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SPAIN & GILLON
THE ZINSZER BUILDING
2117 SECOND AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
TELEPHONE (205) 328-4100
August 25, 1995
Securities and Exchange Commission
Division of Corporate Finance
500 North Capitol Street, N.W.
Washington, D.C. 20549
Re: Golden Enterprises, Inc.
File No.: 0-4339
Form 10-K Annual Report
Gentlemen:
Pursuant to the Securities and Exchange Act, Golden Enterprises, Inc. is
filing by EDGAR a Form 10-K Annual Report for the fiscal year ended May 31,
1995 which contains financial statement schedules and exhibits.
The Company is also filing by EDGAR a statement that the financial
statements contained in the 10-K Report for the fiscal year ended May 31, 1995
do not reflect any change from the preceding year in any accounting principles
or practices or in the method of applying any such principles or practices.
A check payable to the Securities and Exchange Commission Acct. No.
910-8739 in the amount of $250.00 as required pursuant to Regulation Section
240.13(a)-1 has been mailed to the Mellon Bank.
Yours very truly,
SPAIN & GILLON
By: /s/ John P. McKleroy, Jr.
John P. McKleroy, Jr.
GOLDEN ENTERPRISES, INC.
August 25, 1995
Securities and Exchange Commission
Division of Corporate Finance
500 North Capitol Street, N.W.
Washington, D.C. 20549
Re: Golden Enterprises, Inc.
File No.: 0-4339
10-K Report
Gentlemen:
The undersigned, John H. Shannon, Vice President, Secretary and
Controller of Golden Enterprises, Inc., hereby declares that the financial
statements contained in the Company's 10-K Report for the fiscal year
ended May 31, 1995 do not reflect any change from the preceding year in any
accounting principles or practices or in the method of applying any such
principles or practices.
WITNESS MY SIGNATURE, this the 25th day of August, 1995.
/s/ John H. Shannon
JOHN H. SHANNON
Vice President, Secretary
and Controller
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended May 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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.)
Suite 212, 2101 Magnolia Avenue, South
Birmingham, Alabama 35205
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including area code
(205) 326-6101
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. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of August 1, 1995.
Common Stock, Par Value $0.66 2/3 -- $33,468,298
Indicate the number of shares outstanding of each of the
Registrant's Classes of Common Stock, as of August 1, 1995.
Class Outstanding at August 1, 1995
--------------------------------- -----------------------------
Common Stock, Par Value $0.66 2/3 12,261,950 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the year ended May
31, 1995 are incorporated by reference into Part III.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -- 1995
GOLDEN ENTERPRISES, INC.
Page
PART I
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of
Security Holders 7
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 8
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operation 10
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 27
PART III
Item 10. Directors and Executive Officers of the Registrant 27
Item 11. Executive Compensation 27
Item 12. Security Ownership of Certain Beneficial
Owners and Management 27
Item 13. Certain Relationships and Related Transactions 27
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 27
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 25, 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 110 South Sixth Street, Birmingham, Alabama. Golden Flake manufactures
and distributes a full line of salted snack items, such as potato chips,
tortilla chips, corn chips, pretzels, fried pork skins, baked and fried
cheese curls, peanut butter crackers, cheese crackers, onion rings and
buttered and cheese popcorn. These products are all packaged in
cellophane bags or other suitable wrapping material. Golden Flake also
sells a line of cakes and cookie items, canned dips, 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
to commercial establishments which sell food products in Alabama and in
parts of Tennessee, Kentucky, Georgia, Florida, Mississippi, Louisiana,
North Carolina, South Carolina, Arkansas, Missouri and Indiana. The
products are distributed by approximately 580 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 912 company owned vehicles to support the route sales system,
including 40 tractors and 73 trailers for long haul delivery to the
various company warehouses located throughout its distribution areas, 719
store delivery vehicles and 80 cars and miscellaneous vehicles. Golden
Flake also leases 20 trailers.
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 1,300 employees. Approximately
750 employees are involved in route sales and sales supervision,
approximately 450 are in production and production supervision, and
approximately 100 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 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.
Environmental Matters
There have been no material effects of compliance with government
provisions regulating discharge of materials into the environment.
Recent Developments
Since the beginning of its last fiscal year, no significant change
has occurred in the kinds of products manufactured or in the markets or
methods of distribution, and no material changes or developments have
occurred in the business done and intended to be done by Golden Flake.
Steel City Bolt & Screw, Inc. and Nall & Associates, Inc.
On February 8, 1995, the Company sold all of the capital stock of
Steel City Bolt & Screw, Inc. ("Steel City") and Nall & Associates, Inc.
("Nall"), which were wholly-owned subsidiaries of the Company, to Coosa
Acquisitions, Inc., an Alabama corporation ("Coosa"), for a purchase
price of $2,100,000. For accounting purposes, the sale was treated to have
occurred as of the close of business on January 31, 1995. All of the
purchase price was paid in cash at closing. Coosa is a non-affiliated
company and was created for the specific purpose of purchasing the
capital stock of Steel City and Nall. After the closing, Steel City and
Nall became wholly-owned subsidiaries of Coosa and were then merged into
Coosa, which changed its operating name to Steel City Bolt & Screw, Inc.
Executive Officers Of Registrant
And Its Subsidiary
Name and Age Position and Offices with Management
------------ ------------------------------------
Sloan Y. Bashinsky, Sr., 75 Mr. Bashinsky is Chairman of the Board
and Treasurer of the Company. He has
been employed with the Company since
1946. Mr. Bashinsky has been Chairman
of the Board, with a one year
interruption, since 1972. Mr. Bashinsky
served as Chief Executive Officer from
1976 to June 1, 1991. Prior to becoming
Chairman of the Board in 1972, he was
President from 1956 to 1972 and
reassumed the position of President
from 1984 to July 1985. Mr. Bashinsky
served as Chairman of the Board,
President and Chief Executive Officer
under a written employment agreement
until May 31, 1985 at which time the
employment agreement terminated. Mr.
Bashinsky is elected Chairman of the
Board and Treasurer on an annual basis
with his present term to expire May 31,
1996.
John S. Stein, 58 Mr. Stein is President and Chief
Executive Officer of the Company. He
was elected Chief Executive Officer on
June 1, 1991 and has served as
President of the Company since 1985.
Mr. Stein served as President of Golden
Flake Snack Foods, Inc. from 1976 to
September 20, 1991. Mr. Stein has been
employed with the Company and its
subsidiaries since 1961. Mr. Stein is
elected President and Chief Executive
Officer annually, and his present term
will expire on May 31, 1996.
F. Wayne Pate, 60 Mr. Pate is President of Golden Flake
Snack Foods, Inc., a wholly-owned
subsidiary of the Company. He was
elected President on September 20,
1991, and has been employed by Golden
Flake since 1968. During his
employment, he has served as Vice
President of Research and Development,
Vice President of Manufacturing and
Executive Vice President of
Manufacturing and Sales. Mr. Pate is
elected President annually, and his
present term will expire on May 31,
1996.
John H. Shannon, 58 Mr. Shannon has been employed with the
Company since 1962. He was elected Controller
in 1976, Secretary in 1978 and Vice-President
in 1979, and has served in these capacities
since then. Mr. Shannon is elected to his
positions on an annual basis, and his present
term of office will expire on May 31, 1996.
ITEM 2. -- PROPERTIES
The office headquarters of the Company are located at Suite 212,
2101 Magnolia Avenue South, Birmingham, Alabama 35205. The Company
occupies approximately 1300 square feet of office space under lease. The
properties of the subsidiary are described below.
Golden Flake
Manufacturing Plants and Office Headquarters
The main plant and office headquarters of Golden Flake are located
at 110 South Sixth Street, Birmingham, Alabama, and are situated on
approximately 23 acres of land which is serviced by a railroad spur
track. This facility consists of 6 buildings which have a total of
approximately 300,000 square feet of floor area. The plant manufactures
a full line of Golden Flake products. Golden Flake maintains a garage and
vehicle maintenance service center from which it services, maintains,
repairs and rebuilds its fleet and delivery trucks. Golden Flake has
adequate employee and fleet parking.
Golden Flake owns approximately 17 acres of undeveloped real estate
which is adjacent to its main plant and office headquarters in
Birmingham. 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 has a manufacturing plant in Nashville, Tennessee,
which is located at 2930 Kraft Drive. The building is of masonry
construction and has approximately 70,000 square feet of floor space.
This facility is serviced by a railroad spur track. Golden Flake
manufactures potato chips and pretzels at this plant. The Company also
owns 2 acres of land across the street from its Nashville plant which is
presently used for parking. 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 and is located on a 56-acre site on
Silver Springs Boulevard. The Company manufactures corn chips, tortilla
chips and potato chips from this facility. This manufacturing plant, with
allowance for future expansion, will use approximately 27 acres of the
56-acre site. The remaining 29 acres are undeveloped and are readily
available for future use for commercial and/or light industrial
development. Plans for the utilization of this property have not been
finalized.
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 Montgomery, 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, Forest Park and
Macon, Georgia; Jacksonville, Panama City, Clearwater, Tampa, Orlando,
Tallahassee and Pensacola, Florida; Baton Rouge and New Orleans,
Louisiana; Louisville, Kentucky 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 912 vehicles which includes 719 route
trucks, 40 tractors, 73 trailers and 80 cars and miscellaneous vehicles.
There are no liens or encumbrances on Golden Flake's vehicle fleet.
Golden Flake also leases 20 trailers and 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.
PART II
ITEM 5. -- MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES
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
range of high and low bid quotations for the common stock during each
quarter of the fiscal years ended May 31, 1995 and 1994 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 Dividends Paid
Quarter High Low Per share
Fiscal 1995
First $8 $6 3/4 $.11 1/4
Second 7 1/4 6 3/4 .11 1/2
Third 7 1/4 6 3/4 .11 1/2
Fourth 7 1/4 6 3/4 .11 1/2
Fiscal 1994
First $8 3/4 $7 3/4 $.11
Second 8 3/4 7 7/8 .11 1/4
Third 8 1/4 7 3/4 .11 1/4
Fourth 8 1/8 7 1/8 .11 1/4
These over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission.
As of August 1, 1995, there were approximately 1,800 record holders
of common stock.
ITEM 6. -- SELECTED FINANCIAL DATA
GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES
FINANCIAL REVIEW (Dollar amounts in thousands, except per share data)
Year Ended May 31,
1995 1994 1993 1992 1991
OPERATIONS
Net sales and other operating income $128,771 $126,462 $130,070 $127,178 $124,595
Investment income 674 438 459 664 789
Total revenues 129,445 126,900 130,529 127,842 125,384
Cost of sales 56,285 55,114 55,110 54,982 52,538
Selling, general and administrative
expenses 64,863 67,143 67,521 65,392 66,020
Interest -- -- 3 7 14
Income before income taxes 8,297 4,643 7,895 7,461 6,812
Federal and state income taxes 3,146 1,662 2,943 2,731 2,553
Income from continuing operations 5,151 2,981 4,592 4,730 4,259
DISCONTINUED OPERATIONS:
Income from operations of
discontinued business net of
related income taxes 3 92 29 45 142
Net income 5,154 3,073 4,981 4,775 4,401
FINANCIAL DATA
Depreciation and amortization $ 2,856 $ 3,377 $ 3,893 $ 4,227 $ 4,962
Capital expenditures, net of disposals 1,366 741 1,840 2,380 1,135
Working capital 25,788 26,212 27,402 26,730 25,564
Long-term debt 599 479 287 150 88
Stockholders' equity 43,490 45,628 49,084 50,103 50,614
Total assets 52,012 54,347 57,771 58,902 60,251
COMMON STOCK DATA
Net income $ .42 $ .25 $ .40 $ .38 $ .35
Dividends .46 .45 .44 .42 .39
Book value 3.55 3.65 3.90 3.96 4.00
Price range (high and low bid) 8-6 3/4 8 3/4-7 1/8 10 1/4-7 1/2 11-6 3/4 11 1/2 - 6 7/8
FINANCIAL STATISTICS
Current ratio 5.26 5.25 5.48 5.52 4.69
Net income as percent of total revenues
from continuing operations 4.0% 2.4% 3.8% 3.8% 3.5%
Net income as percent of stockholders'
equity (a) 11.6% 6.5% 10.0% 9.5% 8.6%
OTHER DATA
Weighted average common shares
outstanding 12,376,769 12,540,809 12,595,896 12,636,723 12,707,477
Common shares outstanding at
year-end 12,261,950 12,496,446 12,600,403 12,639,400 12,668,427
Approximate number of stockholders 1,800 1,900 2,000 2,000 1,900
(a) Average amounts at beginning and end of fiscal year.
ITEM 7. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Working capital was $25.8 million at May 31, 1995 compared to $26.2
million at May 31, 1994. Net cash provided by operations amounted to $6.6
million in fiscal year 1995, $5.0 million in 1994, and $9.7 million in
1993. An additional $0.3 million in cash was provided this year by a net
decrease in investment securities compared to $2.0 million in 1994, and
a usage of $0.9 million in 1993 to increase investment securities. $2.1
million in cash was received this year from the sale of the Company's
fastener division, which consisted of two wholly-owned subsidiaries,
Steel City Bolt & Screw, Inc. and Nall & Associates, Inc.
Additions to property, plant and equipment, net of disposals, were
$1.4 million, $0.7 million, and $1.8 million in fiscal years 1995, 1994,
and 1993, respectively, and are expected to be about $5.0 million in
1996.
Cash dividends of $5.7 million were paid during fiscal year 1995
compared to $5.6 million in 1994 and $5.5 million in 1993.
Cash in the amount of $1.9 million was used to purchase treasury
shares during fiscal 1995 while $1.2 million and $0.7 million was used
for this purpose in 1994 and 1993, respectively.
Long-term liabilities as a percentage of total capitalization was
1.3% at May 31, 1995. The Company's current ratio at the year end was
5.26 to 1.00.
Management is not aware of any trends or events that will cause a
material change in the Company's liquidity.
Operating Results
Net sales and other operating income increased by 1.8% in fiscal
year 1995, decreased by 2.8% in 1994, and increased by 2.3% in 1993.
Although the intense competition in the snack food industry continued in
1995, sales were up compared to 1994 because of a better general economy
and improved effectiveness of the Company's advertising and promotions.
The Company's investment income as a percentage of income before
taxes was 8.1% in 1995, 9.4% in 1994, and 5.8% in 1993. The decrease in
this percentage in 1995 compared to 1994 was due to the increase in the
Company's operating income, and the increase in 1994 compared to 1993 was
due to the decrease in 1994's operating income.
Cost of sales was 43.9% in 1995, 43.8% in 1994, and 42.8% in 1993.
This percentage stabilized for the past two years after increasing
considerably in 1994 due to increased raw material costs primarily in
cooking oil and potatoes.
Selling, general and administrative expenses were 50.6% of sales in
1995, 53.4% in 1994, and 52.5% in 1993. The significant improvement in
this percentage for 1995 was due to a decrease in advertising expense and
the impact of route and job consolidations. Prior to 1995, the upward
trend in this percentage was due to increases in advertising and
promotional expense and employee health benefit costs.
The Company's fastener business was sold for cash as of January 31,
1995. Accordingly, the income from operations of the fastener business
is reported as income from operations of discontinued business. The
consolidated financial statements have been reclassified to report
separately the assets, liabilities and operating results of the
discontinued business. The Company's consolidated financial statements
and notes to consolidated financial statements have been restated to
reflect comparative information on the continuing business. The
discontinuance of the fastener business will not significantly impact the
Company's performance because fastener revenues were less than 4% of the
Company's total revenues, and fastener income was below 3% of total
income.
Inflation
Although inflation has moderated in recent years, certain costs and
expenses of the Company are affected adversely by inflation, and the
Company's prices for its products for the last five years have remained
relatively flat. The Company will continue to contend with the effect of
further inflation through efficient purchasing, improved manufacturing
methods, pricing, and by monitoring and controlling expenses.
SFAS No. 107
The Financial Accounting Standards Board has issued Standard No. 107
which is required to be adopted by the Company in a future year. This
standard is discussed in Note 1 to the Consolidated Financial Statements.
The standard will be implemented when required. Management does not
believe the implementation of the standard will have a material impact
on the Company's financial statements.
Environmental Matters
There have been no material effects of compliance with governmental
provisions regulating discharge of materials into the environment.
ITEM 8. -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and its
subsidiaries for the year ended May 31, 1995, consisting of the
following, are contained herein:
Consolidated Balance Sheets -- May 31, 1995 and 1994
Consolidated Statements of Income -- Years ended May 31, 1995, 1994 and 1993
Consolidated Statements of -- Years ended May 31, 1995, 1994 and 1993 Cash
Flows
Consolidated Statements of Changes -- Years ended May 31, 1995, 1994 and
1993 in Stockholders' Equity
Notes to Consolidated Financial Statements -- Years ended May 31, 1995,
1994 and 1993
Quarterly Results of Operations -- Years ended May 31, 1995 and 1994
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 subsidiaries as of May 31, 1995 and 1994,
and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the
period ended May 31, 1995. 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 generally accepted
auditing standards. 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 subsidiaries as of May
31, 1995 and 1994, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended May 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed in item
14(a) 2 are presented for purposes of complying with the Securities
Exchange Commission's rules and are not part of the basic financial
statements. These schedules for the years ended May 31, 1995, 1994, and
1993, have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein
in relation to the basic financial statements taken as a whole.
Birmingham, Alabama
July 12, 1995 DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31, 1995 and 1994
ASSETS
1995 1994
Current Assets:
Cash and cash equivalents $ 623,592 $ 642,064
Investment securities available-for-sale 13,828,663 --
Marketable securities -- 13,415,968
Receivables:
Trade accounts 10,234,990 9,839,703
Other 644,709 283,185
10,879,699 10,122,888
Less: Allowance for doubtful accounts 10,000 10,000
10,869,699 10,112,888
Inventories:
Raw materials 1,697,629 1,826,133
Finished goods 2,857,217 2,425,120
4,554,846 4,251,253
Prepaid expenses 1,968,851 1,967,560
Current assets of discontinued business -- 1,989,309
Total current assets 31,845,651 32,379,042
Property, plant and equipment:
Land 3,974,429 3,974,429
Buildings 18,987,134 18,920,734
Machinery and equipment 31,745,856 31,119,547
Transportation equipment 16,271,171 16,640,782
70,978,590 70,655,492
Less: Accumulated depreciation 52,842,545 51,028,550
18,136,045 19,626,942
Noncurrent assets of discontinued business -- 587,562
Other Assets 2,030,234 1,753,612
Total $52,011,930 $54,347,158
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,324,632 $ 4,045,257
Accrued income taxes 135,217 --
Other accrued expenses 1,307,049 1,380,124
Deferred income taxes 291,246 252,170
Current installments of long-term debt -- 7,366
Current liabilities of discontinued business -- 417,746
Total current liabilities 6,058,144 6,166,663
Long-term liabilities 598,922 478,526
Deferred income taxes 1,864,461 2,015,260
Deferred income taxes of discontinued business -- 58,240
1,864,461 2,073,500
Commitments and contingencies -- --
Stockholders' Equity:
Common stock -- $.662/3 par value:
Authorized 35,000,000 shares;
issued 13,828,793 shares 9,219,195 9,219,195
Additional paid-in capital 6,499,554 6,528,147
Retained earnings 36,521,373 37,031,156
Treasury shares -- at cost
(1,566,843 shares in 1995 and
1,332,347 shares in 1994) (8,818,533) (7,137,457)
Deferred compensation -- (12,572)
Unrealized gains on securities
available-for-sale, net
of deferred income taxes 68,814 --
Total stockholders' equity 43,490,403 45,628,469
Total $52,011,930 $54,347,158
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSUIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years ended May 31, 1995, 1994 and 1993
1995 1994 1993
Revenues:
Net sales $128,144,977 $125,840,804 $128,698,233
Other income, including gain
on sale of property and
equipment of $457,385 in
1995, $465,743 in 1994,
and $1,193,500 in 1993 626,202 620,845 1,371,874
Net investment income 674,227 438,463 458,794
Total revenues 129,445,406 126,900,112 130,528,901
Costs and expenses:
Cost of sales 56,285,331 55,113,907 55,110,124
Selling, general and
administrative expenses 64,240,117 66,515,778 66,893,120
Contributions to employee
profit-sharing and employee
stock ownership plans 622,486 627,474 627,698
Interest -- 101 3,192
Total costs and expenses 121,147,934 122,257,260 122,634,134
Income from continuing
operations before
income taxes 8,297,472 4,642,852 7,894,767
Provision for income taxes:
Currently payable:
Federal 2,856,000 1,654,000 2,745,000
State 440,000 254,000 410,000
Deferred taxes (150,000) (246,000) (212,000)
Total provision for
income taxes 3,146,000 1,662,000 2,943,000
Income from continuing
operations 5,151,472 2,980,852 4,951,767
Discontinued Operations:
Income from operations of
discontinued business,
net of related income taxes 2,490 92,563 28,816
Gain on disposal of discontinued
business 252 -- --
Net income $5,154,214 $3,073,415 $4,980,583
Per share of common stock:
Income from continuing
operations $ .42 $ .24 $ .40
Income from operations
of discontinued business -- .01 --
Net income $ .42 $ .25 $ .40
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended May 31, 1995, 1994 and 1993
1995 1994 1993
Cash flows from operating activities:
Net income $ 5,154,214 $ 3,073,415 $ 4,980,583
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,856,445 3,377,278 3,892,617
Compensation related to stock plan 3,509 53,574 ( 7,798)
Salary continuation benefits 120,396 257,726 220,800
Deferred income taxes ( 150,000) ( 246,000) ( 212,000)
Gain on sale of property and
equipment ( 457,385) ( 465,743) (1,193,500)
Gain on disposal of
discontinued business ( 252) -- --
Income from operations of
discontinued business ( 2,490) ( 92,563) ( 28,816)
Dividends received from
discontinued business 53,375 165,500 168,500
Changes in operating assets and
liabilities:
(Increase) in accounts receivable ( 756,811) (1,120,776) ( 269,484)
(Increase) decrease in inventories ( 303,593) 238,618 ( 14,380)
(Increase) decrease in prepaid
expenses ( 1,291) 126,019 115,921
(Increase) in other assets --
long-term ( 276,622) ( 385,607) ( 503,176)
Increase in accounts payable 279,375 89,697 2,281,794
Increase (decrease) in accrued
income taxes 135,217 ( 22,303) ( 18,770)
(Decrease) increase in accrued
expenses ( 73,075) ( 67,582) 305,093
Net cash provided by
operating activities 6,581,012 4,981,253 9,717,384
Cash flows from investing activities:
Purchase of property, plant and
equipment (1,477,321) ( 851,572) (2,778,977)
Proceeds from sale of property,
plant and equipment 568,727 576,132 2,131,969
Net proceeds from disposal of
discontinued business 2,050,252 -- --
Investment securities available-for-sale:
Purchases (85,802,956) -- --
Proceeds from disposals 85,497,783 -- --
Marketable securities:
Purchases -- (52,614,763) (14,143,834)
Proceeds from disposals -- 54,607,629 13,240,000
Net cash provided by (used in)
investing activities 836,485 1,717,426 ( 1,550,842)
Cash flows from financing activities:
(Decrease) in checks outstanding
in excess of bank balances -- -- ( 2,107,643)
Payments of current installment of
long-term debt ( 71,366) ( 107,723) ( 197,506)
Purchase of treasury shares ( 1,883,106) ( 1,172,309) ( 746,969)
Proceeds from sale of treasury stock 182,500 205,000 255,600
Cash dividends paid ( 5,663,997) ( 5,610,058) ( 5,476,606)
Net cash (used in)
financing activities ( 7,435,969) ( 6,685,090) ( 8,273,124)
Net (decrease) increase in cash
and cash equivalents ( 18,472) 13,589 ( 106,582)
Cash and cash equivalents at
beginning of year 642,064 628,475 735,057
Cash and cash equivalents
at end of year $ 623,592 $ 642,064 $ 628,475
Supplemental information:
Cash paid during the year for:
Income taxes $ 3,101,623 $ 1,879,447 $ 3,065,990
Interest $ -- $ 101 $ 3,300
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSIDIAIRES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended May 31, 1995, 1994, 1993
Additional Unrealized
Common Paid-in Retained Treasury Deferred Gains on
Stock Capital Earnings Shares Compensation Securities
Balance, May 31, 1992 $9,219,195 $6,756,988 $40,063,822 $(5,643,883) $(293,209) $ --
Net income -- -- 4,980,583 -- -- --
Cash dividends declared --
$.44 per share -- -- (5,476,606) -- -- --
Purchase of shares
for Treasury -- -- -- ( 746,969) -- --
Stock options exercised -- ( 37,334) -- 212,384 80,550 --
Awards under stock option
plan -- ( 167,000) -- -- 167,000 --
Amortization of deferred
compensation -- -- -- -- ( 31,213) --
Balance, May 31, 1993 9,219,19 6,552,654 39,567,799 (6,178,468) ( 76,872) --
Net income -- -- 3,073,415 -- -- --
Cash dividends declared --
$.45 per share -- -- ( 5,610,058) -- -- --
Purchase of shares
for Treasury -- -- -- (1,172,309) -- --
Stock options exercised -- 19,055 -- 213,320 ( 27,375) --
Awards under stock option
plan -- ( 43,562) -- -- 43,562 --
Amortization of deferred
compensation -- -- -- -- 48,113 --
Balance, May 31, 1994 9,219,195 6,528,147 37,031,156 (7,137,457) ( 12,572) --
Net income -- -- 5,154,214 -- -- --
Cash dividends declared --
$.46 per share -- -- ( 5,663,997) -- -- --
Purchase of shares
for Treasury -- -- -- (1,883,106) -- --
Stock options exercised -- ( 28,593) -- 202,030 9,063 --
Amortization of deferred
compensation -- -- -- -- 3,509 --
Unrealized gains on securities
available-for-sale -- -- -- -- -- 68,814
Balance, May 31, 1995 $9,219,195 $6,499,554 $36,521,373 $(8,818,533) $ -- $ 68,814
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1995, 1994 and 1993
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Golden
Enterprises, Inc. and its wholly-owned subsidiaries: Golden Flake Snack
Food, Inc., Steel City Bolt & Screw, Inc. and Nall & Associates, Inc.
(the "Company"). All significant intercompany transactions and balances
have been eliminated.
Discontinued Operations
On January 31, 1995, the Company disposed of its investment in its
wholly-owned subsidiaries, Steel City Bolt & Screw, Inc. and Nall &
Associates, Inc. (the Steel City group) for cash. Accordingly, the Steel
City group's income from operations, previously reported in the bolt and
other fasteners segment of business, is reported as income from
operations of discontinued business. The consolidated financial
statements have been reclassified to report separately the assets,
liabilities and operating results of the discontinued business. The
Company's consolidated financial statements and notes to consolidated
financial statements have been restated to reflect comparative
information on the continuing business.
Revenue Recognition
The Company recognizes sales and related costs upon delivery or
shipment of products to its customers.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
a maturity of three months or less to be cash equivalents.
Investment Securities
Investment securities at May 31, 1995 are principally instruments
of the U.S. Government and its agencies, of municipalities and of
short-term mutual municipal and corporate bond funds. Effective June 1,
1994, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" (SFAS 115). This statement, among other things,
requires investment securities (bonds, notes, common stock and preferred
stock) to be divided into one of three categories: held-to-maturity,
available-for-sale, and trading. The Company currently classifies all
investment securities as available-for-sale. Under SFAS 115 securities
accounted for as available-for-sale includes bonds, notes, common stock
and non-redeemable preferred stock not classified as either
held-to-maturity or trading. Securities available-for-sale are reported
at fair value, adjusted for other-than-temporary declines in value.
Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate component
of stockholders' equity until realized. Realized gains and losses on the
sale of securities available-for-sale are determined using the
specific-identification method.
Prior to adopting SFAS 115, all of the Company's marketable
securities were reported at cost which approximated market value.
Therefore, no adjustment was necessary for the initial effect of adopting
SFAS 115 at June 1, 1994.
Inventories
Inventories are stated at the lower of cost or market. Cost is
computed on the first-in, first-out method. The opening and closing
inventories used in computing cost of sales are as follows:
Date Amount
May 31, 1993 $4,489,871
May 31, 1994 4,251,253
May 31, 1995 4,554,846
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 income.
Employee Benefit and Stock Options Plans
The Company has trusteed "Qualified Profit-Sharing Plans." The plans
are "Non-Formula" plans and the annual contributions to the plans are
determined by the applicable Board of Directors. The profit-sharing
expenses for the years ended May 31, 1995, 1994 and 1993 were $518,663,
$522,803, and $523,083, respectively.
The Company has an Employee Stock Ownership Plan. The annual
contributions to the plan are amounts determined by the Boards 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, 1995, 1994 and 1993 were $103,823, $104,671 and
$104,615, respectively.
The contributions to the Profit-Sharing Plans and the Employee Stock
Ownership Plan may not exceed fifteen percent of the total compensation
of all participating employees. The Company expects to continue these
plans indefinitely; however, the rights to modify, amend or terminate the
plans have been reserved.
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.
In 1988, the Company's shareholders approved the "1988 Stock Option
and Stock Appreciation Rights Plan" for certain employees of the Company.
The plan provides that non-qualified stock options and stock appreciation
rights may be granted to key employees for up to 400,000 shares of the
Company's common stock. The options and stock appreciation rights are
exercisable three years after date of grant. The option price may be less
than, equal to or greater than the fair market value of the stock on the
date of grant. Each stock appreciation right entitles the option holder,
upon exercise of the related stock option, to receive from the Company
the amount of the appreciation in the underlying common stock as
determined by the excess of the fair market value of a share of common
stock on the exercisedate of the related stock option over the option
price. The options and stock appreciation rights granted, if not
exercised, will expire three months from the date they are exercisable.
As of May 31, 1995, options and stock appreciation rights had been
granted for 145,000 shares (net of 13,000 shares forfeited) at an option
price of $6 per share and for 79,500 shares (net of 6,000 shares
forfeited) at an option price of $5 per share. 36,500 shares and 41,000
shares were exercised at $5 per share during the fiscal years ended May
31, 1995 and 1994, respectively. The plan expires July 6, 2002, except
as to options and stock appreciation rights outstanding on that date;
however, the rights to amend, suspend or terminate the plan have been
reserved.
Income Taxes
Deferred income taxes are recorded on the differences between the
tax bases of assets and liabilities and the amounts at which they are
reported in the consolidated financial statements. Recorded amounts are
adjusted to reflect changes in income tax rates and other tax law
provisions as they become enacted.
Net Income Per Share
Net income per share computations are based on the weighted average
number of shares outstanding of 12,376,769 in 1995; 12,540,809 in 1994
and 12,595,896 in 1993. Stock options were not included in these
computations as their effect was not material.
Postretirement Benefits Other than Pensions
In December 1990, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The standard
requires employers to account for retiree benefit obligations
(principally for health care) on an accrual basis (rather than on a
"pay-as-you-go" basis) for fiscal years beginning after December 15,
1992, although recognition in an earlier year is permitted. The Company
adopted the standard on June 1, 1993; however, the implementation of the
standard did not have a material impact on the financial statements of
the Company.
Financial Instruments
In December 1991, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments," the adoption
of which is required in fiscal 1996. The statement requires all entities
to disclose the fair value of financial instruments, both assets and
liabilities recognized and not recognized in the statement of financial
position, for which it is practicable to estimate fair value. The Company
has elected not to adopt the provisions of SFAS 107 before the required
date.
Postemployment Benefits
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits." The standard requires employers
to accrue, for fiscal years beginning after December 15, 1993 with
earlier adoption permitted, for benefits provided to former or inactive
employees after employment but prior to retirement. The Company adopted
the standard in fiscal 1995; however, the implementation of the standard
did not have a material impact on the financial statements of the
Company.
NOTE 2 _ INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses and fair
value of the investment securities available-for-sale as of May 31, 1995,
are as follows:
Gross Gross
Unrealized Unrealized
Amortized Holding Holding
Cost Gains Losses Fair Value
Investment securities
available-for-sale:
U.S. Government and its agencies
(See Note 5) $ 8,098,280 $ 90,321 $ -- $ 8,188,601
Municipal obligations 3,549,406 17,201 -- 3,566,607
Mutual funds 2,073,455 -- -- 2,073,455
Total $13,721,141 $107,522 $ -- $13,828,663
Maturities of investment securities classified as available-for-sale
at May 31, 1995 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to recall or prepay obligations with or without call or
prepayment penalties.
Amortized
Cost Fair Value
Investment securities available-for-sale:
Due within one year $ 4,073,455 $ 4,073,755
Due after one year through three years 8,647,686 8,749,608
Due after three years through five years 1,000,000 1,005,300
Total $13,721,141 $13,828,663
Proceeds from sales of investment securities available-for-sale
during fiscal 1995 were $85,497,783 and related net realized losses
included in income were $44,399.
At May 31, 1994 marketable securities are as follows:
U.S. Treasury Bills $11,308,214
Mutual Funds -- government and corporate bonds 2,107,754
Total $13,415,968
NOTE 3 -- LONG-TERM LIABILITIES
Long-term liabilities are summarized below:
1995 1994
Stock appreciation rights $ -- $ 71,366
Salary continuation benefits 598,922 478,526
Less: Current installments -- 71,366
Total $598,922 $478,526
Aggregate annual maturities of long-term liabilities within each of
the next five fiscal years following May 31, 1995 are as follows: 1996
through 2000, $-0-.
NOTE 4 -- INCOME TAXES
The effective tax rate for continuing operations differs from the
expected tax using statutory rates. A reconciliation between the expected
tax and the actual income tax expense follows:
1995 1994 1993
Tax on income at statutory rates $2,821,000 $1,579,000 $2,684,000
Increases (decreases) resulting from:
State income taxes, less Federal income
tax benefit 290,000 168,000 271,000
Tax exempt interest (57,000) (107,000) (144,000)
Other -- net 92,000 22,000 132,000
Total $3,146,000 $1,662,000 $2,943,000
The tax effects of temporary differences that result in deferred tax
liabilities are as follows:
1995 1994
Property and equipment $2,041,253 $2,187,760
Accrued expenses 75,746 79,670
Net unrealized gains on investment securities
available-for-sale 38,708 --
Total $2,155,707 $2,267,430
The income tax effects of changes in temporary differences are as
follows:
1995 1994 1993
Difference between depreciation deducted for
income tax purposes and the amount recorded
for financial accounting purposes $(146,000) $(166,000) $(175,000)
Difference between expenses, other than
depreciation, deducted for income tax
purposes and the amount recorded for
financial accounting purposes ( 4,000) ( 80,000) (37,000)
Total $(150,000) $(246,000) $(212,000)
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
Rental expenses were $540,284 in 1995, $515,256 in 1994 and $477,488
in 1993. At May 31, 1995, the Company was obligated under certain leases
(which have not been capitalized) for buildings, office space and
equipment. The following amounts represent future payment commitments
under these leases:
Years Ending Buildings and
May 31, Office Space Equipment Total
1996 $14,000 $162,000 $176,000
1997 -- 117,000 117,000
1998 -- 35,000 35,000
One of the subsidiaries leases equipment from a company which is
principally owned by the Chairman of the Board of Golden Enterprises,
Inc. The terms of these leases are equal to or better than those
available from unaffiliated third parties.
The Company had investment securities with a fair value of
$2,105,901 pledged to its insurance carrier to support the Company's
self-insurance program at May 31, 1995. The self-insurance program was
supported by a letter of credit of approximately $1,266,000 at May 31,
1994 with a 1% commitment fee.
NOTE 6 -- 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's cash equivalents are in high quality securities placed
with a financial institution. The investment policy limits the Company's
exposure to concentrations of credit risk.
The Company's trade receivables result primarily from its snack food
operations and reflect a broad customer base, primarily large grocery
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.
NOTE 7 -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of
operations of the years ended May 31, 1995, 1994 and 1993:
Per Share
Total Revenues Income from Income from
Quarter from Continuing Continuing Continuing Net
Operations Operations Net Income Operations Income
1995
First $31,814,543 $1,317,709 $1,341,057 $.11 $.11
Second 30,194,288 1,176,782 1,177,953 .09 .09
Third 32,608,859 1,231,273 1,209,496 .10 .10
Fourth 34,827,716 1,425,708 1,425,708 .12 .12
For the year $129,445,406 $5,151,472 $5,154,214 $.42 $.42
1994
First $ 30,289,504 $1,055,339 $1,096,509 $.08 $.09
Second 30,528,126 429,054 475,390 .04 .04
Third 31,922,292 118,899 116,609 .01 .01
Fourth 34,160,190 1,377,560 1,384,907 .11 .11
For the year $126,900,112 $2,980,852 $3,073,415 $.24 $.25
1993
First $31,800,266 $1,793,141 $1,802,885 $.14 $.14
Second 30,735,643 1,070,657 1,078,044 .09 .09
Third 35,197,699 976,644 975,830 .08 .08
Fourth 32,795,293 1,111,325 1,123,824 .09 .09
For the year $130,528,901 $4,951,767 $4,980,583 $.40 $.40
NOTE 8 -- SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
The following tabulation gives certain supplementary statement of
income information for continuing operations the years ended May 31,
1995, 1994 and 1993:
1995 1994 1993
Maintenance and repairs $ 4,757,679 $ 4,620,141 $ 5,199,209
Depreciation and amortization 2,856,445 3,377,278 3,892,617
Payroll taxes 2,581,797 2,621,766 2,729,517
Advertising costs 19,984,946 21,706,940 20,596,331
Amounts for depreciation and amortization of intangible assets,
royalties, other taxes, rents and research and development costs are not
presented because each of such amounts is less than 1% of total revenues.
GOLDEN ENTERPRISES , INC. AND SUBSIDIARIES
SUPPLEMENTARY FINANCIAL INFORMATION
Selected quarterly financial data for the
fiscal years ended May 31, 1995 and 1994 (unaudited)
(Dollar amounts in thousands, except per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1995
Total revenues $31,814 $30,194 $32,609 $34,828
Income before income taxes
from continuing operations $ 2,161 $ 1,827 $ 1,982 $ 2,327
Income (loss) from operations
of discontinued business net
of related income taxes $ 23 $ 1 $ (22) $ 0
Income from continuing
operations $ 1,318 $ 1,177 $ 1,231 $ 1,426
Net income $ 1,341 $ 1,178 $ 1,209 $ 1,426
Net income per share $ .11 $ .09 $ .10 $ .12
Cash dividends per share $ .11 1/4 $ .11 1/2 $ .11 1/2 $ .11 1/2
1994
Total revenues $30,290 $30,528 $31,922 $34,160
Income before income taxes
from continuing operations $ 1,677 $ 600 $ 202 $ 2,164
Income (loss) from operations
of discontinued business net
of related income taxes $ 41 $ 46 $ (2) $ 7
Income from continuing
operations $ 1,055 $ 429 $ 119 $ 1,378
Net income $ 1,096 $ 475 $ 117 $ 1,385
Net income per share $ .09 $ .04 $ .01 $ .11
Cash dividends per share $ .11 $ .11 1/4 $ .11 1/4 $ .11 1/4
ITEM 9. -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. -- EXECUTIVE COMPENSATION
ITEM 12. -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
With the exception of a description of Executive Officers of
The Registrant which appears on page 5 herein, Part III is omitted
because prior to September 28, 1995, the Company will file a definitive
Proxy Statement with the Securities and Exchange Commission pursuant to
Regulation 14A which involves the election of directors.
PART IV
ITEM 14. -- EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
(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, 1995 and 1994
Consolidated Statements of Income -- Years ended May 31, 1995, 1994
and 1993
Consolidated Statements of Changes in Stockholders' Equity -- Years
ended May 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows -- Years ended May 31, 1995,
1994 and 1993
Notes to Consolidated Financial Statements
The following consolidated financial statements schedule is
included in Item 14(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.
3. Exhibits:
21.1 -- Subsidiary of the Registrant.
99.1 -- A copy of Agreement for Purchase and Sale of Stock of
Steel City Bolt & Screw, Inc. and Nall & Associates, Inc. dated as of
December 19, 1994 Between Golden Enterprises, Inc., Seller and Coosa
Acquisitions, Inc., Purchaser.
(b) Report on Form 8-K -- The Registrant did not file a Form
8-K report during the last quarter of the period covered by this report.
(c) Exhibits. See (a)3. above.
(d) Financial Statement Schedules. The response to this portion
of Item 14, is submitted under Item 14.(a) 1. and 2. above.
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/ John H. Shannon August 25, 1995
----------------------------------- ---------------
John H. Shannon Date
Vice President, Principal Financial
Officer and Controller
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/ Sloan Y. Bashinsky, Sr. Chairman of the Board August 25, 1995
Sloan Y. Bashinsky, Sr.
/s/ John S. Stein President, Chief Executive August 25, 1995
John S. Stein Officer and Director
/s/ John H. Shannon Vice President, Secretary, August 25, 1995
John H. Shannon Principal Financial Officer
and Controller
/s/ F. Wayne Pate Director August 25, 1995
F. Wayne Pate
/s/ Edward R. Pascoe Director August 25, 1995
Edward R. Pascoe
/s/ John P. McKleroy, Jr. Director August 25, 1995
John P. McKleroy, Jr.
/s/ James I. Rotenstreich Director August 25, 1995
James I. Rotenstreich
/s/ John S. P. Samford Director August 25, 1995
John S. P. Samford
/s/ D. Paul Jones, Jr. Director August 25, 1995
D. Paul Jones, Jr.
/s/ J. Wallace Nall, Jr. Director August 25, 1995
J. Wallace Nall, Jr.
SCHEDULE II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years ended May 31, 1993, 1994 and 1995
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, 1993 $10,000 $248,630 $248,630 $10,000
Year ended May 31, 1994 $10,000 $ 37,570 $ 37,570 $10,000
Year ended May 31, 1995 $10,000 $ 11,690 $ 11,690 $10,000
INDEX TO EXHIBITS
Exhibit Number Page
21.1 Subsidiary of the Registrant 32
99.1 A copy of Agreement for Purchase and Sale of Stock
of Steel City Bolt & Screw, Inc. and Nall &
Associates, Inc. dated as of December 19, 1994
Between Golden Enterprises, Inc., Seller and Coosa
Acquisitions, Inc., Purchaser 33
EXHIBIT 21.1
SUBSIDIARY OF THE REGISTRANT
The Registrant owns all of the capital stock of Golden Flake Snack
Foods, Inc., a wholly-owned subsidiary. Golden Flake Snack Foods, Inc.
is a Delaware corporation.
EXHIBIT NUMBER
99.1
A copy of Agreement for Purchase and Sale of Stock of Steel City
Bolt & Screw, Inc. and Nall & Associates, Inc. dated as of December 19,
1994 Between Golden Enterprises, Inc., Seller and Coosa Acquisitions,
Inc., Purchaser.
Agreement for Purchase and Sale of Stock
of Steel City Bolt & Screw, Inc. and Nall and associates, Inc.
Dated as of December 19, 1994,
between
Golden Enterprises, Inc.
Seller
and
Coosa Acquisitions, Inc.,
Purchaser
TABLE OF CONTENTS
1. SALE AND TRANSFER OF SHARES 1
1.1 Sale 1
1.2 Consideration From Purchaser At Closing 1
1.3 Adjustment To Purchase Price 2
1.4 Manner of Payment 2
2. REPRESENTATIONS AND WARRANTIES OF SELLER 2
2.1 Good Standing and Qualification 2
2.2 Subsidiaries 2
2.3 Capital Structure 2
2.4 Title to Shares 3
2.5 Capacity of and Execution by Seller 3
2.6 Conflict with Other Instruments 3
2.7 Financial Statements 4
2.9 Absence of Undisclosed Liabilities 4
2.10 Tax Returns and Tax Liabilities 4
2.11 Real Property Assets 5
2.12 Tangible Personal Property 5
2.13 Title to Assets 5
2.14 Accounts Receivable 6
2.15 Employment Contracts 6
2.16 Insurance Policies 6
2.17 Absence of Certain Business Practices 7
2.18 Compliance with Laws 7
2.19 Litigation 8
2.20 Employee Benefit Plans 9
2.21 Material Information 12
2.22 Other Contracts 12
2.23 Licenses and Permits 12
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES 12
3.1 Purchaser's Standing and Qualification 12
3.2 Execution, Delivery and Performance of Agreement 12
3.3 Investment Representation 13
4. SELLER'S OBLIGATIONS BEFORE CLOSING 13
4.1 Purchaser's Access to Premises and Information 13
4.2 Conduct of Business 13
4.3 Preservation of Business 13
4.4 Corporate Matters 14
4.5 Maintenance of Insurance 14
4.6 Employees and Compensation 14
4.7 New Transaction 14
4.8 Dividends, Distributions and Acquisition of Stock 14
4.9 Waiver of Claims 14
4.10 Existing Agreements 15
5. CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE 15
5.2 Performance by Seller 15
5.3 No Material Adverse Change 15
5.4 Certification by Seller 15
5.5 Opinion of Seller's Counsel 15
5.6 Absence of Litigation 17
5.7 Statutory Requirements 17
5.8 Resignations 17
5.9 Environmental Report 17
5.10 Survey; Title Insurance 18
5.11 Seller's Undertakings 18
5.12 Eminent Domain 18
6. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE 19
6.1 Accuracy of Purchaser's Representations
and Warranties 19
6.2 Purchaser's Performance 19
6.3 Corporate Approval 20
6.4 Opinion of Purchaser's Counsel 20
6.5 Absence of Litigation 20
6.6 Statutory Requirements 20
6.7 Certification by Purchaser 21
7. THE CLOSING 21
7.1 Time and Place 21
7.2 Seller's Obligations at the Closing 21
7.3 Purchaser's Obligations at the Closing 21
8. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION, ETC. 22
8.1 Survival of Representations, Warranties, Etc. 22
8.2 Seller's Indemnity 22
8.3 Purchaser's Indemnity 23
8.4 Third Party Claims 23
9. CERTAIN TAX MATTERS 24
9.1 Cooperation 24
9.2 Current Year's Tax Returns 24
9.3 Contest Provisions 24
10. CONTINUED EMPLOYMENT OF OFFICERS, DIRECTORS
AND EMPLOYEES 25
11. PRESS RELEASE; DISCLOSURE 25
12. CONFIDENTIALITY 25
13. FEES AND EXPENSES 25
14. TRANSFER TAXES 26
15. NOTICES 26
16. SUCCESSORS AND ASSIGNS 27
17. COUNTERPARTS 27
18. ENTIRE AGREEMENT 27
19. TERMINATION AND ABANDONMENT 27
20. OTHER INSTRUMENTS TO BE EXECUTED 27
21. SCHEDULES 28
22 APPLICABLE LAW 28
TABLE OF SCHEDULES
The following Schedules will be provided to Purchaser by Seller on
or before January 15, 1995 and will be attached hereto and made a part
of this Agreement.
Schedule 2.9 Liabilities Not Reflected on Acquisition Balance Sheet
Schedule 2.11 Real Property
Schedule 2.12 Description and Location of Tangible Personal Property
Owned or Leased by the Corporation with a Depreciated
Book Value in excess of $1,000
Schedule 2.15 Employment Contracts, Collective Bargaining
Agreements, and Pension, Bonus, Profit Sharing and
Stock Option Agreements
Schedule 2.16 Insurance Policies
Schedule 2.17 Shareholder, Officer, Director and Employee
Interests in Other Entities
Schedule 2.19 Litigation
Schedule 2.20 Benefit Plans
Schedule 2.22 Material Contracts
Schedule 2.23 Licenses and Permits
AGREEMENT FOR PURCHASE AND SALE OF STOCK
OF STEEL CITY BOLT & SCREW, INC. AND NALL & ASSOCIATES, INC.
THIS AGREEMENT for purchase and sale of stock of STEEL CITY BOLT &
SCREW, INC. and NALL & ASSOCIATES, INC. (the "Agreement") is entered into
as of December 19, 1994, by and between GOLDEN ENTERPRISES, INC.
("Seller") and COOSA ACQUISITIONS, INC., an Alabama corporation
("Purchaser").
R E C I T A L S
Seller owns all of the issued and outstanding shares of stock of
Steel City Bolt & Screw, Inc., an Alabama corporation ("Steel City") and
all of the issued and outstanding shares of stock of Nall & Associates,
Inc., an Alabama corporation ("Nall") (Steel City and Nall are
collectively referred to as the "Corporation").
Purchaser desires to purchase from Seller and Seller desires to sell
to Purchaser all of the outstanding stock of Steel City and all of the
outstanding stock of Nall (collectively, the "Shares").
AGREEMENT
In consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties
agree as follows:
1. SALE AND TRANSFER OF SHARES
1.1 Sale. Subject to the terms and conditions set forth in
this Agreement, on the Closing Date (as defined in Section 7), Seller
shall sell, assign, transfer and convey the Shares to Purchaser, and
Purchaser shall acquire the Shares from Seller.
1.2 Consideration From Purchaser At Closing. Subject to
adjustment pursuant to Paragraph 1.3 below, Purchaser agrees to pay
Seller as consideration for the sale and transfer to Purchaser of the
Shares, the aggregate amount of Two Million One Hundred Thousand and
NO/100 Dollars ($2,100,000.00) (the "Purchase Price"). Purchaser and
Seller represent and warrant to each other that no broker's, finder's or
any other commissions or other fees are owed or shall be owed in
connection with this Agreement and the consumption of the transactions
contemplated herein. Any commissions or fees owed to any party shall be
the responsibility of the party incurring such liability. Purchaser and
Seller agree to indemnify and hold the other harmless against any and all
demands and claims for such fees and/or commissions, together with all
charges, costs and expenses incurred by the other including reasonable
attorneys' fees, arising out of or in connection with the defense of any
such demand or claim.
1.3 Adjustment To Purchase Price. On the day that is 180 days
after the Closing Date, the Seller shall purchase from the Purchaser all
accounts receivable of the Corporation that remain uncollected at that
time that were at least 60 days past due on the Closing Date. The Seller
shall purchase said accounts receivable at the value at which they are
carried on the books of the Corporation.
1.4 Manner of Payment. At the Closing, as provided in
Paragraph 7 herein, Purchaser shall pay to Seller by wire transfer of
immediately available funds made payable to the account of the Seller in
accordance with its written instructions received by Purchaser at least
two business days prior to the Closing, the Purchase Price.
2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Except as otherwise specified below, Seller represents and
warrants that the following facts are true and correct, all of which
shall be deemed to have been made also at the Closing without further
writing and to be true and correct thereupon, and all of which shall
survive the Closing as hereinafter provided or any termination or
cancellation of this Agreement, unless otherwise provided herein.
2.1 Good Standing and Qualification. Each of Steel City and
Nall, is a corporation duly organized, validly existing and in good
standing under the laws of the State of Alabama; each of them has all
requisite corporate power and authority to carry on its business as now
being conducted and to own, lease or operate its properties in the places
where such business is now conducted and such properties are now owned,
leased or operated, and each is duly qualified to transact business in
all other jurisdictions in which, by reason of the nature of its business
or activities, such qualification is necessary. Seller shall deliver at
the Closing to Purchaser true and complete copies of Steel City's and
Nall's Articles of Incorporation and all amendments thereto certified by
the Judge of Probate of Jefferson County, and the By-laws of Steel City
and Nall then in effect, certified as true and correct by the Secretary
of Steel City and Nall, respectively.
2.2 Subsidiaries. Neither Steel City or Nall has any
interest, direct or indirect, or any commitment to purchase any interest,
direct or indirect, in any other corporation, or in any partnership,
joint venture or other business enterprise or entity.
2.3 Capital Structure. The authorized capital stock of
Steel City consists of 2000 shares of common stock (the "Steel City
Stock") having a par value of $10.00 per share, 1,850 of which shares are
issued and outstanding. The authorized capital stock of Nall consists of
1000 shares of common stock (the "Nall Stock") having a par value of
$10.00 per share, 450 of which shares are issued and outstanding. All of
the outstanding shares of Steel City Stock and Nall Stock are duly
authorized, validly issued and outstanding, fully paid and
non-assessable. All of the outstanding shares of Steel City Stock and
Nall Stock have been issued in full compliance with all federal and state
securities laws. There are no outstanding subscriptions, options, rights,
warrants, convertible securities or other agreements or commitments
obligating Steel City or Nall or any shareholder of Steel City or Nall
to issue or to transfer from treasury or otherwise any additional shares
of capital stock of any class. The issued and outstanding equity
securities of Steel City and Nall of all classes and kinds consist
exclusively of said Steel City Stock and said Nall Stock, respectively,
and at the Closing the issued and outstanding equity securities of Steel
City and Nall of all classes and kinds will consist exclusively of said
Steel City Stock and said Nall Stock, respectively.
2.4 Title to Shares. Seller is the lawful owner of record
and beneficially of the Shares free and clear of all liens, encumbrances,
pledges, security agreements, equities, options, claims, charges and
restrictions whatsoever except as created by this Agreement. Seller
represents and warrants that Seller has full power to transfer the Shares
to Purchaser without obtaining the consent or approval of any other
person, entity or governmental authority.
2.5 Capacity of and Execution by Seller. Seller has full
and unrestricted power, authority and capacity to execute, deliver and
perform this Agreement and to deliver certificates representing the
Shares and now has, and at the Closing will have, full legal power to
sell and transfer the Shares to Purchaser in accordance with this
Agreement and to carry out all the transactions contemplated hereby. All
proceedings required to be taken by Seller to authorize the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been properly taken. This Agreement has been
duly and validly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller enforceable in accordance with its
terms; and delivery of the Shares at the Closing in accordance with this
Agreement will vest good and marketable title to the Shares in Purchaser,
free and clear of all security interests, pledges, liens, encumbrances,
claims and equities of any kind whatsoever.
2.6 Conflict with Other Instruments. Neither the execution,
delivery nor performance of this Agreement by Seller, with or without the
giving of notice or the passage of time, or both, will conflict with,
results in a default, right to accelerate or lose any right under, or
result in the creation of a lien, charge or encumbrance pursuant to any
provision of the Seller's, Steel City's or Nall's Articles of
Incorporation or By-laws, or any material franchise, mortgage, deed of
trust, lease, license, agreement, understanding, law, ordinance, rule or
regulation or any order, judgment, or decree to which Steel City, Nall
or the Seller is a party or by which Steel City, Nall or the Seller may
be bound or affected.
2.7 Financial Statements. The consolidated Balance Sheet
of Steel City and Nall, as of September 30, 1994 (the "Acquisition
Balance Sheet") and the period then ended previously delivered by Seller
to Purchaser have in all material respects been prepared in accordance
with generally accepted accounting principles consistently applied and
in all material respects fairly represent the financial position of the
Corporation as of September 30, 1994, and the results of operations for
the period then ended.
2.8 Absence of Certain Changes. Since September 30, 1994,
there has not occurred:
(i) any material adverse change in the financial
condition or properties, liabilities, capitalization or business of Steel
City or Nall, except changes in the ordinary course of business, none of
which is materially adverse, or
(ii) any damage, destruction, loss or occurrence
(whether or not covered by insurance) materially and adversely affecting
the properties, business or prospects of Steel City or Nall.
2.9 Absence of Undisclosed Liabilities. Except as set forth
in Schedule 2.9, neither Steel City or Nall has any material debt,
liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not
reflected in the Acquisition Balance Sheet other than current liabilities
arising in the ordinary course of business subsequent to the date of the
Acquisition Balance Sheet, none of which alone or in the aggregate is
material to the property, business, prospects, or financial condition of
the Corporation.
2.10 Tax Returns and Tax Liabilities. Each of Steel City
and Nall have (i) timely filed all tax returns required to be filed in
any jurisdiction on which either is subject, (ii) either timely paid in
full all taxes due on such returns or any assessment, deficiency notice,
30-day letter or similar notice received by it (except for any such taxes
as are being contested in good faith by appropriate proceedings), and any
interest, additions to tax and penalties with respect thereto, or
provided adequate reserves for the payment thereof, and (iii) fully
accrued on their respective books all taxes, and any interest, additions
to tax and penalties with respect thereto, for any period through the
date hereof which are not yet due, including such as are being contested.
Seller has no information that would lead it to believe that any taxing
authority or jurisdiction to which Steel City or Nall is or was subject
has instituted or will institute an audit, review, examination, or other
investigation of Steel City or Nall with respect to any tax applicable
to Steel City or Nall prior to the date hereof. Seller has caused Steel
City and Nall to make available for inspection by Purchaser or by
Purchaser's authorized representative complete and correct copies of all
material income tax, franchise or capital stock tax, sales, occupational,
employment, personal property, real property or other tax returns related
to Steel City and Nall for each of the three (3) fiscal years of Steel
City and Nall which conclude with the fiscal year that ended May 31,
1994, together with complete and correct copies of any reports of tax
authorities relating to examination of such returns and all prior returns
for periods ending since May 31, 1989 that have been audited, together
with any elections to adopt any particular method of treating an item for
tax purposes and any closing agreement applicable to Steel City or Nall.
2.11 Real Property Assets. Schedule 2.11 to this Agreement
sets forth a complete and accurate legal description of each parcel of
real property owned by the Corporation. Schedule 2.11 contains a
description of all buildings, fixtures and other improvements located on
real properties owned by the Corporation and a list of all policies of
title insurance issued to the Corporation for these properties. The
zoning of each parcel of real property described in Schedule 2.11 permits
the currently existing improvements and the continuation of the business
currently being conducted on such parcel. There is no pending or, to the
best knowledge of the Seller, contemplated eminent domain or condemnation
proceeding affecting any of the real property described in Schedule 2.11
or any part thereof, and Seller shall give prompt notice to Purchaser of
any such proceeding which occurs or is threatened with respect to such
property prior to the Closing. The real property described on Schedule
2.11 includes all of the real property occupied or used by the
Corporation on the date hereof or in the last 12 months. No real property
is leased to the Corporation.
2.12 Tangible Personal Property. Schedule 2.12 to this
Agreement is a complete and accurate schedule describing and specifying
the location of all trucks, automobiles, machinery, equipment, furniture,
supplies and all other tangible personal property owned or leased by
Steel City or Nall in connection with their respective businesses having
a current depreciated book value of $1,000 or more. Included on Schedule
2.12 are certain assets with a depreciated book value of less than
$1,000. Except as specified in Schedule 2.12, no personal property used
by Steel City or Nall in connection with its business is held under any
lease, security agreement, conditional sales contract, or other title
retention or security arrangement or is located other than in the
possession of Steel City or Nall.
2.13 Title to Assets. Each of Steel City and Nall has good
and marketable title to all of its assets and interests in assets,
whether real, personal, tangible or intangible, which constitute all of
the assets and interests in assets that are used in the business of Steel
City and Nall, respectively. All these assets are free and clear of all
mortgages, liens, pledges, charges, encumbrances, equities, claims,
easements, rights of way, covenants, conditions or restrictions
whatsoever, except for (i) those disclosed in Schedule 2.12; (ii) those
disclosed in the Acquisition Balance Sheet; (iii) the lien for current
taxes not yet due and payable; and (iv) possible minor matters that in
the aggregate are not substantial in amount and do not materially detract
from or interfere with the present use of any of these assets or
materially impair business operations of Steel City or Nall. To the best
of Seller's knowledge, all real property and material tangible personal
property of Steel City and Nall are in good operating condition and
repair, except for ordinary wear and tear and any defects, the cost of
repairing which would not be material. Neither Seller nor, to the best
of Seller's knowledge, any officer, director or employee of Seller, Steel
City or Nall owns or has any interest, directly or indirectly, in any of
the real or material personal property owned by or leased to Steel City
or Nall. Neither Steel City nor Nall occupies any real property in
violation of any law, regulation or decree.
2.14 Accounts Receivable. All customer accounts receivable
of the Corporation shown on the Acquisition Balance Sheet arose from
valid sales in the ordinary course of business and will at the Closing
be valid, binding obligations in favor of the Corporation, and the Seller
has no reason to believe that such accounts receivable (net of applicable
revenues) are not collectible in the ordinary course of business without
undue delay of expense.
2.15 Employment Contracts. Schedule 2.15 to this Agreement
is a list of all employment contracts and all pension, bonus,
profit-sharing, stock option or other agreements or arrangements
providing for employee remuneration or benefits to which Steel City or
Nall is a party or by which either is bound; all these contracts and
arrangements are in full force and effect, and neither Steel City nor
Nall is in default under them. There have been no claims of default, and
to the best knowledge of Seller, there are no facts or conditions which
if continued or unnoticed will result in a default, under any such
contract or arrangement. Neither Steel City nor Nall is a party to any
collective bargaining agreements. There is no pending or, to Seller's
knowledge, threatened labor dispute, strike, or work stoppage affecting
Steel City or Nall.
2.16 Insurance Policies. Schedule 2.16 to this Agreement
is a description of all insurance policies held by Steel City or Nall
concerning their respective businesses and properties (other than the
title insurance policies heretofore listed in Schedule 2.11). All these
policies are in the principal amounts set forth in Schedule 2.16. Steel
City and Nall have maintained and now maintain (i) insurance on all their
respective assets and businesses of a type customarily insured, covering
property damage and loss by fire or other casualty; and (ii) adequate
insurance protection against all liabilities, claims and risks against
which it is customary to insure.
2.17 Absence of Certain Business Practices. None of Steel
City, Nall or any director, officer, or, to the best of Seller's
knowledge, any employee or agent, of Steel City or Nall or any other
person acting on their behalf has, directly or indirectly, within the
past five (5) years given or agreed to give any gift or similar benefit
to any customer, supplier, governmental employee or other person who is
or may be in a position to help or hinder the business of Steel City or
Nall which might reasonably subject Steel City or Nall to any damage or
other liability in any private or governmental, civil or criminal
litigation or proceeding. Except as set forth in Schedule 2.17, neither
Seller nor, to the best of Seller's knowledge, any officer, director, or
employee of Steel City or Nall, has any direct or indirect interest of
material character in any competitor, supplier or customer of Steel City
or Nall, or in any person from whom or to whom Steel City or Nall leases
any real or material personal property, or in any other person with whom
Steel City or Nall is doing any material business.
2.18 Compliance with Laws. Neither Steel City nor Nall has
received any notice of failure of compliance with or violation of
applicable federal, state or local statutes, laws or regulations that
would materially affect its properties or the operation of its business
including without limitation, any applicable building, zoning or other
law, ordinance or regulation materially affecting its properties or the
operation of its business during the last five years. To Seller's best
knowledge Steel City and Nall have properly discharged, transported,
stored, disposed of and dealt with any Hazardous Material either has
produced or accumulated in accordance with all federal, state and local
laws and do not require, or are not otherwise subject to any material
remedial, response, removal or corrective action under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") 42 USC
SectionSection9601 et seq., as amended, the Resource Conservation and
Recovery Act ("RCRA") 42 USC SectionSection 6901 et seq., applicable
provisions of law of the State of Alabama, or any other federal, state,
local or foreign statutes, regulations, policies or orders now existing
with respect to Hazardous Materials or relating to pollution or
protection of the environment. "Hazardous Materials" shall mean any
chemical substance known to be hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether
solid, liquid or gaseous, including but not limited to substances defined
as "hazardous wastes," "hazardous substances," "toxic substances,"
"pollutants," "contaminants," "chemicals known in the State of Alabama
to cause cancer or reproductive toxicity,"-"radioactive materials," or
other similar designations in or otherwise subject to regulation under
any environmental laws, or under the plans, rules, regulations or
ordinances adopted, or other criteria and guidelines promulgated pursuant
to any environmental laws, including without limitation asbestos,
polychlorinated biphenyls (PCBs) or urea formaldehyde foam insulation.
To the best of Seller's knowledge, Steel City and Nall have complied in
all material respects with all laws and regulations of any applicable
jurisdiction with which it is or was required to comply in connection
with its ownership or use of its properties and operation of its business
(including without limitation the Occupational Safety and Health Act of
1970, as amended ("OSHA"), the Equal Employment Opportunity Act, as
amended (the "EEOA"), the Clear Water Act, the Clean Air Act, the Federal
Water Pollution Control Act, the Solid Waste Disposal Act, RCRA and
CERCLA, or any rules and regulations promulgated pursuant thereto or any
similar or equivalent state or local legislation or rule or regulation),
the enforcement of which would have a material and adverse effect on the
business of Steel City or Nall. Steel City and Nall have all material
governmental permits, permissions, and licenses necessary to own their
respective properties or conduct their respective businesses in
conformance with all applicable federal, state, and local legislation,
rules and regulations, none of which require the permission, approval or
consent of any person to remain fully effective with respect to such
corporation and for said business after consummating the transactions
contemplated by this Agreement.
There are no known conditions in any way relating to Steel City or
Nall or their businesses, resulting from any action or inaction of the
Seller or their agents or Steel City or Nall during the time Seller owned
Steel City or Nall, involving or resulting from any past or present
spill, discharge, leak, emission, injection, escape, dumping or release
of any kind whatsoever of any substance or exposure of any type in any
work place or to any medium, including, but not limited to, air, land,
surface waters and ground waters or from any generation, transportation,
treatment, storage, disposal of waste materials, toxic materials or
Hazardous Materials of any kind, or from the storage, use or handling of
any toxic substance or Hazardous Materials that have had or it is
reasonable to expect will have a material adverse effect on said business
or the properties of Steel City or Nall.
2.19 Litigation. Except as set forth in Schedule 2.19
hereto, there are no actions, suits, investigations or proceedings
pending in any court or before any governmental agency to which Steel
City or Nall is a party or, to the best of Seller's knowledge, otherwise
affecting its properties or its business and, to the best of Seller's
knowledge, there is no litigation, proceeding, claim, grievance,
proceeding or controversy threatened against Steel City or Nall with
regard to or affecting its properties or its business. There is no
action, suit, proceeding or investigation known to Seller that is pending
or threatened that questions the validity or propriety of this Agreement
or any action taken or to be taken by Seller or Steel City or Nall in
connection with this Agreement. Neither Steel City nor Nall is subject
to any judicial injunction or mandate or any quasi-judicial order or
quasi-judicial restriction directed to or against it as a result of its
ownership of its properties or its conduct of its business as currently
conducted by it, and, except as set forth in Schedule 2.19 hereto, no
governmental agency has at any time during the five years immediately
preceding the date hereof challenged or questioned in writing the legal
right of Steel City or Nall to conduct its business so as to materially
and adversely affect the ownership and use of its properties.
2.20 Employee Benefit Plans
(a) Schedule 2.20 hereto sets forth a description of
each compensation, employment, or collective bargaining agreement, and
each stock option, stock purchase, life, health, accident or other
insurance, bonus, deferred or incentive compensation, severance or
separation, profit sharing, retirement, or other employee benefit plan,
practice, policy or arrangement, covering employees or former employees
of Steel City or Nall, which Steel City or Nall maintains, to which Steel
City or Nall contributes, or under which Steel City's or Nall's employees
or former employees are covered (collectively, the "Benefit Plans"). The
term "Benefit Plans" as used herein refers to all plans included in
Schedule 2.20, but the terms "plan" or "plans" are used in this Agreement
for convenience only and do not constitute an acknowledgment that a
particular arrangement, agreement, commitment, pleading, policy or
understanding is an employee benefit plan within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) Seller shall, on or before January 15, 1995,
deliver to Purchaser true and complete copies of each Benefit Plan
maintained by Steel City or Nall listed on Schedule 2.20, including all
amendments, if any, to each thereof and copies of all summary plan
descriptions booklets and other communications and disclosures provided
to or made to the Corporation's employees with respect to each such
Benefit Plan.
(c) As of the date of the Acquisition Balance Sheet,
all contributions required to be made by Steel City or Nall under Steel
City's and Nall's normal funding procedures to any Benefit Plan for or
on behalf of its employees for periods prior to the date of the
Acquisition Balance Sheet have been made or reserves adequate for such
purposes as of the date of the Acquisition Balance Sheet have been set
aside therefor and reflected in the Acquisition Balance Sheet, in
accordance with the terms of each such plan. As of the date of the
Acquisition Balance Sheet, there were no accrued salaries, wages or other
employee benefits that are not reflected on the Acquisition Balance
Sheet. All contributions made by employees of Steel City or Nall as of
the date of the Acquisition Balance Sheet have been deposited by Steel
City or Nall with the appropriate funding agency of each Benefit Plan in
accordance with the terms of each such plan. There are no material
outstanding liabilities of any such Benefit Plan maintained by Steel city
or Nall other than liabilities for benefits to be paid to participants
in such plan and their beneficiaries in accordance with the terms of such
plan. As of Closing there shall have been no material change in the
status of any Benefit Plan maintained by Steel City or Nall. As of the
Closing Date, all contributions required to be made by Steel City or Nall
under the Corporation's normal funding procedures to any Benefit Plan for
or on behalf of its employees for periods prior to the Closing Date shall
have been made or reserves adequate for such purposes shall have been set
aside therefor as of the Closing Date; and any such plan shall be fully
funded, as that phrase is commonly understood in the industry, in
accordance with the terms thereof as of the Closing Date.
(d) Each Benefit Plan maintained by Steel City or Nall
is, and has been, administered in material compliance with the applicable
provisions of ERISA and with other applicable federal or state law.
(e) There are no actions, suits, or claims (other than
routine claims for benefits) pending or, to the best of Seller's
knowledge, threatened, against any Benefit Plan maintained by Steel City
or Nall, or any administrator or fiduciary of any such plan except as set
forth on Schedule 2.9.
(f) Except as provided in subparagraph (g) below and
except as may be required in order to comply with any requirements of the
Internal Revenue Service ("IRS") or to bring any Benefit Plan into
compliance with the Internal Revenue Code of 1986, as amended (the
"Code") or any IRS guidelines, or to conform any Benefit Plan to current
operational practices, neither Steel City nor Nall has any agreement,
arrangement, commitment or understanding, whether legally binding or not,
to create any additional Benefit Plan or to continue, modify, change, or
terminate, in any material respect, any existing Benefit Plan.
(g) Steel City and Nall are participating employers
in the Golden Enterprises, Inc. Amended and Restated Employee Stock
Ownership Plan and Trust (the "Stock Ownership Plan"). At or prior to the
Closing, Steel City and Nall will terminate their participation in the
Stock Ownership Plan. During the period that the Stock Ownership Plan has
been maintained for the benefit of employes of Steel City and Nall, (i)
the Stock Ownership Plan has been qualified and continues to be qualified
in all material respects under Section 401(a) of the Code, (ii) the
assets of the Stock Ownership Plan have been and continue to be held in
a trust which is tax exempt under Section 501(a) of the Code, (iii) the
Stock Ownership Plan has been and is the subject of a favorable
determination letter from the Internal Revenue Service, (iv) the Stock
Ownership Plan has been filed for a determination with respect to the
compliance of the plan with the Tax Reform Act of 1986, and such
application is pending, and (v) the Stock Ownership Plan has been
administered and operated in accordance with its terms and in a manner
to preserve its tax qualification.
(h) Neither Steel City nor Nall has ever participated
in any pension plan, as defined in Section 3(2) of ERISA, which would
subject it or the plan to (i) any liability to the Pension Benefit
Guaranty Corporation ("PBGC"), (ii) the provisions of Section 40441,
4042, or 4043 of ERISA, or (iii) the funding requirements of Section 302
of ERISA. Further, neither Steel City nor Nall has ever participated in
any multiemployer plan, as defined in Section 3(37) of ERISA, which would
subject it or the plan to (A) any withdrawal liability under Section 4201
of ERISA, or (B) any increased annual liability as a result of a plan
reorganization as described in Section 4241 of ERISA.
(i) Steel City and Nall are participating employers
in Seller's Voluntary Employee Benefits Association (the "VEBA"). At or
prior to the Closing, Steel City and Nall will terminate their
participation in the VEBA. During the period that the VEBA has been
maintained for the benefit of employees of Steel City and Nall, (i) the
VEBA and the related trust established for the VEBA have been maintained
and operated so as to preserve the tax exempt status of the trust under
Section 501(c)(9) of the Code, to include compliance with the
nondiscrimination requirements imposed by Section 505(b) of the Code and
the notice requirements imposed by Section 505(c) of the Code, and (ii)
the VEBA has been funded in compliance with the requirements of and
subject to the limitations imposed by Section 419 of the Code.
(j) To the best of Seller's knowledge, (i) none of the
Benefit Plans is currently under investigation, audit, or review by the
Department of Labor, the Internal Revenue Service, or any other federal
or state agency or is liable for any federal, state, local, or foreign
taxes, and (ii) there is no transaction in connection with which Steel
City or Nall or any fiduciary of any Benefit Plan could be subject to
either a civil penalty assessed pursuant to Section 502 of ERISA, a tax
imposed by Section 4975 of the Code, or liability for a breach of
fiduciary or other responsibility under ERISA.
2.21 Material Information. Neither the Schedules nor
Exhibits attached hereto nor any written material furnished by Seller to
Purchaser hereunder or pursuant to this Agreement contained, as of their
respective dates, nor does this Agreement contain, any untrue statement
of a material fact or omit to state a material fact necessary to make
statements contained therein or herein not false or misleading in light
of the circumstances under which they are made.
2.22 Other Contracts. Neither Steel City nor Nall is a
party to, or in any way obligated under, any material understanding or
agreement, written or oral, of any sort applicable to or affecting the
business or properties of Steel City or Nall, other than (a) leases
listed on Schedule 2.11, (b) the agreements listed in Schedule 2.15
hereto, and (c) contracts listed in Schedule 2.22 hereto. A true copy of
each contract described in Schedule 2.22 shall be furnished to Purchaser
on or before January 15, 1995, and each such Contract is in full force
and effect, and none of the parties thereto are in default in any
material respect thereunder.
2.23 Licenses and Permits. Schedule 2.23 contains a true
and accurate list of all material licenses and permits to which Steel
City or Nall is a party. A copy of each license or permit listed on
Schedule 2.23 shall be furnished to Purchaser on or before January 15,
1995, and each such license or permit is in full force and effect as of
the date thereof.
3. Purchaser's REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants that the following facts are true and correct,
all of which shall be deemed to have been made also at the Closing
without further writing, and all of which shall survive the Closing as
hereinafter provided or any termination or cancellation of this Agreement
unless otherwise contemplated hereby.
3.1 Purchaser's Standing and Qualification. Purchaser is
a Corporation duly organized, validly existing and in good standing under
the laws of the State of Alabama; it has all requisite corporate power
and authority to own its properties and to carry on its business as now
being conducted and is duly qualified to transact business in all other
jurisdictions in which, by reason of the nature of its business or
activities, such qualification is necessary.
3.2 Execution, Delivery and Performance of Agreement.
Neither the execution, delivery n or performance of this Agreement by
Purchaser, with or without the giving of notice, or the passage of time,
or both, conflict with, result in a default, right to accelerate or loss
of any right under, or result in the creation of any lien, charge or
encumbrance pursuant to any provision of Purchaser's Certificate of
Incorporation or By-laws, or any material franchise, mortgage, deed of
trust, lease, license agreement, understanding, law, ordinance, rule or
regulation or any order, judgment, or decree to which Purchaser is a
party or by which Purchaser may be bound or affected. Purchaser has full
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby; all proceedings required to be taken
by Purchaser to authorize the execution, delivery and performance of this
Agreement and the agreements relating hereto have been properly taken;
and this Agreement has been duly executed and delivered by Purchaser and
constitutes a valid and binding obligation of Purchaser.
3.3 Investment Representation. Purchaser understands that
the Shares have not been registered under the Securities Act of 1933, as
amended, or any applicable state securities law and that they must be
held indefinitely unless they are subsequently registered thereunder or
an exemption from registration is available. Purchaser represents and
warrants to Seller that it is acquiring the Shares for investment, and
not with a view to the distribution thereof, and agrees that it will not
transfer any of the Shares in violation of the provisions of any
applicable securities statute.
4. SELLER'S OBLIGATIONS BEFORE CLOSING.
From the date hereof through the Closing Date:
4.1 Purchaser's Access to Premises and Information.
Purchaser and its counsel, accountants, and other representatives shall
have full access during normal business hours, upon reasonable notice,
to all properties, books, accounts, records, contracts and documents
relating to the Corporation. Seller shall furnish or cause to be
furnished to Purchaser and its representatives all data and information
concerning the business, finances and properties of the Corporation that
may reasonably be requested.
4.2 Conduct of Business. The Corporation shall carry on its
business and activities in the ordinary course and in substantially the
same manner as they previously have been carried on and shall not make
or institute any unusual or novel methods of production, manufacture,
purchase, sale, lease, management, accounting or operation that will vary
materially from those methods used by the Corporation as of the date of
this Agreement.
4.3 Preservation of Business. The Corporation will use all
reasonable efforts to preserve its business organization intact, to
retain its current employees and preserve its current relationships with
suppliers, customers and others having business relationships with it.
4.4 Corporate Matters. Neither Steel City nor Nall will (i)
amend its Articles of Incorporation or By-laws, (ii) issue any shares of
its capital stock, (iii) issue or create any warrants, obligations,
subscriptions, options, convertible securities or other commitments under
which any additional shares of its stock of any class might be directly
or indirectly authorized, issued or transferred from treasury, or (iv)
agree to do any of the acts listed above.
4.5 Maintenance of Insurance. The Corporation will continue
to carry its existing insurance subject to variations in amounts required
by the ordinary operations of its business. At the request of Purchaser,
and at Purchaser's sole expense, the amount of insurance against fire and
other casualties which at the date of this Agreement the Corporation
carries on any of its properties or in respect of its operations shall
be increased by such an amount as Purchaser shall specify.
4.6 Employees and Compensation. The Corporation will not
do, or agree to do, any of the following acts, without Purchaser's prior
written consent: (i) grant any increase in salaries payable or to become
payable to any director, officer or employee other than regularly
scheduled salary increases for employees earning less than $25,000 per
year; or (ii) increase benefits payable to any officer, director or
employee under any bonus or pension plan or other contract or commitment
other than scheduled increases that take effect pursuant to existing
plans or arrangements described in Schedule 2.20 or as required by law,
or (iii) enter into any collective bargaining agreement by which the
Corporation may be bound.
4.7 New Transaction. The Corporation will not, without
Purchaser's written consent, enter into any contract, commitment or
transaction not in the usual and ordinary course of business.
4.8 Dividends, Distributions and Acquisition of Stock.
Neither Steel City nor Nall will, without Purchaser's prior written
consent, (i) declare, set aside or pay any dividend (cash or stock), or
make any distribution in respect to its capital stock; (ii) directly or
indirectly purchase, redeem or otherwise acquire any shares of its
capital stock; or (iii) enter into any agreement obligating it to do any
of the foregoing prohibited acts.
4.9 Waiver of Claims. The Corporation will not do any of
the following acts without Purchaser's prior written consent: (i) waive
or compromise any right or claim of substantial value, or (ii) cancel
without full payment any note, loan or other obligations owing to the
Corporation; provided, however, that the Corporation may make adjustments
in accounts receivable in the ordinary course of business.
4.10 Existing Agreements. The Corporation will not, except
in the ordinary course of business, modify, amend, cancel or terminate
any of its existing material contracts or agreements or agree to do any
of those acts without the prior written consent of Purchaser.
5. CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE.
All obligations of Purchaser under this Agreement to be
performed on the Closing Date are specifically subject to the
satisfaction of the following conditions precedent on or before the
Closing Date or the waiver thereof by Purchaser all as indicated below:
5.1 Accuracy of Seller's Representations and Warranties.
Except as otherwise permitted by this Agreement, all representations and
warranties by Seller contained in this Agreement or in any written
statement that shall be delivered to Purchaser by Seller shall be true
in all material respects as of the date hereof and on and as of the
Closing Date.
5.2 Performance by Seller. Seller shall have performed,
satisfied and complied with in all material respects all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by them, or any of them, on or before the Closing.
5.3 No Material Adverse Change. Since September 30, 1994,
to the Closing, there shall not have been any material adverse change in
the financial condition or the results of operations of the Corporation,
and the Corporation shall not have sustained any material loss or damage
to its assets, whether or not insured, that materially affects its
ability to conduct its business.
5.4 Certification by Seller. Purchaser shall have received
a certificate dated as of the Closing, signed by the Seller and in such
detail as Purchaser and its counsel may reasonably request, certifying
that all actions and transactions to be performed by Seller pursuant to
the terms of this Agreement have been performed, and that all
representations and warranties by Seller contained in this Agreement or
in any written statement delivered to Purchaser by Seller are true in all
material respects as of the Closing Date.
5.5 Opinion of Seller's Counsel. Purchaser shall have
received from Spain, Gillon, Grooms, Blan & Nettles, counsel for Seller,
an opinion dated as of the Closing Date in form and substance reasonably
satisfactory to Purchaser and its counsel that:
(i) Each of Steel City and Nall is a corporation duly
organized and validly existing and in good standing under the laws of the
State of Alabama and has all necessary corporate power to own its
properties as now owned and to operate its business as now operated.
(ii) The authorized capital stock of Steel City
consists of 2000 shares of common stock with par value of $10.00 per
share, of which 1,850 shares and no more are issued and outstanding. All
outstanding shares are validly issued, fully paid and non-assessable. To
the best knowledge and belief of counsel, there are no outstanding
subscriptions, options, rights, warrants, convertible securities or other
agreements or commitments obligating Steel City to issue any additional
shares of its capital stock of any class.
(iii) The authorized capital stock of Nall consists of
1000 shares of common stock with par value of $10.00 per share, of which
450 shares and no more are issued and outstanding. All outstanding shares
are validly issued, fully paid and non-assessable. To the best knowledge
and belief of counsel, there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements or
commitments obligating Steel City to issue any additional shares of its
capital stock of any class.
(iv) Except as set forth in Schedules 2.9 and 2.19 to
this Agreement, counsel does not know of any suit, action, arbitration,
or legal or administrative or other proceeding, or governmental
investigation pending or threatened against the Corporation or any of its
business or properties or its financial or other condition.
(v) To the best of such counsel's knowledge, neither
the execution nor delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement will constitute (a) a
default, or an event that would with notice or lapse of time, or both,
constitute a default under, or a violation or breach of, any material
agreement or understanding to which the Corporation is a party, or (b)
an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any material indebtedness
or material other obligations of the Corporation or (c) an event that
would result in the creation or imposition of any lien, charge, or
encumbrance on any material asset of the Corporation, under the Articles
of Incorporation, By-Laws of Steel City or Nall or any material
indenture, license, lease, franchise, mortgage, instrument or other
material agreement to which either Steel City or Nall is a party or may
be bound of which such counsel has knowledge after due inquiry;
(v) To the best of such counsel's knowledge, Seller
is the owner of record of all the issued and outstanding shares of each
of Steel City and Nall as set forth in paragraph (ii) above, free and
clear of all liens and encumbrances, Seller will at the Closing have full
power to transfer such shares to Purchaser without obtaining the consent
or approval of any other person or governmental authority (other than
such consents or approvals as shall have been duly obtained) and upon
payment for and delivery of the Shares in accordance with the terms of
this Agreement and assuming Purchaser is acquiring the Shares in good
faith without notice of any adverse claim, Purchaser will be the owner
of the Shares, free and clear of any adverse claim (other than security
interests, pledges, liens, encumbrances, claims or equities created by
Purchaser).
(vi) This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding obligation of
Seller enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights or by general principles
of equity.
5.6 Absence of Litigation. No action, suit or proceeding
before any court or any governmental body or authority pertaining to the
transaction contemplated by this Agreement or to its consummation shall
have been instituted on or before the Closing.
5.7 Statutory Requirements. All statutory requirements and
all material authorizations, consents and approvals by federal, state and
local governmental agencies and authorities necessary or required to be
obtained for the valid consummation of the transaction contemplated by
this Agreement shall have been fulfilled or obtained.
5.8 Resignations. Seller shall have delivered to Purchaser
the written resignation of all the officers and directors of the
Corporation in form and substance satisfactory to Purchaser and its
counsel and will cause any other action to be taken with respect to these
resignations that Purchaser may reasonably request.
5.9 Environmental Report. Seller shall have delivered to
Purchaser at Seller's expense, prior to Closing, a Phase I
environmental/hazardous substances report in form and substance
satisfactory to Purchaser for the property owned and leased by the
Corporation, which report shall be prepared by an environmental engineer
or other environmental consultant satisfactory to Purchaser. The report
will include, at a minimum: (i) the qualifications of the
engineer/consultant with respect to environmental testing, (ii) a site
inspection, (iii) an inquiry into prior uses and ownership of the site
and identification of the sources used in such inquiry, (iv)
identification of the types of waste which should be generated by said
use, (v) soil borings tests to determine if any hazardous substance or
waste has contaminated the site or an explanation as to why the same was
not necessary in their opinion, (vi) an inquiry with city, county, state
and federal environmental agencies to determine if the site is on a list
of problem sites or is located such that a problem site could affect the
Corporation's site, or if special permits for the handling of hazardous
substances or wastes have been issued to previous owners or operators of
the site, (vii) a detailed statement of findings, and (viii) a statement
that in the opinion of the engineer/consultant its level of inquiry was
sufficient to determine the existence of Hazardous Materials, hazardous
or dangerous wastes or substances or petroleum products. Such
environmental report shall not have revealed any material environmental
remediation required on any such real property such that the
indemnification provisions of this Agreement could reasonably be regarded
as an inadequate remedy therefor.
5.10 Survey; Title Insurance. Seller shall have delivered
to Purchaser, at Seller's expense, (i) an accurate survey certified by
the surveyor, reflecting that the real estate described in Schedule 2.11,
describes all of the real estate occupied or used by the Corporation on
the date hereof; and (ii) a commitment for owner's title insurance
reflecting that the Corporation has good and merchantable title to the
real property described in Schedule 2.11 as being owned by the
Corporation, subject to no liens, encumbrances or restrictions, except
(i) liens for state and county taxes for the current year which are a
lien but which are not yet due and payable, (ii) easements, restrictions,
convenants and rights of way which do not interfere with the use of the
premises for the manufacture of bolts and special fasteners, (iii) liens
which are reflected in the Acquisition Balance Sheet; and (iv) liens
which are otherwise described herein.
5.11 Seller's Undertakings. Seller shall have performed and
satisfied in all material respects, to the satisfaction of the Purchaser,
each of the transactions undertaken by Seller pursuant to this Agreement.
5.12 Eminent Domain. There shall be no eminent domain or
condemnation proceeding pending or contemplated affecting the real
property described in Schedule 2.11 hereto or any part thereof.
5.13 Employment Agreement. Purchaser shall have entered
into an Employment Agreement with Edward R. Pascoe in form and substance
satisfactory to Purchaser.
5.14 Cash and Marketable Securities. At the Closing Date,
the Corporation shall have cash and marketable securities on hand in an
amount not less than Three Hundred Thousand and NO/100 Dollars
($300,000.00).
5.15 Financing Condition. The Purchaser shall have been
successful in obtaining bank loans in order to finance the transaction,
including a $900,000 Revolving Line of Credit and a term loan of at lease
$525,000, such loans to be on terms and conditions satisfactory to
Purchaser.
5.16 Due Diligence Review. The Purchaser shall not have
discovered in its due diligence review of the Corporation any information
not disclosed to Purchaser prior to the execution of this Agreement that
would have a material adverse impact on the business, property, prospects
or financial condition of the Corporation.
5.17 Stockholder's Equity. The Corporation shall have
stockholder's equity, calculated in accordance with Generally Accepted
Accounting Principles, on a consolidated basis, of not less than
$2,050,000 as of the Closing Date.
5.18 Closing Balance Sheet. Seller shall have delivered to
Purchaser a consolidated balance sheet of the Corporation as of the date
as close to the Closing Date as reasonably practicable audited by Dudly,
Hopton-Jones, Sims & Freeman (the "Closing Balance Sheet"). Purchaser
agrees that if the Closing Date is on or prior to February 28, 1995, a
balance sheet dated as of December 31, 1994, shall satisfy this
condition.
5.19 Schedules. On or prior to January 15, 1995, Seller
shall deliver to Purchaser any Schedules referred to herein that are not
attached to this Agreement on the date hereof. When the Schedules are
delivered to the Purchaser, they will be attached to this Agreement and
will become a part hereof as if they had been attached at the time of the
execution of this Agreement.
6. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE. The obligations
of Seller to sell and transfer the Shares under this Agreement are
specifically subject to the satisfaction at or before the Closing of the
following conditions or the waiver thereof by Seller:
6.1 Accuracy of Purchaser's Representations and Warranties.
All representations and warranties by Purchaser contained in this
Agreement or in any written statement delivered by Purchaser under this
Agreement shall be true in all material respects on and as of the Closing
as though such representations and warranties were made on and as of that
date.
6.2 Purchaser's Performance. Purchaser shall have
performed, satisfied and complied with in all material respects all
covenants, agreements and conditions required by this Agreement to be
performed, compiled with or satisfied by it on or before the Closing.
6.3 Corporate Approval. Purchaser shall have duly
authorized and approved the execution and delivery of this Agreement and
all corporate action necessary or proper to fulfill the obligations of
Purchaser to be performed under this Agreement on or before the Closing
shall have been performed.
6.4 Opinion of Purchaser's Counsel. Purchaser shall have
furnished Seller with an opinion dated as of the Closing by Burr &
Furman, counsel for Purchaser, in form and substance reasonably
satisfactory to Seller and their counsel to the effect that:
(i) Purchaser is a Corporation duly organized, validly
existing and in good standing under the laws of the State of Alabama and
has all requisite corporate power to perform its obligations under this
Agreement.
(ii) All corporate action required by law or by the
provisions of this Agreement to be taken by Purchaser on or before the
Closing in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement
has been duly and validly taken; this Agreement has been duly executed
and delivered of Purchaser and constitutes the valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors's rights or by
general principles of equity.
(iii) The consummation of the transactions
contemplated by this Agreement does not violate or contravene any of the
provisions of Purchaser's Certificate of Incorporation, By-laws, or, to
such counsel's knowledge, of any material indenture, agreement, judgment,
or order to which Purchaser is a party or by which Purchaser is bound.
6.5 Absence of Litigation. No action, suit or proceeding
before any court or any governmental body or authority pertaining to the
transaction contemplated by this Agreement or to its consummation shall
have been instituted on or before the Closing.
6.6 Statutory Requirements. All statutory requirements and
all material authorizations, consents and approvals by federal, state and
local governmental agencies and authorities necessary or required to be
obtained for the valid consummation of the transaction contemplated by
this Agreement shall have been fulfilled or obtained.
6.7 Certification by Purchaser. Seller shall have received
a certificate dated as of the Closing Date, signed by Purchaser and in
such detail as Seller and its counsel may reasonably request, certifying
that all actions and transactions to be performed by Purchaser pursuant
to the terms of this Agreement have been performed.
7. THE CLOSING.
7.1 Time and Place. The payment of the Purchase Price by
Purchaser and the transfer and conveyance of the Shares by Seller to
Purchaser (the "Closing") shall take place in the offices of Burr &
Forman at 420 North 20th Street, Suite 3100, Birmingham, Alabama at 10:00
a.m. local time on February 1, 1995 (the "Closing Date"), or at such
other time and place as the parties may agree in writing.
7.2 Seller's Obligations at the Closing. At the Closing,
Seller shall deliver to Purchaser the following instruments:
(a) Certificates representing the Shares registered
in the name of Seller, duly endorsed by Seller for transfer or
accompanied by assignments of the Shares duly executed by Seller;
(b) The stock books, stock ledgers, minute books and
corporate seals of each of Steel City and Nall;
(c) The opinion of Seller's counsel as provided in
Paragraph 5.5:
(d) The written resignations of all the officers and
directors of the Corporation;
(e) A certificate executed by the Seller, dated as of
the Closing Date, certifying that all of its respective representations
and warranties in this Agreement are true and correct in all material
respects at and as of the Closing as though each representation and
warranty had been made on that date;
(f) The certificate required by Paragraph 5.4.
7.3 Purchaser's Obligations at the Closing. At the Closing,
Purchaser shall deliver to Seller the following instruments and
documents:
(a) Wire transfer of immediately available funds in
the amount of the Purchase Price, made payable to the account of the
Seller in accordance with its written instructions received by Purchaser
at least two business days prior to the Closing;
(b) The opinion of Purchaser's counsel dated as of the
Closing as provided for in Paragraph 6.4;
(c) A certified resolution of Purchaser's Board of
Directors in form satisfactory to counsel for Seller authorizing the
execution and performance of this Agreement and all action to be taken
by Purchaser under this Agreement and a certified copy of Purchaser's
By-laws;
(d) A certificate executed by an officer of Purchaser
certifying that all Purchaser's representations and warranties under this
Agreement are true in all material respects as of the Closing as though
each of those representations and warranties had been made on that date;
8. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION, ETC. All statements contained in any Schedule hereto or
in any certificate or instrument of transfer or conveyance delivered by
or on behalf of the parties pursuant to this Agreement or in connection
with the transactions contemplated hereby shall be deemed representations
and warranties by the parties hereunder.
8.1 Survival of Representations, Warranties, Etc. All
representations and warranties of the parties made in this Agreement or
as provided herein shall survive the Closing Date for a period of
thirty-six (36) months thereafter notwithstanding any investigation at
any time made by or on behalf of the other party (the "Survival Period");
provided, however, that all representations and warranties related to any
claim asserted in writing prior to the expiration of the Survival Period
shall survive until such claim shall be resolved and payment in respect
thereof, if any is owing, shall be made.
8.2 Seller's Indemnity. Sell shall indemnify, defend and
hold harmless Purchaser against and in respect of any and all claims,
demands, lawsuits, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies including interest, penalties and reasonable
attorneys' fees (collectively, "Losses"), that it shall incur or suffer
which shall result from or relate to (i) any breach of or failure by
Seller to perform any of its representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, or any
other instrument furnished or to be furnished by Seller under this
Agreement, (ii) any tax liability of any kind whatsoever (including
taxes, interest, additions to tax and penalties) of the Corporation for
any period ending prior to the Closing Date in excess of the amount
accrued therefor on the Closing Balance Sheet.
8.3 Purchaser's Indemnity. Purchaser agrees to indemnify
and hold Seller harmless against and in respect of any and all Losses it
may incur or suffer which shall result from or relate to any breach of
or failure by Purchaser to perform any of its representations,
warranties, covenants or agreements in this Agreement or in a schedule,
certificate, or any other instrument furnished or to be furnished by
Purchaser under this Agreement or by reason of any act of omission by
Purchaser after the Closing that constitutes a breach or default under
or failure to perform any obligation, duty or liability of the
Corporation under any loan agreement, lease, contract, order or any other
agreement to which it is a party or for which they are bound at the
Closing or otherwise arising out of the conduct of the business of the
Corporation after the Closing.
8.4 Third Party Claims. Promptly after the receipt by any
party hereto of notice of any claim, action, suit or proceeding of any
third party that is subject to indemnification hereunder, such party (the
"Indemnified Party") shall give written notice of such claim to the party
obligated to provide indemnification hereunder (the "Indemnifying Party")
as promptly as practicable after receipt of notice thereof, stating the
nature and basis of such claim and the amount thereof, to the extent
known. The Indemnifying Party shall have the right to compromise or
defend, at its own expense and by its own counsel, any such matter. Such
notice, and the opportunity to compromise or defend as herein provided,
shall be a condition precedent to any liability of the Indemnifying Party
under the provisions of this Paragraph 8. If the Indemnifying Party shall
undertake to compromise or defend, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party
shall cooperate with the Indemnifying Party and its counsel in the
defense thereof and in any compromise thereof. Such cooperation shall
include, but not be limited to, furnishing the Indemnifying Party with
any books, records or information reasonably requested by the
Indemnifying Party that are in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party
of its intention to undertake to defend any such asserted liability, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense of such
asserted liability, except as requested by the Indemnifying Party. If the
Indemnifying Party shall desire to make a final and complete compromise
of any such third party claim and then the Indemnifying Party's liability
under this Paragraph 8 with respect to such third party claim shall be
limited to the amount so offered in compromise with said third party.
Under no circumstances shall the Indemnified Party compromise any third
party claim without the written consent of the Indemnifying Party.
9. CERTAIN TAX MATTERS.
9.1 Cooperation. After the Closing Date, Purchaser will
provide Seller, promptly upon their request, with access to all such
records and other factual information relating to the business of the
Corporation during periods prior to the Closing Date as Seller may
reasonably require in connection with the preparation or audit of the
Corporation's federal, state, and local income and other tax returns or
with respect to any dispute, refund claim or litigation relating thereto,
and Purchaser will give Seller such other assistance as it may reasonably
request, including reasonable access to the Corporation's employees, in
connection with any such audit, dispute, refund claim or litigation. In
addition, Purchaser agrees that all records, information or documents
relating to tax matters shall be preserved by Purchaser until the
expiration of any applicable statutes of limitations (and, if notified
thereof, extensions thereof).
9.2 Current Year's Tax Returns. Any and all tax returns of
the Corporation for the current taxable year not filed on or prior to the
Closing Date shall be subject to review by Seller prior to being filed,
and Purchaser and the Corporation shall lend such assistance to Seller
for purposes of their review as Seller shall reasonably require.
9.3 Contest Provisions. If any taxing authority shall at
any time contact Purchaser or the Corporation with respect to any tax
matter which, if paid by Purchaser would be the subject of indemnity by
Seller hereunder, then promptly upon the occurrence thereof (and in all
events within ten (10) business days after such occurrence) Purchaser
shall notify Seller thereof in writing, shall furnish Seller with copies
of any legal process or documents delivered to Purchaser or the
Corporation with respect thereto, and shall cooperate with Seller to
cause such taxing authority to deal directly with Seller or Seller's
designee with respect to such matters. In all events Seller shall decide
whether to contest, and shall have control over any contest relating to,
any such matters and may direct Purchaser or the Corporation to resist
payment of any deficiency asserted against such Corporation until there
has been a Final Determination (as hereinafter defined).
For purposes hereof, "Final Determination" shall mean a closing
agreement with the taxing authority, a notice of deficiency with respect
to which there has been executed a waiver of restrictions on assessment
or with respect to which the period for filing a petition with the United
States Tax Court has expired or, if such a petition is filed, a decision
of any court of competent jurisdiction which is not subject to appeal or
the time for appeal of which has expired.
If Seller decides to contest any asserted deficiency by causing
Purchaser to make payment thereof (in which case a Final Determination
shall have occurred and indemnity hereunder paid) and to file a claim for
refund, Purchaser will cooperate with Seller in connection therewith.
Upon notice of disallowance of such claim for refund, if any, Seller, on
behalf of the Corporation, may contest such disallowance by suing for a
refund and shall have control over the conduct of such contest (including
appeal of any adverse determination) with counsel reasonably satisfactory
to Purchaser. Upon receipt by Purchaser of any refund or offset
(including any refund or offset that would have been received but for a
counterclaim not indemnified by Seller hereunder) from any taxing
authority of any amounts paid by it based on the deficiency, within
thirty (30) days of receipt thereof, Purchaser shall pay to Seller the
amount of such refund together with any interest received thereon (or any
interest that would have been received if no other matters had been
involved in the judicial or administrative proceeding in question)
together with any tax benefits Purchaser realizes as a result of making
such payment.
10. CONTINUED EMPLOYMENT OF OFFICERS, DIRECTORS AND EMPLOYEES.
Subject to the requirements of any employment agreement to which the
Corporation is a party, listed on Schedule 2.15 hereto, Purchaser shall
have no responsibility of any kind to continue the employment of any of
the officers, directors or employees of the Corporation.
11. PRESS RELEASE; DISCLOSURE. Upon execution of this Agreement,
Seller shall have the right to make the contents of this Agreement
public.
12. CONFIDENTIALITY. All information furnished by Seller and the
Corporation or either of them to Purchaser pursuant hereto shall be
treated as the sole property of Seller and shall be kept confidential by
Purchaser until Closing. If this Agreement is terminated, as herein
provided, Purchaser shall return to Seller all documents and other
materials containing, reflecting or referring to such other information
and shall keep confidential all such information. Purchaser's obligation
to keep such information confidential shall continue for two years from
the date of the termination of this Agreement and shall not apply to (i)
any information which (a) was already in its possession prior to the
disclosure thereof by Seller; (b) was then generally known to the public;
(c) became known to the public through no fault of Purchaser or any of
its agents or representatives; or (d) was disclosed to Purchaser by a
third party unaffiliated with Purchaser who was not bound by any
obligation of confidential to Seller or (ii) disclosures required to be
made in accordance with any law, regulation or order of a court of
competent jurisdiction.
13. FEES AND EXPENSES. Each of the parties hereto shall be
responsible for any and all fees, costs or expenses incurred by such
party in connection with the negotiations, preparation and execution of
this Agreement and the Closing including the fees and costs of attorneys,
accountants, consultants of every kind and nature. Each party will hold
the other party harmless and indemnify the other from any claim or
liability in connection therewith. In the event that either Purchaser or
Seller shall commence any legal action or proceeding against the other
arising out of or in connection with this Agreement or any alleged breach
thereof, the prevailing party shall be entitled to receive from the
losing party such reasonable attorneys' fees as the court may determine.
14. TRANSFER TAXES. Any transfer tax, use tax, sales tax or
other tax imposed a result of the purchase and sale of the Shares shall
be paid by Seller.
15. NOTICES. Any notice required or permitted to be given
hereunder shall be deemed to be effectively given not more than
seventy-two (72) hours after having been deposited in the United States
mail, certified or registered mail, postage prepaid and addressed as
follows:
TO SELLER:
Golden Enterprises, Inc.
2101 Magnolia Avenue South
Birmingham, Alabama 35205
Attn: Mr. John S. Stein
with a copy to:
Spain, Gillon, Grooms, Blan & Nettles
2117 2nd Avenue North
Birmingham, Alabama 35203
Attn: John P. McKleroy, Jr.
TO PURCHASER:
Coosa Acquisitions, Inc.
2530 Mountain Brook Circle
Birmingham, Alabama 35233
Attn: Philip C. Jackson, III
with a copy to:
Burr & Forman
3000 SouthTrust Tower
420 South 20th Street
Either party may change such address by giving written notice
of such change to the other party in the manner provided above. Any such
notice shall be deemed to be delivered as of the date delivered if
personally delivered to such party.
16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties, and their respective
heirs, legal representatives, successors and assigns; provided, however,
that neither Seller, nor Purchaser may assign any of their rights under
this Agreement except that Purchaser may assign its rights under this
Agreement to an entity controlled by Purchaser. No such assignment by
Purchaser shall relieve Purchaser of any of its obligations or duties
under this Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the other documents and
agreements referred to herein or entered into in connection herewith
constitute the entire agreement between the parties pertaining to the
subject matter contained herein and therein and supersede all prior
agreements, representations and understandings of the parties. No
supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by all of the parties. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver
of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
19. TERMINATION AND ABANDONMENT. This Agreement may be
terminated and the transactions contemplated hereby abandoned (i) by the
mutual consent of Purchaser and Seller; (ii) by Purchaser or Seller at
any time after February 28, 1994 (or such later date as shall have been
agreed to in writing by them) if the conditions set forth in Paragraphs
5 or 6 of this Agreement have not been fulfilled (or waived by the party
entitled to the benefit thereto) by February 28, 1995, without liability
on the party of any party hereto; provided, however, that no party shall
be released from liability hereunder if any such condition is not
fulfilled by reason of the breach by such party of its obligations
hereunder or under any other instrument or agreement contemplated hereby.
20. OTHER INSTRUMENTS TO BE EXECUTED. From and after the Closing
Date, Seller shall, from time to time, at the request of Purchaser and
without further consideration (but at Purchaser's expense) do, execute,
acknowledge and deliver, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be
reasonably required more effectively to convey, assign, transfer or
confirm the sale of the Shares and complete the transactions contemplated
herein.
21. SCHEDULES. The Schedules attached hereto are incorporated
herein and made a part hereof for all purposes. As used herein, the
expression "this Agreement" means the body of this Agreement and such
Schedules, and the expressions "hereof," "herein," and "hereunder" and
other words of similar import refer to this Agreement and such Schedules
as a whole and not to any particular part or subdivision thereof.
22. APPLICABLE LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it on the day and the year first above written.
"PURCHASER"
COOSA ACQUISITIONS, INC.
By: /s/ Philip C. Jackson, III
Philip C. Jackson, III
President
"SELLER"
GOLDEN ENTERPRISES, INC.
By: /s/ John S. Stein
John S. Stein
President