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 31, 2004
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 EXECUTIVE OFFICES) (ZIP CODE)
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 $0.662/3
(TITLE OF CLASS)
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 an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes____ No __X__
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of August 6, 2004. Common Stock, Par Value $0.662/3
--$11,487,987
Indicate the number of shares outstanding of each of the Registrant's
Classes of Common Stock, as of August 6, 2004.
CLASS OUTSTANDING AT AUGUST 6, 2004
----- -----------------------------
Common Stock, Par Value $0.662/3 11,852,830 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the Annual Meeting of
Stockholders to be held on September 23, 2004 are incorporated by reference into
Part III.
EXPLANATORY NOTE
The Company has restated its consolidated balance sheet for the years ended
May 31, 2003 and consolidated statements of operations, cash flows and retained
earnings for the years ended May 31, 2003 and 2002 (the "2003 Restatement"). The
restatement affects periods prior to 2002. The impact of the restatement on such
prior periods was reflected as an adjustment to retained earnings June 1, 2001.
The restatement is reported in this Annual Report on Form 10-K for the year
ending May 31, 2004 and will be reported in amendments to our Quarterly Reports
on Form 10-Q for its quarterly periods ended August 31, 2003, November 30, 2003
and February 29, 2004.
The restatement adjustment for years ended May 31, 2003 and 2002 resulted
in a reduction in a previously reported net loss of approximately $.5 million
and a reduction in a previously reported net income of approximately $.5 million
respectively. Basic and diluted loss per share was reduced by $.04 per share for
fiscal 2003. Basic and diluted earnings per share declined $.04 for fiscal year
2002. In addition, as a result of the cumulative effect of the restatement,
retained earnings has been reduced by $1.9 million and $2.4 million as of May
31, 2003 and 2002 respectively. Also as the result of the cumulative effect of
the restatement of periods prior to 2002, the cumulative effect was to reduce
opening retained earnings June 1, 2001 by approximately $1.9 million.
For a discussion of the individual restatement adjustments, see "Item 8.
Financial Statements - Note 2. Restatement of Prior Period Financial Statements"
(Years ended May 31, 2003 and 2002). Additionally, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Resulting Operations." For
more information on the impact of the restatement on years 2001 and 2000, see
"Item 6. Selected Financial Data" in Part II of this report. These restatement
adjustments reflect a correction of the Company's accounting for accruals for
its vacation pay and self-insured health and casualty obligations. The Company
determined that there had been an error in its accounting for self-insurance
related liabilities. The adjustments required included recognition of previously
unrecorded liabilities and reductions in amounts previously recognized as
prepaid amounts to an employee benefit trust which was incorrect. The Company
also determined that it had not recorded liabilities for earned vacation not yet
taken as required by Generally Accepted Accounting Principles (GAAP).
The Company did not amend its Annual Report on Form 10-K or Quarterly
Reports on Form 10-Q for periods affected by the restatement that ended prior to
May 31, 2003, and the financial statements and related financial information
contained in such reports should no longer be relied on.
All referenced amounts in this Annual Report for prior periods and prior
period comparisons reflect the balances and amounts on a restated basis.
3
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -2004
GOLDEN ENTERPRISES, INC.
PAGE
----
Explanatory Note ........................................................... 3
PART I
Item 1 Business ................................................................... 5
Item 2 Properties ................................................................. 7
Item 3 Legal Proceedings .......................................................... 8
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 .................... 9
Item 6 Selected Financial Data .................................................... 11
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................ 12
Item 7A Quantitative and Qualitative Disclosure About Market Risk .................. 18
Item 8 Financial Statements and Supplementary Data ................................ 18
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ............................... 48
Item 9A Controls and Procedures .................................................... 48
Item 9B Other Information .......................................................... 48
PART III
Item 10 Directors and Executive Officers of the Registrant ......................... 48
Item 11 Executive Compensation ..................................................... 49
Item 12 Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters ................ 49
Item 13 Certain Relationships and Related Transactions ............................. 49
Item 14 Principal Accountant Fees and Services ..................................... 49
PART IV.
Item 15. Exhibits and Financial Statement Schedules ................................. 50
4
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 buttered
popcorn. 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, pretzel, 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 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 supply available. Golden Flake has no control of 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 and Missouri. The products
are distributed by approximately 436 route salesmen 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 door delivery
method. Golden Flake is not dependent upon any single 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 866 company owned vehicles to support
the route sales system, including 43 tractors and 123 trailers for long haul
delivery to the various company warehouses located throughout its distribution
areas, 632 store delivery vehicles and 68 cars and miscellaneous vehicles.
5
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 is 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 1,095 employees. Approximately 643
employees are involved in route sales and sales supervision, approximately 306
are in production and production supervision, and approximately 146 are
management and administrative personnel.
Golden Flake believes that the performance and loyalty of its employees are
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 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.
RECENT DEVELOPMENTS
No significant changes have occurred in the kinds of products manufactured
or in the markets of methods of distribution, and no material changes or
developments have occurred in the business done and intended to be done by
Golden Flake.
6
EXECUTIVE OFFICERS OF REGISTRANT
AND ITS SUBSIDIARY
NAME AND AGE POSITION AND OFFICES WITH MANAGEMENT
------------ ------------------------------------
John S. Stein, 67 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 May 31, 2005.
Mark W. McCutcheon, 49 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
May 31, 2005.
Patty Townsend, 46 Ms. Townsend is Chief Financial Officer, Vice President and Secretary of
Golden Enterprises, Inc. and Controller of Golden Flake Snack Foods,
Inc. a wholly owned subsidiary of the Company. She was elected Chief
Financial Officer, Vice-President and Secretary of the Company March 1,
2004 and Controller of Golden Flake on March 15, 1997. She has been
employed with the Company since 1988. Ms. Townsend is elected to her
position on an annual basis, and her present term of office will expire
on May 31, 2005.
Randy Bates, 50 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 May 31, 2005.
David Jones, 52 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 May 31, 2005.
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.
7
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.
Approximately 17 acres of the Birmingham property is undeveloped. This
property is zoned for industrial use and is readily available for future use.
Plans for the utilization of this property have not been finalized.
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 corn chips,
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;
Chattanooga, Knoxville, and Memphis, Tennessee; Decatur, Marietta, and Macon
Georgia; Jacksonville, Panama City, Tallahassee and Pensacola, Florida; Baton
Rouge and New Orleans, Louisiana; and Little Rock, Arkansas. 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 866 vehicles which includes 632 route trucks,
43 tractors, 123 trailers and 68 cars and miscellaneous vehicles. There are no
liens or encumbrances on Golden Flake's vehicle fleet. Golden Flake also owns a
1987 Cessna Citation II 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.
ITEM 4. - SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS
Not Applicable.
8
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
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 31, 2004 and 2003
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
-------------------- DIVIDEND PAID
QUARTER HIGH LOW PER SHARE
----------- ---- --- --------------
FISCAL 2004
First ........................................................ $2.890 $2.150 $.0313
Second ....................................................... 2.750 2.370 .0313
Third ........................................................ 3.500 2.340 .0313
Fourth ....................................................... 3.430 2.400 .0313
FISCAL 2003
First ........................................................ $4.490 $3.710 $.0625
Second ....................................................... 5.530 2.760 .0625
Third ........................................................ 4.100 2.160 .0313
Fourth ....................................................... 2.500 1.640 .0313
As of August 6, 2004, there were approximately 1,500 shareholders of record.
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:
EQUITY COMPENSATION PLAN INFORMATION
----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
Number of securities remaining
Number of securities to be available for future issuance
issued upon exercise of out- Weighted-average exercise under equity compensation plans
standing options, warrants price of outstanding options, (excluding securities reflected in
Plan category and rights warrants and rights column (a))
----------------------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------------------
9
ISSUER PURCHASES OF EQUITY SECURITIES
The following table provides information of the repurchase by the
Company of shares of its common stock during the fourth quarter of fiscal year
ended May 31, 2004:
(d) Maximum
(c) Total Number Number (or
of Shares Approximate Dollar
Purchased as Part Value) of Shares
(b) of that May Yet Be
(a) Total Average Publicly Purchased Under
Number of Price paid Announced Plans the Plans or
Period Shares Purchased per Share or Programs Programs
-----------------------------------------------------------------------------------------------------------------
March 1
to -0- -0- -0- -0-
March 31
-----------------------------------------------------------------------------------------------------------------
April 1
to 30,475(1) $3.00(1) -0- -0-
April 30
-----------------------------------------------------------------------------------------------------------------
May 1
to -0- -0- -0- -0-
May 31
-----------------------------------------------------------------------------------------------------------------
Total 30,475 $3.00 -0- -0-
-----------------------------------------------------------------------------------------------------------------
------------------
(1) On April 21, 2004, the Company purchased 30,475 shares of its common stock
for $3.00 per share through a private purchase transaction.
10
ITEM 6 - SELECTED FINANCIAL DATA
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
FINANCIAL REVIEW (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Year Ended May 31,
2003 2002 2001 2000
2004 Restated Restated Restated Restated
------------ ------------ ----------- ----------- -----------
Net sales (b) ........................ $ 97,583 $ 96,604 $ 104,335 $ 102,797 $ 113,227
Gain on sales of assets .............. 14 304 756 599 250
Other income ......................... 499 506 563 691 67
---------------------------------------------------------------------------
Total revenues .................. 8,096 97,414 105,694 104,087 113,544
Cost of sales ........................ 51,243 50,748 54,326 53,631 57,460
Selling, general and
administrative expenses ............ 46,595 47,686 47,653 46,333 52,100
Interest ............................. 220 269 189 85 --
Restructuring charge ................. -- -- -- -- 2.565
(Loss) income before cumulative
effect of a change in accounting
policy and income
taxes ............................ 38 (1,289) 3,486 4,038 1,419
Federal and state income taxes ....... 84 (361) 1,367 1,386 642
Net (loss) income before cumulative
effect of a change in accounting
policy ............................ (46) (928) 2,119 2,653 777
Cumulative effect of a change in
accounting policy net of
taxes ............................ -- -- 413 -- --
Net (loss) income ........... $ (46) $ (928) $ 2,532 $ 2,653 $ 777
---------------------------------------------------------------------------
FINANCIAL DATA
Depreciation and amortization ........ $ 2,347 $ 2,490 $ 2,594 $ 2,436 $ 3,230
Capital expenditures, net of disposals 829 287 3,802 1,294 149
Working capital ...................... 6,697 8,818 10,989 12,909 14,028
Long-term debt ....................... 2,327 3,862 5,083 1,807 1,807
Stockholders' equity ................. 22,456 24,078 27,233 27,865 28,641
Total assets ......................... 33,623 36,492 40,840 40,243 41,814
---------------------------------------------------------------------------
COMMON STOCK DATA
Net (loss) income before cumulative
effect of a change in accounting
policy ............................. $ (0.00) $ (0.08) $ 0.18 $ 0.22 $ 0.06
Cumulative effect of a change in
accounting policy net of taxes ..... -- -- 0.03 -- --
Basic and diluted net (loss) income .. (0.00) (0.08) 0.21 0.22 0.06
Dividends ............................ .1250 .1875 0.25 0.25 0.24
Book value ........................... 1.89 2.20 2.29 2.33 2.37
Price range .......................... 3.50-2.15 5.530-1.640 4.550-2.950 4.750-2.875 4.125-2.313
---------------------------------------------------------------------------
FINANCIAL STATISTICS
Current ratio ........................ 1.84 2.09 2.37 2.58 2.43
Net (loss) income as percent of
total revenues ................... 0.00% (1.0)% 2.4% 2.5% 0.7%
Net (loss) income as percent of
stockholders' equity (a) ............. (0.00)% (5.1)% 10.1% 9.0% 3.9%
---------------------------------------------------------------------------
OTHER DATA
Weighted average common shares
outstanding ....................... 11,879,891 11,883,305 11,898,097 11,965,671 12,154,057
Common shares outstanding at
year end .......................... 11,852,830 11,883,305 11,883,305 11,932,741 12,065,000
Approximate number of
stockholders ......................... 1,500 1,500 1,500 1,500 1,600
(a) Average amounts at beginning and end of fiscal year.
(b) Reflects on all periods presented, the effect on revenues of adopting the
provisions of the Emerging Issues Task Force of the Financial Accounting
Standards Board issue No. 01-9 Accounting for Consideration Given by a
Vendor to a Customer (Including a Reseller of the Vendor's Products) (EITF
01-9)
11
Golden Enterprises
Selected Financial Data
The 2004 Restatement adjustments affecting the years 2001 and 2000 are set
forth in the following table:
2001 2000
----------------------- ---------------------
As As
Previously As Previously As
Reported Restated Reported Restated
----------------------- ---------------------
Income statement data;
Net sales $ 102,797 102,797 $ 113,227 113,227
Net Income 2,700 2,653 1,243 777
Basic and diluted net income per share 0.23 0.22 0.10 0.06
Financial position data (at May 31):
Total assets $ 39,247 40,243 $ 41,333 41,814
Stockholders' equity 29,800 27,865 30,528 28,641
The 2004 restatement adjustments affecting the years 2001 and 2000 are
adjustments with respect to self insurance accruals and accrued compensated
absences, as described in "Item 8. Financial Statements - Note 2. Restatement of
Previously Issued Financial Statements."
11-A
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 Management's Discussion and Analysis of Financial Condition and Results
of Operations set forth in this Item 7 has been revised to reflect the May 31,
2003 10-K/A Amendment No. 1 "Restatement."
The purpose of this discussion is to provide additional information about
Golden Enterprises, Inc., its financial condition and the results of its
operations. Readers should refer to the consolidated financial statements and
other financial data presented throughout this report to fully understand the
following discussion and analysis.
RESTATEMENT
The Company has restated its consolidated balance sheet for the years ended
May 31, 2003 and consolidated statements of operations, cash flows and retained
earnings for the years ended May 31, 2003 and 2002 (the "2003" Restatement). The
restatement affects periods prior to 2002. The impact of the restatement on such
prior periods was reflected as an adjustment to retained earnings June 1, 2001.
The restatement is reported in this Annual Report on Form 10-K for the year
ending May 31, 2004 and will be reported in amendments to our Quarterly Reports
on form 10-Q for its quarterly periods ended August 31, 2003, November 30, 2003
and February 29, 2004.
The restatement adjustment for years ended May 31, 2003 and 2002 resulted in a
reduction in a previously reported net loss of approximately $.5 million and a
reduction in a previously reported net income of approximately $.5 million
respectively. Basic and diluted loss per share was reduced by $.04 per share for
fiscal 2003. Basic and diluted earnings per share declined $.04 for fiscal year
2002. In addition, as a result of the cumulative effect of the restatement,
retained earnings has been reduced by $1.9 million and $2.4 million as of May
31, 2003 and 2002 respectively. Also, as the result of the cumulative effect of
the restatement of periods prior to 2002, the cumulative effect was to reduce
opening retained earnings June 1, 2001 by approximately $1.9 million. For a
discussion of individual adjustment items, see "Item 8- Financial Statements-
Note 2 Restatement."
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 buttered popcorn. 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, 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 supply
available. The Company has no control of the agricultural aspects and its
profits are affected accordingly.
12
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
approximately 436 route representatives 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 from these estimates.
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.
In November 2001, the Emerging Issues Task Force reached a consensus on
Issue No. 01-09 Accounting for Consideration given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products) effective for annual or interim
periods beginning after December 15, 2001. The issue addresses the recognition,
measurement and income statement classification for certain sales incentives.
The Company implemented this new accounting policy in the fourth quarter of
fiscal 2002. The effect of this accounting change is to adopt this policy as of
the beginning of the fiscal 2002 (June 1, 2001). Certain of these expenses,
including slotting fees, previously classified as selling, general, and
administrative expenses, are now characterized as offsets to net sales.
Reclassifications have been made to prior period financial statements to conform
to current year presentation. Total vendor sales incentives now characterized as
reductions of net sales that previously would have been classified as selling,
general and administrative expenses were approximately $11.6 million, $12.8
million and $11.7 million for the years ended 2004, 2003 and 2002, respectively.
There was no resulting impact on net operating results from adopting EITF 01-09.
Change in Accounting Policy
The Company changed its accounting policy in the fourth quarter of fiscal
2002 with regard to slotting fees. The effect of this accounting change was to
adopt this policy as of the beginning of fiscal 2002 (June 1, 2001). Previously,
slotting fees were expensed as incurred. The Company changed this accounting
policy to capitalize and amortize such costs over the expected benefit period,
which is generally one year. This change in accounting policy was made to more
closely match the cost of the shelf space obtained with the slotting fees with
the revenues produced by the shelf space. The cumulative effect of this change
in accounting policy resulted in a non-cash cumulative adjustment of $413,401
($0.03 per share), net of taxes. The accounting change also increased net income
before the cumulative effect in 2002 by $197,141 ($0.02 per share).
13
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. Management records a general
reserve based on analysis of historical data. In addition, management 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 31, 2004 and 2003 the Company
had accounts receivables in the amount of $7.5 million and $7.8 million, net of
an allowance for doubtful accounts of $0.2 million and $0.2 million,
respectively.
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 material expenses in an effort to record those
expenses in the period incurred. The most material accrued estimates relate to a
salary continuation plan for certain key executives of the Company, and to
insurance-related expenses, including self-insurance. Workers' compensation and
general liability insurance accruals are recorded based on insurance claims
processed as well as historical claims experience for claims incurred, but not
yet reported. These estimates are based on historical loss development factors.
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 assumption could result in an
accrual requirement materially different from the calculated accrual.
OTHER MATTERS
Transactions with related parties, reported in Note 14 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 $6.7 million at May 31, 2004 compared to $8.3 million
at May 31, 2003. Net cash provided by operations amounted to $2.9 million in
fiscal year 2004, $4.6 million in fiscal year 2003 and $1.9 million in fiscal
year 2002. The decrease in net cash provided by operations is primarily related
to changes in receivables, inventories and accounts payable offset by the net
loss for fiscal year 2004 of $45,846 compared to the net loss for fiscal year
2003 of $927,765.
Additions to property, plant and equipment, net of disposals were $0.8
million, $0.3 million and $3.8 million in fiscal years 2004, 2003 and 2002,
respectively, and are expected to be about $1.9 million in 2005.
Cash dividends of $1.5 million, $2.2 million and $3.0 million were paid
during fiscal years 2004, 2003, and 2002, respectively. The quarterly dividend
was reduced to $.03125 from $.0625 in the third quarter of fiscal 2003 in
response to a decrease in earnings.
14
The amount of cash used to purchase treasury shares in fiscal 2004 was
$0.09 million. No cash was used to purchase treasury shares in fiscal 2003 and
$0.2 million was used in 2002.
During fiscal 2004, the company re-paid debt, net of borrowings, of $1.4
million.
The following table summarizes the significant contractual obligations of
the Company as of May 31, 2004:
CONTRACTUAL OBLIGATIONS TOTAL 2005 2006-2007 2008-2009 THEREAFTER
----------------------- ----- ---- --------- --------- ----------
Long-Term Debt $ 999,562 $ 477,980 $ 521,582 $ -0- $ -0-
Purchase Commitment 2,096,000 1,491,000 605,000 -0- -0-
Salary Continuation Plan 1,901,567 95,948 216,448 253,870 1,335,301
--------- ------ ------- ------- ---------
Total Contractual Obligations $ 4,997,129 $ 2,064,928 $ 1,343,030 $ 253,870 $ 1,335,301
========= ========= ========= ======= =========
Other Commitments
The Company had letters of credit in the amount of $1,758,987 outstanding
at May 31, 2004 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 $1 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.
Long-term liabilities as a percentage of total capitalization was 12.3% at
May 31, 2004. The Company's current ratio at year end was 1.84 to l.00.
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 1.0% in fiscal year 2004, decreased by 7.4% in
fiscal year 2003, and increased by 1.5% in fiscal year 2002. The increase in
fiscal 2004 was primarily due to less promotional payments to vendors that were
subtracted from sales as required by EITF 01-9. The decrease in fiscal 2003 was
due to a general sales weakness in the U.S. salty snacks category, particularly
during the first part of the fiscal year.
Cost of sales as a percentage of net sales amounted to 52.5% in 2004,
52.5% in 2003, and 52.1% in 2002. Cost of sales stabilized in 2004 and the
percentage increase in cost of sales for fiscal 2003 was caused by the lower
sales volume and higher commodity prices and energy cost. The cost decrease in
2002 was due primarily to lower energy costs.
Selling, general and administrative expenses were 47.7% of net sales in
2004, 49.4% in 2003, and 45.7% in 2002. The 1.7% decrease for fiscal 2004 is
attributed to the increase in net sales and a decrease in vendor sales
incentives. The higher percentage cost for fiscal 2003 was due to significant
increases in employee medical, workers' compensation, general and auto liability
insurance costs, and energy costs. The more favorable cost percentage for fiscal
2002 was primarily due to lower selling and delivery cost brought about by the
exiting of the fringe sales regions in Central Florida as part of the fiscal
2000 restructuring plan.
The Company's effective tax rates for 2004, 2003, and 2002 were 221.3%,
(27.9%) and 39.2%, respectively. Note 9 to the Consolidated Financial Statements
provides additional information about the provision for income taxes.
15
OFF-BALANCE SHEET ARRANGEMENT
The Company entered into a five-year term product purchase agreement during
the year ending May 31, 2001 with a supplier. Under the terms of the agreement
the minimum purchase quantity and the purchase price were fixed resulting in a
minimum first year commitment of approximately $2,171,000. After the first year,
the minimum purchase quantity was fixed and the purchase unit price, was
negotiable based on the current market. The purchase product agreement as
subsequently amended is described in more detail in Note 14 of the Notes to
Consolidated Financial Statements.
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, investment securities and bank loans, and
commodity prices affecting the cost of its raw materials.
The Company's cash equivalents consist of short-term marketable securities.
Presently these are variable rate money market funds. Its bank loans also carry
variable rates. Assuming year end 2004 variable rate investment levels and bank
loan balances, a one-point change in interest rates would impact interest income
by $1,520 and interest expense by $9,996.
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.
INFLATION
Certain costs and expenses of the Company are affected by inflation, and
the Company's prices for its products over the past several years have remained
relatively flat. The Company will contend with the effect of further inflation
through efficient purchasing, improved manufacturing methods, pricing, and by
monitoring and controlling expenses.
ENVIRONMENTAL MATTERS
There have been no material effects of compliance with government
provisions regulating discharge of materials into the environment.
FORWARD-LOOKING STATEMENTS
This discussion 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 and effectiveness of sales and marketing
activities, as described in the Company's filings with Securities and Exchange
Commission.
RECENT DEVELOPMENTS
The Company restated its previously issued financial statements for the
three years ended May 31, 2003. The restatement affected periods prior to May
31, 2001. The impact of the restatement on such prior periods was reflected as
an adjustment to opening retained earnings as of June 1, 2000. The restatement
was reported in amendment No. 1 to the retained earnings as of June 1, 2000. The
restatement was reported in amendment No. 1 to the Company's Annual Report on
Form 10-K/A for the year ended May 31, 2003. The Company also restated the
Company's Quarterly Reports on Form 10-Q/A for the quarterly periods ended
August 31, 2003, November 30, 2003 and February 29, 2004 with restated
comparative information for comparative periods of the previous year.
16
In connection with their audits of the restatement of previously issued
annual financial statements and the consolidated financial statements for the
year ended May 31, 2004, the Company's independent auditors identified and
communicated to the Company and the Audit Committee "material weaknesses" (as
defined under audit standards adopted by the Public Company Accounting Oversight
Board) relating to the Company's accounting and public reporting of significant
matters and management review and oversight of certain accounting matters.
In the past year, the Company undertook to review and analyze its internal
audit program and has directed senior management to dedicate resources and take
steps to strengthen controls. The company engaged the services of a third party
consultant to assist in its review and analysis. The Company intends to identify
and implement actions to improve the effectiveness of procedures and internal
controls, including enhanced training with respect to financial reporting and
disclosure responsibilities.
RECENT ISSUED ACCOUNTING PRONOUNCEMENTS
Effective June 1, 2002, the Company adopted SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets to be held and used, to be disposed of other than by sale and to be
disposed of by sale. The adoption of this standard did not have a material
impact on the Company's financial position, results of operations or cash flows.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated
with Exit or Disposal Activities." SFAS No 146 requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Costs covered by
SFAS No. 146 includes lease termination costs and certain employee severance
costs that are associated with a restructuring, discontinued operations, plant
closing or other exit or disposal activity. SFAS No. 146 is effective for exit
or disposal activities initiated after December 31, 2002. The Company adopted
SFAS No. 146 on June 1, 2003 and the adoption of this standard did not have a
material impact on the Company's consolidated financial statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The Company
has adopted the disclosure requirements of SFAS No. 148 effective May 31, 2003
in its consolidated financial statements. The Company will continue to account
for stock-based compensation using the methods detailed in the stock-based
compensation accounting policy as described earlier.
In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies the accounting and reporting for derivative instruments, including
embedded derivatives, and for hedging activities under SFAS No. 133, "Accounting
for Derivative instruments and Hedging Activities." SFAS No. 149 amends SFAS No.
133 to reflect the decisions made as part of the Derivatives Implementation
Group and in other FASB projects or deliberations. SFA No. 149 is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designed after June 30, 2003 and did not have an impact on the
Company.
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51."
FIN No. 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 became
effective February 1, 2003 for variable interest entities created after January
31, 2003, and July 31, 2003 for variable interest entities created prior to
February 1, 2003. In December 2003, the FASB issued a revised FIN 46. The
revised standard, FIN 46R, modifies or clarifies various provisions of FIN 46
and incorporates many FASB Staff Positions previously issued by the FASB. This
standard replaces the original FIN 46 that was issued in January 2003. The
adoption of these new standards did not have an impact on the Company's
financial position, results of operations or cash flows.
17
In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The revised SFAS
No. 132 revised employers' disclosures about pension plans and other post
retirement benefit plans. It did not change the measurement or recognition of
those plans required by SFAS No. 87, "Employers' Accounting for Pensions," SFAS
No. 88, "Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits," and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
revised SFAS No. 132 retains the disclosure requirements contained in the
original SFAS No. 132. It requires additional disclosures to those in the
original SFAS No. 132 about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined benefit
postretirement plans. The adoption of this new standard did not have an impact
on the Company's financial position, results of operations or cash flows.
In December 2003, the SEC released Staff Accounting Bulletin ("SAB") 104.
SAB 104 revises or rescinds portions of the interpretative guidance included in
SEC Topic 13, "Revenue Recognition," in order to make this interpretive guidance
consistent with current authoritative accounting and auditing guidance and SEC
rules and regulations. The principal revisions relate to the rescission of
material no longer necessary because of private sector developments in U.S.
generally accepted accounting principles. SAB 104 also rescinds the Revenue
Recognition in Financial Statements Frequently Asked Questions and Answers
document issued in conjunction with Topic 13. Selected portions of that document
have been incorporated into Topic 13. The adoption of this new standard did not
have an impact on the Company's financial position, results of operations or
cash flows.
ITEM 7 A.- QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Included in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations- Market Risk beginning on page 16.
ITEM 8.- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and its subsidiary
for the year ended May 31, 2004, consisting of the following, are contained
herein:
Consolidated Balance Sheets - May 31, 2004 and 2003
Consolidated Statements of Operations - Years ended May 31, 2004, 2003
and 2002
Consolidated Statements of - Years ended May 31, 2004, 2003
Cash Flows and 2002
Consolidated Statements of Changes -Years ended May 31, 2004, 2003
in Stockholders' Equity and 2002
Notes to Consolidated Financial Statements - Years ended May 31, 2004, 2003
and 2002
Quarterly Results of Operations - Years ended May 31, 2004,
and 2003
18
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 31, 2004 and 2003, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended May 31, 2004. Our audits
also included the financial statement schedule listed at Item 16(a)2. 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 31, 2004 and 2003, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended May 31, 2004, in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, such financial statement schedule, when considering in relation to the
basic consolidated financial statements, taken as a whole, presents fairly, in
all material respects, the information set forth therein.
As described in Note 2, Restatement of prior period financial statements, the
Company has restated previously issued financial statements.
As discussed in Note 3 to the financial statements, effective June 1, 2001 the
Company changed its accounting policy with respect to slotting fees.
Birmingham, Alabama DUDLEY, HOPTON-JONES, SIMS & FREEMAN, PLLP
July 21, 2004
19
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
May 31, 2004 and 2003
ASSETS
Restated
2004 2003
----------- -----------
CURRENT ASSETS
Cash and cash equivalents ............. $ 565,195 $ 1,278,333
Receivables:
Trade accounts ...................... 7,445,741 7,835,874
Other ............................... 231,410 206,480
----------- -----------
7,677,151 8,042,354
Less: Allowance for doubtful accounts 185,000 196,100
----------- -----------
7,492,151 7,846,254
Notes receivable, current ........... 45,760 42,253
----------- -----------
7,537,911 7,888,507
----------- -----------
Inventories:
Raw materials ....................... 1,198,534 1,016,050
Finished goods ...................... 2,504,515 2,289,145
----------- -----------
3,703,049 3,305,195
----------- -----------
Prepaid expenses ...................... 2,292,943 2,881,121
Deferred income taxes ................. 618,803 652,153
----------- -----------
Total current assets ............... 14,717,901 16,005,309
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land .................................. 3,030,974 3,030,974
Buildings ............................. 16,925,279 16,897,204
Machinery and equipment ............... 35,159,507 41,478,108
Transportation equipment .............. 15,170,308 15,113,558
70,286,068 76,519,844
Less: Accumulated depreciation ...... 56,439,726 61,158,271
----------- -----------
13,846,342 15,361,573
----------- -----------
OTHER ASSETS
Notes receivable, long-term ........... 1,819,986 1,865,747
Cash surrender value of life insurance 2,648,567 2,762,739
Other ................................. 589,760 496,175
----------- -----------
Total other assets .................. 5,058,313 5,124,661
----------- -----------
TOTAL ............................... $33,622,556 $36,491,543
=========== ===========
20
LIABILITIES AND STOCKHOLDERS' EQUITY
Restated
2004 2003
------------ -------------
CURRENT LIABILITIES
Checks outstanding in excess of bank balances ......... $ 1,293,534 $ 1,157,108
Accounts payable ...................................... 1,816,879 1,700,934
Current portion of long-term debt ..................... 477,980 432,142
Other accrued expenses ................................ 4,334,798 4,289,448
Salary continuation plan .............................. 95,948 88,595
------------ ------------
Total current liabilities ........................... 8,019,139 7,668,227
------------ ------------
LONG-TERM LIABILITIES
Note payable - bank, non-current ...................... 521,582 1,990,767
Salary continuation plan .............................. 1,805,619 1,870,991
Deferred income taxes ................................. 820,432 884,033
------------ ------------
Total long-term liabilities ......................... 3,147,633 4,745,791
------------ ------------
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 ..................................... 17,363,237 18,893,553
Treasury shares - at cost (1,975,963 shares in 2004 and
1,945,488 shares in 2003) ........................... (10,624,602) (10,533,177)
------------ ------------
Total stockholders' equity ............................ 22,455,784 24,077,525
------------ ------------
TOTAL ............................................... $ 33,622,556 $ 36,491,543
============ ============
21
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended May 31, 2004, 2003 and 2002
Restated Restated
2004 2003 2002
------------ ------------ -------------
Net sales ................................................. $ 97,583,493 $ 96,604,461 $ 104,335,234
Cost of sales ............................................. 51,243,037 50,747,626 54,325,919
------------ ------------ -------------
Gross margin .............................................. 46,340,456 45,856,835 50,009,315
Selling, general and administrative expenses .............. 46,595,519 47,686,174 47,653,164
------------ ------------ -------------
Operating (loss) income ................................... (255,063) (1,829,339) 2,356,151
------------ ------------ -------------
Other income (expenses):
Gain on sale of assets .................................... 13,861 304,221 756,259
Interest expense .......................................... (219,608) (268,489) (190,159)
Other income .............................................. 498,613 506,296 563,383
------------ ------------ -------------
Total other income (expenses) ........................... 292,866 542,028 1,129,483
------------ ------------ -------------
Income (Loss) income before cumulative effect of a change
in accounting policy and income taxes .................. 37,803 (1,287,311) 3,485,634
------------ ------------ -------------
Provision for income taxes ............................. 83,649 (359,546) 1,366,930
------------ ------------ -------------
Net (loss) income before cumulative effect of a change in
accounting policy ...................................... (45,846) (927,765) 2,118,704
Cumulative effect of a change in accounting
policy, net of taxes of $262,037 ....................... -- -- 413,401
------------ ------------ -------------
Net (loss) income ....................................... $ (45,846) $ (927,765) $ 2,532,105
============ ============ =============
PER SHARE OF COMMON STOCK
Net (loss) income before cumulative effect of a change
in accounting policy .................................... $ -- $ (0.08) $ 0.18
Cumulative effect of a change in accounting
policy, net of taxes .................................... -- -- 0.03
------------ ------------ -------------
Basic earnings ............................................ $ -- $ (0.08) $ 0.21
============ ============ =============
Diluted earnings .......................................... $ -- $ (0.08) $ 0.21
============ ============ =============
See Accompanying Notes to Consolidated
Financial Statements
22
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended May 31, 2004, 2003 and 2002
Additional Total
Common Paid-in Retained Treasury Stockholders'
Stock Capital Earnings Shares Equity
---------- ----------- ------------ ------------ ------------
Balance - May 31, 2001 as restated ... $9,219,195 6,499,554 22,491,346 (10,345,168) 27,864,927
Net income - 2002 ................. -- -- 2,532,105 -- 2,532,105
Cash dividends paid ............... -- -- (2,974,005) -- (2,974,005)
Treasury shares purchased ......... -- -- -- (193,419) (193,419)
Stock options exercised ........... -- (1,600) -- 5,410 3,810
---------- ----------- ------------ ------------ ------------
Balance - May 31, 2002 as restated 9,219,195 6,497,954 22,049,446 (10,533,177) 27,233,418
Net loss - 2003 ................... -- -- (927,765) -- (927,765)
Cash dividends paid ............... -- -- (2,228,128) -- (2,228,128)
Balance - May 31, 2003 as restated $9,219,195 $ 6,497,954 $ 18,893,553 $(10,533,177) $ 24,077,525
---------- ----------- ------------ ------------ ------------
Net loss - 2004 ................... -- -- (45,846) -- (45,846)
Cash dividends paid ............... -- -- (1,484,470) -- (1,484,470)
Treasury shares purchased ......... -- -- -- (91,425) (91,425)
---------- ----------- ------------ ------------ ------------
Balance - May 31, 2004 ............ $9,219,195 $ 6,497,954 $ 17,363,237 $(10,624,602) $ 22,455,784
========== =========== ============ ============ ============
See Accompanying Notes to Consolidated
Financial Statements
23
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended May 31, 2004, 2003 and 2002
Restated Restated
2004 2003 2002
--------- --------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income ............................................ $(45,846) $(927,765) $2,532,105
Adjustment to reconcile net (loss) income to net cash provided
by operating activities:
Cumulative effect of a change in accounting policy ........ -- -- (413,401)
Depreciation .............................................. 2,346,880 2,490,329 2,593,621
Deferred income taxes ..................................... (30,251) 1,433 36,641
Gain on sale of property and equipment .................... (13,861) (304,221) (756,261)
Decrease (increase) in receivables - net .................... 354,103 1,570,347 (408,060)
Decrease (increase) in inventories .......................... (397,854) 1,443,303 (428,026)
Decrease (increase) in prepaid expenses .................... 588,178 783,358 (1,667,703)
Decrease in cash surrender value of insurance ............... 114,172 22,597 50,614
Increase in other assets .................................... (93,585) (19,214) (42,334)
Increase (decrease) in accounts payable ..................... 115,945 (488,795) 265,301
Increase in accrued expenses ................................ 45,350 60,940 90,449
(Decrease) increase in salary continuation plan ............. (58,019) (54,805) 86,568
--------- --------- ---------
Net cash provided by operating activities ................. 2,925,212 4,577,507 1,939,514
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment .................... (973,076) (851,111) (5,236,601)
Proceeds from sale of property, plant and equipment .......... 155,288 399,690 1,301,160
Collection of notes receivable ............................... 42,254 119,636 42,399
Investment securities available-for-sale:
Proceeds from disposals ...................................... -- -- 625,326
--------- --------- ---------
Net cash used in investing activities ..................... (775,534) (331,785) (3,267,716)
--------- --------- ---------
See Accompanying Notes to Consolidated
Financial Statements
24
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Years Ended May 31, 2004, 2003 and 2002
Restated Restated
2004 2003 2002
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Debt proceeds .............................................. 10,304,286 11,543,824 7,806,676
Debt repayments ............................................ (11,727,633) (13,121,345) (4,666,346)
Increase (decrease) in checks outstanding in excess of bank
balances ................................................ 136,426 535,782 (931,135)
Purchases of treasury shares ............................... (91,425) -- (193,419)
Proceeds from exercise of stock options .................... -- -- 3,810
Cash dividends paid ........................................ (1,484,470) (2,228,128) (2,974,005)
------------ ------------ -----------
Net cash used in financing activities ................... (2,862,816) (3,269,867) (954,419)
------------ ------------ -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ........................................... (713,138) 975,855 (2,282,621)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR .......................................... 1,278,333 302,478 2,585,099
------------ ------------ -----------
CASH AND CASH EQUIVALENTS AT
END OF YEAR ................................................ $ 565,195 $ 1,278,333 $ 302,478
============ ============ ===========
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
Income taxes .............................................. $ (430,216) $ (626,349) $ 2,343,597
Interest .................................................. 219,608 268,489 190,159
Noncash items:
Equipment traded in ....................................... -- 22,123 --
25
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2004, 2003 and 2002
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 principles 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 intercompany 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.
REVENUE CLASSIFICATION CHANGES
In November 2001, the Emerging Issues Task Force reached a consensus on Issue
No. 01-09 Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products) effective for annual or interim
periods beginning after December 15, 2001. The issue addresses the recognition,
measurement and income statement classification for certain sales incentives.
The Company implemented this new accounting policy in the fourth quarter of
fiscal 2002. The effect of this accounting change is to adopt this policy as of
the beginning of the fiscal 2002 (June 1, 2001). Certain of these expenses,
including slotting fees, previously classified as selling, general, and
administrative expenses, are now characterized as offsets to net sales.
Reclassifications have been made to prior period financial statements to conform
to current year presentation. Total vendor sales incentives now characterized as
reductions of net sales that previously would have been classified as selling,
general and administrative expenses were approximately $11.6 million, $12.8
million and $11.7 million for the years ended 2004, 2003 and 2002, respectively.
There was no resulting impact on net operating results from adopting EITF 01-09.
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.
26
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
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 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. Self-insurance claims filed and claims incurred but not reported are
accrued based upon management's estimates of the aggregate liability for
uninsured claims incurred. Automobile liability, general liability, workers'
compensation, and property losses costs are covered by letters of credit with
the Company's claims administrators.
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 $4,452,926, $5,031,409 and
$4,371,719 for the fiscal years 2004, 2003 and 2002, 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 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 applies APB Opinion 25, "Accounting for Stock Issued to Employees,"
and related interpretations in accounting for all stock option plans. No
stock-based compensation cost has been recognized in operations for stock
options granted because the option exercise price was equal to or more than the
market price of the underlying common stock on the date of grant.
SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure,"
requires the Company to provide pro forma information regarding net income
(loss) as if the compensation cost for the Company's stock option plans had been
determined in accordance with the fair value based method prescribed in SFAS No.
123. To provide the required pro forma information, the Company estimates the
fair value of each stock option at the grant date by using the Black-Scholes
option-pricing model.
27
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The following table represents the pro forma effect on net income (loss) and
earnings (loss) per share as if the Company had applied the fair value based
method recognition provisions of SFAS No 123 to stock-based employee
compensation:
Years Ended May 31,
---------------------------------------
Restated Restated
2004 2003 2002
Net (loss) income as reported ............................. $(45,846) $ (927,765) $ 2,532,105
Deduct: total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects ............................. (12,291) (12,660) (52,289)
-------- ----------- -----------
Pro forma net (loss) income ............................ $(58,137) (940,425) 2,479,816
======== =========== ===========
(Loss) earnings per share:
Basic - as reported .................................... $ -- $ (0.08) $ .21
======== =========== ===========
Basic - Pro forma ...................................... $ -- $ (0.08) $ 21
======== =========== ===========
Diluted - as reported .................................. $ -- $ (0.08) $ .21
======== =========== ===========
Diluted - Pro forma .................................... $ -- $ (0.08) $ .21
======== =========== ===========
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 $2.3 million, $2.3 million and
$2.5 million for the fiscal years 2004, 2003 and 2002, 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.
RECENT ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
143, "Accounting for Asset Retirement Obligations," which addresses financial
accounting and reporting obligations associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development or
normal use of assets. The Company adopted SFAS No. 143 on June 1, 2003 and the
adoption did not have a material impact on the Company's consolidated financial
statements.
28
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Effective June 1, 2002, the Company adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets to
be held and used, to be disposed of other than by sale and to be disposed of by
sale. The adoption of this standard did not have a material impact on the
Company's financial position, results of operations or cash flows.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated with
Exit or Disposal Activities." SFAS No 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Costs covered by SFAS
No. 146 includes lease termination costs and certain employee severance costs
that are associated with a restructuring, discontinued operations, plant closing
or other exit or disposal activity. SFAS No. 146 is effective for exit or
disposal activities initiated after December 31, 2002. The Company adopted SFAS
No. 146 on June 1, 2003 and the adoption of this standard did not have a
material impact on the Company's consolidated financial statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The Company
has adopted the disclosure requirements of SFAS No. 148 effective May 31, 2003
in its consolidated financial statements. The Company will continue to account
for stock-based compensation using the methods detailed in the stock-based
compensation accounting policy as described earlier.
In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies the accounting and reporting for derivative instruments, including
embedded derivatives, and for hedging activities under SFAS No. 133, "Accounting
for Derivative instruments and Hedging Activities." SFAS No. 149 amends SFAS No.
133 to reflect the decisions made as part of the Derivatives Implementation
Group and in other FASB projects or deliberations. SFA No. 149 is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designed after June 30, 2003 and did not have an impact on the
Company.
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51."
FIN No. 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 became
effective February 1, 2003 for variable interest entities created after January
31, 2003, and July 31, 2003 for variable interest entities created prior to
February 1, 2003. In December 2003, the FASB issued a revised FIN 46. The
revised standard, FIN 46R, modifies or clarifies various provisions of FIN 46
and incorporates many FASB Staff Positions previously issued by the FASB. This
standard replaces the original FIN 46 that was issued in January 2003. The
adoption of these new standards did not have an impact on the Company's
financial position, results of operations or cash flows.
29
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The revised SFAS
No. 132 revised employers' disclosures about pension plans and other
postretirement benefit plans. It did not change the measurement or recognition
of those plans required by SFAS No. 87, "Employers' Accounting for Pensions,"
SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits," and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
revised SFAS No. 132 retains the disclosure requirements contained in the
original SFAS No. 132. It requires additional disclosures to those in the
original SFAS No. 132 about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined benefit
postretirement plans. The adoption of this new standard did not have an impact
on the Company's financial position, results of operations or cash flows.
In December 2003, the SEC released Staff Accounting Bulletin ("SAB") 104. SAB
104 revises or rescinds portions of the interpretatative guidance included in
SEC Topic 13, "Revenue Recognition," in order to make this interpretive guidance
consistent with current authoritative accounting and auditing guidance and SEC
rules and regulations. The principal revisions relate to the rescission of
material no longer necessary because of private sector developments in U.S.
generally accepted accounting principles. SAB 104 also rescinds the Revenue
Recognition in Financial Statements Frequently Asked Questions and Answers
document issued in conjunction with Topic 13. Selected portions of that document
have been incorporated into Topic 13. The adoption of this new standard did not
have an impact on the Company's financial position, results of operations or
cash flows.
RECLASSIFICATIONS
Certain items included in prior years' consolidated financial statements have
been reclassified to conform to current year presentation.
NOTE 2 - RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS
Prior period financial statements have been restated to reflect adjustments to
the Company's financial information previously reported on Form 10-K for the
years ended May 31, 2003, and 2002. The Company's 2003 quarterly information and
comparative 2002 information has also been restated to reflect adjustments to
the Company's previously reported financial information on Form 10-Q. The
restatement affected periods prior to 2002. The impact of the restatement on
such prior periods has reflected as an adjustment to retained earnings as of
June 1, 2001. In addition, the restatement impacts the first, second and third
quarters of 2004. The restated amounts for these quarters are presented in Note
16, Quarterly Results of Operations (Unaudited). Each of the restatement
adjustments is an "error" within the meaning of APB Opinion 20, Accounting
Changes.
30
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003, and 2002
NOTE 2 - RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS - CONTINUED
The Following table presents the impact of the restatement adjustments on net
earnings for the years ended May 31, 2003, 2002 and retained earnings as of June
1, 2001:
Retained
Earnings
Year Ended May 31, June 1,
--------------------------- -----------
2003 2002 2001
----------- ----------- -----------
Net (loss) income as originally reported $(1,412,145) $ 3,008,948 $24,426,345
Adjustments (pretax):
Self-insurance liability 669,136 (523,974) (1,445,533)
Compensated absences 47,826 8,398 (1,609,890)
Other Items 237,373 (237,373) --
----------- ----------- -----------
Total Adjustments (pretax) 954,335 (752,949) (3,055,423)
Tax effect of restatement adjustments (469,955) 276,106 1,120,424
----------- ----------- -----------
Total net adjustments 484,380 (476,843) (1,934,999)
----------- ----------- -----------
Net (loss) income as restated $ (927,765) $ 2,532,105 $22,491,346
=========== =========== ===========
Per share of Common Stock:
Net Loss- Basic as originally reported $ (0.12) $ 0.25
Effect of net adjustments 0.04 (0.04)
----------- -----------
Net (loss) income - Basic as restated $ (0.08) 0.21
=========== ===========
Net (loss) income - Diluted as originally reported $ (0.12) $ 0.25
Effect of net adjustments 0.04 (0.04)
----------- -----------
Net (loss) income - Diluted as restated $ (0.08) $ 0.21
=========== ===========
31
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003, and 2002
NOTE 2 -RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS - CONTINUED
Self-Insurance liability: The Company determined that there had been an error in
its accounting for self-insurance related liabilities. The adjustments required
included recognition of previously unrecorded liabilities and reductions in
amounts previously recognized as prepaid amounts to an employee trust which were
incorrect.
Compensated absences: The Company determined that it had not recorded
liabilities for earned vacation not yet taken as required by GAAP.
Other items: This category includes adjustments previously identified but deemed
to be immaterial. Adjustments in this category change the timing of the items
that were previously recognized.
Income tax adjustments: As a result of the restatement adjustments, the Company
recognized an additional federal and state deferred valuation allowance of
$120,000 in 2003. The remaining amounts pertain to the tax effects of the error
correction themselves.
The following table sets forth the effects of the restatement adjustments
discussed above on the Consolidated Statement of Operations for each of the
years ended May 31, 2003 and 2002.
Year Ended May 31, 2003 Year Ended May 31, 2002
---------------------------- ---------------------------
As Originally As Originally
Reported As Restated Reported As Restated
---------------------------- ---------------------------
Net sales $ 96,367,088 $ 96,604,461 $104,572,608 $104,335,234
Cost of goods sold 51,191,313 50,747,626 54,257,812 54,325,919
Selling, general and administrative expenses 47,959,449 47,686,174 47,205,695 47,653,164
Other income (expenses) 542,028 542,028 1,129,483 1,129,483
------------ ------------ ------------ ------------
(Loss) income before cumulative effect of a change
in accounting policy and income taxes (2,241,646) (1,287,311) 4,238,584 3,485,634
Provision for income taxes (829,501) (359,546) 1,643,037 1,366,930
------------ ------------ ------------ ------------
Net (loss) income before cumulative
effect of a change in accounting policy (1,412,145) (927,765) 2,595,547 2,118,704
Cumulative effect of a change in accounting policy,
net of taxes of $262,037 -- -- 413,401 413,401
------------ ------------ ------------ ------------
Net (loss) income $ (1,412,145) $ (927,765) $ 3,008,948 $ 2,532,105
============ ============ ============ ============
Net (loss) income per share- basic $ (0.12) $ (0.08) $ 0.25 $ 0.21
Average shares outstanding 11,883,305 11,883,305 11,898,097 11,898,097
Net (loss) income per share- diluted $ (0.12) $ (0.08) $ 0.25 $ 0.21
Average shares outstanding 11,883,305 11,883,305 11,900,893 11,900,893
32
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003, and 2002
NOTE 2 -RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS - CONTINUED
The following table sets forth the effects of the restatement adjustments
discussed above on the Consolidated Balance Sheet at May 31, 2003.
May 31, 2003
----------------------------
As Originally
Reported As Restated
----------------------------
ASSETS
Current assets
Cash and cash equivalents $ 1,278,333 $ 1,278,333
Receivables:
Trade accounts 7,835,874 7,835,874
Other 299,142 206,480
Allowance for doubtful accounts (196,100) (196,100)
Notes receivable, current 42,253 42,253
Inventories 3,305,195 3,305,195
Prepaid expenses 3,645,298 2,881,121
Deferred income taxes -- 652,153
------------ ------------
Total current assets 16,209,995 16,005,309
------------ ------------
Property, plant and equipment 15,361,573 15,361,573
Notes receivable, long-term 1,865,747 1,865,747
Cash surrender value of life insurance 2,762,739 2,762,739
Other 496,175 496,175
------------ ------------
TOTAL ASSETS $ 36,696,229 $ 36,491,543
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Checks outstanding in excess of bank balances $ 1,157,108 $ 1,157,108
Accounts payable 1,700,934 1,700,934
Current portion of long-term debt 432,142 432,142
Other accrued expenses 2,381,975 4,289,448
Deferred income taxes 304,698 --
Salary continuation plan 88,595 88,595
------------ ------------
Total current liabilities 6,065,452 7,668,227
------------ ------------
Note payable - bank, non-current 1,990,767 1,990,767
Salary continuation plan 1,870,991 1,870,991
Deferred income taxes 764,032 884,033
------------ ------------
TOTAL LIABILITIES 10,691,242 12,414,018
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 20,821,015 18,893,553
Treasury shares - at cost (1,945,488 shares) (10,533,177) (10,533,177)
============ ============
TOTAL STOCKHOLDERS' EQUITY 26,004,987 24,077,525
============ ============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,696,229 $ 36,491,543
33
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 3 - CHANGE IN ACCOUNTING POLICY
The Company changed its accounting policy in the fourth quarter of fiscal 2002
with regard to slotting fees. The effect of this accounting change was to adopt
this policy as of the beginning of fiscal 2002 (June 1, 2001). Previously,
slotting fees were expensed as incurred. The Company changed this accounting
policy to capitalize and amortize such costs over the expected benefit period,
which is generally one year. This change in accounting policy was made to more
closely match the cost of the shelf space obtained with the slotting fees with
the revenues produced by the shelf space. The cumulative effect of this change
in accounting policy resulted in a noncash cumulative adjustment of $413,401
($0.03 per share), net of taxes. The accounting change also increased net income
before the cumulative effect in 2002 by $197,141 ($0.02 per share).
NOTE 4 - NOTES RECEIVABLE
Notes receivable as of May 31, 2004 and 2003 consist of the following:
2004 2003
---------- -----------
8% note, due in 120 monthly installments of $3,640
through November 1, 2010, collateralized by property .........................$ 220,823 $ 245,743
8% note, due in 360 monthly installments of $12,474
through November 1, 2030, collateralized by property .......................... 1,644,923 1,662,257
---------- -----------
1,865,746 1,908,000
Less current portion ..................................................... 45,760 42,253
---------- -----------
$1,819,986 $1,865,747
========== ===========
Maturities at May 31,
2006 ........ $ 49,558
2007 ........ 53,672
2008 ........ 58,126
2009 ........ 62,951
2010 ........ 68,176
Thereafter ....... 1,527,503
34
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 5 - PREPAID EXPENSES
At May 31, prepaid expenses consist of the following:
Restated
2004 2003
---------- ----------
Prepaid slotting fees ............................................... $ 376,295 $ 333,799
Other prepaid expenses .............................................. 1,916,648 2,547,322
---------- ----------
$2,292,943 $2,881,121
========== ==========
NOTE 6 - OTHER ACCRUED EXPENSES
At May 31, other accrued expenses consist of the following:
Restated
2004 2003
---------- ----------
Accrued payroll ..................................................... $ 450,214 $ 448,250
Self insurance liability ............................................ 1,969,332 1,832,591
Accrued vacation .................................................... 1,463,539 1,461,005
Other accrued expenses .............................................. 451,713 547,602
---------- ----------
$4,334,798 $4,289,448
========== ==========
NOTE 7 - LINE OF CREDIT
The Company has a line of credit agreement with a local bank which permits
borrowing up to $1 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.
NOTE 8 - LONG-TERM LIABILITIES
Long-term debt consist of the following:
2004 2003
---------- ----------
Note payable - bank - payable in equal monthly installments of
$41,688 including interest at the LIBOR index rate plus 1.75%
(2.85% at May 31, 2004) through April 3, 2011, secured by equipment $ 999,562 $2,422,909
Less: current portion ........................................... 477,980 432,142
---------- ----------
$ 521,582 $1,990,767
========== ==========
35
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 8 - LONG-TERM LIABILITIES - CONTINUED
Maturities at May 31,
2006 ........... $491,782
2007 ........... 29,800
Other long-term obligations at May 31, 2004 and 2003, consist of the following:
2004 2003
---------- ----------
Salary continuation plan .................................... $1,901,567 $1,959,586
Less current portion ........................................ (95,948) (88,595)
---------- ----------
$1,805,619 $1,870,991
========== ==========
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 $30,576, $27,000 and $127,341 for fiscal 2004, 2003 and 2002,
respectively.
NOTE 9 - INCOME TAXES
The provision for income taxes consists of the following:
Restated Restated
2004 2003 2002
--------- ---------- -----------
Federal ................................ $ 101,350 $ (320,635) $ 1,416,947
State .................................. 12,550 (40,342) 175,379
--------- ---------- -----------
113,900 (360,977) 1,592,326
Federal ................................ (27,859) 1,272 (200,560)
State .................................. (2,392) 159 (24,836)
--------- ---------- -----------
(30,251) 1,431 (225,396)
--------- ---------- -----------
$ 83,649 $ (359,546) $ 1,366,930
========= ========== ===========
36
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 9 - INCOME TAXES - CONTINUED
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:
Restated Restated
2004 2003 2002
-------- --------- ----------
Tax on income at statutory rates ........................... $ 12,853 $(437,685) $1,185,116
(Decrease) increase resulting from:
State income taxes, less Federal income tax effect ....... 8,741 (26,894) 149,000
Tax exempt interest ...................................... (1,388) (1,356) (9,303)
Change in valuation allowance ............................ 55,000 120,000 --
Other - net .............................................. 8,443 (13,611) 42,117
-------- --------- ----------
Total ................................................... $ 83,649 $(359,546) $1,366,930
The tax effects of temporary differences that result in deferred tax assets and
liabilities are as follows:
Restated
2004 2003
----------- ------------
Deferred tax assets
Salary continuation plan ............................................... $ 697,305 $ 718,580
Accrued vacation ....................................................... 536,680 535,751
Contribution carryforward .............................................. 229,588 121,491
Inventory capitalization ............................................... 65,688 58,922
Allowance for doubtful accounts ........................................ 67,840 71,910
Other accrued expenses ................................................. 86,582 107,974
----------- ------------
Gross defered tax assets before valuation allowance ................... 1,683,683 1,614,628
Less valuation allowance .............................................. (175,000) (120,000)
----------- ------------
Total deferred tax assets ................................................ 1,508,683 1,494,628
----------- ------------
Deferred tax liabilities
Property and equipment ................................................. 1,572,325 1,604,103
Prepaid expenses ....................................................... 137,987 122,405
----------- ------------
Total deferred tax liabilities ........................................... 1,710,312 1,726,508
----------- ------------
Net deferred tax liability ............................................ $ (201,629) $ (231,880)
=========== ============
37
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 10 - 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 fifteen 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 percent of the participants'
compensation. The annual contributions to the plans are determined by the Board
of Directors. Total plan expenses for the years ended May 31, 2004, 2003 and
2002 were $94,683, $231,332, and $177,405, 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. The Employee Stock Ownership Plan expenses for the
years ended May 31, 2004, 2003 and 2002 were $-0-. Each participant's account is
credited with an allocation of shares acquired with the Company's annual
contributions, dividends received on ESOP shares and forfeitures of terminated
participants' nonvested accounts.
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 such 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:
2004 2003
----------- -----------
Accrued Salary Continuation Plan - beginning of year ............. $ 1,959,586 $ 2,014,391
Benefits Accrued ................................................. 30,576 27,000
Benefits Paid .................................................... (88,595) (81,805)
----------- ------------
Accrued Salary Continuation Plan - end of year ................... $ 1,901,567 $ 1,959,586
=========== ============
NOTE 11 - 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 the 2004, 2003, and 2002 are exercisable.
The 1996 Plan provides for the granting of Incentive Stock Options as defined
under the Internal Revenue Code. Under the Plan, grants may be made to selected
officers and employees, of incentive stock option 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.
38
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 11 - 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:
Shares Under Option 2004 2003 2002
-------------------- ----------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------- -------- ------- --------- -------- ---------
Outstanding - beginning of year ........... 369,000 $ 3.78 369,000 $ 3.78 40,000 $ 3.50
Granted ................................ -- -- -- -- 330,000 3.81
Exercised .............................. -- -- -- -- (1,000) 3.81
Forfeited .............................. -- -- -- -- -- --
Cancelled .............................. -- -- -- -- -- --
------- -------- ------- --------- -------- ---------
Outstanding - end of year ................. 369,000 $ 3.78 369,000 $ 3.78 369,000 $ 3.78
======= ======== ======= ========= ======== =========
Pro forma information regarding net income and earnings per share is presented
as if the Company had accounted for its employees stock options under the fair
value method. The per share weighted average fair value of the stock options
granted during fiscal 2002 was $.25. The fair value of these options was
estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions: risk-free interest rate 5.05
percent; dividend yield 6.56 percent; expected option life of 5 years; and
expected volatility of 15 percent. No options were granted during 2004 or 2003.
The Black-Scholes options pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect an option's fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of it employee stock options.
39
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 12 - 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". Options to purchase 369,000 shares of common
stock at May 31, 2004 and 2003 were not included in the computation of diluted
earnings per share because the options' exercise price were greater than the
average market price of the common shares and, therefore, the effect would be
antidulitive. The following reconciles the information used to compute basic and
diluted earnings per share:
Average Common Stock Shares
-----------------------------------------------
2004 2003 2002
Basic weighted average shares outstanding .............................. 11,879,891 11,883,305 11,898,097
Effect of options ...................................................... -- -- 2,796
---------- ---------- ----------
Diluted shares 11,879,891 11,883,305 11,900,893
========== ========== ==========
NOTE 13 - 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 instrument,
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
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 31, 2004 and 2003 the
aggregate fair value was approximately $2,437,778 and $2,507,357 compared to a
carrying amount of $1,865,746 and $1,908,000, respectively.
40
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 13 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS -CONTINUED
The interest rate on the Company's bank debt is reset monthly to reflect the 30
day LIBOR rate. Consequently, the carrying value of the bank debt approximates
fair value.
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 14 - COMMITMENTS AND CONTINGENCIES
Rental expense was $493,028 in 2004, $498,031 in 2003, and $547,742 in 2002. At
May 31, 2004, the Company was obligated under certain operating leases for
buildings, office space and equipment.
In May of 2004, the Company terminated a lease for equipment from a company
which is principally owned by a major shareholder of Golden Enterprises, Inc.
The lease was terminated through a purchase of the equipment for $160,000.
The Company leases its airplane to a major shareholder of the Company for
approximately $20,000 per month. The lease provides for his personal use of the
airplane for up to 100 flight hours per year and is for a term of one year with
automatic renewal at the option of either party.
The Company had letters of credit in the amount of $1,758,987 outstanding at May
31, 2004 to support the Company's commercial self-insurance program. The Company
pays a commitment fee of 0.375% to maintain the letters of credit.
The Company entered into a five-year term product purchase commitment during the
year ending May 31, 2001 with a supplier. Under the terms of the agreement the
minimum purchase quantity and the unit purchase price were fixed resulting in a
minimum first year commitment of approximately $2,171,000. After the first year,
the minimum purchase quantity was fixed and the purchase unit price was
negotiable, based on current market. Subsequently, in September 2002, the
product purchase agreement was amended to fix the purchase unit price and
establish specific annual quantities. As of May 31, 2004 the Company's
outstanding purchase commitments were as follows:
Years ending
May 31, Amount
------------- ---------
2005 ...................... $1,491,000
2006 ...................... 605,000
The Company has entered into various other short term purchase commitments with
suppliers for raw materials in the normal course of business.
41
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 15 -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's notes receivable require collateral and buyer investment and
management believes they are well secured.
NOTE 16 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations of
the years ended May 31, 2004 and 2003.
RESTATED RESTATED RESTATED
Per Share
Net (Loss) Net (Loss)
Net Sales Income Income
----------- ---------- --------
Quarter
--------
2004
-----
First ...................................... $24,580,778 $ 431,692 $ 0.04
Second ..................................... 23,296,981 (196,021) (0.02)
Third ...................................... 24,102,358 (606,028) (0.05)
Fourth ..................................... 25,603,376 324,511 0.03
----------- --------- --------
For the year .......................... $97,583,493 $ (45,846) $ --
=========== ========= ========
2003
-----
First ...................................... $24,840,321 $ 222,230 $ 0.01
Second ..................................... 23,491,688 (385,437) (0.03)
Third ...................................... 24,021,750 (483,635) (0.04)
Fourth ..................................... 24,250,702 (280,923) (0.02)
----------- --------- --------
For the year .......................... $96,604,461 $(927,765) $ (0.08)
=========== ========= ========
42
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
May 31, 2004, 2003 and 2002
NOTE 17 - SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
The following tabulation gives certain supplementary statement of income
information for continuing operations for the years ended May 31, 2004, 2003 and
2002:
2004 2003 2002
---------- ---------- ----------
Maintenance and repairs ............... $5,914,221 $5,625,851 $5,290,498
Depreciation .......................... 2,346,880 2,490,329 2,593,621
Payroll taxes ......................... 2,241,443 2,337,330 2,473,871
Advertising costs ..................... 4,452,926 5,031,409 4,371,719
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 18 - SUBSEQUENT EVENT
The Company signed a line of credit note with a financial institution with a
limit of $2,262,500 on July 6, 2004. The interest rate will be a monthly
variable rate based on the LIBOR rate plus 1.75%. The purpose of the line of
credit is to pay off the current line of credit and to purchase new vehicles.
The line of credit note expires on November 30, 2004, at which time the Company
plans to convert the line of credit into a note with a fixed monthly payment and
maturity date which will be collateralized by the above equipment purchased.
43
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
SUPPLEMENTAL FINANCIAL INFORMATION
Selected quarterly financial data for the
fiscal years ended May 31, 2004 and 2003 (unaudited)
(Dollar amounts in thousands, except per share data)
For a description of the restatement items, which also affect the unaudited
quarterly date, see Note 2, Restatement of Previously Issued Financial
Statements, to these restated consolidated financial statements.
Restated
----------------------------------------
First Second Third Fourth
2004 Quarter Quarter Quarter Quarter
----------- ----------- ------------ ----------
Total revenues $ 24,581 $ 23,297 $ 24,102 $ 25,603
=========== =========== ============ ==========
Income before income taxes $ 685 $ (324) $ (976) $ 652
=========== =========== ============ ==========
Net income $ 432 $ (196) $ (606) $ 325
=========== =========== ============ ==========
Net income per share $ .04 $ (0.02) $ (0.05) $ .03
=========== =========== ============ ==========
Cash dividends per share $ .0313 $ .0313 $ .0313 $ .0313
=========== =========== ============ ==========
As Originally Reported
--------------------------------------
First Second Third
2004 Quarter Quarter Quarter
Total revenues $ 24,581 $ 23,297 $ 24,102
=========== ========== =========
Income before income taxes $ 413 $ (518) $ (887)
=========== ========== =========
Net income $ 259 $ (319) $ (550)
=========== ========== =========
Net income per share $ .02 $ (0.03) $ (0.05)
=========== ========== =========
Cash dividends per share $ .0313 $ .0313 $ .0313
=========== ========== =========
44
Effect of restatement adjustments on previously issued 2004 Quarterly Financial
Statements
Quarter Ended
-------------------------------------
August 31 Nov 30 Feb 29
2004 2003 2003 2004
--------- --------- ----------
Net Income (loss) as originally reported $ 259 $ (319) $ (550)
Adjustments (pre-tax):
Accrued vacation liability -- (1) (1)
--------- --------- ----------
Self insurance liability 273 195 (88)
Total adjustments (pre-tax) 273 194 (89)
Total taxes 100 71 (33)
--------- --------- ----------
Total net adjustments 173 123 (56)
--------- --------- ----------
Net income as restated $ 432 $ (196) $ (606)
========= ========= ==========
Per share of Common Stock:
Net income (loss)-Basic as originally reported $ 0.02 $ (0.03) $ (0.05)
Effect of net adjustments 0.02 0.01 --
--------- --------- ----------
Net income-Basic as restated $ 0.04 $ (0.02) $ (0.05)
========= ========= =========
Net income-Dilluted as originally reported $ 0.02 $ (0.03) $ (0.05)
Efect of net adjustments 0.02 0.01 --
--------- --------- ----------
Net income-Dilluted as restated $ 0.04 $ (0.02) $ (0.05)
========= ========= =========
45
2003 Restated
--------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ---------- ----------
Total revenues $ 24,840 $23,492 $ 24,022 $ 24,251
=========== ======== ======== ==========
Income before income taxes $ 346 $ (624) $ (779) $ (230
=========== ======== ======== ==========
Net income $ 222 $ (385) $ (484) $ (281
=========== ======== ======== ==========
Net income per share $ .02 $ (0.03) $ (0.04) $ (0.02
=========== ======== ======== ==========
Cash dividends per share $ 0.0625 $ .0625 $ .0313 $ .0313
=========== ======== ======== ==========
2003 As Originally Reported
--------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
Total revenues $ 24,803 $23,425 $ 23,955 $ 24,184
=========== ======== ======== ==========
Income before income taxes $ (58) $ (618) $ (701) $ (865)
=========== ======== ======== ==========
Net income $ (34) $ (382) $ (434) $ (562)
=========== ======== ======== ==========
Net income per share $ 0.00 $ (0.03) $ (0.04) $ (0.05)
=========== ======== ======== ==========
Cash dividends per share $ 0.0625 $ .0625 $ .0313 $ .0313
=========== ======== ======== ==========
46
Effect of restatement adjustments on previously issued 2004 Quarterly Financial
Statements
2003 Quarter Ended
--------------------------------------------------------
August 31 Nov 30 Feb 29 31-May
2002 2002 2003 2003
--------- --------- ------ ---------
Net (loss) income as originally reported $ (34) $ (382) $ (434) $ (562)
Adjustments (pre-tax):
Accrued vacation liability 11 11 11 15
Self insurance liability 356 (84) (156) 553
Other 37 68 67 67
--------- -------- ------ ------
Total adjustments (pre-tax) 404 (5) (78) 635
Total taxes 148 (2) (28) 354
--------- -------- ------ ------
Total net adjustments 256 (3) (50) 281
--------- -------- ------ ------
Net income as restated $ 222 $ (385) $ (484) $ (281)
========= ======== ====== ======
Per share of Common Stock:
Net income (loss)-Basic as originally reported $ -- $ (0.03) $(0.04) $(0.05)
Effect of net adjustments 0.02 -- -- 0.03
--------- -------- ------ ------
Net income-Basic as restated $ 0.02 $ (0.03) $(0.04) $(0.02)
========= ======== ====== ======
Net income-Dilluted as originally reported $ -- $ (0.03) $(0.04) $(0.05)
Efect of net adjustments 0.02 -- -- 0.03
--------- -------- ------ ------
Net income-Dilluted as restated $ 0.02 $ (0.03) $(0.04) $(0.02)
========= ======== ====== ======
47
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
ITEM 9 A. - CONTROLS AND PROCEDURES
The Company performed an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
the end of the fiscal year ended May 31, 2004. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that as of the end
of the fiscal year ended May 31, 2004, the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed in
reports that the Company files or submits under the Securities and Exchange Act
of 1934 is recorded, processed, summarized and reported within the specified
time periods.
During the performance of the audit for the fiscal year ended May 31,
2004, the Company's independent auditors, Dudley, Hopton-Jones, Sims & Freeman,
PLLP (the "Auditor"), identified and communicated to the Company material
weaknesses relating to the Company's accounting for its vacation pay (which was
not in conformity with generally accepted accounting principles ("GAAP")) and
self insured obligations. The Company was not accruing for earned vacation pay
and its liabilities were understated for certain incurred as well as incurred
but not reported self-insured casualty claims and health costs. Based upon the
forgoing, the Company has restated its audited financial statements for fiscal
year 2003 and for the first three quarters of fiscal year 2004 to properly
account for accruals for its vacation pay and self-insured health and casualty
obligations. The Company believed, during the years being restated, that it was
correctly following proper accounting practices. For a full discussion of the
restatements, see "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Company has accepted the recommendations of its Auditor to reduce
the recurrence of material weaknesses and is implementing policies and
procedures to strengthen the Company's internal controls, including, among other
things, the following: (1) developing written policies and procedures to be
followed with respect to accounting for vacation pay and self-insured
obligations; (2) formally designating management level personnel responsible for
accounting for vacation pay and self-insured obligations; (3) expanding internal
audit activities to include a quarterly examination of vacation pay and
self-insured obligations; (4) implementing a fully developed actuarially based
method of measuring liabilities related to self-insured obligations; and (5)
implementing quarterly communications among management, internal auditor, and
the Audit Committee prior to filing Forms 10-Q.
Other than as described above, there has not been any change in the
Company's internal controls over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
ITEM 9 B. - OTHER INFORMATION
Not Applicable.
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
With the exception of information 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 entitled "Election of Directors," "Additional
Information Concerning the Board of Directors," "Executive Compensation and
Other Information" and "Code of Conduct and Ethics" of the Company's Proxy
Statement for the 2004 Annual Meeting of Stockholders to be held September 23,
2004.
48
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 2004 Annual Meeting of Stockholders to be held
September 23, 2004. See Item 5 of this Annual Report on Form 10-K for
information concerning the Company's equity compensation plans.
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 2004 Annual Meeting of Stockholders to be
held September 23, 2004.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
section entitled "Certain Transactions" of the Company's Proxy Statement for the
2004 Annual Meeting of Stockholders to be held September 23, 2004.
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 2004 Annual Meeting of Stockholders to be held September 23, 2004.
Prior to September 28, 2004, the Company will file a definitive Proxy
Statement with the Securities and Exchange Commission pursuant to Regulation 14A
which involves the election of directors.
49
PART IV
ITEM 15.- EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. and 2. LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES
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 31, 2004 and 2003
Consolidated Statements of Operations- Years ended May 31, 2004, 2003, and
2002
Consolidated Statements of Changes in Stockholders' Equity- Years ended May
31, 2004, 2003 and 2002
Consolidated Statements of Cash Flows- Years ended May 31, 2004, 2003 and
2002
Notes to Consolidated Financial Statements
The following consolidated financial statements schedule is included in
Item 16 (d):
Schedule II- Valuation and Qualifying Accounts
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.
Section 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.
3.2 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated December 22, 1976.
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).
50
(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).
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 Lease of Aircraft executed by and between Golden Flake Snack Foods,
Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and
Sloan Y. Bashinsky, Sr. (incorporated by reference as Exhibit 10.1 to
Golden Enterprises, Inc. May 31, 1999 Form 10-K filed with the
Commission).
10.8 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).
10.9 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).
10.10 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).
10.11 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).
50-A
10.12 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).
10.13 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).
10.14 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).
10.15 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).
(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.
(21) Subsidiaries of the Registrant
(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.
(b) Exhibits. See (a) 3. above.
(c) Financial Statement Schedules. The response to this portion of Item 15, is
submitted under Item 15(a) 1. and 2. above.
50-B
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 26, 2004
----------------------------------------------------------- ---------------
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 26, 2004
------------------------------------
JOHN S. STEIN
/S/ MARK W. MCCUTCHEON Chief Executive August 26, 2004
------------------------------------ Officer, President and Director
MARK W. MCCUTCHEON
/S/ PATTY TOWNSEND Vice President, Secretary and August 26, 2004
------------------------------------ Principal Financial Officer
PATTY TOWNSEND
/S/ F. WAYNE PATE Director August 26, 2004
------------------------------------
F. WAYNE PATE
/S/ EDWARD R. PASCOE Director August 26, 2004
------------------------------------
EDWARD R. PASCOE
/S/ JOHN P. MCKLEROY, JR. Director August 26, 2004
------------------------------------
JOHN P. MCKLEROY, JR.
/S/ JAMES I. ROTENSTREICH Director August 26, 2004
------------------------------------
JAMES I. ROTENSTREICH
Director August 26, 2004
------------------------------------
JOHN S.P. SAMFORD
Director August 26, 2004
------------------------------------
J. WALLACE NALL, JR.
/S/ JOANN F. BASHINSKY Director August 26, 2004
------------------------------------
JOANN F. BASHINSKY
51
SCHEDULE II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MAY 31, 2002, 2003 AND 2004
Additions
Balance at Charged to Balance
Beginning Costs and at End
Allowance for Doubtful Accounts of Year Expenses Deductions of Year
-------------------------------------------- -------------- -------------- --------------- -------------
Year ended May 31, 2002 $346,100 $(113,175) $36,825 $196,100
============== ============== =============== =============
Year ended May 31, 2003 $196,100 $224,722 $224,722 $196,100
============== ============== =============== =============
Year ended May 31, 2004 $196,100 $131,771 $142,871 $185,000
============== ============== =============== =============
52
INDEX TO EXHIBITS
PAGE
3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally
known as "Golden Flake, Inc.") dated December 11, 1967. 56
3.2 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated December 22, 1976. 67
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).
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).
53
PAGE
----
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 Lease of Aircraft executed by and between Golden Flake Snack Foods,
Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Sloan
Y. Bashinsky, Sr. (incorporated by reference as Exhibit 10.1 to Golden
Enterprises, Inc. May 31, 1999 Form 10-K filed with the Commission).
10.8 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).
10.9 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).
10.10 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).
10.11 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).
10.12 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).
10.13 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).
10.14 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).
10.15 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).
14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the
Board of Directors on April 8, 2004. 70
21 Subsidiaries of the Registrant 74
54
PAGE
----
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 76
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 77
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 78
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 79
55