivable as of May 30, 2008 and June 1, 2007 consist of the following:
2008 2007
---- ----
8% note, due in 120 monthly installments of $3,640
through November 1, 2010, collateralized by property $ - $ 132,955
8% note, due in 360 monthly installments of $12,474
through November 1, 2030, collateralized by property - 1,583,801
----------- -----------
- 1,716,756
Less current portion - 58,126
----------- -----------
$ - $ 1,658,630
=========== ===========
During the year, the Company received cash payments totaling $53,107. On May 2,
2008, the Company re-acquired, the property located at 2930 Kraft Drive in
Nashville, TN for $1,715,985. In consideration, the Company cancelled the
remaining notes and interest receivable of $1,675,454 and paid $40,531 in cash
for closing costs.
NOTE 3 - PREPAID EXPENSES
-------------------------
At May 30, 2008 and June 1, 2007, prepaid expenses consist of the following:
2008 2007
---- ----
Prepaid slotting fees $ 202,391 $ 220,437
Other prepaid expenses 1,440,568 1,402,463
----------- -----------
$ 1,642,959 $ 1,622,900
=========== ===========
NOTE 4 - OTHER ACCRUED EXPENSES
-------------------------------
At May 30, 2008 and June 1, 2007, other accrued expenses consist of the
following:
2008 2007
---- ----
Accrued payroll $ 462,581 $ 457,398
Self insurance liability 1,877,100 1,865,200
Accrued vacation 1,414,678 1,230,385
Other accrued expenses 1,235,325 1,507,775
----------- -----------
$ 4,989,684 $ 5,060,758
=========== ===========
27
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 5 - LINE OF CREDIT
-----------------------
The Company has a line of credit agreement with a local bank which permits
borrowing up to $2 million. The balance on the line of credit at May 30, 2008
was $1.5 million a rate of 7.75%. The line of credit is subject to the Company's
continued credit worthiness and compliance with the terms and conditions of the
advance application.
NOTE 6 - LONG-TERM LIABILITIES
------------------------------
At May 30, 2008 and June 1, 2007, long-term debt consists of the following:
Note payable - bank - payable in equal monthly 2008 2007
installments of $65,108 including interest at the ---- ----
LIBOR index rate plus 1.75% (7.07% at June 1, 2007)
through November 30, 2007, secured by equipment $ - $ 270,625
Less: current portion - 270,625
----------- -----------
$ - $ -
=========== ===========
Other long-term obligations at May 30, 2008 and June 1, 2007 consist of the
following:
2008 2007
---- ----
Salary continuation plan $ 1,631,414 $ 1,704,314
Less: current portion (131,993) (121,877)
----------- -----------
$ 1,499,421 $ 1,582,437
=========== ===========
The Company is accruing the present values of the estimated future retirement
payments over the period from the date of the agreements to the retirement
dates, for certain key executives. The Company recognized compensation expense
of approximately $48,976 and $42,951 for fiscal 2008 and 2007, respectively.
28
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 7 - INCOME TAXES
---------------------
At May 30, 2008 and June 1, 2007 the provision for income taxes consists of the
following:
2008 2007
---- ----
Current:
Federal $ 858,851 $ 727,167
State 106,843 89,671
----------- -----------
965,694 816,838
Deferred:
Federal (176,597) (13,288)
State (21,865) (1,645)
----------- -----------
(198,462) (14,933)
----------- -----------
Total $ 767,232 $ 801,905
=========== ===========
The effective tax rate for continuing operations differs from the expected tax
using statutory rates. A reconciliation between the expected tax and actual tax
follows:
2008 2007
---- ----
Tax on income at statutory rates $ 644,232 $ 685,147
(Decrease) increase resulting from:
State income taxes, less Federal income tax effect 70,516 59,183
Tax exempt interest (2,533) (1,818)
Change in valuation allowance (137,710) (49,249)
Other - net 192,727 108,642
----------- -----------
Total $ 767,232 $ 801,905
=========== ===========
29
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 7 - INCOME TAXES- CONTINUED
--------------------------------
The tax effects of temporary differences that result in deferred tax assets and
liabilities are as follows:
2008 2007
---- ----
Deferred tax assets
Salary continuation plan $ 598,239 $ 624,972
Accrued vacation 518,762 451,182
Contribution carry forward 285,826 346,179
Inventory capitalization 30,971 25,167
Allowance for doubtful accounts 25,669 41,406
Other accrued expenses 148,235 146,258
----------- -----------
Gross deferred tax assets before valuation allowance 1,607,702 1,635,164
Less valuation allowance (81,640) (219,350)
----------- -----------
Total deferred tax assets 1,526,062 1,415,814
----------- -----------
Deferred tax liabilities
Property and equipment 1,422,502 1,504,099
Prepaid expenses 74,217 80,834
----------- -----------
Total deferred tax liabilities 1,496,719 1,584,933
----------- -----------
Net deferred tax liability $ 29,343 $ (169,119)
=========== ===========
NOTE 8 - EMPLOYEE BENEFIT PLANS
-------------------------------
The Company has trusteed "Qualified Profit-Sharing Plans" that were amended and
restated effective June 1, 1996 to add a 401 (k) salary reduction provision.
Under this provision, employees can contribute up to fifty percent of their
compensation to the plan on a pretax basis subject to regulatory limits; and the
Company, at its discretion, can match up to 4% of the participants'
compensation. The annual contributions to the plans are determined by the Board
of Directors. Total plan contributions for the years ended May 30, 2008 and June
1, 2007 were $131,319 and $121,583, respectively.
The Company has an Employee Stock Ownership Plan that covers all full-time
employees. The annual contributions to the plan are amounts determined by the
Board of Directors of the Company. Annual contributions are made in cash or
common stock of the Company. Contributions to the Employee Stock Ownership Plan
for the years ended May 30, 2008 and June 1, 2007 were $0 and $0, respectively.
Each participant's account is credited with an allocation of shares acquired
with the Company's annual contributions, dividends received on Employee Stock
Ownership Plan shares and forfeitures of terminated participants' non-vested
accounts.
30
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30 2008 and June 1, 2007
NOTE 8 - EMPLOYEE BENEFIT PLANS - CONTINUED
-------------------------------------------
The Company has a salary continuation plan with certain of its key officers
whereby monthly benefits will be paid for a period of fifteen years following
retirement. The Company is accruing the present value of all retirement benefits
until the key officers reach normal retirement age at which time the principal
portion of the retirement benefits paid are applied to the liability previously
accrued. The change in the liability for the Salary Continuation Plan is as
follows:
2008 2007
---- ----
Accrued salary continuation plan - beginning of year $ 1,704,314 $ 1,773,899
Benefits accrued 48,977 42,951
Benefits paid (121,877) (112,536)
----------- -----------
Accrued salary continuation plan - end of year $ 1,631,414 $ 1,704,314
=========== ===========
NOTE 9 - LONG-TERM INCENTIVE PLANS
----------------------------------
The Company has a long-term incentive plan currently in effect under which
future stock option grants may be issued. This Plan (the 1996 Plan) is
administered by the Stock Option Committee of the Board of Directors, which has
sole discretion, subject to the terms of the Plan, to determine those employees,
including executive officers, eligible to receive awards and the amount and type
of such awards. The Stock Option Committee also has the authority to interpret
the Plan, formulate the terms and conditions of award agreements and make all
other determinations required in the administration thereof. All options
outstanding at the end of 2008 and 2007 are exercisable.
The 1996 Plan provides for the granting of Incentive Stock Options as defined
under the Internal Revenue Code. Under the Plan, grants of incentive stock
options may be made to selected officers and employees, with a term not
exceeding ten years from the issue date and at a price not less than the fair
market value of the Company's stock at the date of grant.
31
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 9 - LONG-TERM INCENTIVE PLANS - CONTINUED
----------------------------------------------
Five hundred thousand shares of the Company's stock have been reserved for
issuance under this Plan. The following is a summary of transactions:
2008 2007
---- ----
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
Outstanding - beginning of year 369,000 $ 3.78 369,000 $ 3.78
Granted - - - -
Exercised - - - -
Forfeited - - - -
Cancelled - - - -
--------- --------- --------- ---------
Outstanding - end of year 369,000 $ 3.78 369,000 $ 3.78
========= ========= ========= =========
The Company adopted SFAS 123R as of June 3, 2006. SFAS 123R establishes
standards for accounting of transactions in which an entity exchanges its equity
instruments for goods or services, such as when an entity obtains employee
services in share-based payment transactions. The revised statement requires a
public entity to measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award.
The cost is to be recognized over the period during which the employee is
required to provide service in exchange for the award. Changes in fair value
during the required service period are to be recognized as compensation cost
over the period. In addition, SFAS 123R amends SFAS No. 95, "Statement of Cash
Flows," to require that excess tax benefits be reported as a financing cash flow
rather than as a reduction of taxes paid. When the Company adopted SFAS 1 23R,
they elected the modified prospective application method and prior period
amounts have not been restated. As of June 3, 2006, all outstanding options were
fully vested. Additionally, no options were granted during the fiscal years
ended May 30, 2008 or June 1, 2007.
Prior to the effective date of SFAS 123R, the Company followed Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretation for stock options granted to employees and directors. The
Company adopted the disclosure-only provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." The proforma disclosures
previously permitted under SFAS 123 are no longer an alternative to financial
statement recognition. The Company continues to account for any portion of
previously granted awards using the accounting principle originally applied to
those awards, APB Opinion No. 25, Accounting for Stock Issued to Employees.
32
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 10 - NET INCOME PER SHARE
------------------------------
Basic earnings per common share are computed by dividing earnings available to
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects per share amounts that would
have resulted if dilutive potential common stock equivalents had been converted
to common stock, as prescribed by Statement of Financial Accounting Standards
No. 128, "Earnings per Share". At May 30, 2008 and June 1, 2007, options on all
369,000 shares were not included in the computation of diluted earnings per
share because the options' exercise price was greater than the average market
price of the common shares and, therefore, the effect would be antidilutive. The
following reconciles the information used to compute basic and diluted earnings
per share:
Average Common Stock Shares
---------------------------
2008 2007
---- ----
Basic weighted average shares outstanding 11,815,621 11,835,330
Effect of options - -
----------- -----------
11,815,621 11,835,330
=========== ===========
NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------------------------
The Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" requires disclosure of fair value information
about financial instruments, whether or not recognized on the face of the
balance sheet, for which it is practical to estimate that value. SFAS 107
defines fair value as the quoted market prices for those instruments that are
actively traded in financial markets. In cases where quoted market prices are
not available, fair values are estimated using present value or other valuation
techniques. The fair value estimates are made at a specific point in time, based
on available market information and judgments about the financial instruments,
such as estimates of timing and amount of expected future cash flows. Such
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of unrealized
gains or losses. In many cases, the fair value estimates cannot be substantiated
by comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument.
The carrying amounts for cash and cash equivalents approximate fair value
because of the short maturity, generally less than three months, of these
instruments.
The fair value of notes receivable is estimated by using a discount rate that
approximates the current rate for comparable notes. At May 30, 2008 and June 1,
2007 the aggregate fair value was approximately $0 and $2.0 million compared to
a carrying amount of $0 million and $1.7 million, respectively.
33
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS -CONTINUED
--------------------------------------------------------------------------
The carrying value of the Company's salary continuation plan and accrued
liability approximates fair value because present value is used in accruing this
liability.
The Company does not hold or issue financial instruments for trading purposes
and has no involvement with forward currency exchange contracts.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
---------------------------------------
Rental expense was $0.8 million in 2008 and $0.4 million in 2007.
The Company has entered into various operating lease agreements to replace aging
route vans. The current annual obligation under this agreement is $896,857.
Future minimum lease commitments for operating leases at May 30, 2008 were as
follows:
2009 $ 896,857
2010 896,857
2011 896,857
2012 827,823
2013 435,909
The Company leases its airplane to a director who is also chairman of the board
of directors of SYB, Inc., a major shareholder of the Company for approximately
$20,000 per month. The lease provides for her personal use of the airplane for
up to 100 flight hours per year and is for a term of one year with automatic
annual renewals unless terminated by either party.
The Company had letters of credit in the amount of $2.3 million outstanding at
May 30, 2008 compared to $2.7 million at June 1, 2007, to support the Company's
commercial self-insurance program. The Company pays a commitment fee of 0.50% to
maintain the letters of credit.
The Company has entered into various other short term purchase commitments with
suppliers for raw materials in the normal course of business.
The Company is subject to routine litigation and claims incidental to its
business. In the opinion of management, such routine litigation and claims
should not have a material adverse effect upon the Company's consolidated
financial statements taken as a whole.
34
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
NOTE 13 - CONCENTRATIONS OF CREDIT RISK
---------------------------------------
The Company's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash equivalents and trade receivables.
The Company maintains deposit relationships with high credit quality financial
institutions. The Company's trade receivables result primarily from its snack
food operations and reflect a broad customer base, primarily large grocery store
chains located in the Southeastern United States. The Company routinely assesses
the financial strength of its customers. As a consequence, concentrations of
credit risk are limited.
The Company purchased credit insurance during the year which reduced the
allowance for doubtful accounts to $70,000. Without credit insurance, the
allowance for doubtful accounts would have been $88,835 compared to $112,915
last year.
NOTE 14 - SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION
-----------------------------------------------------------
The following tabulation gives certain supplementary statement of operations
information for continuing operations for the years ended May 30, 2008 and June
1, 2007:
2008 2007
---- ----
Maintenance and repairs $ 6,334,758 $ 6,394,349
Depreciation 2,287,025 2,268,468
Payroll taxes 2,364,913 2,312,079
Amounts for other taxes, rents and research and development costs are not
presented because each of such amounts is less than 1% of total revenues.
NOTE 15 - SIGNIFICANT EVENT
---------------------------
On May 2, 2008, the Company re-acquired the property located at 2930 Kraft Drive
in Nashville, TN for $1,715,985. In consideration, the Company cancelled the
remaining notes and interest receivable of $1,675,454 and paid $40,531 in cash
for closing costs.
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
35
ITEM 9A. - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our company's management, with the participation of our chief executive officer
and chief financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of May 30, 2008. The term "disclosure controls and
procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
means controls and other procedures of a company that are designed to ensure
that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Based on the
evaluation of our disclosure controls and procedures as of May 30, 2008, our
chief executive officer and chief financial officer concluded that, as of such
date, our disclosure controls and procedures were effective at the reasonable
assurance level.
Internal Control Over Financial Reporting
Management's Annual Report on Internal Control Over Financial Reporting
The management of the company is responsible for establishing and maintaining
adequate internal control over financial reporting for the company. Internal
control over financial reporting is defined in Rule 13a-15(f) or 1 5d- 15(f)
promulgated under the Securities Exchange Act of 1934 as a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers and effected by the company's board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principals and
includes those policies and procedures that:
o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of
the company;
o Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and
o Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
36
The company's management assessed the effectiveness of the company's internal
control over financial reporting as of May 30, 2008. In making this assessment,
the company's management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in its Internal
Control-Integrated Framework.
Based on our assessment, management concluded that, as of May 30, 2008, the
company's internal control over financial reporting is effective based on those
criteria set forth.
The annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this annual report.
Changes in Internal Control Over Financial Reporting
No change in our internal controls over financial reporting occurred during the
fiscal quarter ended May 30, 2008 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B. - OTHER INFORMATION
Not Applicable.
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
With the exception of information as follows and as set forth under the caption
Executive Officers of the Registrant and Its Subsidiary which appears in Part I
of this Form 10-K on Page 5, the information required by this item is
incorporated by reference to the sections of the Company's Proxy Statement
entitled "Election of Directors," "Additional Information Concerning the Board
of Directors," "Executive Compensation and Other Information," "Section 16(a)
Beneficial Ownership Reporting Compliance", "Code of Conduct and Ethics" and
"Corporate Governance" for the 2008 Annual Meeting of Stockholders to be held
September 25, 2008.
Section 16A Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, as amended, requires the Company's officers
and directors and persons who own more than 10% of the Company's outstanding
Common Stock to file reports of ownership with the Securities and Exchange
Commission ("SEC"). There were no directors, officers or more than 10%
stockholders of the Company who failed to timely file a Form 4 or 5 except for
Edward R. Pascoe, who filed a Form 4 reporting a transaction involving the sale
of 9,000 common shares, two days late on July 11, 2008.
ITEM 11. - EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation and Other Information" of the
Company's Proxy Statement for the 2008 Annual Meeting of Stockholders to be held
September 25, 2008. See Item 5 of this Annual Report on Form 10-K for
information concerning the Company's equity compensation plans.
37
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to the
sections entitled "Security Ownership of Certain Beneficial Owners and
Management" and "Section 16(a) Beneficial Ownership Reporting Compliance," of
the Company's Proxy Statement for the 2008 Annual Meeting of Stockholders to be
held September 25, 2008.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information required by this item is incorporated by reference to the
section entitled "Certain Transactions" and "Director Independence" of the
Company's Proxy Statement for the 2008 Annual Meeting of Stockholders to be held
September 25, 2008.
ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to the
section entitled "Independent Accountants" of the Company's Proxy Statement for
the 2008 Annual Meeting of Stockholders to be held September 25, 2008.
Prior to September 30, 2008, the Company will file a definitive Proxy Statement
with the Securities and Exchange Commission pursuant to Regulation 14A which
involves the election of directors.
PART IV
ITEM 15.- EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(a) 1. LIST OF FINANCIAL STATEMENTS
The following consolidated financial statements of Golden Enterprises, Inc., and
subsidiary required to be included in Item 8 are listed below:
Consolidated Balance Sheets - May 30, 2008 and June 1, 2007
Consolidated Statements of Operations- Years ended May 30, 2008 and June 1, 2007
Consolidated Statements of Changes in Stockholders' Equity- Years ended May 30,
2008 and June 1, 2007
Consolidated Statements of Cash Flows- Years ended May 30, 2008 and June 1, 2007
Notes to Consolidated Financial Statements
(a) 2. LIST OF FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements schedule is included in Item 15
(c):
Schedule II- Valuation and Qualifying Accounts
38
All other schedules are omitted because the information required therein is not
applicable, or the information is given in the financial statements and notes
thereto.
(a) 3. Exhibits
(3) Articles of Incorporation and By-laws of Golden Enterprises, Inc.
3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally
known as "Golden Flake, Inc.") dated December 11, 1967 (incorporated by
reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004 Form
10-K filed with the Commission).
3.2 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated December 22, 1976 (incorporated by reference to
Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed
with the Commission).
3.3 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 2, 1978 (incorporated by reference to
Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K filed with
the Commission).
3.4 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 4, 1979 (incorporated by reference to
Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K filed with
the Commission).
3.5 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 24, 1982 (incorporated by reference
to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1983 Form 10-K filed
with the Commission).
3.6 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 22, 1983 (incorporated by reference
to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1983 filed with the Commission).
3.7 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 3, 1985 (incorporated by reference to
Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1985 filed with the Commission).
3.8 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 23, 1987 (incorporated by reference
to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed
with the Commission).
3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to
Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed
with the Commission).
(10) Material Contracts.
10.1 A Form of Indemnity Agreement executed by and between Golden
Enterprises, Inc. and Each of Its Directors (incorporated by reference
as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1987 filed with the Commission).
10.2 Amended and Restated Salary Continuation Plans for John S. Stein
(incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc.
May 31, 1990 Form 10-K filed with the Commission).
39
10.3 Indemnity Agreement executed by and between the Company and J. Wallace
Nall, Jr. (incorporated by reference as Exhibit 19.4 to Golden
Enterprises, Inc. May 31, 1991 Form 10-K filed with the Commission).
10.4 Salary Continuation Plans - Retirement, Disability and Death Benefits
for F. Wayne Pate (incorporated by reference to Exhibit 19.1 to Golden
Enterprises, Inc. May 31, 1992 Form 10-K filed with the Commission).
10.5 Indemnity Agreement executed by and between the Registrant and F. Wayne
Pate (incorporated by reference as Exhibit 19.3 to Golden Enterprises,
Inc. May 31, 1992 Form 10-K filed with the Commission).
10.6 Golden Enterprises, Inc. 1996 Long-Term Incentive Plan (incorporated by
reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31, 1997 Form
10-K filed with the Commission).
10.7 Equipment Purchase and Sale Agreement dated October 2000 whereby Golden
Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc., sold the Nashville, Tennessee Plant Equipment
(incorporated by reference as Exhibit 10.1 to Golden Enterprises, Inc.
May 31, 2001 Form 10-K filed with the Commission).
10.8 Real Property Contract of Sale dated October 2000 whereby Golden Flake
Snack Foods, Inc. sold the Nashville, Tennessee Plant Real Property
(incorporated by reference as Exhibit 10.2 to Golden Enterprises, Inc.
May 31, 2001 Form 10-K filed with the Commission).
10.9 Amendment to Salary Continuation Plans, Retirement and Disability for
F. Wayne Pate dated April 9, 2002 (incorporated by reference to Exhibit
10.2 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.10 Amendment to Salary Continuation Plans, Retirement and Disability for
John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit
10.3 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.11 Amendment to Salary Continuation Plan, Death Benefits for John S. Stein
dated April 9, 2002 (incorporated by reference to Exhibit 10.4 to
Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.12 Retirement and Consulting Agreement for John S. Stein dated April 9,
2002 (incorporated by reference to Exhibit 10.5 to Golden Enterprises,
Inc. May 31, 2002 Form 10-K filed with the Commission).
10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002
(incorporated by reference to Exhibit 10.6 to Golden Enterprises, Inc.
May 31, 2002 Form 10-K filed with the Commission).
10.14 Trust Under Salary Continuation Plan for Mark W. McCutcheon dated May
15, 2002 (incorporated by reference to Exhibit 10.7 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission).
10.15 Lease of aircraft executed by and between Golden Flake Snack Foods,
Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Joann
F. Bashinsky dated February 1, 2006 (incorporated by reference to
Exhibit 10.15 to Golden Enterprises, Inc. June 2, 2006 Form 10-K filed
with the Commission).
40
10.16 Real Property Purchase and Sale Agreement dated May 2, 2008 whereby
Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc. re-acquired certain real property in Nashville,
Tennessee.
(14) Code of Ethics
14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the
Board of Directors on April 8, 2004 (incorporated by reference to
Exhibit 14.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed
with the Commission).
(18) Letter Re: Change in Accounting Principles
18.1 Letter from the Registrant's Independent Accountant dated August 12,
2005 indicating a change in the method of applying accounting practices
followed by the Registrant for the fiscal year ended June 3, 2005
(incorporated by reference to Exhibit 18.1 to Golden Enterprises,
Inc.'s June 3, 2005 Form 10-K filed with the Commission)
21 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21
to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the
Commission)
(31) Certifications
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(99) Additional Exhibits
99.1 A copy of excerpts of the Last Will and Testament and Codicils thereto of
Sloan Y. Bashinsky, Sr. and of the SYB Common Stock Trust created by
Sloan Y. Bashinsky, Sr. providing for the creation of a Voting Committee
to vote the shares of common stock of Golden Enterprises, Inc. held by
SYB, Inc. and the Estate/Testamentary Trust of Sloan Y. Bashinsky, Sr.
(incorporated by reference to Exhibit 99.1 to Golden Enterprises, Inc.'s
June 3, 2005 Form 10-K filed with the Commission).
41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GOLDEN ENTERPRISES, INC.
By /s/Patty Townsend August 22, 2008
--------------------- ---------------
Patty Townsend Date
Vice President, Secretary and Principal Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/John S. Stein Chairman of Board August 22, 2008
---------------------------------
John S. Stein
/s/Mark W. McCutcheon Chief Executive August 22, 2008
--------------------------------- Officer, President
Mark W. McCutcheon and Director
/s/Patty Townsend Vice President, August 22, 2008
--------------------------------- Secretary and
Patty Townsend Principal Financial
Officer
/s/F. Wayne Pate Director August 22, 2008
---------------------------------
F. Wayne Pate
/s/Edward R. Pascoe Director August 22, 2008
---------------------------------
Edward R. Pascoe
/s/John P. McKleroy, Jr. Director August 22, 2008
---------------------------------
John P. McKleroy, Jr.
/s/James I. Rotenstreich Director August 22, 2008
---------------------------------
James I. Rotenstreich
/s/John S.P. Samford Director August 22, 2008
---------------------------------
John S.P. Samford
/s/J. Wallace Nall, Jr. Director August 22, 2008
---------------------------------
J. Wallace Nall, Jr.
/s/Joann F. Bashinsky Director August 22, 2008
---------------------------------
Joann F. Bashinsky
42
SCHEDULE II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
For the Fiscal Years Ended May 30, 2008 and June 1, 2007
Additions
Balance at Charged to Balance
Beginning Costs and at End
Allowance for Doubtful Accounts of Year Expenses Deductions of Year
---------------------------------- =========== =========== =========== ===========
Year ended June 1, 2007 $133,422 $ 41,823 $ 62,330 $112,915
=========== =========== =========== ===========
Year ended May 30, 2008 $112,915 $ --- $ 42,915 $ 70,000
=========== =========== =========== ===========
43
INDEX TO EXHIBITS
-----------------
3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally
known as "Golden Flake, Inc.") dated December 11, 1967 (incorporated by
reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004 Form
10-K filed with the Commission).
3.2 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated December 22, 1976 (incorporated by reference to
Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed
with the Commission).
3.3 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 2, 1978 (incorporated by reference to
Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K filed with
the Commission).
3.4 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 4, 1979 (incorporated by reference to
Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K filed with
the Commission).
3.5 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 24, 1982 (incorporated by reference
to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1983 Form 10-K filed
with the Commission).
3.6 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 22, 1983 (incorporated by reference
to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1983 filed with the Commission).
3.7 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 3, 1985 (incorporated by reference to
Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1985 filed with the Commission).
3.8 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 23, 1987 (incorporated by reference
to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed
with the Commission).
3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to
Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed
with the Commission).
10.1 A Form of Indemnity Agreement executed by and between Golden
Enterprises, Inc. and Each of Its Directors (incorporated by reference
as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1987 filed with the Commission).
10.2 Amended and Restated Salary Continuation Plans for John S. Stein
(incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc.
May 31, 1990 Form 10-K filed with the Commission).
44
10.3 Indemnity Agreement executed by and between the Company and J. Wallace
Nall, Jr. (incorporated by reference as Exhibit 19.4 to Golden
Enterprises, Inc. May 31, 1991 Form 10-K filed with the Commission).
10.4 Salary Continuation Plans - Retirement, Disability and Death Benefits
for F. Wayne Pate (incorporated by reference to Exhibit 19.1 to Golden
Enterprises, Inc. May 31, 1992 Form 10-K filed with the Commission).
10.5 Indemnity Agreement executed by and between the Registrant and F. Wayne
Pate (incorporated by reference as Exhibit 19.3 to Golden Enterprises,
Inc. May 31, 1992 Form 10-K filed with the Commission).
10.6 Golden Enterprises, Inc. 1996 Long-Term Incentive Plan (incorporated by
reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31, 1997 Form
10-K filed with the Commission).
10.7 Equipment Purchase and Sale Agreement dated October 2000 whereby Golden
Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc., sold the Nashville, Tennessee Plant Equipment
(incorporated by reference as Exhibit 10.1 to Golden Enterprises, Inc.
May 31, 2001 Form 10-K filed with the Commission).
10.8 Real Property Contract of Sale dated October 2000 whereby Golden Flake
Snack Foods, Inc. sold the Nashville, Tennessee Plant Real Property
(incorporated by reference as Exhibit 10.2 to Golden Enterprises, Inc.
May 31, 2001 Form 10-K filed with the Commission).
10.9 Amendment to Salary Continuation Plans, Retirement and Disability for
F. Wayne Pate dated April 9, 2002 (incorporated by reference to Exhibit
10.2 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.10 Amendment to Salary Continuation Plans, Retirement and Disability for
John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit
10.3 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.11 Amendment to Salary Continuation Plan, Death Benefits for John S. Stein
dated April 9, 2002 (incorporated by reference to Exhibit 10.4 to
Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.12 Retirement and Consulting Agreement for John S. Stein dated April 9,
2002 (incorporated by reference to Exhibit 10.5 to Golden Enterprises,
Inc. May 31, 2002 Form 10-K filed with the Commission).
10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002
(incorporated by reference to Exhibit 10.6 to Golden Enterprises, Inc.
May 31, 2002 Form 10-K filed with the Commission).
45
10.14 Trust Under Salary Continuation Plan for Mark W. McCutcheon dated May
15, 2002 (incorporated by reference to Exhibit 10.7 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission).
10.15 Lease of aircraft executed by and between Golden Flake Snack Foods,
Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Joann
F. Bashinsky dated February 1, 2006 (incorporated by reference to
Exhibit 10.15 to Golden Enterprises, Inc. June 2, 2006 Form 10-K filed
with the Commission).
10.16 Real Property Purchase and Sale Agreement dated May 2, 2008 whereby
Golden 47 Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc. re-acquired certain real property in Nashville,
Tennessee.
14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the
Board of Directors on April 8, 2004 (incorporated by reference to
Exhibit 14.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed
with the Commission).
(18) Letter Re: Change in Accounting Principles
18.1 Letter from the Registrant's Independent Accountant dated August 12,
2005 indicating a change in the method of applying accounting practices
followed by the Registrant for the fiscal year ended June 3, 2005
(incorporated by reference to Exhibit 18.1 to Golden Enterprises,
Inc.'s June 3, 2005 Form 10-K filed with the Commission).
21 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21
to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the
Commission)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes- 57 Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes- 58 Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes- 59 Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes- 60 Oxley Act of 2002.
99.1 A copy of excerpts of the Last Will and Testament and Codicils thereto
of Sloan Y. Bashinsky, Sr. and of the SYB Common Stock Trust created by
Sloan Y. Bashinsky, Sr. providing for the creation of a Voting
Committee to vote the shares of common stock of Golden Enterprises,
Inc. held by SYB, Inc. and the Estate/Testamentary Trust of Sloan Y.
Bashinsky, Sr. (incorporated by reference to Exhibit 99.1 to Golden
Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the Commission).
46