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, 2001
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 025063005
(State or other jurisdiction of (I.R.S Employer Identification No.)
incorporation or organization)
Suite 208, 2140 11th Avenue, South
Birmingham, Alabama 35205
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including area code (205) 933-9300
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 RegistrantOs 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 3, 2001.
Common Stock, Par Value $0.662/3 -- $17,797,239
Indicate the number of shares outstanding of each of the Registrant's
Classes of Common Stock, as
of August 3, 2001.
Class
Common Stock, Par Value $0.662/3
Outstanding at August 3, 2001
11,927,423 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the year ended May 31, 2001 are
incorporated by reference into Part III.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -- 2001
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 11
Item 8. Financial Statements and Supplementary
Data 11
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 30
PART III
Item 10. Directors and Executive Officers of
the Registrant 30
Item 11. Executive Compensation 30
Item 12. Security Ownership of Certain Beneficial
Owners and Management 30
Item 13. Certain Relationships and Related
Transactions 30
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 31
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, fried
pork skins, baked and fried cheese curls, onion rings and buttered
popcorn. These products are all packaged in flexible bags or
other suitable wrapping material. Golden Flake also sells a
line of cakes and cookie items, canned dips, pretzels, peanut
butter crackers, cheese crackers, dried meat products, and
nuts packaged by other manufacturers using the Golden Flake
label. No single product or product line accounts for more
than 50% of Golden Flake's sales, which affords some
protection against loss of volume due to a crop failure of
major agricultural raw materials.
Raw Materials
Golden Flake purchases raw materials used in manufacturing
and processing its snack food products on the open market and
under contract through brokers and directly from growers. A
large part of the raw materials used by Golden Flake consists
of farm commodities which are subject to precipitous change in
supply and price. Weather varies from season to season and directly
affects both the quality and supply available. Golden Flake has no
control of the agricultural aspects and its profits are affected
accordingly.
Distribution
Golden Flake sells its products through its own sales
organization and independent distributors to commercial
establishments which sell food products in Alabama and in
parts of Tennessee, Kentucky, Georgia, Florida, Mississippi,
Louisiana, North Carolina, South Carolina, Arkansas and
Missouri. The products are distributed by approximately
448 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 768 company owned vehicles to support the route sales
system, including 34 tractors and 98 trailers for long
haul delivery to the various company warehouses located
throughout its distribution areas, 579 store delivery
vehicles and 57 cars and miscellaneous vehicles. Golden
Flake also leases 6 tractors and 20 store delivery vehicles.
Competition
The snack foods business is highly competitive.
In the area in which Golden Flake operates, many companies
engage in the production and distribution of food products
similar to those produced and sold by Golden Flake. Most,
if not all, of Golden Flake's products are in direct
competition with similar products of several local and
regional companies and at least one national company, the
Frito Lay Division of Pepsi Co., Inc., which 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 1,200 employees.
Approximately 700 employees are involved in route sales and
sales supervision, approximately 400 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 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, Golden Flake on October
25, 2000 completed the sale of the Nashville Manufacturing Plant for
$3.8 million. The payment of the purchase price was made $1,710,000 in
cash and $2,090,000 in secured notes. The sale of the Nashville Plant
concluded the Restructuring Plan which the Company implemented in
Janurary of 2000. Pursuant to the Restructuring Plan, the Nashville
Plant was closed in fiscal year 2000 and the sale concluded in fiscal
year 2001. The Company continues its distribution of Golden Flake brand
products throughout the Nashville, Tennessee area and has leased a
portion of the Nashville Plant for distribution purposes.
Other than these changes, no significant changes have 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, 64
Mr. Stein is Chairman of the Board. He was elected Chairman on
June 1, 1996. He served as Chief Executive Officer from 1991 to
April 4, 2001, and as President from 1985 to 1998 and from
June 1, 2000 to April 4, 2001. Mr. Stein also served as President
of Golden Flake Snack Foods, Inc. from 1976 to 1991. Mr. Stein
has been employed with the Company and its subsidiaries since
1961. Mr. Stein is elected Chairman annually, and his present
term will expire on May 31, 2002.
Mark W. McCutcheon, 46
Mr. McCutcheon is Chief Executive Officer and President of the
Company and President of Golden Flake Snack Foods, Inc., a
wholly-owned subsidiary of the Company. He was elected President
and Chief Executive Officer of the Company on April 4, 2001 and
President of Golden Flake on November 1, 1998. He has been employed
by Golden Flake since 1980. During his employment, he has served as
Plant Manager of the Ocala, Florida Plant, Plant Manager of the
Birmingham, Alabama Plant, Vice President of Manufacturing, Vice
President of Operations, and Executive Vice President. Mr. McCutcheon
is elected Chief Executive Officer and President of the Company and
President of Golden Flake annually, and his present terms will
expire on May 31, 2002.
John H. Shannon, 64
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, 2002.
ITEM 2. -- PROPERTIES
The headquarters of the Company are located at Suite 208, 2140
11th Avenue South, Birmingham Alabama 35205. The Company occupies
approximately 1500 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 40 acres of land which is serviced
by a railroad spur track. This facility consists of 3 buildings
which have a total of approximately 300,000 square feet of floor
area. The plant manufactures a full line of Golden Flake products.
Golden Flake maintains a garage and vehicle maintenance service
center from which it services, maintains, repairs and rebuilds
its fleet and delivery trucks. Golden Flake has adequate employee
and fleet parking.
Approximately 17 acres of the Birmingham property is undeveloped.
This property is zoned for industrial use and is readily available
for future use. Plans for the utilization of this property have not
been finalized.
Golden Flake also has a manufacturing plant in Ocala, Florida.
This plant was placed in service in November 1984. The plant consists
of approximately 100,000 square feet 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 Birmingham,
Montgomery, Pelham, Midfield, Demopolis, Fort Payne, Muscle Shoals,
Huntsville, Phenix City, Tuscaloosa, Mobile, Dothan and Oxford,
Alabama; Gulfport and Jackson, Mississippi; Chattanooga, Knoxville and
Memphis, Tennessee; Decatur, Marietta, and Macon, Georgia; Jacksonville,
Panama City, Tallahassee and Pensacola, Florida; Baton Rouge and New Orleans,
Louisiana; and Little Rock, Arkansas. The warehouses vary in size from 2,400
to 8,000 square feet. All distribution warehouses are owned free and clear of
any debts.
Vehicles
Golden Flake owns a fleet of 768 vehicles which includes
579 route trucks, 34 tractors, 98 trailers and 57 cars and
miscellaneous vehicles. There are no liens or encumbrances
on Golden Flake's vehicle fleet. Golden Flake also leases 6
tractors and 20 route trucks and owns a 1987 Cessna Citation
II aircraft.
ITEM 3. D 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 sale prices
for the common stock during each quarter of the fiscal years
ended May 31, 2001 and 2000 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 2001
First $ 3.563 $ 2.875 $ .06
Second 4.750 3.063 .0625
Third 4.469 3.063 .0625
Fourth 4.500 3.688 .0625
Fiscal 2000
First $ 4.125 $ 3.063 $ .06
Second 4.000 2.531 .06
Third 4.000 2.313 .06
Fourth 3.375 2.750 .06
As of August 3, 2001, there were approximately 1,500 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,
2001 2000 1999 1998 1997
Operations
Net sales and other
operating income $116,712 $126,936 $129,564 $129,363 $138,427
Investment income 305 67 66 160 286
Total revenues 117,017 127,003 129,630 129,523 138,713
Cost of sales 53,637 57,146 60,283 58,923 63,548
Selling, general
And administrative
expenses 59,264 65,138 67,671 64,728 69,845
Interest 3 -- -- -- --
Restructuring charge -- 2,565 -- -- --
Income before income
taxes 4,113 2,154 1,676 5,872 5,320
Federal and state
income taxes 1,413 911 603 2,171 1,832
Net income 2,700 1,243 1,073 3,701 3,488
________________________________________________________________
Financial data
Depreciation and
amortization $ 2,436 $ 3,230 $ 3,309 $ 3,183 2,853
Capital expenditures,
net of disposals 1,294 149 1,861 3,666 3,611
Working capital 13,431 15,915 11,642 13,516 15,887
Long-term debt 2,527 1,807 1,579 1,285 1,049
Stockholders'
equity 29,800 30,528 32,504 36,089 38,253
Total assets 39,247 41,433 41,912 46,925 49,569
________________________________________________________________
Common stock data
Basic and diluted
net income $ .23 $ .10 $ .09 $ .30 $ .29
Dividends .25 .24 .36 .48 .48
Book value 2.50 2.53 2.67 2.96 3.13
________________________________________________________________
Financial statistics
Current ratio 3.26 3.12 2.99 2.79 2.90
Net income as percent
of total revenues 2.3% 1.0% 0.8% 2.9% 2.5%
Net income as percent
of stockholders'
equity (a) 9.0% 3.9% 3.1% 10.0% 8.8%
________________________________________________________________
Other data
Weighted average
common shares
outstanding 11,965,671 12,154,057 12,171,043 12,205,950 12,205,950
Common shares
outstanding at
year-end 11,932,741 12,065,000 12,160,950 12,205,950 12,205,950
Approximate number
of stockholders 1,500 1,600 1,600 1,600 1,800
(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 $13.4 million at May 31, 2001 compared to $15.9 million
at May 31, 2000. Net cash provided by operations amounted to $0.05 million in
fiscal year 2001, $8.4 million in fiscal year 2000 and $2.1 million in fiscal
year 1999. Receivables and inventories increased significantly this year
instead of decreasing as they did in the two prior years, and accounts
payable decreased $2.1 million this
year compared to an increase of $1.3 million last year. There was a net
decrease in investment securities providing $1.9 million in cash this year, a
net cash usage of $4.4 million to increase investment securities in 2000, and
a net decrease in investment securities providing $3.0 million in cash in
1999.
Additions to property plant equipment, net of disposals, were $1.3 million,
$0.1 million, and $1.9 million in fiscal years 2001, 2000, and 1999,
respectively, and are expected to be about $1.9 million in 2002 in addition
to a $3.0 million special project to upgrade the potato chip packaging
department with new conveyors, scales, packaging machines, etc. This special
project is being financed with a bank loan OF $3.0 million, of which $0.86
million has already been received and used to pay purchase deposits on the
new machinery.
Cash dividends of $3.0 million, $2.9 million and $4.4 million were paid
during fiscal years 2001,2000, and 1999, respectively.
Cash in the amount of $0.5 million was used to purchase treasury shares in
fiscal year 2001 and 0.3 million was used for this purpose in 2000 and 1999.
Long-term liabilities as a percentage of total capitalization was 7.6% at May
31, 2001. The Company's current ratio at year end was 3.26 to 1.00.
Operating Results
Net sales and other operating income decreased by 8.1% in fiscal year 2001,
2.0% in fiscal year 2000 and increased by 0.2% in fiscal year 1999. The sales
decreases for fiscal 2001 and 2000 were primarily a result of discontinuing
the Company-operated distribution of Golden Flake Branded products in three
fringe sales regions in Central Florida as part of the fiscal year 2000
restructuring plan which is explained further in a separate section of this
Management's Discussion.
Although sales for 1999 were approximately equal to those for 1998, it was
necessary to increase discount spending considerably in order to keep sales
at the 1998 level.
The Company's investment income was 7.4% of income before taxes in 2001,
3.1% in 2000, and 4.0% in 1999. Investment income for fiscal year 2001 was
higher than the previous two years because investment securities were at a
higher level for most of the year. The cash and notes received from the sale
of the Nashville plant and equipment were major factors contributing to the
increase in investments.
Cost of sales as a percentage of net sales amounted to 46.3% in 2001, 45.3%
in 2000, and 46.8% in 1999. The cost increase in 2001 was due primarily to
higher energy prices. Favorable trends in commodity prices and packaging
costs were the major factors causing the improvement in cost of sales for
2000.
Selling, general and administrative expenses were 51.2% of sales in 2001,
51.6% in 2000, and 52.6% in 1999. The improvement in fiscal 2001 and 2000 was
primarily due to lower selling and delivery cost brought about by the exiting
of the fringe sales regions in Central Florida as part of the fiscal 2000
restructuring plan. An increase in discount spending in fiscal 1999 was the
major reason for the higher expenses in that year.
The Company's effective tax rates for 2001, 2000, and 1999 were 34.4%,
42.3% and 36.0%, respectively. Note six to the consolidated financial
statements provides additional information about the provision for income
taxes.
Market Risk
The principal market risks (i.e. the risk of loss arising from adverse
changes in market rates and prices) to which the Company is exposed are
interest rates on its investment securities and bank loans, and commodity
prices, affecting the cost of its raw materials.
The Company's investment securities consist of short-term marketable
securities. Presently these are variable rate money market funds and
municipal obligations. Its bank loans also carry variable rates. Assuming
year end 2001 variable rate investment levels and bank loan
balances, a one-point change in interest rates would impact interest income
by $18,748 and interest expense by $8,601.
The Company is subject to market risk with respect to
commodities because its ability to recover increased costs through higher
pricing may be limited by the competitive environment in which it operates.
The Company purchases its raw materials on the open market, under contract
through brokers and directly from growers.
Future contracts have been used occasionally to hedge immaterial amounts of
commodity purchases but none are presently being used.
Inflation
Certain costs and expenses of the Company are affected by inflation, and the
Company's prices for its products over the past several years have remained
relatively flat. The Company will contend with the effect of further
inflation through efficient purchasing, improved manufacturing methods,
pricing, and by monitoring and controlling expenses.
Environmental Matters
There have been no material effects of compliance with governmental
provisions regulating discharge of materials into the environment.
Restructuring Charges
The restructuring charge of $2,564,892 recognized in fiscal 2000 relates to
a restructuring plan approved by the Board of Directors in January, 2000
whereby the Nashville plant which primarily manufactured low fat snacks was
closed, a voluntary retirement package was offered to a group of qualified
employees, and the company-operated distribution system for Golden Flake
Brand products in three fringe sales regions in Central Florida was
discontinued.
The following is a summary of the one-time restructuring charge to expense
for the year ended May 31, 2000.
Employee termination benefits $ 1,335,550
Other Charges 1,229,342
Total restructuring charge $ 2,564,892
Net after tax $ 1,607,892
Per share $ .13
The employee related termination benefits of $1,335,550 primarily includes
severance costs for 104 employees, 10 of which accepted the voluntary
retirement package, 71 of which were employed in the three fringe sales
regions of Central Florida and 23 of which were employed at the Nashville
plant.
The other charges of $1,229,342 consisted primarily of gains and losses on
disposal of property and equipment and the cost related to the exiting of
sales regions in Central Florida.
The net book value of $3,324,683, carried on the balance sheet as "net
assets held for disposition," is for the property and equipment at the closed
Nashville plant which was sold on October 25, 2000 for $3.8 million with
$1.71 million in cash and $2.09 million in secured notes.
Forward-Looking Statements
This discussion contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual
results could differ materially from those forward-looking statements.
Factors that may cause actual results to differ materially include price
competition, industry consolidation, raw material costs and effectiveness of
sales and marketing activities, as described
in the Company's filings with Securities and Exchange Commission.
ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Included in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations--Market Risk beginning on page 10.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and its subsidiary
for the year ended May 31, 2001, consisting of the following, are contained
herein:
Consolidated Balance Sheets -- May 31, 2001 and 2000
Consolidated Statements -- Years ended May 31, 2001, 2000
Of Income and 1999
Consolidated Statements of -- Years ended May 31, 2001, 2000
and 1999
Cash Flows
Consolidated Statements of Changes -- Years ended May 31, 2001, 2000
and 1999
in Stockholders' Equity
Notes to Consolidated Financial
Statements -- Years ended May 31, 2001, 2000
and 1999
Quarterly Results of Operations -- Years ended May 31, 2001 and
2000
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, 2001 and 2000, 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, 2001. 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 auditing standards generally
accepted in the United States of America. 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, 2001 and 2000, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended May 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.
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, 2001, 2000, and 1999, 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 6, 2001 DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
Golden Enterprises, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
May 31, 2001 and 2000
ASSETS
Current Assets. 2001 2001
Cash and cash equivalents $710,278 $ 835,074
Investment securities
available-for-sale 2,500,147 4,421,843
Receivables:
Trade accounts 9,017,885 9,015,975
Other 430,197 188,319
9,448,082 9,204,294
Less: Allowance for
doubtful accounts 346,100 600,000
9,101,982 8,604,294
Notes receivable,
current 42,399 --
9,144,381 8,604,294
Inventories:
Raw materials 1,883,167 1,743,910
Finished goods 2,856,593 2,298,435
4,739,760 4,042,345
Prepaid expenses 2,275,659 2,203,930
Net assets held for
disposition -- 3,324,683
Total current assets 19,370,225 23,432,169
Property, Plant and equipment:
Land 3,528,054 3,528,054
Buildings 17,151,522 17,021,709
Machinery and equipment 36,023,701 34,205,642
Transportation equipment 15,727,913 16,381,683
72,431,190 71,137,088
Less accumulated
depreciation 57,433,048 56,017,880
14,998,142 15,119,208
Other Assets
Notes receivable,
long-term 2,027,636 --
Cash surrender value of
life insurance 2,835,950 2,866,541
Other 15,339 15,339
Total other assets 4,878,925 2,881,880
Total $39,247,292 $41,433,257
See Accompanying Notes to Consolidated Financial Statements.
LIABILITIES AND STOCKHOLDERS' EQUITY
2001 2000
Current Liabilities:
Checks outstanding in
excess of bank balances $ 1,552,461 $ 620,465
Accounts payable 2,924,428 4,998,328
Note payable - bank,
current 220,387 --
Other accrued expenses 941,360 1,737,359
Deferred income taxes 260,196 123,605
Salary continuation plan 40,773 37,648
Total current liabilities 5,939,605 7,517,405
Long-term liabilities:
Note payable - bank,
non current 639,713 --
Salary continuation plan ,887,050 1,806,633
Total long-term
liabilities 2,526,763 1,806,633
Deferred income taxes 980,998 1,581,252
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 24,426,345 24,686,435
Treasury shares -
at cost (1,896,052
shares in 2001 and
1,763,793 shares
in 2000) (10,345,168) 9,877,217)
Accumulated other
comprehensive income -- --
Total stockholders'
equity 29,799,926 30,527,967
Total $39,247,292 $41,433,257
Golden Enterprises, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
Years ended May 31, 2001, 2000 and 1999
2001 2000 1999
Revenues:
Net sales $ 115,726,844 $ 126,182,156 $ 128,740,552
Other income,
including gain on
sale of property and
equipment of $599,497
in 2001,
$250,180 in 2000
and $536,709
in 1999 985,741 753,385 823,363
Investment income 304,783 67,454 66,567
Total revenues 117,017,368 127,002,995 129,630,482
Cost And Expenses:
Cost of sales 53,636,803 57,146,571 60,283,113
Selling, general
and administrative
expenses 59,083,287 64,627,686 7,416,243
Interest 3,068 -- --
Contributions to
employee 401(k)
profit-sharing
and employee stock
ownership plans 181,055 510,000 255,020
Restructuring charge -- 2,564,892 --
Total costs and
expenses 112,904,213 124,849,149 127,954,376
Income before
income taxes 4,113,155 2,153,846 1,676,106
Provision for income taxes:
Currently payable:
Federal 1,678,000 1,242,000 526,000
State 199,000 188,000 91,000
Deferred taxes (464,000) (519,000) (14,000)
Total provision
for income taxes 1,413,000 911,000 603,000
Net income $ 2,700,155 $ 1,242,846 $1,073,106
Per share of common stock:
Basic earnings per
share $ 0.23 $ 0.10 $ 0.09
Basic weighted
shares outstanding 11,965,671 12,154,057 12,171,043
Diluted earnings
per share $ 0.23 $ 0.10 $ 0.09
Diluted weighted
shares outstanding 11,967,823 12,154,057 12,171,411
See Accompanying Notes to Consolidated Financial Statements.
Golden Enterprises, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001, 2000 and 1999
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. Sales are reduced by returns and allowances to
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, 2001 are principally instruments of
municipalities and of short-term mutual municipal 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 classified as available-for-sale are
required to be reported at fair value with unrealized gains and losses, net
of taxes, excluded from earnings and shown separately as a component of
accumulated other comprehensive income within stockholders' equity. 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, 1999................................................$4,628,609
May 31, 2000.................................................4,042,345
May 31, 2001.................................................4,739,760
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, 2001, 2000 and 1999 were $181,055,
$255,000 and $255,020, 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, 2001, 2000 and 1999 were $-0-, $ 255,000 and $-0-
, 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 Stock
Option 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 stock option 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, 2001, 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, 2001, 2000 and 1999; however, there were 175,500shares
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 have been granted for 40,000 shares, net
of 300,000 shares cancelled, leaving 460,000 shares available for future
options. Following is a summary of transactions:
Shares Under Option
2001 2000 1999
Outstanding - beginning
of the year 340,000 340,000 300,000
Granted (--) (--) (--)
Exercised (--) (--) (--)
Forfeited (--) (--) (--)
Cancelled (300,000) (--) (--)
Outstanding - end of year 40,000 340,000 340,000
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (OAPB25O) and related
interpretation in accounting for its Employee Stock Options rather than the
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation. Under APB25, because 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.
Proforma information regarding net income and earnings per share is
presented as if the Company had accounted for its employee stock options
under the fair value method. The fair value for these options was estimated
at the date of grant using the Black-Scholes option pricing model with the
following assumptions for 1999 (no options were granted in 2001 and 2000);
risk-free interest rates of 6.33 percent; dividend yields of 5.2 percent;
expected option life of 5 years; volatility factors of expected market price
of the Company's stock of 0.150.
The Black-Scholes options pricing model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect an
option's fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options.
The Company's actual and proforma information is as follows:
2001 2000 2001
Net income:
As reported $ 2,700,155 & 1,242,846 $ 1 073,106
Proforma 2,700,155 1,242,846 1,062,098
Basic earnings per share:
As reported $ .23 $ .10 $ .09
Proforma .23 .10 .09
Diluted earnings per share:
As reported $ .23 $ .10 $ .09
Proforma .23 .10 .09
Advertising
The Company expenses advertising cost as incurred. The advertising costs
for fiscal 2001, 2000 and 1999 are disclosed in Note 10.
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 6.
Net Income Per Share
During 1996, the FASB issued Statement of Financial Accounting Standards
No. 128, Earnings Per Share. SFAS 128 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
2001 2000 1999
Basic weighted shares outstanding 11,965,671 12,154,057 12,171,043
Effects of options 2,152 -- 368
Diluted shares 11,967,823 12,154,057 12,171,411
Disclosures about Fair Value of Financial Instruments
The Statement of Financial Accounting Standards No. 107, Disclosures About
Fair Value of Financial Instruments requires disclosure of fair value
information about financial instruments, whether or not recognized on the
face of the balance sheet, for which it is practical to estimate that value.
SFAS 107 defines fair value as the quoted market prices for those instruments
that are actively traded in financial markets. In cases where quoted market
prices are not available, fair values are estimated using present value or
other valuation techniques. The fair value estimates are made at a specific
point in time, based on available market information and judgments about the
financial instrument, such as estimates of timing and amount of expected
future cash flows. Such estimates do not reflect any premium or discount
that could result from offering for sale at one time the CompanyOs 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 aggregate fair value of notes receivable is estimated at May 31, 2001
and approximates its carrying amounts because the transaction to acquire the
notes was recent and based on market conditions.
The interest rate on the Company's bank debt is reset monthly to reflect
the 30 day LIBOR rate. Consequently, the carrying value of the bank debt
approximates fair value.
The carrying value of the Company's salary continuation plan and accrued
liability approximates fair value because present value is used in accruing
this liability.
The Company does not hold or issue financial instruments for trading
purposes and has no involvement with forward currency exchange contracts.
Comprehensive Income
In June 1997, the FASB issued the Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income which establishes
reporting and presentation standards for comprehensive income and its
components in a full 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 non-owner sources. the adoption of SFAS 130 and
the restatement of prior periods for comparative financial statements did not
have a material impact on the financial statements of the Company.
Segment Information
Also in June 1997, the FASB issued the Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS 131 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 an
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. The adoption of SFAS 131 did not have a material impact on
the financial statements of the Company.
Pension and Postretirement Benefits
The Company has adopted the revised disclosure requirements of the
Statement of Financial Accounting Standards No. 132, EmployersO Disclosures
about Pensions and Other Postretirement Benefits. SFAS 132 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. The adoption of SFAS
132 did not have a material impact on the financial statements of the
Company.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Recent Issued Accounting Standards
In June 1998, the FASB issued the Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS 133, as amended by SFAS 137, was effective for the fiscal
year beginning June 1, 2000. SFAS 133 establishes accounting and reporting
standards for derivative instruments including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that
the Company recognize all derivative instruments as either assets or
liabilities in the consolidated balance sheet and measure those instruments
at fair value. The adoption of SFAS 133 did not have a material impact on
the financial statements of the Company.
Golden Enterprises, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
May 31, 2001, 2000 and 1999
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, 2001 and 2000, are as
follows:
May 31, 2001
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
Municipal obligations $ 625,326 $ -- $ -- $ 625,326
Mutual funds 1,874,821 -- -- 1,874,821
$2,500,147 $ -- $ -- $2,500,147
May 31, 2000
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
Municipal obligations $ 511,471 $ -- $ -- $ 511,471
Mutual funds 3,910,372 -- -- 3,910,372
$ 4,421,843 $ -- $ -- 4,421,843
Maturities of investment securities classified as available-for sale at May
31, 2001 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 $2,500,147 $ 2,500,147
Due after one year through three years -- --
Due after three years through five years -- --
Total $2,500,147 $ 2,500,147
Proceeds from sales of investment securities available-for-sale during
fiscal 2001 and 2000 were $12,045,251 and $2,550,000, respectively. No gains
or losses were realized on those sales for fiscal 2001 and 2000.
NOTE 3 -- NOTES RECEIVABLE
In October 2000, the Company sold property and equipment for $3,800,000.
The Company received cash of $1,710,000 at the time of sale and notes of
$90,000, $300,000 and $1,700,000 for the remainder of $2,090,000. The notes
earn interest at a rate of 8% and are payable in monthly installments.
NOTE 4 -- RESTRUCTURING CHARGES
The restructuring charge of $2,564,892 recognized in the fourth quarter of
fiscal 2000 relates to a restructuring plan approved by the Board of
Directors in January 2000 whereby the Nashville plant which primarily
manufactured low fat snacks was closed, a voluntary retirement package was
offered to a group of qualified employees, and the Company-operated
distribution system for Golden Flake Brand products in three fringe sales
regions in Central Florida was discontinued.
The following is a summary of the one-time restructuring charge to expense
for the year ended May 31, 2000.
Employee termination benefits $ 1,335,550
Other charges 1,229,342
Total restructuring charge $ 2,564,892
Net after tax $ 1,607,892
Per share $ .13
The employee related termination benefits of $1,335,550 primarily includes
severance costs for 104 employees, 10 of which accepted the voluntary
retirement package, 71 of which were employed in the three fringe sales
regions of Central Florida and 23 of which were employed at the Nashville
plant.
The other charges of $1,229,342 consisted primarily of gains and losses on
disposal of property and equipment and the cost related to the exiting of
sales regions in Central Florida.
The net book value of $3,324,683, carried on the balance sheet as "net
assets held for disposition," was for the property and equipment at the
closed Nashville plant, the sale of which was completed on October 20, 2000
for $3.8 million with $1.71 million in cash and $2.09 million in secured
notes.
NOTE 5-- LONG -TERM LIABILITIES
Long-term liabilities consist of the following:
2001 2000
Note payable - bank $ 860,100 $ --
Salary continuation plan accrued 1,927,823 1,844,281
2,787,923 1,844,281
Less: current portion 261,160 37,648
$ 2,526,763 $ 1,806,633
Maturities at May 31,
2002 $ 61,160
2003 442,734
2004 288,958
2005 51,791
2006 56,090
Thereafter 1,687,190
In April 2001, the Company entered into a new line of credit with a local
bank for $3,000,000 secured by a note payable that has a varied rate of
interest of 1.75% over the 30 day LIBOR rate currently at 6.83%. At May 31,
2001 the Company had drawn $860,100 against the line-of credit. The note
requires interest only payments through October 2001 with monthly principal
and interest installments of $35,842.39 thereafter. The note is secured by
equipment.
The Company has a salary continuation plan for certain key executives of
the Company. The Company is accruing the present values of the estimated
future retirement payments over the period from the date of the agreements to
the retirement dates. The Company recognized compensation expense of
approximately $203,500 and $264,828 for fiscal 2001 and 2000 respectively.
NOTE 6 -- 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
2001 2000 1999
Tax on income at
statutory rates $ 1,398,000 $ 732,000 $ 570,000
Increase (decrease)
resulting from:
State income taxes,
less Federal
income tax
benefit 131,000 124,000 60,000
Tax exempt interest (59,000) (20,000) (20,000)
Other - net (57,000) 75,000 (7,000)
Total $ 1,413,000 $ 911,000 $ 603,000
2001 2000
Property and equipment $ 1,791,172 $2,426,752
Accrued expenses (432,304) (538,895)
Addition to allowance
for doubtful accounts (117,674) (183,000)
Total $ 1,241,194 $1,704,857
The income tax effects of changes in temporary differences are as follows:
2001 2000 1999
Property and equipment $ (635,000) $ 109,000) $ 91,000
Accrued expenses 106,000 (227,000) (105,000)
Addition to allowance
for doubtful accounts 65,000 (183,000) --
Total $ (464,000) $ (519,000) $ (14,000)
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Rental expenses were $410,189 in 2001, $498,307 in 2000 and $662,565 in
1999. At May 31, 2001, 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 Building and
May 31, Office Space Equipment Total
2002 $24,000 $225,000 $249,000
2003 -- 187,000 187,000
2004 -- 187,000 187,000
The subsidiary of the Company leases equipment for approximately $26,000
per month 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 subsidiary of the Company leases its airplane to a major stockholder of
the Company for approximately $20,000 per month. The lease provides for his
personal use of the airplane for up to 100 flight hours per year and is for a
term of one year with automatic renewal at the option of either party. The
terms of this lease are equal to or better than those available to an
unrelated third party.
The Company had letters of credit in the amount of $2,000,000 outstanding
at May 31, 2001, and $2,200,000 at May 31, 2000 to support the Company's
commercial self-insurance program. The Company pays a commitment fee of
0.375% to maintain the letters of credit.
NOTE 8 - 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 an Alabama bank at
May 31, 2001 that exceeded the balance insured by the F.D.I.C. in the amount
of $331,000.
The Company's trade receivables result primarily from its snack food
operations and reflect a broad customer base, primarily large grocery store
chains located in the southeastern United States. The Company routinely
assesses the financial strength of its customers. As a consequence,
concentrations of credit risk are limited.
Golden Enterprises, Inc. and Subsidiary
NOTE 9 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of
operations of the years encded May 31, 2001, 2000 and 1999:
Per Share
Total Revenues Net Income Net Income
Quarter
2001
First $ 29,085,153 $ 1,272,111 $ 0.11
Second 28,285,378 ,079,301 0.09
Third 29,362,210 389,156 0.03
Fourth 30,284,627 (40,413) 0.00
For the year $ 117,017,368 $ 2,700,155 $ 0.23
2000
First $ 31,690,046 $ 552,601 $ 0.05
Second 30,773,777 532,998 0.04
Third 33,219,908 1,029,365 0.08
Fourth 31,319,264 (872,118) (0.07)
For the year $ 127,002,995 $ 1,242,846 $ 0.10
1999
First $ 31,668,331 $ 586,164 $ 0.05
Second 30,926,099 104,646 0.01
Third 34,080,883 185,177 0.01
Fourth 32,955,169 197,119 0.02
For the year $ 129,630,482 $ 1,073,106 $ 0.09
NOTE 10- SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
The following tabulation gives certain supplementary statement of income
information for continuing operations for the years ended May 31, 2001, 2000
and 1999:
2001 2000 1999
Maintenance and repairs $5,375,639 $5,889,306 $5,939,882
Depreciation and
amortization 2,435,599 3,230,321 3,309,182
Payroll taxes 2,388,828 2,599,980 2,769,228
Advertising costs 18,669,592 19,106,839 19,132,322
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
SUPPLEMENTAL FINANCIAL INFORMATION
Selected quarterly financial data for the
fiscal years ended May 31, 2001 and 2000 (unaudited)
(Dollar amounts in thousands, except per share data)
First Second Third Fourth
Quarter Qarter Quarter Quarter
2001
Total revenues $29,085 $28,285 $29,362 $30,285
Income before
income taxes $ 2,004 $ 1,689 $ 598 $ (178)
Net income $ 1,272 $ 1,079 $ 389 $ (40)
Net income
per share $ .11 $ .09 $ .03 $ .00
Cash dividends
per share $ .06 $ .0625 $ .0625 $ .0625
2000
Total revenues $ 31,690 $ 30,774 $ 33,220 $ 31,319
Income before
income taxes $ 878 $ 845 $ 1,639 $ (1,208)
Net income $ 553 $ 533 $ 1,029 $ (872)
Net income
per share $ .05 $ .04 $ .08 $ (0.07)
Cash dividends
per share $ .06 $ .06 $ .06 $ .06
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, 2001, 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. D 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 D May 31, 2001 and 2000
Consolidated Statements of Income D Years ended May 31, 2001, 2000 and 1999
Consolidated Statements of Changes in Stockholders' Equity D Years ended
May 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows D Years ended May 31, 2001, 2000 and
1999
Notes to Consolidated Financial Statements
The following consolidated financial statements schedule is included in
Item 14 (d):
Schedule II D 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:
10.1 - A copy of Equipment Purchase and Sale Agreement dated October 2000
whereby Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant
Equipment.
10.2 - A copy of Real Property Contract of Sale dated October 2000 whereby
Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real
Property.
10.3 - A copy of Amended and Restated Truck Lease Agreement effective June
1, 2001 whereby Golden Flake Snack Foods, Inc. leased 20 delivery van trucks
from SYB, Inc.
(b) Report on Form 8-K D 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 August 24, 2001
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 24, 2001
/s/ Mark W. McCutcheon Chief Executive August 24, 2001
Officer, President
and Director
/s/ John H. Shannon Vice President, August 24, 2001
Secretary, Principal
Financial Officer
and Controller
/s/ F. Wayne Pate Director August 24, 2001
/s/John P. McKleroy, Jr. Director August 24, 20
/s/James I. Rotenstreich Director August 24, 2001
/s/John S. P. Samford Director August 24, 2001
/s/D. Paul Jones, Jr. Director August 24, 2001
/s/J. Wallace Nall, Jr. Director August 24, 2001
/s/Joann F. Bashinsky Director August 24, 2001
Schedule II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
Years ended May 31, 1999, 2000, and 2001
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, 1999 $ 75,000 $ 153,459 $ 117,459 $ 111,000
Year ended May 31, 2000 $ 111,000 $ 690,983 $ 201,983 $ 600,000
Year ended May 31, 2001 $ 600,000 $ (194,938) $ 58,962 $ 346,100
INDEX TO EXHIBITS
Exhibit Number Page
10.1 A copy of Equipment Purchase and Sale Agreement dated October 2000
whereby Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee
Plant Equipment
10.2 A copy of Real Property Contract of Sale dated October 2000 whereby
Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real
Property
10.3 A copy of Amended and Restated Truck Lease Agreement effective June 1,
2001 whereby Golden Flake Snack Foods, Inc. leased 20 delivery van
trucks from SYB, Inc.
DOCUMENT
TYPE EX-27
TEXT
ARTICLE
MULTIPLIER 5
TABLE
S
PERIOD TYPE 12 MONTHS
FISCIAL-YEAR-END MAY-31-2000
PERIOD END MAY-31-2000
CASH $835,074.00
SECURITIES $4,421,843.00
RECEIVABLES $9,204,294.00
ALLOWANCES $600,000,00
INVENTORY $4,042,345.00
CURRENT-ASSETS $23,432,169.00
PROPERTY, PLANT & EQUIPMENT $71,137,088.00
DEPRECIATION $56,017,880.00
TOTAL $41,433,257.00
CURRENT LIABILITIES $7,517,405.00
BONDS .00
COMMON $9,219,195.00
PREFERRED MANDATORY .00
PREFERRED .00
OTHER $21,308,772.00
TOTAL LIABILITY AND EQUITY $41,433,257.00
SALES $126,182,156.00
TOTAL REVENUES $127,002,995.00
CGS $57,146,571.00
TOTAL COSTS $124,849,149.00
OTHER EXPENSES .00
LOSS PROVISION $489,000.00
INTEREST EXPENSE .00
INCOME PRETAX $2,153,846.00
INCOME TAX $911,000.00
INCOME-CONTINUING $1,242,846.00
DISCONTINUED .00
EXTRAORDINARY .00
CHANGES .00
NET-INCOME $1,242,846.00
EPS PRIMARY .10
EPS-DILUTED .10
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, 2001 which contains financial statement schedules.
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, 2001 do not reflect any change from the preceding year in any
accounting principles or practices or int he 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, L.L.C.
By:
John P. McKleroy, Jr.
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, 2001
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 24th day of August, 2001.
JOHN H. SHANNON
Vice President,
Secretary and Controller