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FORM 10-K
UNITED STATES
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
For the fiscal year ended May 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-4339
GOLDEN ENTERPRISES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0250005
------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 $0.66 2/3
(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 7, 1998.
Common Stock, Par Value $0.66 2/3 -- $28,192,722
Indicate the number of shares outstanding of each of the
Registrant's Classes of Common Stock, as of August 7, 1998.
Class Outstanding at August 7, 1998
- --------------------------------- -----------------------------
Common Stock, Par Value $0.66 2/3 12,205,950 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the year ended May
31, 1998 are incorporated by reference into Part III.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -- 1998
GOLDEN ENTERPRISES, INC.
Page
PART I
Item 1. Business 3
Item 2. Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of
Security Holders 6
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation 9
Item 7A. Quantitative and Qualitative Disclosure
about Market Risk 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 28
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 One Golden Flake Drive, Birmingham, Alabama. Golden
Flake manufactures and distributes a full line of salted snack
items, such as potato chips, tortilla chips, corn chips, 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
545 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 1,012 company owned vehicles to support the
route sales system, including 41 tractors and 116 trailers for long
haul delivery to the various company warehouses located throughout
its distribution areas, 771 store delivery vehicles and 84 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 1,440 employees.
Approximately 790 employees are involved in route sales and sales
supervision, approximately 500 are in production and production
supervision, and approximately 150 are management and
administrative personnel.
Golden Flake believes that the performance and loyalty of its
employees are the most important factors in the growth and
profitability of its business. Since labor costs represent a
significant portion of Golden Flake's expenses, employee
productivity is important to profitability. Golden Flake considers
its relations with its employees to be excellent.
Golden Flake has a 401(k) Profit Sharing Plan and an Employee
Stock Ownership Plan designed to reward the long term employee for
his loyalty. In addition, the employees are provided medical
insurance, life insurance, and an accident and sickness salary
continuance plan. Golden Flake believes that its employee wage
rates are competitive with those of its industry and with
prevailing rates in its area of operations.
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.
Executive Officers Of Registrant
And Its Subsidiary
Name and Age Position and Offices with Management
------------ ------------------------------------
John S. Stein, 61 Mr. Stein is Chairman of the Board,
President and Chief Executive Officer of
the Company. He was elected Chairman on
June 1, 1996 and has served as Chief
Executive Officer since June 1, 1991 and
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 Chairman, President and Chief
Executive Officer annually, and his
present term will expire on May 31, 1999.
F. Wayne Pate, 63 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,
1999.
John H. Shannon, 61 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, 1999.
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 One Golden Flake Drive, 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, baked tortilla 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 1,012 vehicles which includes 771
route trucks, 41 tractors, 116 trailers and 84 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 SUBSIDIARY
MARKET AND DIVIDEND INFORMATION
The Company's common stock is traded in the over-the-counter
market under the "NASDAQ" symbol, GLDC, and transactions are
reported through the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market System. The following
tabulation sets forth the high and low sales prices for the common
stock during each quarter of the fiscal years ended May 31, 1998
and 1997 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 1998
First $7 3/4 $6 3/4 $.12
Second 7 3/4 6 3/4 .12
Third 7 1/4 6 .12
Fourth 7 1/8 6 .12
Fiscal 1997
First $9 3/4 $7 7/16 $.11 3/4
Second 8 7 1/4 .12
Third 8 1/8 7 1/4 .12
Fourth 8 6 7/8 .12
As of August 7, 1998, there were approximately 1,600
shareholders of record.
ITEM 6. -- SELECTED FINANCIAL DATA
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
FINANCIAL REVIEW (Dollar amounts in thousands, except per share data)
Year Ended May 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Operations
Net sales and other
operating income $129,363 $138,427 $127,150 $128,771 $126,462
Investment income 160 286 675 674 438
-------- -------- -------- -------- --------
Total revenues 129,523 138,713 127,825 129,445 126,900
Cost of sales 58,923 63,548 57,331 56,285 55,114
Selling, general and
administrative expenses 64,728 69,845 65,419 64,863 67,143
Interest -- -- -- -- --
Income before income taxes 5,872 5,320 5,075 8,297 4,643
Federal and state income taxes 2,171 1,832 1,700 3,146 1,662
Income from continuing operations 3,701 3,488 3,375 5,151 2,981
Discontinued operations:
Income from operations of
discontinued business net
of related income taxes -- -- -- 3 92
Net income 3,701 3,488 3,375 5,154 3,073
Financial data
Depreciation and amortization $ 3,183 $ 2,853 $ 2,486 $ 2,856 $ 3,377
Capital expenditures, net of
disposals 3,666 3,611 6,216 1,366 741
Working capital 13,516 15,887 19,053 25,788 26,212
Long-term debt 1,285 1,049 823 599 479
Stockholders' equity 36,089 38,253 40,582 43,490 45,628
Total assets 46,925 49,569 48,846 52,012 54,347
Common stock data
Income from continuing
operations $ .30 $ .29 $ .28 $ .42 $ .24
Net income .30 .29 .28 .42 .25
Dividends .48 .48 .47 .46 .45
Book value 2.96 3.13 3.32 3.55 3.65
Price range (high & low bid) 7 3/4-6 9 3/4-6 7/8 9 3/4-6 3/4 8-6 3/4 8 3/4-7 1/8
Financial statistics
Current ratio 2.79 2.90 4.37 5.26 5.25
Net income as percent of total
revenues from continuing
operations 2.9% 2.5% 2.6% 4.0% 2.4%
Net income as percent of stockholders'
equity (a) 10.0% 8.8% 8.0% 11.6% 6.5%
Other data
Weighted average common shares
outstanding 12,205,950 12,205,950 12,243,283 12,376,769 12,540,809
Common shares outstanding at
year-end 12,205,950 12,205,950 12,205,950 12,261,950 12,496,446
Approximate number of
stockholders 1,600 1,800 1,800 1,800 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 SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Working capital was $13.5 million at May 31, 1998 compared to
$15.9 million at May 31, 1997. Net cash provided by operations
amounted to $7.6 million in fiscal year 1998, $6.2 million in
fiscal year 1997, and $5.2 million in 1996. An additional $0.9
million in cash was provided this year by a net decrease in
investment securities compared to $3.3 million in 1997, and $6.5
million in 1996.
Additions to property, plant and equipment, net of disposals,
were $3.7 million, $3.6 million, and $6.2 million in fiscal years
1998, 1997, and 1996, respectively, and are expected to be about
$2.5 million in 1999.
Cash dividends of $5.9 million, $5.8 million, and $5.7 million
was paid during fiscal years 1998, 1997, and 1996, respectively.
No cash was used to purchase treasury shares during fiscal
years 1998 and 1997, and $0.5 million was used for this purpose in
1996.
Long-term liabilities as a percentage of total capitalization
was 3.3% at May 31, 1998. The Company's current ratio at the year
end was 2.79 to 1.00.
Operating Results
Net sales and other operating income decreased by 6.5% in
fiscal year 1998, increased by 8.9% in 1997, and decreased by 1.3%
in 1996. The drop in sales for 1998 was primarily caused by
decisions made by three major accounts in reaction to very
aggressive spending by a competitor. A sizeable reduction in
discount spending also had a negative impact on sales, but this had
a positive effect on profits. The improvement in sales for fiscal
1997 was due to expansion into new products and market areas.
The Company's investment income was 2.7% of income before
taxes in 1998, 5.4% in 1997, and 13.3% in 1996. Investment income
has dropped over the past two years because of the decrease in
investment securities which were sold to finance capital
expenditures that were incurred in developing several new products.
Cost of sales as a percentage of net sales has been fairly
stable over the last three years, amounting to 45.9% in 1998, 46.1%
in 1997, and 45.3% in 1996.
Selling, general and administrative expenses were 50.4% of
sales in 1998, 50.7% in 1997, and 51.7% in 1996. The improvement in
this percentage for 1998 was due to significant reductions in
advertising and promotional expenses, and the improvement for 1997
compared to 1996 was due to an increase in sales with very little
increase in advertising expense.
Year 2000 Compliance
The Company has conducted an extensive review of its computer
systems to determine the extent of modifications required to
prevent system date problems associated with the year 2000. The
necessary modifications are beings made and all of them will be
completed in ample time to avoid problems. The Company is utilizing
primarily internal staff for this conversion. The cost of this
project, which is immaterial to the Company, is expensed as
incurred. To the degree possible, the Company is verifying that
other companies with which its systems interface or rely on are
currently year 2000 compliant or are in the process of becoming
compliant.
Inflation
Certain costs and expenses of the Company are affected
adversely by inflation, and the Company's prices for its products
over the last seven years have remained relatively flat. The
Company will contend with the effect of further inflation through
efficient purchasing, improved manufacturing methods, pricing, and
by monitoring and controlling expenses.
Environmental Matters
There have been no material effects of compliance with
governmental provisions regulating discharge of materials into the
environment.
ITEM 7A. -- QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
Not applicable.
ITEM 8. -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and
its subsidiary for the year ended May 31, 1998, consisting of the
following, are contained herein:
Consolidated Balance Sheets -- May 31, 1998 and 1997
Consolidated Statements of Income -- Years ended May 31, 1998, 1997
and 1996
Consolidated Statements of Cash Flows -- Years ended May 31, 1998,
1997 and 1996
Consolidated Statements of Changes
in Stockholders' Equity -- Years ended May 31, 1998,
1997 and 1996
Notes to Consolidated Financial
Statements -- Years ended May 31, 1998,
1997 and 1996
Quarterly Results of Operations -- Years ended May 31, 1998 and 1997
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Golden Enterprises, Inc.
We have audited the accompanying consolidated balance sheets
of Golden Enterprises, Inc. and subsidiary as of May 31, 1998 and
1997, 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, 1998. These consolidated financial
statements and schedules referred to below are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and schedules
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 subsidiary as
of May 31, 1998 and 1997, and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended May 31, 1998, 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 and Exchange Commission's rules and are not part of
the basic financial statements. These schedules for the years ended
May 31, 1998, 1997, and 1996, 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 7, 1998 DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
May 31, 1998 and 1997
ASSETS
1998 1997
----------- -----------
Current Assets:
Cash and cash equivalents $ 114,869 $ 670,974
Investment securities available-for-sale 3,077,464 4,012,813
Receivables:
Trade accounts 10,812,685 11,433,301
Other 471,101 555,166
----------- -----------
11,283,786 11,988,467
Less: Allowance for doubtful accounts 75,000 10,000
----------- -----------
11,208,786 11,978,467
----------- -----------
Inventories:
Raw materials 2,425,367 2,495,815
Finished goods 2,359,201 2,901,025
----------- -----------
4,784,568 5,396,840
----------- -----------
Prepaid expenses 1,899,294 2,200,582
----------- -----------
Total current assets 21,084,981 24,259,676
----------- -----------
Property, plant and equipment:
Land 3,840,514 3,831,179
Buildings 19,503,824 19,278,356
Machinery and equipment 42,018,529 39,271,564
Transportation equipment 16,884,469 17,138,701
----------- -----------
82,247,336 79,519,800
Less: Accumulated depreciation 59,274,250 57,029,496
----------- -----------
22,973,086 22,490,304
----------- -----------
Other Assets 2,866,681 2,818,918
----------- -----------
Total $46,924,748 $49,568,898
=========== ===========
See Accompanying Notes to Consolidated Financial Statements.
LIABILITIES AND STOCKHOLDERS' EQUITY
1998 1997
----------- -----------
Current Liabilities:
Accounts payable $ 5,795,698 $ 6,621,083
Accrued income taxes 213,813 233,605
Other accrued expenses 1,304,349 1,261,035
Deferred income taxes 254,898 257,435
----------- -----------
Total current liabilities 7,568,758 8,373,158
----------- -----------
Long-term liabilities 1,284,543 1,049,175
----------- -----------
Deferred income taxes 1,982,324 1,893,772
----------- -----------
Commitments and Contingencies -- --
Stockholders' Equity:
Common stock -- $.66 2/3 par value:
Authorized 35,000,000 shares;
issued 13,828,793 shares 9,219,195 9,219,195
Additional paid-in capital 6,499,554 6,499,554
Retained earnings 29,671,907 31,830,204
Treasury shares -- at cost (1,622,843 shares
in 1998 and 1997) (9,301,533) (9,301,533)
Unrealized gains (losses) on securities
available-for-sale, net of deferred
income taxes -- 5,373
----------- -----------
Total stockholders' equity 36,089,123 38,252,793
----------- -----------
Total $46,924,748 $49,568,898
=========== ===========
GOLDEN ENTERPRISES, INC. AND SUBSIDIAIRY
CONSOLIDATED STATEMENTS OF INCOME
Years ended May 31, 1998, 1997 and 1996
1998 1997 1996
------------ ------------ ------------
Revenues:
Net sales $128,496,511 $137,744,137 $126,557,610
Other income, including gain
on sale of property and equipment
of $450,923 in 1998, $397,772 in
1997, and $326,797 in 1996 866,327 682,601 592,134
Net investment income 159,956 286,644 675,091
------------ ------------ ------------
Total revenues 129,522,794 138,713,382 127,824,835
Costs and expenses:
Cost of sales 58,922,656 63,548,396 57,330,989
Selling, general and administrative
expenses 64,172,339 69,288,269 64,846,206
Contributions to employee 401(k)
profit-sharing and employee stock
ownership plans 556,240 556,882 572,406
------------ ------------ ------------
Total costs and expenses 123,651,235 133,393,547 122,749,601
------------ ------------ ------------
Income before income taxes 5,871,559 5,319,835 5,075,234
------------ ------------ ------------
Provision for income taxes:
Currently payable:
Federal 1,800,000 1,519,000 1,475,000
State 282,000 252,000 255,000
Deferred taxes 89,000 61,000 (30,000)
------------ ------------ ------------
Total provision for income taxes 2,171,000 1,832,000 1,700,000
------------ ------------ ------------
Net income $ 3,700,559 $ 3,487,835 $ 3,375,234
============ ============ ============
Per share of common stock:
Basic earnings per share $ .30 $ .29 $ .28
Basic weighted shares outstanding 12,205,950 12,205,950 12,205,950
Diluted earnings per share $ .30 $ .29 $ .28
Diluted weighted shares outstanding 12,205,950 12,205,950 12,205,950
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSIDIAIRY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended May 31, 1998, 1997 and 1996
1998 1997 1996
------------ ------------ -------------
Cash flows from operating activities:
Net income $ 3,700,559 $ 3,487,835 $ 3,375,234
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,183,490 2,853,024 2,485,533
Salary continuation benefits 235,368 225,948 224,305
Deferred income taxes 89,000 61,000 ( 30,000)
Gain on sale of property and equipment ( 450,923) ( 397,772) ( 326,797)
Donation of property -- -- 134,000
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 769,681 ( 1,843,864) 735,096
Decrease (increase) in inventories 612,272 ( 624,468) ( 217,526)
Decrease (increase) in prepaid expenses 301,288 104,764 ( 336,495)
(Increase) in other assets -- long-term ( 47,763) ( 404,980) ( 383,704)
(Decrease) increase in accounts payable ( 825,385) 2,582,340 ( 285,889)
(Decrease) increase in accrued income taxes ( 19,792) 233,605 ( 135,217)
Increase (decrease) in accrued expenses 43,314 ( 57,228) 11,214
------------ ------------ -------------
Net cash provided by operating activities 7,591,109 6,220,204 5,249,754
------------ ------------ -------------
Cash flows from investing activities:
Purchase of property, plant and equipment ( 3,725,447) ( 3,636,960) ( 6,293,499)
Proceeds from sale of property, plant and equipment 510,135 423,656 404,742
Investment securities available-for-sale:
Purchases ( 9,649,257) (11,673,398) (12,625,052)
Proceeds from disposals 10,576,211 14,938,643 19,076,530
------------ ------------ -------------
Net cash (used in) provided by
investing activities ( 2,288,358) 51,941 562,721
------------ ------------ -------------
Cash flows from financing activities:
Purchase of treasury shares -- -- ( 483,000)
Cash dividends paid ( 5,858,856) ( 5,828,344) ( 5,725,894)
------------ ------------ -------------
Net cash (used in) financing activities ( 5,858,856) ( 5,828,344) ( 6,208,894)
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents ( 556,105) 11,443,801 ( 396,419)
Cash and cash equivalents at beginning of year 670,974 227,173 623,592
------------ ------------ ------------
Cash and cash equivalents at end of year $ 114,869 $ 670,974 $ 227,173
============ ============ ============
Supplemental information:
Cash paid during the year for:
Income taxes $ 2,101,972 $ 1,103,222 $ 2,299,57
Interest $ -- $ -- $ --
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended May 31, 1998, 1997 and 1996
Additional Unrealized
Common Paid-in Retained Treasury Gains (Losses)
Stock Capital Earnings Shares on Securities
---------- ---------- ----------- ------------ --------------
Balance, May 31, 1995 $9,219,195 $6,499,554 $36,521,373 $(8,818,533) $ 68,814
Net income -- -- 3,375,234 -- --
Cash dividends declared --
$.47 per share -- -- (5,725,894) -- --
Purchase of shares
for Treasury -- -- -- ( 483,000) --
Unrealized (losses)
on securities
available-for-sale -- -- -- -- (74,816)
---------- ---------- ----------- ----------- ---------
Balance, May 31, 1996 9,219,195 6,499,554 34,170,713 (9,301,533) ( 6,002)
Net income -- -- 3,487,835 -- --
Cash dividends declared --
$.48 per share -- -- (5,828,344) -- --
Unrealized gains
on securities
available-for-sale -- -- -- -- 11,375
---------- ---------- ----------- ----------- ---------
Balance, May 31, 1997 9,219,195 6,499,554 31,830,204 (9,301,533) 5,373
Net income -- -- 3,700,559 -- --
Cash dividends declared --
$.48 per share -- -- (5,858,856) -- --
Unrealized (losses)
on securities
available-for-sale -- -- -- -- ( 5,373)
---------- ---------- ----------- ----------- ---------
Balance, May 31, 1998 $9,219,195 $6,499,554 $29,671,907 $(9,301,533) $ --
========== ========== =========== =========== =========
See Accompanying Notes to Consolidated Financial Statements.
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1998, 1997 and 1996
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of
Golden Enterprises, Inc. and its wholly-owned subsidiary: Golden
Flake Snack Foods, Inc., (the "Company"). All significant
intercompany transactions and balances have been eliminated.
Revenue Recognition
The Company recognizes sales and related costs upon delivery
or shipment of products to its customers.
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, 1998 are principally
instruments of municipalities and of short-term mutual, municipal
and corporate bond funds. The Company currently classifies all
investment securities as available-for-sale. 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.
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, 1996 $4,772,372
May 31, 1997 5,396,840
May 31, 1998 4,784,568
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 Plans
The Company has trusteed "Qualified Profit-Sharing Plans" that
were amended and restated effective June 1, 1996 to add a 401(k)
salary reduction provision. Under this provision, employees can
contribute up to fifteen percent of their compensation to the plan
on a pretax basis subject to regulatory limits; and the Company, at
its discretion, can match up to 4 percent of the participants'
compensation. The annual contributions to the plans are determined
by the applicable Board of Directors. Total plan expenses for the
years ended May 31, 1998, 1997 and 1996 were $505,179, $505,622 and
$518,597, respectively.
The Company has an Employee Stock Ownership Plan that covers
all full-time employees. The annual contributions to the plan are
amounts determined by the Board of Directors of the Company. Annual
contributions are made in cash or common stock of the Company. The
Employee Stock Ownership Plan expenses for the years ended May 31,
1998, 1997 and 1996 were $51,061, $51,260 and $53,809,
respectively. Each participant's account is credited with an
allocation of shares acquired with the Company's annual
contributions, dividends received on ESOP shares and forfeitures of
terminated participants' nonvested accounts.
The contributions to the 401(k) Profit-Sharing Plans and the
Employees 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.
Stock Options and Long-Term Incentive Plans
The Company has a stock option plan and a long-term incentive
plan currently in effect under which future grants may be issued:
the 1988 Stock Option and Stock Appreciation Plan (the 1988 Plan)
and the 1996 Long-Term Incentive Plan (the 1996 Plan). The Plans
are administered by the Compensation Committee of the Board of
Directors, which has sole discretion, subject to the terms of the
Plans, to determine those employees including executive officers,
eligible to receive awards and the amount and type of such awards.
The compensation committee also has the authority to interpret the
Plans, formulate the terms and conditions of award agreements, and
make all other determinations required in the administration
thereof.
The 1988 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
exercise date 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, 1998, 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 were exercised at $5 per share during the fiscal year
ended May 31, 1995. There were no stock options and stock
appreciation rights outstanding under this Plan at May 31, 1998,
1997 and 1996; however, there were 175,500 shares available for
granting of additional options. The 1988 Plan expires July 6, 2002
except as to options and stock appreciation rights outstanding on
that date; but, the rights to amend, suspend or terminate the Plan
have been reserved.
The 1996 Plan provides for the granting of "Incentive Stock
Options" as defined under the Internal Revenue Code. Under the
Plan, grants may be made to selected officers and employees, of
incentive stock options with a term not exceeding ten years from
the issue date and at a price not less than the fair market value
of the Company's stock at the date of grant. Five hundred thousand
shares of the Company's stock have been reserved for issuance under
this Plan. Incentive Stock Options were granted for 300,000 of the
reserved shares in fiscal 1997 leaving 200,000 remaining shares
available for future options. Following is a summary of
transactions:
Shares Under Option
-------------------------------
1998 1997 1996
-------- ---- ----
Outstanding -- beginning of the year 300,000 -- --
Granted -- 300,000 --
Exercised -- -- --
Forfeited (--) (--) (--)
------- ------- ----
Outstanding -- end of year 300,000 300,000 --
======= ======= ====
During 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting and Disclosure of Stock-Based
Compensation, ("FAS123"). FAS123 is effective for fiscal years
beginning after December 15, 1995, and allows for the option of
continuing to follow Accounting Principals Board Opinion No. 25
("APB25"), Accounting for Stock Issued to Employees, and the
related interpretations or selecting the fair value method of
expense recognition as described in FAS123. The Company has elected
to follow APB25 in accounting for its employee stock options. Pro
forma information regarding net income and earnings per share is
required by FAS123, and has been determined as if the Company had
accounted for its employee stock options under the fair value
method of that statement in measuring compensation costs as
presented below for the year ended May 31, 1998 and 1997.
1998 1997
---------- ----------
Net income:
As reported $3,700,559 $3,487,835
Pro forma 3,700,559 3,279,935
Net income per share:
As reported $ .30 $ .29
Pro forma .30 .27
The fair value of the Incentive Stock granted in 1997 was
estimated to be $1.05 per share at the date of grant using the
Black-Scholes option pricing model with the following assumptions:
expected dividend yield of 5.20%; expected option life of 7.50
years; expected volatility factor of 0.150; and a risk free rate of
6.62%.
The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
an options fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
Since the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date
of grant, no compensation expense is recognized.
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. For
further information concerning the provision for income taxes see
Note 4.
Earnings Per Share
During 1996, the FASB issued Statement of Financial Accounting
Standards No. 128, Earnings Per Share, ("FAS128"). FAS128 specifies
the computation, presentation and disclosure requirements for
earnings per share, replacing the presentation of primary earnings
per share with the presentation of basic earnings per share. The
only difference in the two methods for computing the Company's per
share amounts is attributable to outstanding options, under the
stock options and long-term incentive plans. The effect of the
stock options was determined using the treasury stock method.
Consolidated net income as reported was not affected. Shares used
to compute diluted earnings per share are as follows:
Average Common Stock Shares
----------------------------------------
1998 1997 1996
---------- ---------- ----------
Basic weighted shares outstanding 12,205,950 12,205,950 12,205,950
Effects of options -- 383 --
---------- ---------- ----------
Diluted shares 12,205,950 12,206,333 12,205,950
Disclosures About Fair Value of Financial Instruments
In fiscal 1996, the Company adopted Statement of Financial
Accounting Standards No. 107, Disclosures about Fair Value of
Financial Instruments, ("FAS107"), which requires companies to
disclose fair value information about certain financial
instruments. FAS107 defines fair value as the quoted market prices
for those instruments that are actively traded in financial
markets. In cases where quoted market prices are not available,
fair values are estimated using present value or other valuation
techniques. The fair value estimates are made at a specific point
in time, based on available market information and judgments about
the financial instrument, such as estimates of timing and amount of
expected future cash flows. Such estimates do not reflect any
premium or discount that could result from offering for sale at one
time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization
of unrealized gains or losses. In many cases, the fair value
estimates cannot be substantiated by comparison to independent
markets, nor can the disclosed value be realized in immediate
settlement of the instrument.
The carrying amounts for cash and cash equivalents approximate
fair value because of the short maturity, generally less than three
months, of these instruments.
The fair values of investment securities have been determined
using values supplied by independent pricing services and are
disclosed together with carrying amounts in Note 2.
The carrying value of the Company's long-term liabilities
approximates fair value because present value is used in accruing
this liability.
The Company does not hold or issue financial instruments for
trading purposes and has no involvement with forward currency
exchange contracts.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Recently Issued Accounting Standards
In June 1997, the FASB issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income,
("FAS130"). FAS130 establishes reporting and presentation standards
for comprehensive income and its components in a set of
general-purpose financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances arising
from nonowner sources. FAS130 is effective for both interim and
annual financial statements issued for periods beginning after
December 15, 1997. Restatement of prior periods for comparative
financial statements is required. These reporting requirements are
not expected to have a material impact on the financial statements
of the Company.
Also in June 1997, the FASB issued Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information, ("FAS131"). FAS131 requires
that financial and descriptive information be disclosed for each
reportable operating segment based on the management approach. The
management approach focuses on financial information that a
business enterprise's decision makers use to assess performance and
make decisions about resource allocations. The statement also
prescribes the enterprise-wide disclosures to be made about
products, services, geographic areas and major customers. FAS131 is
effective for annual financial statements issued for periods
beginning after December 15, 1997, and for interim financial
statements in the second year of application. These disclosures
requirements are not expected to have a material impact on the
financial statements of the Company.
In February 1998, the FASB issued Statement of Financial
Accounting Standards No. 132, Employers' Disclosures about Pensions
and Other Postretirement Benefits, ("FAS132"). FAS132 standardizes
the disclosure requirements for pensions and other postretirement
benefits, eliminates certain disclosures and requires additional
information on changes in benefit obligations and fair values of
plan assets. FAS132 is effective for annual financial statements
for periods beginning after December 15, 1997. Restatement of
disclosures for previous periods is also required. The Company does
not expect the implementation of this statement to have a material
impact on the financial statement 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 are as
follows:
May 31, 1998
-------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
Municipal obligations $ 177,700 $ -- $ -- $ 177,700
Mutual funds 2,899,764 -- -- 2,899,764
----------- ---------- ---------- -----------
Total $ 3,077,464 $ -- $ -- $ 3,077,464
=========== ========== ========== ===========
May 31, 1997
------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
U.S. Government (See Note 5) $ 2,288,343 $ 9,103 $ -- $ 2,297,446
Municipal obligations 150,708 -- 708 150,000
Mutual funds 1,565,367 -- -- 1,565,367
----------- -------- ---------- -----------
Total $ 4,004,418 $ 9,103 $ 708 $ 4,012,813
=========== ======== =========== ===========
Maturities of investment securities classified as
available-for-sale at May 31, 1998 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 $2,899,764 $2,899,764
Due after one year through three years 102,986 102,986
Due after three years through five years 74,714 74,714
---------- ----------
Total $3,077,464 $3,077,464
========== ==========
Proceeds from sales of investment securities
available-for-sale during fiscal 1998 and 1997 were $10,576,211 and
$14,938,643, respectively. Gross gains of $ 9,678 and $18,333 for
fiscal 1998 and 1997, respectively, were realized on those sales.
NOTE 3 -- LONG-TERM LIABILITIES
Long-term liabilities consisted of salary continuation
benefits accrued under the Company's salary continuation plan in
the amounts of $1,284,543 and $1,049,175 at May 31, 1998 and 1997,
respectively.
Aggregate annual maturities of long-term liabilities within
each of the next five fiscal years following May 31, 1998 are as
follows: 1999 through 2003, $-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:
1998 1997 1996
---------- ---------- ----------
Tax on income at statutory rates $1,996,000 $1,809,000 $1,726,000
Increases (decreases) resulting from:
State income taxes, less Federal
income tax benefit 186,000 166,000 168,000
Tax exempt interest (29,000) (39,000) (72,000)
Tax benefit of donated property -- -- (134,000)
Other -- net 18,000 (104,000) 12,000
---------- ---------- ----------
Total $2,171,000 $1,832,000 $1,700,000
========== ========== ==========
The tax effects of temporary differences that result in
deferred tax liabilities are as follows:
1998 1997
---------- ----------
Property and equipment $2,443,824 $2,267,250
Accrued expenses (206,602) (119,065)
Net unrealized gains (losses) on investment
securities available-for-sale -- 3,022
---------- ----------
Total $2,237,222 $2,151,207
========== ==========
The income tax effects of changes in temporary differences are
as follows:
1998 1997 1996
---------- ---------- ----------
Property and equipment $ 176,500 $ 174,000 $ 51,000
Accrued expenses (87,500) (113,000) (81,000)
---------- ---------- ----------
Total $ 89,000 $ 61,000 $ (30,000)
========== ========== ==========
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
Rental expenses were $ 656,727 in 1998, $702,270 in 1997 and
$541,744 in 1996. At May 31, 1998, 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
------------ ------------- --------- --------
1999 $17,000 $131,000 $148,000
2000 -- 22,000 22,000
2003 -- -- --
The subsidiary of the company leases equipment from a company
which is principally owned by a major shareholder of Golden
Enterprises, Inc. The terms of these leases are equal to or better
than those available from unaffiliated third parties.
The Company had a letter of credit in the amount of $2,189,000
outstanding at May 31, 1998 to support the Company's commercial
self-insurance program. The Company pays a commitment fee of 0.375%
regarding the letter of credit. The Company had Investment
securities with a fair value of $2,297,446 pledged to support the
commercial self-insurance program at May 31, 1997.
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 maintains its cash accounts primarily with banks
located in Alabama. The total cash balances are insured by the
F.D.I.C. up to $100,000 per bank. The Company had cash balances on
deposit with two Alabama banks at May 31, 1998 that exceeded the
balance insured by the F.D.I.C. in the amount of $1,162,372.
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, 1998, 1997 and 1996:
Per Share
Quarter Total Revenues Net Income Net Income
------- -------------- ---------- -----------
1998
----
First $ 32,608,207 $1,172,986 $.10
Second 30,920,499 629,399 .05
Third 32,577,407 796,083 .06
Fourth 33,416,681 1,102,091 .09
------------ ---------- ---------
For the year $129,522,794 $3,700,559 $.30
============ ========== =========
1997
----
First $ 34,345,727 $1,198,974 $.10
Second 33,066,321 650,002 .05
Third 35,736,176 471,031 .04
Fourth 35,565,158 1,167,828 .10
------------ ---------- ---------
For the year $138,713,382 $3,487,835 $.29
============ ========== =========
1996
----
First $ 33,247,256 $1,440,823 $.12
Second 29,829,016 835,589 .07
Third 31,178,423 509,234 .04
Fourth 33,570,140 589,588 .05
------------ ---------- ---------
For the year $127,824,835 $3,375,234 $.28
============ ========== =========
NOTE 8 -- SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
The following tabulation gives certain supplementary statement
of income information for continuing operations for the years ended
May 31, 1998, 1997 and 1996:
1998 1997 1996
----------- ----------- -----------
Maintenance and repairs $ 6,133,748 $ 5,328,776 $ 4,919,783
Depreciation and amortization 3,183,490 2,853,024 2,485,533
Payroll taxes 2,737,153 2,867,871 2,611,995
Advertising costs 16,747,607 21,202,756 21,058,226
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 SUBSIDIARY
SUPPLEMENTARY FINANCIAL INFORMATION
Selected quarterly financial data for the
fiscal years ended May 31, 1998 and 1997 (unaudited)
(Dollar amounts in thousands, except per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
1998
- ----
Total revenues $32,608 $30,921 $32,577 $33,417
======= ======= ======= =======
Income before income taxes $ 1,842 $ 968 $ 1,224 $ 1,838
======= ======= ======= =======
Net income $ 1,173 $ 630 $ 796 $ 1,102
======= ======= ======= =======
Net income per share $ .10 $ .05 $ .06 $ .09
======= ======= ======= =======
Cash dividends per share $ .12 $ .12 $ .12 $ .12
======= ======= ======= =======
1997
- ----
Total revenues $34,346 $33,066 $35,736 $35,565
======= ======= ======= =======
Income before income taxes $ 1,857 $ 944 $ 786 $ 1,733
======= ======= ======= =======
Net income $ 1,199 $ 650 $ 471 $ 1,168
======= ======= ======= =======
Net income per share $ .10 $ .05 $ .04 $ .10
======= ======= ======= =======
Cash dividends per share $ .1175 $ .12 $ .12 $ .12
======= ======= ======= =======
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, 1998, 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, 1998 and 1997
Consolidated Statements of Income -- Years ended May 31, 1998,
1997 and 1996
Consolidated Statements of Changes in Stockholders' Equity --
Years ended May 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows -- Years ended May 31,
1998, 1997 and 1996
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:
None.
(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 26, 1998
-------------------- --------------
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/ John S. Stein Chairman of the Board, August 26, 1998
-------------------------- President, Chief Executive
John S. Stein Officer and Director
/s/ John H. Shannon Vice President, Secretary, August 26, 1998
-------------------------- Principal Financial Officer
John H. Shannon and Controller
/s/ F. Wayne Pate Director August 26, 1998
--------------------------
F. Wayne Pate
/s/ Edward R. Pascoe Director August 26, 1998
--------------------------
Edward R. Pascoe
/s/ John P. McKleroy, Jr. Director August 26, 1998
--------------------------
John P. McKleroy, Jr.
/s/ James I. Rotenstreich Director August 26, 1998
--------------------------
James I. Rotenstreich
/s/ John S. P. Samford Director August 26, 1998
--------------------------
John S. P. Samford
/s/ D. Paul Jones, Jr. Director August 26, 1998
--------------------------
D. Paul Jones, Jr.
/s/ J. Wallace Nall, Jr. Director August 26, 1998
--------------------------
J. Wallace Nall, Jr.
/s/ Joann F. Bashinsky Director August 26, 1998
--------------------------
Joann F. Bashinsky
SCHEDULE II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
Years ended May 31, 1998, 1997 and 1996
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, 1996 $ 10,000 $ 9,549 $ 9,549 $ 10,000
======== ======== ======== ========
Year ended May 31, 1997 $ 10,000 $145,853 $145,853 $ 10,000
======== ======== ======== ========
Year ended May 31, 1998 $ 10,000 $ 72,527 $ 7,527 $ 75,000
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