Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 28, 2010
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-4339
GOLDEN ENTERPRISES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0250005
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Golden Flake Drive
Birmingham, Alabama 35205
-------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including area code: (205) 458-7316
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title Of Class Name of exchange on which registered
-------------- ------------------------------------
Common Stock, Par Value $0.6623 NASDAQ
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ( ) No (X)
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ( ) No (X)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T ( 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).Yes ( ) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K. ( )
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company (as
defined in Rule 12b-2 of the Act). (Check One)
Large accelerated filer ( ) Accelerated filer ( ) Non-accelerated filer ( )
Smaller reporting company(X)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ( ) No (X)
State the aggregate market value of the voting common stock held by
non-affiliates of the registrant as of November 27, 2009.
Common Stock, Par Value $0.66 2/3 --$21,616,106
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of July 30, 2010.
Class Outstanding at July 30, 2010
----- ----------------------------
Common Stock, Par Value $0.6623 11,734,632 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the Annual Meeting of Stockholders to
be held on September 22, 2010 are incorporated by reference into Part III.
2
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -2010
GOLDEN ENTERPRISES, INC.
Page
----
PART I.
Item 1. Description of Business 4
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 8
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II.
Item 5. Market for Registrant's Common Equity, Related Stockholder 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial Condition 12
Item 7A. Quantitative And Qualitative Disclosures About Market Risk 16
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 35
Item 9A(T). Controls and Procedures 35
Item 9B. Other Information 36
PART III.
Item 10. Directors and Executive Officers and Corporate Governance 37
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters 37
Item 13. Certain Relationships and Related Transactions and Director
Independence 37
Item 14. Principal Accountant Fees and Services 37
PART IV.
Item 15. Exhibits and Financial Statement Schedules 38
3
PART I
ITEM 1. - DESCRIPTION OF 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").
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. 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 has been a premiere producer, marketer
and distributor of snack products in the Southeastern United States since 1923.
The Company manufactures and distributes a full line of high quality salted
snack items, such as potato chips, tortilla chips, corn chips, fried pork skins,
baked and fried cheese curls, onion rings and puff corn. 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.
Raw Materials
Golden Flake purchases raw materials used in manufacturing and processing its
snack food products from various sources. A large part of the raw materials
used by Golden Flake consists of farm commodities, most notably corn and
potatoes, which are subject to precipitous change in supply and price. Weather
varies from season to season and directly affects both the quality and quantity
of supply available. Golden Flake has no control over the agricultural aspects
and its profits are affected accordingly. The Company also purchases flexible
bags or other suitable wrapping material for the storage, shipment and
presentation of the finished product to our customers.
Distribution
Golden Flake sells its products through its own sales organization and
independent distributors to commercial establishments which sell food products
in Alabama, Tennessee, Georgia, Mississippi and Louisiana and in parts of
Kentucky, Florida, North Carolina, South Carolina, Arkansas, Missouri and Texas.
The Golden Flake brand is well-known throughout the Southeast. The products are
distributed by route salesmen and independent distributors who are supplied with
selling inventory by the Company's trucking fleet which operates out of
Birmingham, Alabama and Ocala, Florida. All of the route salesmen are employees
of Golden Flake and use the direct-store delivery system. Recently, the company
has converted many of the company-owned routes, primarily in Florida, Georgia,
South Carolina, Arkansas and Texas, to independent distributors.
4
Golden Flake's products are distributed to a wide variety of grocery store
chains, discount stores, convenience stores, restaurants and other outlets
generally located in the Southeastern part of the United States. No single
customer accounts for more than 10% of its total sales.
Competition
The snack foods business is highly competitive. In the area in which Golden
Flake operates, many companies engage in the production and distribution of food
products similar to those produced and sold by Golden Flake. Most, if not all,
of Golden Flake's products are in direct competition with similar products of
several local and regional companies and at least one national company, the
Frito Lay Division of Pepsi Co., Inc., which are larger in terms of capital and
sales volume than is Golden Flake. Golden Flake'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. The Company
believes that one of its major advantages is the Golden Flake brand, which has
been developed and enhanced throughout the history of the company and is now
well known within the geographic area served by the Company. The Company
continues to promote the Golden Flake brand through sponsorship agreements,
billboard campaigns, advertising and other efforts.
Employees
As of July 14, 2010, Golden Flake employed approximately 826 employees. Of
these employees, 798 were full-time, while 28 were part-time. Approximately 480
employees are involved in route sales and sales supervision, approximately 207
are in production and production supervision, and approximately 139 are
management and administrative personnel.
Golden Flake believes that the performance and loyalty of its employees are two
of the most important factors in the growth and profitability of its business.
Since labor costs represent a significant portion of Golden Flake's expenses,
employee productivity is important to profitability. The Company's employees
are not represented by any collective bargaining organization and the Company
has never experienced a work stoppage. Golden Flake considers all of its
employees to be a part of the "Golden Flake Family".
SEC Filings
Under "SEC Filings" on the "Financial" page of the Company's website located at
www.goldenflake.com, links to the following filings are made available as soon
as reasonably practicable after they are electronically filed with or furnished
to the Securities and Exchange Commission (the "SEC")" the Company's Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, Proxy Statement on Schedule 14A related to the Company's Annual
Shareholders Meeting, and any amendments to those reports or statements filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Act of 1934. You
may also read and copy any materials we file with the SEC at the SEC's Public
Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet website located at
http://www.sec.gov that contains the information we file or furnish
electronically with the SEC.
Environmental Matters
In November 2009, Golden Flake completed the construction on a water treatment
plant as an environmentally-friendly way to dispose of process water at the
Birmingham plant. The project has allowed the Company to release this water
into a neighboring creek which has improved the flow of water in the creek and
has positively impacted the environment in the area surrounding the plant. This
project has also helped to reduce expenses associated with sewer charges since
this has replaced the previous system which disposed of the process water
through the sewer system.
5
Significant Events
On January 20, 2010, the Company closed the sale of the property located at 4771
Phyllis St., Jacksonville, Florida for $147,164.69.
On April 22, 2010, the Company closed the sale of the Company airplane for
$1,149,175.00.
6
Executive Officers Of Registrant
And Its Subsidiary
Name and Age Position and Offices with Management
------------ ------------------------------------
Mark W. McCutcheon, 55 Mr. McCutcheon is Chairman of the Board, Chief
Executive Officer and President of the Company and
President of Golden Flake Snack Foods, Inc. He was
elected Chairman of the Board on July 22, 2010,
President and Chief Executive Officer of the Company
on April 4, 2001 and President of Golden Flake on
November 1, 1998. He has been employed by Golden Flake
since 1980. Mr. McCutcheon is elected Chairman of the
Board and Chief Executive Officer and President of the
Company and President of Golden Flake annually, and
his present terms will expire on June 3, 2011.
Patty Townsend, 52 Ms. Townsend is Chief Financial Officer, Vice President
and Secretary of Golden Enterprises, Inc. She was
elected Chief Financial Officer, Vice-President and
Secretary of the Company on March 1, 2004. She has
been employed with the Company since 1988. Ms.
Townsend is elected to her positions on an annual
basis, and her present term of office will expire on
June 3, 2011.
Paul R. Bates, 56 Mr. Bates is Executive, Vice-President of Sales,
Marketing and Transportation for Golden Flake. He has
held these positions since October 26, 1998. Mr. Bates
was Vice-President of Sales from October 1, 1994 to
1998. Mr. Bates has been employed by Golden Flake
since March 1979. Mr. Bates is elected to his
positions on an annual basis, and his present term of
office will expire on June 3, 2011.
David A. Jones, 58 Mr. Jones is Executive Vice-President of Operations,
Human Resources and Quality Control for Golden Flake.
He has held these positions since May 20, 2002. Mr.
Jones was Vice-President of Manufacturing from 1998 to
2002 and Vice-President of Operations from 2000 to
2002. Mr. Jones has been employed by Golden Flake
since 1984. Mr. Jones is elected to his positions on
an annual basis, and his present term of office will
expire on June 3, 2011.
7
ITEM 1A. - RISK FACTORS
Important factors that could cause the Company's actual business results,
performance or achievements to differ materially from any forward looking
statements or other projections contained in this Annual Form 10-K Report
include, but are not limited to the principal risk factors set forth below.
Additional risks and uncertainties, including risks not presently known to the
Company, or that it currently deems immaterial, may also impair the Company's
business and or operations. If the events, discussed in these risk factors
occur, the Company's business, financial condition, results of operations or
cash flow could be adversely affected in a material way and the market value of
the Company's common stock could decline.
Competition
Price competition and consolidation within the Snack Food industry could
adversely impact the Company's performance. The Company's business requires
significant marketing and sales effort to compete with larger companies. These
larger competitors sell a significant portion of their products through
discounting and other price cutting techniques. This intense competition
increases the possibility that the Company could lose one or more customers,
lose market share and/or be forced to increase discounts and reduce pricing, any
of which could have an adverse impact on the Company's business, financial
condition, results of operation and/or cash flow.
Commodity and Energy Cost Fluctuations
Significant commodity price fluctuations for certain commodities purchased by
the Company, particularly potatoes, could have a material impact on results of
operations. In an attempt to manage commodity price risk, the Company, in the
normal course of business, enters into contracts to purchase pre-established
quantities of various types of raw materials, at contracted prices based on
expected short term needs. The Company can also be adversely impacted by
changes in the cost of natural gas and other fuel costs. Long term increases in
the cost of natural gas and fuel costs could adversely impact the Company's cost
of sales and selling, marketing and delivery expenses.
There are other risks and factors not described above that could also cause
actual results to differ materially from those in any forward looking statement
made by the Company.
ITEM 1B. - UNRESOLVED STAFF COMMENTS
Not Applicable.
8
ITEM 2. - PROPERTIES
The headquarters of the Company are located at One Golden Flake Drive,
Birmingham, Alabama 35205. The properties of the subsidiary are described
below.
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. This facility consists of three buildings which have a total of
approximately 300,000 square feet of floor area. The plant manufactures a full
line of Golden Flake products. In Birmingham, Golden Flake also has a garage
and vehicle maintenance service center from which it services, maintains,
repairs and rebuilds its fleet and delivery trucks.
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 28-acre site on Silver Springs Boulevard. The
Company manufactures tortilla chips and potato chips from this facility.
Management believes that our Company's facilities for the production of our
products are suitable and adequate, that they are being appropriately utilized
in line with past experience, and that they have sufficient production capacity
for their present intended purposes. The extent of utilization of such
facilities varies based upon seasonal demand for our products. It is not
possible to measure with any degree of certainty or uniformity the productive
capacity and extent of utilization of these facilities. However, management
believes that additional production can be obtained at the existing facilities
by adding personnel and capital equipment and, at some facilities, by adding
shifts of personnel or expanding the facilities. We continuously review our
anticipated requirements for facilities and, on the basis of that review, may
from time to time acquire additional facilities and/or dispose of existing
facilities.
The manufacturing plants, office headquarters and additional lands are owned by
Golden Flake.
Distribution Warehouses
Golden Flake owns branch warehouses in Birmingham, Montgomery, Midfield,
Demopolis, Fort Payne, Muscle Shoals, Huntsville, Phoenix City, Tuscaloosa,
Mobile, Dothan and Oxford, Alabama; Gulfport and Jackson, Mississippi; Knoxville
and Memphis, Tennessee; Decatur and Macon, Georgia; Panama City, Tallahassee and
Pensacola, Florida; and New Orleans, Louisiana. The warehouses vary in size
from 2,400 to 8,000 square feet. All distribution warehouses are owned free and
clear of any debts.
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.
9
ITEM 4. - SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Golden Enterprises, Inc. and Subsidiary
Market and Dividend Information
The Company's common stock is traded under the symbol, GLDC, and transactions
are reported through the National Association of Securities Dealers Automated
Quotation (NASDAQ) Over The Counter (OTC) 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 28, 2010 and May 29, 2009 and the amount of dividends
paid per share in each quarter. The Company currently expects that comparable
regular cash dividends will be paid in the future.
Market Price
High Low Dividend
Quarter Price Price Paid
Year Ended 2010 Per share
------------------------------------------------- -------- ------- ----------
First quarter (13 weeks ended August 28, 2009) $2.95 $2.02 $.0313
Second quarter (13 weeks ended November 27, 2009) 3.93 2.51 .0313
Third quarter (13 weeks ended February 26, 2010) 3.80 3.12 .0313
Fourth quarter (13 weeks ended May 28, 2010) 3.79 2.97 .0313
High Low Dividend
Quarter Price Price Paid
Year Ended 2009 Per share
------------------------------------------------- -------- ------- ----------
First quarter (13 weeks ended August 29, 2008) $2.55 $1.49 $.0313
Second quarter (13 weeks ended November 28, 2008) 2.25 0.64 .0313
Third quarter (13 weeks ended February 27, 2009) 2.35 1.65 .0313
Fourth quarter (13 weeks ended May 29, 2009) 2.44 1.82 .0313
As of July 30, 2010, there were approximately 1,019 shareholders of record.
10
Securities Authorized For Issuance Under Equity Compensation Plans
The following table provides Equity Compensation Plan information under which
equity securities of the Registrant are authorized for issuance:
EQUITY COMPENSATION PLAN INFORMATION
--------------------- ----------------------------------------------------------------------
Number of securities Weighted-average Number of securities
to be exercise remaining available
issued upon exercise price of outstanding for future issuance
of out- options, under equity
standing options, warrants and rights compensation plans
warrants (excluding securities
and rights reflected in
column(a)
Plan category (a) (b) (c)
--------------------- ----------------------- ---------------------- ----------------------
Equity compensation
plans
approved by security
holders 329,000 $3.81 0
--------------------- ----------------------- ---------------------- ----------------------
Equity compensation
plans
not approved by
security
holders 0 0 0
--------------------- ----------------------- ---------------------- ----------------------
Total 329,000 $3.81 0
--------------------- ----------------------- ---------------------- ----------------------
No securities remain under this plan for future awards.
Issuer Purchases Of Equity Securities
The Company did not purchase any shares of its common stock during the fiscal
year ended May 28, 2010.
ITEM 6. - SELECTED FINANCIAL DATA
Not required due to Smaller Reporting Company status.
11
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion provides an assessment of the Company's financial
condition, results of operations, liquidity and capital resources and should be
read in conjunction with the accompanying consolidated financial statements and
notes.
Overview
The Company manufactures and distributes a full line of snack items, such as
potato chips, tortilla chips, corn chips, fried pork skins, baked and fried
cheese curls, onion rings and puff corn. The products are all packaged in
flexible bags or other suitable wrapping material. The Company also sells a
line of cakes and cookie items, canned dips, pretzels, popcorn, peanut butter
crackers, cheese crackers, dried meat products and nuts packaged by other
manufacturers using the Golden Flake label.
No single product or product line accounts for more than 50% of the Company's
sales, which affords some protection against loss of volume due to a crop
failure of major agricultural raw materials. Raw materials used in
manufacturing and processing the Company's snack food products are purchased on
the open market and under contract through brokers and directly from growers. A
large part of the raw materials used by the Company consists of farm
commodities, most notably potatoes and corn, which are subject to precipitous
changes in supply and price. Weather varies from season to season and directly
affects both the quality and quantity of supply available. The Company has no
control of the agricultural aspects and its profits are affected accordingly.
The Company sells its products through its own sales organization and
independent distributors to commercial establishments that sell food products
primarily in the Southeastern United States. The products are distributed by
route representatives and independent distributors who are supplied with selling
inventory by the Company's trucking fleet. All of the route representatives are
employees of the Company and use the Company's direct-store delivery system.
Critical Accounting Policies And Estimates
The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, the
preparation of which in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that in certain circumstances affect amounts reported in the
consolidated financial statements. In preparing these financial statements,
management has made its best estimates and judgments of certain amounts included
in the financial statements, giving due considerations to materiality. The
Company does not believe there is a great likelihood that materially different
amounts would be reported under different conditions or using different
assumptions related to the accounting policies described below. However,
application of these accounting policies involves the exercise of judgment and
use of assumptions as to future uncertainties and, as a result, actual results
could differ materially from these estimates. Other accounting policies and
estimates are detailed in Note 1 of the Notes To Consolidated Financial
Statements in this 10-K.
12
Revenue Recognition
The Company recognizes sales and related costs upon delivery or shipment of
products to its customers. Sales are reduced by returns and allowances to
customers.
Accounts Receivable
The Company records accounts receivable at the time revenue is recognized.
Amounts for bad debt expense are recorded in selling, general and administrative
expenses on the Consolidated Statements of Operations. The amount of the
allowance for doubtful accounts is based on management's estimate of the
accounts receivable amount that is uncollectible. The Company records a general
reserve based on analysis of historical data. In addition, the Company records
specific reserves for receivable balances that are considered high-risk due to
known facts regarding the customer. The allowance for bad debts is reviewed
quarterly, and it is determined whether the amount should be changed. Failure
of a major customer to pay the Company amounts owed could have a material impact
on the financial statements of the Company. At May 28, 2010 and May 29, 2009,
the Company had accounts receivables in the amount of $9,534,542 and $9,297,434,
net of an allowance for doubtful accounts of $76,790 and $127,130 respectively.
The Company did not have any major customer write-offs this year that were not
covered by credit insurance. However, due to the bankruptcy of two
distributors, the Company did recognize an adjustment to the allowance of $7,790
at year-end. In the future, the credit insurance coverage will be expanded to
include many distributors that were not previously covered. This should further
mitigate the Company's credit risk.
Inventories
Inventories are stated at the lower of cost or market. Cost is computed on the
first-in, first out method.
Accrued Expenses
Management estimates certain expenses in an effort to record those expenses in
the period incurred. The Company's significant estimates relate to insurance
expenses. The Company is self-insured for certain casualty losses relating to
automobile liability, general liability, workers' compensation, property losses
and medical claims. The Company also has stop loss coverage to limit the
exposure arising from these claims. Automobile liability, general liability,
workers' compensation, and property losses costs are covered by letters of
credit with the company's claim administrators.
The Company uses a third-party actuary to estimate the casualty insurance
obligations on an annual basis.
In determining the ultimate loss and reserve requirements, the third-party uses
various actuarial assumptions including compensation trends, health care cost
trends and discount rates. The third-party actuary also uses historical
information for claims frequency and severity in order to establish loss
development factors.
The actuarial calculation includes a factor to account for changes in inflation;
health care costs, compensation and litigation cost trends as well as estimated
future incurred claims. This year, the Company utilized a 50% confidence level
for estimating the ultimate outstanding casualty liability based on the
actuarial report. Approximately 50% of each claim should be equal to or less
than the ultimate liability recorded based on the historical trends experienced
by the Company. If the Company chose a 75% factor, the liability would have
been increased by approximately $0.3 million. If the Company chose a 90%
factor, the liability would have increased by approximately $0.5 million.
13
This year the Company used a 4% investment rate to discount the estimated claims
based on the historical payout pattern during 2010 and 2009. A one percentage
point change in the discount rate would have impacted the liability by
approximately $44,100.
Actual ultimate losses could vary from those estimated by the third-party
actuary. The Company believes the reserves established are reasonable estimates
of the ultimate liability based on historical trends.
As of May 28, 2010, the Company's casualty reserve was $1,615,492 and at May 29,
2009 the casualty reserve was $1,805,300.
Employee medical insurance accruals are recorded based on medical claims
processed as well as historical medical claims experienced for claims incurred
but not yet reported. Differences in estimates and assumptions could result in
an accrual requirement materially different from the calculated accrual.
Other Matters
Transactions with related parties, included in Note 11 of the Notes to
Consolidated Financial Statements, are conducted on an arm's-length basis in the
ordinary course of business.
Other Commitments
The Company has a letter of credit in the amount of $2,057,014 outstanding at
May 28, 2010 compared to $2,264,857 outstanding at May 29, 2009. The letter of
credit supports the Company's commercial self-insurance program.
The Company has a line-of-credit agreement with a local bank that permits
borrowing up to $3 million. During the quarter ended November 27, 2009, this
line of credit was renewed and the limit was increased from $2 million to $3
million. The line-of-credit is subject to the Company's continued credit
worthiness and compliance with the terms and conditions of the advance
application. The Company's line-of-credit debt at May 28, 2010 was $1,781,996
with an interest rate of 4.00%, leaving the Company with $1,218,004 of credit
availability. The Company's line-of-credit debt as of May 29, 2009 was
$1,454,155 with an interest rate of 4.00%, which left the Company with $545,845
of credit availability.
The Company's current ratio was 1.27 to 1.00 and 1.46 to 1.00 at May 28, 2010
and May 29, 2009, respectively.
Available cash, cash from operations and available credit under the line of
credit are expected to be sufficient to meet anticipated cash expenditures and
normal operating requirements for the foreseeable future.
Operating Results
Net sales increased by 5.1% in fiscal year 2010 and 7.8% in fiscal year 2009.
Cost of sales as a percentage of net sales amounted to 51.3% and 52.8% in 2010
and 2009, respectively.
Selling, general and administrative expenses were 44.0% of net sales in 2010 and
45.3% of net sales in 2009.
Operating income for the fiscal year increased 159.2% compared to last fiscal
year.
The Company's effective tax rates for 2010 and 2009 were 38.3% and 40.6%,
respectively. Note 6 to the Consolidated Financial Statements provides
additional information about the provision for income taxes.
14
The following tables compare manufactured products to resale products for the
fiscal years ended May 28, 2010 and May 29, 2009:
Manufactured Products-Resale Products
2010 2009
------------------- -------------------
Sales % %
Manufactured Products $101,443,335 79.0% $ 98,701,412 80.8%
Resale Products 26,998,122 21.0% 23,467,214 19.2%
------------ ------ ------------ ------
Total $128,441,457 100.0% $122,168,626 100.0%
============ ====== ============ ======
Gross Margin % %
Manufactured Products $ 52,842,886 52.1% $ 49,093,733 49.7%
Resale Products 9,644,790 35.7% 8,597,087 36.6%
------------ ------------
Total $ 62,487,676 48.7% $ 57,690,820 47.2%
============ ====== ============ ======
Liquidity And Capital Resources
Working capital was $3,820,371 and $5,603,395 at May 28, 2010 and May 29, 2009,
respectively. Net cash provided by operations amounted to $8,807,907 and
$1,510,066 in fiscal years May 28, 2010 and May 29, 2009, respectively. During
2010, the principal source of liquidity for the Company's operating needs was
provided from operating activities, credit facilities and cash on hand.
Additions to property, plant and equipment are expected to be about $4,000,000
in 2011.
Cash dividends of $1,469,582 and $1,471,495 were paid in 2010 and 2009,
respectively.
The Company did not purchase any shares of treasury stock in fiscal 2010 while
cash of $75,282 was used to purchase 42,275 shares of treasury stock in 2009.
During fiscal 2010, the Company's debt proceeds net of re-paid debt was
$1,414,583 versus $2,713,228 during fiscal 2009.
Market Risk
The principal market risks (i.e. the risk of loss arising from adverse changes
in market rates and prices) to which the Company is exposed are interest rates
on its cash equivalents and bank loans, fuel costs and commodity prices
affecting the cost of its raw materials.
The Company is subject to market risk with respect to commodities because its
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which it operates. The Company purchases its raw
materials on the open market, under contract through brokers and directly from
growers. Futures contracts have been used occasionally to hedge immaterial
amounts of commodity purchases, but none are presently being used.
15
Inflation
Certain costs and expenses of the Company are affected by inflation. The
Company's prices for its products over the past several fiscal 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.
Higher fuel and commodity costs continue to be a challenge.
Environmental Matters
In November 2009, Golden Flake completed the construction on a water treatment
plant as an environmentally-friendly way to dispose of process water at the
Birmingham plant. The project has allowed the Company to release this water
into the neighboring creek which has improved the flow of water in the creek and
has positively impacted the environment in the area surrounding the plant. This
project has also helped to reduce expenses associated with sewer charges since
this has replaced the previous system which disposed of the process water
through the sewer system.
Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those forward-looking statements. Factors that may cause
actual results to differ materially include price competition, industry
consolidation, raw material costs, fuel costs and effectiveness of sales and
marketing activities, as described in this 10-K. You are cautioned not to place
undue reliance on these forward-looking statements which speak only as of the
date which they are made.
Recent Developments
The Company, in compliance with Section 404 of the Sarbanes-Oxley Act of 2002
has completed the management assessment of its internal controls. See Item 9A
for further details.
Recently Issued Accounting Pronouncements
See Note 1 to the consolidated financial statements included in Item 8 for a
summary of recently issued accounting pronouncements.
ITEM 7 A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable as Company is a Smaller Reporting Company.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and its subsidiary for
the year ended May 28, 2010, consisting of the following, are contained herein:
Consolidated Balance Sheets - As of May 28, 2010 and May 29, 2009
Consolidated Statements of Income - Fiscal years ended 2010 and 2009
Consolidated Statements of Changes in Stockholders' Equity - Fiscal years ended 2010 and 2009
Consolidated Statements of Cash Flows - Fiscal years ended 2010 and 2009
Notes to Consolidated Financial Statements - Fiscal years ended 2010 and 2009
16
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 28, 2010 and May 29, 2009, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the years then ended. Our audits also included the financial
statement schedule listed at Item 15(a) Schedule II. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Golden
Enterprises, Inc. and subsidiary as of May 28, 2010 and May 29, 2009, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
We were not engaged to examine management's assertion about the effectiveness of
Golden Enterprises, Inc. and subsidiary's internal control over financial
reporting as of May 28, 2010 included in the Company's Item 9A "Controls and
Procedures" in the Annual Report on Form 10-K and, accordingly, we do not
express an opinion thereon.
DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
Birmingham, Alabama
August 5, 2010
17
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of May 28, 2010 and May 29, 2009
ASSETS
2010 2009
---- ----
CURRENT ASSETS
Cash and cash equivalents $ 1,443,801 $ 1,178,060
Receivables:
Trade accounts 9,363,389 9,042,937
Other 247,943 381,627
---------- ----------
9,611,332 9,424,564
Less: Allowance for doubtful accounts 76,790 127,130
---------- ----------
9,534,542 9,297,434
Inventories:
Raw materials 1,580,379 1,693,655
Finished goods 3,320,286 3,318,497
---------- ----------
4,900,665 5,012,152
---------- ----------
Prepaid expenses 1,573,253 1,608,790
Deferred income taxes 580,154 676,480
---------- ----------
Total current assets 18,032,415 17,772,916
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Land 2,793,593 2,803,594
Buildings 16,906,669 16,774,579
Machinery and equipment 52,356,462 44,265,326
Transportation equipment 8,075,670 11,620,027
---------- ----------
80,132,394 75,463,526
Less: Accumulated depreciation 57,852,770 59,407,291
---------- ----------
22,279,624 16,056,235
---------- ----------
OTHER ASSETS
Cash surrender value of life insurance 1,299,084 1,620,822
Other 1,132,237 955,003
---------- ----------
Total other assets 2,431,321 2,575,825
---------- ----------
TOTAL $42,743,360 $36,404,976
========== ==========
See Accompanying Notes to Consolidated Financial Statements
18
LIABILITIES AND STOCKHOLDERS' EQUITY
2010 2009
---- ----
CURRENT LIABILITIES
Checks outstanding in excess of bank balances $ 1,083,512 $ 1,691,230
Accounts payable 6,137,412 3,437,482
Accrued income taxes 238,031 286,383
Current portion of long-term debt 350,304 -
Line of credit outstanding 1,781,996 1,454,155
Other accrued expenses 4,465,977 5,157,323
Salary continuation plan 154,812 142,948
------------ ------------
Total current liabilities 14,212,044 12,169,521
------------ ------------
LONG-TERM LIABILITIES
Note payable-bank, non-current 3,479,879 2,743,440
Salary continuation plan 1,317,251 1,414,303
Deferred income taxes 1,586,833 669,815
------------ ------------
Total long-term liabilities 6,383,963 4,827,558
------------ ------------
STOCKHOLDERS' EQUITY
Common stock - $.66 2/3 par value:
Authorized 35,000,000 shares;
issued 13,828,793 shares 9,219,195 9,219,195
Additional paid-in capital 6,497,954 6,497,954
Retained earnings 17,319,003 14,579,547
Treasury shares -at cost(2,082,161 shares in
2010 and 2009) (10,888,799) (10,888,799)
------------ ------------
Total stockholders' equity 22,147,353 19,407,897
------------ ------------
TOTAL $ 42,743,360 $ 36,404,976
============ ============
19
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
2010 2009
---- ----
Net sales $128,441,457 $122,168,626
Cost of sales 65,953,781 64,477,806
--------------- ---------------
Gross margin 62,487,676 57,690,820
Selling, general and administrative expenses 56,499,554 55,380,292
--------------- ---------------
Operating income 5,988,122 2,310,528
--------------- ---------------
Other income (expenses):
Gain on sale of assets 829,618 910,875
Interest expense (359,605) (198,252)
Other income 365,319 325,022
--------------- ---------------
Total other income (expenses) 835,332 1,037,645
--------------- ---------------
Income before income tax 6,823,454 3,348,173
Provision for income taxes 2,614,416 1,358,073
--------------- ---------------
Net income $ 4,209,038 $ 1,990,100
=============== ===============
PER SHARE OF COMMON STOCK
Basic earnings $ 0.36 $ 0.17
Diluted earnings $ 0.36 $ 0.17
See Accompanying Notes to Consolidated Financial Statements
20
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
Additional Total
Common Paid-in Retained Treasury Stockholders'
Stock Capital Earnings Shares Equity
----- ------- -------- ------ ------
Balance - May 30, 2008 $ 9,219,195 $ 6,497,954 $ 14,060,942 $ (10,813,517) $ 18,964,574
Net income - 2009 - - 1,990,100 - 1,990,100
Cash dividends paid - - (1,471,495) - (1,471,495)
Treasury shares purchased - - - (75,282) (75,282)
------------- ------------- ---------------- ---------------- ----------------
Balance - May 29, 2009 9,219,195 6,497,954 14,579,547 (10,888,799) 19,407,897
Net income - 2010 - - 4,209,038 - 4,209,038
Cash dividends paid - - (1,469,582) - (1,469,582)
------------- ------------- ---------------- ---------------- ----------------
Balance - May 28, 2010 $ 9,219,195 $ 6,497,954 $ 17,319,003 $ (10,888,799) $ 22,147,353
============= ============= ================ ================ ================
See Accompanying Notes to Consolidated Financial Statements
21
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
2010 2009
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 128,204,349 $ 120,811,739
Interest income 7,425 18,677
Rental income 50,304 40,485
Other operating cash payments/receipts 307,590 265,860
Cash paid to suppliers and employees for cost of goods sold (61,344,227) (63,652,300)
Cash paid for suppliers and employees for selling, general
and administrative (56,408,505) (54,566,512)
Income taxes (1,649,424) (1,209,631)
Interest expense (359,605) (198,252)
--------------- -----------------
Net cash provided by operating activities 8,807,907 1,510,066
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (9,449,381) (5,607,304)
Proceeds from sale of property, plant and equipment 1,569,931 2,792,231
--------------- -----------------
Net cash used in investing activities (7,879,450) (2,815,073)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt proceeds 20,467,497 22,490,254
Debt repayments (19,052,913) (19,777,026)
(Decrease) increase in checks outstanding in excess of bank
balances (607,718) 873,860
Purchases of treasury shares - (75,282)
Cash dividends paid (1,469,582) (1,471,495)
--------------- -----------------
Net cash (used in) provided by financing activities (662,716) 2,040,311
NET INCREASE IN CASH AND
CASH EQUIVALENTS 265,741 735,304
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,178,060 442,756
--------------- -----------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 1,443,801 $ 1,178,060
=============== =================
See Accompanying Notes to Consolidated Financial Statements
22
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
2010 2009
---- ----
Net income $4,209,038 $ 1,990,100
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation 2,485,679 2,299,049
Deferred income taxes 1,013,344 22,678
Gain on sale of property and equipment (829,618) (910,875)
Change in receivables-net (237,108) (1,356,887)
Change in inventories 111,487 (674,054)
Change in prepaid expenses 35,537 34,169
Change in cash surrender value of insurance 321,738 185,160
Change in other assets - other (177,234) (168,057)
Change in accounts payable 2,699,930 (130,457)
Change in accrued expenses (691,346) 167,639
Change in salary continuation plan (85,188) (74,163)
Change in accrued income taxes (48,352) 125,764
---------- -----------
Net cash provided by operating activities $8,807,907 $ 1,510,066
========== ===========
See Accompanying Notes to Consolidated Financial Statements
23
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------
The accounting and reporting policies of Golden Enterprises, Inc. and subsidiary
("Company") conform to accounting principles generally accepted in the United
States of America and to general practices within the snack foods industry. The
following is a description of the more significant accounting policies:
Nature of the Business
-------------------------
The Company manufactures and distributes a full line of snack items that are
sold through its own sales organization and independent distributors to
commercial establishments that sell food products primarily in the Southeastern
United States.
Consolidation
-------------
The consolidated financial statements include the accounts of Golden
Enterprises, Inc. and its wholly-owned subsidiary, Golden Flake Snack Foods,
Inc., (the "Company"). All significant inter-company transactions and balances
have been eliminated.
Revenue Recognition
--------------------
The Company recognizes sales and related costs upon delivery or shipment of
products to its customers. Sales are reduced by returns and allowances to
customers.
Accounts Receivable
--------------------
The Company records accounts receivable at the time revenue is recognized.
Amounts for bad debt expense are recorded in selling, general and administrative
expenses on the consolidated statements of income. The determination of the
allowance for doubtful accounts is based on management's estimate of
uncollectible accounts receivables. The Company records a general reserve based
on analysis of historical data. In addition, management records specific
reserves for receivable balances that are considered at higher risk due to known
facts regarding the customer.
Fiscal Year
------------
The Company ends its fiscal year on the Friday closest to the last day in May.
The years ended May 28, 2010 and May 29, 2009 included 52 weeks.
Fair Value of Financial Instruments
---------------------------------------
The carrying amounts of cash and cash equivalents, receivables, accounts payable
and short-term debt approximate fair value.
Cash and Cash Equivalents
----------------------------
The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
Inventories
-----------
Inventories are stated at the lower of cost or market. Cost is computed on the
first-in, first-out method.
Property, Plant and Equipment
--------------------------------
Property, plant and equipment are stated at cost. For financial reporting
purposes, depreciation and amortization have been provided principally on the
straight-line method over the estimated useful lives of the respective assets.
Accelerated methods are used for tax purposes.
24
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
------------------------------------------------------------------------
Expenditures for maintenance and repairs are charged to operations as incurred;
expenditures for renewals and betterments are capitalized and written off by
depreciation and amortization charges. Property retired or sold is removed from
the asset and related accumulated depreciation accounts and any profit or loss
resulting there from is reflected in the statements of operations.
Self-Insurance
--------------
The Company is self-insured for certain casualty losses relating to automobile
liability, general liability, workers' compensation, property losses and medical
claims. The Company also has stop loss coverage to limit the exposure arising
from these claims. Automobile liability, general liability, workers'
compensation, and property losses costs are covered by letters of credit with
the company's claim administrators.
The Company uses a third-party actuary to estimate the casualty insurance
obligations on an annual basis. In determining the ultimate loss and reserve
requirements, the third-party uses various actuarial assumptions including
compensation trends, health care cost trends and discount rates. The third-party
actuary also uses historical information for claims frequency and severity in
order to establish loss development factors. The actuarial calculation includes
a factor to account for changes in inflation, health care costs, compensation
and litigation cost trends as well as estimated future incurred claims.
Advertising
-----------
The Company expenses advertising costs as incurred. These costs are included in
selling, general and administrative expenses in the Consolidated Statement of
Income. Advertising expense amounted to $6,587,476 and $5,431,754 for the
fiscal years 2010 and 2009, respectively.
Income Taxes
-------------
Deferred income taxes are provided using the liability method to measure tax
consequences resulting from differences between financial accounting standards
and applicable income tax laws. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
Segment Information
-------------------
The Company does not identify separate operating segments for management
reporting purposes. The results of operations are the basis on which management
evaluates operations and makes business decisions. The Company's sales are
generated primarily within the Southeastern United States.
Stock Options
--------------
The Company has granted stock options to management in previous years, though
none were granted during fiscal years ended May 28, 2010 or May 29, 2009. See
Note 8 for further discussion of our stock option awards.
25
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 28, 2010 and May 29, 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
------------------------------------------------------------------------
Shipping and Handling Costs
---------------------------
Shipping and handling costs, which include salaries and vehicle operations
expenses relating to the delivery of products to customers by the Company are
classified as Selling, General and Administrative (SG&A) expenses. Shipping and
handling costs classified as SG&A amounted to $3,588,124 and $3,666,101 for the
fiscal years 2010 and 2009, respectively.
Use of Estimates
------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements
--------------------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements."
SFAS No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles, and expands disclosures about
fair value measurements. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007. The adoption of SFAS
No. 157 did not have a material impact on our financial condition, results of
operations or cash flows.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities: Including an amendment of FASB
Statement No. 115." SFAS No. 159 permits entities to measure many financial
instruments and certain other items at fair value with changes in fair value
reported in earnings. The FASB issued SFAS No. 159 to mitigate earnings
volatility that arises when financial assets and liabilities are measured
differently, and to expand the use of fair value measurement for financial
instruments. SFAS No. 159 is effective for our fiscal year beginning May 31,
2008. The adoption of SFAS No. 159 did not have a material impact on our
financial condition, results of operations or cash flows.
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events." SFAS No. 165
establishes general standards of accounting for and disclosure of events
occurring subsequent to the date of the balance sheet, but before financial
statements are issued. The Company will consider the application of SFAS 165 to
its interim and annual periods that end after June 15, 2009 (fiscal year 2010).
26
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 2 - PREPAID EXPENSES
-------------------------
At May 28, 2010 and May 29, 2009, prepaid expenses consist of the following:
2010 2009
---- ----
Prepaid marketplace spending $ 179,579 $ 221,325
Other prepaid expenses 1,393,674 1,387,465
---------- ----------
$1,573,253 $1,608,790
========== ==========
NOTE 3 - OTHER ACCRUED EXPENSES
-------------------------------
At May 28, 2010 and May 29, 2009, other accrued expenses consist of the
following:
2010 2009
---- ----
Accrued payroll $ 423,161 $ 408,107
Self insurance liability 1,615,492 1,805,300
Accrued vacation 1,167,884 1,367,282
Other accrued expenses 1,259,440 1,576,634
---------- ----------
$4,465,977 $5,157,323
========== ==========
NOTE 4 - LINE OF CREDIT
-----------------------
The Company has a line-of-credit agreement with a local bank that permits
borrowing up to $3 million. During the quarter ended November 27, 2009 this
line of credit was renewed and the limit was increased from $2 million to $3
million. The line-of-credit is subject to the Company's continued credit
worthiness and compliance with the terms and conditions of the advance
application. The Company's line-of-credit debt at May 28, 2010 was $1,781,996
with an interest rate of 4.00%, leaving the Company with $1,218,004 of credit
availability. The Company's line-of-credit debt as of May 29, 2009 was
$1,454,155 with an interest rate of 4.00%, leaving the Company with $545,845 of
credit availability.
27
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 5 - LONG-TERM LIABILITIES
----------------------------------
Long-term debt at May 28, 2010 and May 29, 2009 consists of the following:
In March 2009, the Company established a construction line
of credit with interest-only payments due through the end
of the construction period at a fixed rate of 4.25%. In
September 2009, the loan converted to a 10-year, 4.25%
fixed rate equipment note, payable in equal monthly
installments based on the final amount drawn during the
construction period which was $4.0 million
2010 2009
---- ----
Total equipment note payable $ 3,755,619 $ 2,743,440
Less: current portion (337,864) -
-------------- --------------
Total non current portion of equipment note $ 3,417,755 $ 2,743,440
============== ==============
In January 2010, the Company transferred an existing
operating lease from one provider to another. Included in
the new lease agreement were 5 transport vehicles that were
added as a capital lease. The capital portion of the lease
is for a term of 4 years at an annual interest rate of
3.69%
2010 2009
---- ----
Total capital lease $ 74,564 -
Less: current portion (12,440) -
-------------- --------------
Total non current portion of capital lease $ 62,124 $ -
============== ==============
2010 2009
---- ----
Total note payable and capital lease $ 3,830,183 $ 2,743,440
Less: current portion (350,304) -
-------------- --------------
Total non current portion of note payable and capital lease $ 3,479,879 $ 2,743,440
============== ==============
28
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 5 - LONG-TERM LIABILITIES- CONTINUED
---------------------------------------------
Other long-term obligations at May 28, 2010 and May 29, 2009 consist of the
following:
2010 2009
---- ----
Salary continuation plan $1,472,063 $1,557,251
Less: current portion (154,812) (142,948)
----------- -----------
$1,317,251 $1,414,303
=========== ===========
The Company is accruing the present values of the estimated future retirement
payments over the period from the date of the agreements to the retirement
dates, for certain key executives. The Company recognized compensation expense
of $57,761 and $57,830 for fiscal 2010 and 2009, respectively.
NOTE 6 - INCOME TAXES
-------------------------
At May 28, 2010 and May 29, 2009 the provision for income taxes consists of the
following:
2010 2009
---- ----
Current:
Federal $1,419,112 $1,169,764
State 181,960 165,630
---------- ----------
1,601,072 1,335,394
Deferred:
Federal 866,675 20,180
State 146,669 2,499
---------- ----------
1,013,344 22,679
---------- ----------
Total $2,614,416 $1,358,073
========== ==========
29
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 6 - INCOME TAXES- CONTINUED
-------------------------------------
The effective tax rate for continuing operations differs from the expected tax
using statutory rates. A reconciliation between the expected tax and actual tax
follows:
2010 2009
---- ----
Tax on income at statutory rates $2,319,974 $1,138,379
(Decrease) increase resulting from:
State income taxes, less Federal income tax effect 120,094 109,316
Tax exempt interest (1,187) (1,204)
Change in valuation allowance - (81,640)
Other - net 175,535 193,222
----------- -----------
Total $2,614,416 $1,358,073
=========== ===========
The tax effects of temporary differences that result in deferred tax assets and
liabilities are as follows:
2010 2009
---- ----
Deferred tax assets
Salary continuation plan $ 559,384 $ 571,044
Accrued vacation 443,796 501,383
Contribution carry forward - 137,217
Inventory capitalization 47,115 19,969
Allowance for doubtful accounts 29,180 46,618
Other accrued expenses 164,329 189,670
------------ ----------
Gross deferred tax assets before valuation allowance 1,243,804 1,465,901
Less valuation allowance - -
------------ ----------
Total deferred tax assets 1,243,804 1,465,901
------------ ----------
Deferred tax liabilities
Property and equipment 2,182,243 1,378,076
Prepaid expenses 68,240 81,160
------------ ----------
Total deferred tax liabilities 2,250,483 1,459,236
------------ ----------
Net deferred tax liability $(1,006,679) $ 6,665
============ ==========
30
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 7 - EMPLOYEE BENEFIT PLANS
-------------------------------
The Company has trusteed "Qualified Profit-Sharing Plans" that were amended and
restated effective June 1, 1996 to add a 401 (k) salary reduction provision.
Under this provision, employees can contribute up to fifty percent of their
compensation to the plan on a pretax basis subject to regulatory limits; and the
Company, at its discretion, can match up to 4% of the participants'
compensation. The annual contributions to the plans are determined by the Board
of Directors. Total plan contributions for the years ended May 28, 2010 and May
29, 2009 were $133,851 and $127,189, respectively.
The Company has an Employee Stock Ownership Plan that covers all full-time
employees. The annual contributions to the plan are amounts determined by the
Board of Directors of the Company. Annual contributions are made in cash or
common stock of the Company. Contributions to the Employee Stock Ownership Plan
for the years ended May 28, 2010 and May 29, 2009 were $0 and $0, respectively.
Each participant's account is credited with an allocation of shares acquired
with the Company's annual contributions, dividends received on Employee Stock
Ownership Plan shares and forfeitures of terminated participants' non-vested
accounts.
The Company has a salary continuation plan with certain of its key officers
whereby monthly benefits will be paid for a period of fifteen years following
retirement. The Company is accruing the present value of all retirement
benefits until the key officers reach normal retirement age at which time the
principal portion of the retirement benefits paid are applied to the liability
previously accrued. The change in the liability for the Salary Continuation
Plan is as follows:
2010 2009
---- ----
Accrued salary continuation plan - beginning of year $1,557,251 $1,631,414
Benefits accrued 57,761 57,830
Benefits paid (142,949) (131,993)
----------- -----------
Accrued salary continuation plan - end of year $1,472,063 $1,557,251
=========== ===========
NOTE 8 - LONG-TERM INCENTIVE PLANS
----------------------------------
The Company has a long-term incentive plan currently in effect under which
future stock option grants were previously issued. This Plan (the 1996 Plan) is
administered by the Stock Option Committee of the Board of Directors, which had
sole discretion, subject to the terms of the Plan, to determine those employees,
including executive officers, eligible to receive awards and the amount and type
of such awards. The Stock Option Committee also has the authority to interpret
the Plan and make all other determinations required in the administration
thereof. All options outstanding at the end of 2010 are exercisable.
The 1996 Plan provided for the granting of Incentive Stock Options as defined
under the Internal Revenue Code. Under the Plan, grants of incentive stock
options were made to selected officers and employees, with a term not exceeding
ten years from the issue date and at a price not less than the fair market value
of the Company's stock at the date of grant. No awards may now be granted under
the plan.
31
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 8 - LONG-TERM INCENTIVE PLANS - CONTINUED
-----------------------------------------------------
Five hundred thousand shares of the Company's stock have been reserved for
issuance under this Plan. The following is a summary of transactions:
2010 2009
---- ----
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
Outstanding - beginning of year 329,000 $ 3.81 369,000 $ 3.78
Granted - - - -
Exercised - - - -
Forfeited - - 40,000 3.50
Cancelled - - - -
---------- ----------- ---------- ----------
Outstanding - end of year 329,000 $ 3.81 329,000 $ 3.81
========== =========== ========== ==========
No securities remain under this plan for future issuance.
The Company adopted SFAS 123R as of June 3, 2006. SFAS 123R establishes
standards for accounting of transactions in which an entity exchanges its equity
instruments for goods or services, such as when an entity obtains employee
services in share-based payment transactions. The revised statement requires a
public entity to measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award.
The cost is to be recognized over the period during which the employee is
required to provide service in exchange for the award. Changes in fair value
during the required service period are to be recognized as compensation cost
over the period. In addition, SFAS 123R amends SFAS No. 95, "Statement of Cash
Flows," to require that excess tax benefits be reported as a financing cash flow
rather than as a reduction of taxes paid. When the Company adopted SFAS 123R,
they elected the modified prospective application method and prior period
amounts have not been restated. As of June 3, 2006, all outstanding options were
fully vested. Additionally, no options were granted during the fiscal years
ended May 28, 2010 or May 29, 2009.
Prior to the effective date of SFAS 123R, the Company followed Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretation for stock options granted to employees and directors.
The Company adopted the disclosure-only provisions of SFAS No. 123, "Accounting
for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." The proforma disclosures
previously permitted under SFAS 123 are no longer an alternative to financial
statement recognition. The Company continues to account for any portion of
previously granted awards using the accounting principle originally applied to
those awards, APB Opinion No. 25, Accounting for Stock Issued to Employees.
32
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 9 - NET INCOME PER SHARE
-------------------------------
Basic earnings per common share are computed by dividing earnings available to
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects per share amounts that would
have resulted if dilutive potential common stock equivalents had been converted
to common stock, as prescribed by Statement of Financial Accounting Standards
No. 128, "Earnings per Share". At May 28, 2010, options on the 329,000 shares
were not included in the computation of diluted earnings per share because the
options' exercise price was greater than the average market price of the common
shares and, therefore, the effect would be antidilutive. At May 29, 2009 options
on the 329,000 shares were also antidilutive. Thus, they were also not included
in the computation of diluted earnings per share. The following reconciles the
information used to compute basic and diluted earnings per share:
Average Common Stock Shares
---------------------------
2010 2009
---- ----
Basic weighted average shares outstanding 11,746,632 11,758,651
Effect of options - -
------------ -----------
11,746,632 11,758,651
============ ===========
NOTE 10 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------------------------
The Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" requires disclosure of fair value information
about financial instruments, whether or not recognized on the face of the
balance sheet, for which it is practical to estimate that value. SFAS 107
defines fair value as the quoted market prices for those instruments that are
actively traded in financial markets. In cases where quoted market prices are
not available, fair values are estimated using present value or other valuation
techniques. The fair value estimates are made at a specific point in time,
based on available market information and judgments about the financial
instruments, such as estimates of timing and amount of expected future cash
flows. Such estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates cannot be
substantiated by comparison to independent markets, nor can the disclosed value
be realized in immediate settlement of the instrument.
The carrying amounts for cash and cash equivalents approximate fair value
because of the short maturity, generally less than three months, of these
instruments.
The 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.
33
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 11 - COMMITMENTS AND CONTINGENCIES
---------------------------------------
Rental expense was $1,077,074 in 2010 and $1,217,045 in 2009.
The Company has entered into various operating lease agreements to replace aging
route vans and transport trucks. The current annual obligation under this
agreement is $839,686. Future minimum lease commitments for operating leases at
May 28, 2010 were as follows:
2011 $ 839,686
2012 839,686
2013 839,686
2014 489,817
2015 -
Prior to April 22, 2010 the Company leased its airplane to a director, who is
also Chairman of the Board of Directors of SYB, Inc., a major shareholder of the
Company, for approximately $20,000 per month. The lease provided for her
personal use of the airplane for up to 100 flight hours per year and was for a
term of one year with automatic renewal unless terminated by either party. This
lease was terminated on the date of the sale of the airplane on April 22, 2010.
The Company has a letter of credit in the amount of $2,057,014 outstanding at
May 28, 2010 compared to $2,264,857 outstanding at May 29, 2009. The letter of
credit supports the Company's commercial self-insurance program. The Company
pays a commitment fee of 0.50% to maintain the letters of credit.
The Company has entered into various other short term purchase commitments with
suppliers for raw materials in the normal course of business.
The Company is subject to routine litigation and claims incidental to its
business. In the opinion of management, such routine litigation and claims
should not have a material adverse effect upon the Company's consolidated
financial statements taken as a whole.
NOTE 12 - CONCENTRATIONS OF CREDIT RISK
---------------------------------------
The Company's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash equivalents and trade receivables.
The Company maintains deposit relationships with high credit quality financial
institutions. The Company's trade receivables result primarily from its snack
food operations and reflect a broad customer base, primarily large grocery store
chains located in the Southeastern United States. The Company routinely
assesses the financial strength of its customers. As a consequence,
concentrations of credit risk are limited.
The Company did not have any major customer write-offs this year that were not
covered by the credit insurance. However, due to the bankruptcy of two
distributors, the Company did recognize an adjustment to the allowance of $7,790
at year-end. In the future, the credit insurance coverage will be expanded to
include many distributors that were not previously covered. This should further
mitigate the Company's credit risk.
34
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
NOTE 13 - SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
-------------------------------------------------------
The following tabulation gives certain supplementary statement of income
information for the years ended May 28, 2010 and May 29, 2009:
2010 2009
---- ----
Maintenance and repairs $ 6,431,681 $ 6,207,074
Depreciation 2,483,857 2,299,049
Payroll taxes 2,352,597 2,210,951
Amounts for other taxes, rents and research and development costs are not
presented because each of such amounts is less than 1% of total revenues.
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
ITEM 9A(T). - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our company's management, with the participation of our chief executive officer
and chief financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of May 28, 2010. The term "disclosure controls and
procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
means controls and other procedures of a company that are designed to ensure
that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Based on the
evaluation of our disclosure controls and procedures as of May 28, 2010, our
chief executive officer and chief financial officer concluded that, as of such
date, our disclosure controls and procedures were effective at the reasonable
assurance level.
35
Internal Control Over Financial Reporting
Management's Annual Report on Internal Control Over Financial Reporting
The management of the company is responsible for establishing and maintaining
adequate internal control over financial reporting for the company. Internal
control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Securities Exchange Act of 1934 as a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers and effected by the company's board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principals and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
company;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
The company's management assessed the effectiveness of the company's internal
control over financial reporting as of May 28, 2010. In making this assessment,
the company's management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in its Internal
Control-Integrated Framework.
Based on our assessment, management concluded that, as of May 28, 2010, the
company's internal control over financial reporting is effective based on those
criteria set forth.
The annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to rules of the Securities and
Exchange Commission that permit the company to provide only management's report
in this annual report.
Changes in Internal Control Over Financial Reporting
No change in our internal controls over financial reporting occurred during the
fiscal quarter ended May 28, 2010 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B. - OTHER INFORMATION
Not Applicable.
36
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
With the exception of information as follows and as set forth under the caption
Executive Officers of the Registrant and Its Subsidiary which appears in Part I
of this Form 10-K on Page 5, the information required by this item is
incorporated by reference to the sections of the Company's Proxy Statement
entitled "Election of Directors," "Additional Information Concerning the Board
of Directors," "Executive Compensation and Other Information," "Section 16(a)
Beneficial Ownership Reporting Compliance", "Code of Conduct and Ethics" and
"Corporate Governance" for the 2010 Annual Meeting of Stockholders to be held
September 22, 2010.
Section 16A Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, as amended, requires the Company's officers
and directors and persons who own more than 10% of the Company's outstanding
Common Stock to file reports of ownership with the Securities and Exchange
Commission ("SEC"). One director failed to timely file a Form 4 or 5.
ITEM 11. - EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation and Other Information" of the
Company's Proxy Statement for the 2010 Annual Meeting of Stockholders to be held
September 22, 2010. See Item 5 of this Annual Report on Form 10-K for
information concerning the Company's equity compensation plans.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to the
sections entitled "Security Ownership of Certain Beneficial Owners and
Management" and "Section 16(a) Beneficial Ownership Reporting Compliance," of
the Company's Proxy Statement for the 2010 Annual Meeting of Stockholders to be
held September 22, 2010.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information required by this item is incorporated by reference to the
section entitled "Certain Transactions" and "Director Independence" of the
Company's Proxy Statement for the 2010 Annual Meeting of Stockholders to be held
September 22, 2010.
ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to the
section entitled "Independent Accountants" of the Company's Proxy Statement for
the 2010 Annual Meeting of Stockholders to be held September 22, 2010.
Prior to September 28, 2010, the Company will file a definitive Proxy Statement
with the Securities and Exchange Commission pursuant to Regulation 14A which
involves the election of directors.
37
PART IV
ITEM 15. - EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(a) 1. LIST OF FINANCIAL STATEMENTS
The following consolidated financial statements of Golden Enterprises, Inc., and
subsidiary required to be included in Item 8 are listed below:
Consolidated Balance Sheets - May 28, 2010 and May 29, 2009
Consolidated Statements of Income- Years ended May 28, 2010 and May 29, 2009
Consolidated Statements of Changes in Stockholders' Equity- Years ended May 28,
2010 and May 29, 2009
Consolidated Statements of Cash Flows- Years ended May 28, 2010 and May 29, 2009
Notes to Consolidated Financial Statements
(a) 2. LIST OF FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements schedule is included in Item 15
(c):
Schedule II- Valuation and Qualifying Accounts
All other schedules are omitted because the information required therein is not
applicable, or the information is given in the financial statements and notes
thereto.
(a) 3. Exhibits
(3) Articles of Incorporation and By-laws of Golden Enterprises, Inc.
3.1 Certificate of Incorporation of Golden Enterprises, Inc.
(originally known as "Golden Flake, Inc.") dated December 11,
1967 (incorporated by reference to Exhibit 3.1 to Golden
Enterprises, Inc. May 31, 2004 Form 10-K filed with the
Commission).
3.2 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated December 22, 1976 (incorporated
by reference to Exhibit 3.2 to Golden Enterprises, Inc. May 31,
2004 Form 10-K filed with the Commission).
3.3 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated October 2, 1978 (incorporated by
reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1979
Form 10-K filed with the Commission).
3.4 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated October 4, 1979 (incorporated by
reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1980
Form 10-K filed with the Commission).
38
3.5 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated September 24, 1982 (incorporated
by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31,
1983 Form 10-K filed with the Commission).
3.6 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated September 22, 1983 (incorporated
by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form
10-Q Report for the quarter ended November 30, 1983 filed with
the Commission).
3.7 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated October 3, 1985 (incorporated by
reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q
Report for the quarter ended November 30, 1985 filed with the
Commission).
3.8 Certificate of Amendment of Certificate of Incorporation of
Golden Enterprises, Inc. dated September 23, 1987 (incorporated
by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31,
1988 Form 10-K filed with the Commission).
3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to
Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K
filed with the Commission).
(10) Material Contracts
10.1 A Form of Indemnity Agreement executed by and between Golden
Enterprises, Inc. and Each of Its Directors (incorporated by
reference as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q
Report for the quarter ended November 30, 1987 filed with the
Commission).
10.2 Amended and Restated Salary Continuation Plans for John S. Stein
(incorporated by reference to Exhibit 19.1 to Golden
Enterprises, Inc. May 31, 1990 Form 10-K filed with the
Commission).
10.3 Indemnity Agreement executed by and between the Company and J.
Wallace Nall, Jr. (incorporated by reference as Exhibit 19.4 to
Golden Enterprises, Inc. May 31, 1991 Form 10-K filed with the
Commission).
10.4 Salary Continuation Plans - Retirement, Disability and Death
Benefits for F. Wayne Pate (incorporated by reference to Exhibit
19.1 to Golden Enterprises, Inc. May 31, 1992 Form 10-K filed
with the Commission).
10.5 Indemnity Agreement executed by and between the Registrant and F.
Wayne Pate (incorporated by reference as Exhibit 19.3 to Golden
Enterprises, Inc. May 31, 1992 Form 10-K filed with the
Commission).
10.6 Golden Enterprises, Inc. 1996 Long-Term Incentive Plan
(incorporated by reference as Exhibit 10.1 to Golden
Enterprises, Inc. May 31, 1997 Form 10-K filed with the
Commission).
10.9 Amendment to Salary Continuation Plans, Retirement and Disability
for F. Wayne Pate dated April 9, 2002 (incorporated by reference
to Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2002 Form
10-K filed with the Commission).
39
10.10 Amendment to Salary Continuation Plans, Retirement and Disability
for John S. Stein dated April 9, 2002 (incorporated by reference
to Exhibit 10.3 to Golden Enterprises, Inc. May 31, 2002 Form
10-K filed with the Commission).
10.11 Amendment to Salary Continuation Plan, Death Benefits for John S.
Stein dated April 9, 2002 (incorporated by reference to Exhibit
10.4 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed
with the Commission).
10.12 Retirement and Consulting Agreement for John S. Stein dated April
9, 2002 (incorporated by reference to Exhibit 10.5 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15,
2002 (incorporated by reference to Exhibit 10.6 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.14 Trust Under Salary Continuation Plan for Mark W. McCutcheon dated
May 15, 2002 (incorporated by reference to Exhibit 10.7 to
Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.15 Lease of aircraft executed by and between Golden Flake Snack
Foods, Inc., a wholly-owned subsidiary of Golden Enterprises,
Inc., and Joann F. Bashinsky dated February 1, 2006 which was
terminated by the sale of the aircraft on April 22, 2010
(incorporated by reference to Exhibit 10.15 to Golden
Enterprises, Inc. June 2, 2006 Form 10-K filed with the
Commission).
10.20 Amendment to Salary Continuation Plan for Mark W. McCutcheon
dated December 30, 2008 (incorporated by reference to Exhibit
10.20 Golden Enterprises, Inc. February 27, 2009 Form 10-Q filed
with the Commission).
10.21 Purchase and Sale Agreement executed by and between Golden Flake
Snack Foods, Inc., as Seller, And Rodney D. Evans and Everett
James Crowell, as Purchasers, with an effective date of December
14, 2009, for the sale of land and improvements located in Duval
County, at 4771 Phyllis St., Jacksonville, Florida (incorporated
by reference to Exhibit 10.21 Golden Enterprises, Inc. November
27, 2009 Form 10-Q filed with the Commission).
10.22 Purchase and Sale Agreement executed by and between Golden Flake
Snack Foods, Inc., as Seller, and Airmasters, Inc., as
Purchaser, with an effective date of April 22, 2010, for the
sale of a Cessna 551 aircraft, s/n 551-0556.
10.23 Termination of aircraft lease executed by and between Golden
Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc., and Joann F. Bashinsky dated April 22, 2010.
40
14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by
the Board of Directors on April 8, 2004 (incorporated by
reference to Exhibit 14.1 to Golden Enterprises, Inc. May 31,
2004 Form 10-K filed with the Commission).
(18) Letter Re: Change in Accounting Principles
18.1 Letter from the Registrant's Independent Accountant dated August
12, 2005 indicating a change in the method of applying
accounting practices followed by the Registrant for the fiscal
year ended June 3, 2005 (incorporated by reference to Exhibit
18.1 to Golden Enterprises, Inc.'s June 3, 2005 Form 10-K filed
with the Commission)
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 to Golden Enterprises, Inc. May 31, 2004 Form 10-K
filed with the Commission)
(31) Certifications
31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(99) Additional Exhibits
99.1 A copy of excerpts of the Last Will and Testament and Codicils
thereto of Sloan Y. Bashinsky, Sr. and of the SYB Common Stock
Trust created by Sloan Y. Bashinsky, Sr. providing for the
creation of a Voting Committee to vote the shares of common
stock of Golden Enterprises, Inc. held by SYB, Inc. and the
Estate/Testamentary Trust of Sloan Y. Bashinsky, Sr.
(incorporated by reference to Exhibit 99.1 to Golden
Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the
Commission).
41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GOLDEN ENTERPRISES, INC.
By /s/Patty Townsend August 20, 2010
---------------------- -----------------
Patty Townsend Date
Vice President, Secretary and Principal Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/Mark W. McCutcheon Chairman of the Board, August 20, 2010
------------------------------ Chief Executive Officer,
Mark W. McCutcheon and President
/s/Patty Townsend Vice President, Secretary August 20, 2010
------------------------------ and Principal Financial
Patty Townsend Officer
/s/F. Wayne Pate Director August 20, 2010
------------------------------
F. Wayne Pate
/s/Edward R. Pascoe Director August 20, 2010
------------------------------
Edward R. Pascoe
/s/John P. McKleroy, Jr. Director August 20, 2010
------------------------------
John P. McKleroy, Jr.
/s/John S.P. Samford Director August 20, 2010
------------------------------
John S.P. Samford
/s/J. Wallace Nall, Jr. Director August 20, 2010
------------------------------
J. Wallace Nall, Jr.
/s/Joann F. Bashinsky Director August 20, 2010
------------------------------
Joann F. Bashinsky
/s/Paul R. Bates Executive Vice-President August 20, 2010
------------------------------ and Director
Paul R. Bates
/s/David A. Jones Executive Vice-President August 20, 2010
------------------------------ and Director
David A. Jones
/s/William B. Morton, Jr. Director August 20, 2010
------------------------------
William B. Morton, Jr.
/s/John S. Stein III Director August 20, 2010
------------------------------
John S. Stein III
42
SCHEDULE II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
For the Fiscal Years Ended May 28, 2010 and May 29, 2009
Additions
Balance at Charged to Balance
Beginning Costs and at End
Allowance for Doubtful Accounts of Year Expenses Deductions of Year
---------------------------------- ------------ ------------ ------------- -----------
Year ended May 29, 2009 $ 70,000 $64,529 $ 7,399 $127,130
============ ============ ============= ===========
Year ended May 28, 2010 $127,130 $ 6,790 $57,130 $ 76,790
============ ============ ============= ===========
43
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44
INDEX TO EXHIBITS
-----------------
Page
----
3.1 Certificate of Incorporation of Golden Enterprises, Inc.
(originally known as "Golden Flake, Inc.") dated
December 11, 1967 (incorporated by reference to Exhibit
3.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K
filed with the Commission).
3.2 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated December 22, 1976
(incorporated by reference to Exhibit 3.2 to Golden
Enterprises, Inc. May 31, 2004 Form 10-K filed with the
Commission).
3.3 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated October 2, 1978
(incorporated by reference to Exhibit 3 to Golden
Enterprises, Inc. May 31, 1979 Form 10-K filed with the
Commission).
3.4 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated October 4, 1979
(incorporated by reference to Exhibit 3 to Golden
Enterprises, Inc. May 31, 1980 Form 10-K filed with the
Commission).
3.5 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated September 24, 1982
(incorporated by reference to Exhibit 3.1 to Golden
Enterprises, Inc. May 31, 1983 Form 10-K filed with the
Commission).
3.6 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated September 22, 1983
(incorporated by reference to Exhibit 19.1 to Golden
Enterprises, Inc. Form 10-Q Report for the quarter ended
November 30, 1983 filed with the Commission).
3.7 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated October 3, 1985
(incorporated by reference to Exhibit 19.1 to Golden
Enterprises, Inc. Form 10-Q Report for the quarter ended
November 30, 1985 filed with the Commission).
3.8 Certificate of Amendment of Certificate of Incorporation
of Golden Enterprises, Inc. dated September 23, 1987
(incorporated by reference to Exhibit 3.1 to Golden
Enterprises, Inc. May 31, 1988 Form 10-K filed with the
Commission).
3.9 By-Laws of Golden Enterprises, Inc. (incorporated by
reference to Exhibit 3.4 to Golden Enterprises, Inc. May
31, 1988 Form 10-K filed with the Commission).
(10) Material Contracts
10.1 A Form of Indemnity Agreement executed by and between
Golden Enterprises, Inc. and Each of Its Directors
(incorporated by reference as Exhibit 19.1 to Golden
Enterprises, Inc. Form 10-Q Report for the quarter ended
November 30, 1987 filed with the Commission).
10.2 Amended and Restated Salary Continuation Plans for John
S. Stein (incorporated by reference to Exhibit 19.1 to
Golden Enterprises, Inc. May 31, 1990 Form 10-K filed
with the Commission).
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10.3 Indemnity Agreement executed by and between the Company
and J. Wallace Nall, Jr. (incorporated by reference as
Exhibit 19.4 to Golden Enterprises, Inc. May 31, 1991
Form 10-K filed with the Commission).
10.4 Salary Continuation Plans - Retirement, Disability and
Death Benefits for F. Wayne Pate (incorporated by
reference to Exhibit 19.1 to Golden Enterprises, Inc.
May 31, 1992 Form 10-K filed with the Commission).
10.5 Indemnity Agreement executed by and between the
Registrant and F. Wayne Pate (incorporated by reference
as Exhibit 19.3 to Golden Enterprises, Inc. May 31, 1992
Form 10-K filed with the Commission).
10.6 Golden Enterprises, Inc. 1996 Long-Term Incentive Plan
(incorporated by reference as Exhibit 10.1 to Golden
Enterprises, Inc. May 31, 1997 Form 10-K filed with the
Commission).
10.9 Amendment to Salary Continuation Plans, Retirement and
Disability for F. Wayne Pate dated April 9, 2002
(incorporated by reference to Exhibit 10.2 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.10 Amendment to Salary Continuation Plans, Retirement and
Disability for John S. Stein dated April 9, 2002
(incorporated by reference to Exhibit 10.3 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).
10.11 Amendment to Salary Continuation Plan, Death Benefits for
John S. Stein dated April 9, 2002 (incorporated by
reference to Exhibit 10.4 to Golden Enterprises, Inc.
May 31, 2002 Form 10-K filed with the Commission).
10.12 Retirement and Consulting Agreement for John S. Stein
dated April 9, 2002 (incorporated by reference to
Exhibit 10.5 to Golden Enterprises, Inc. May 31, 2002
Form 10-K filed with the Commission).
10.13 Salary Continuation Plan for Mark W. McCutcheon dated May
15, 2002 (incorporated by reference to Exhibit 10.6 to
Golden Enterprises, Inc. May 31, 2002 Form 10-K filed
with the Commission).
10.14 Trust Under Salary Continuation Plan for Mark W.
McCutcheon dated May 15, 2002 (incorporated by reference
to Exhibit 10.7 to Golden Enterprises, Inc. May 31, 2002
Form 10-K filed with the Commission).
10.15 Lease of aircraft executed by and between Golden Flake
Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc., and Joann F. Bashinsky dated February
1, 2006 (incorporated by reference to Exhibit 10.15 to
Golden Enterprises, Inc. June 2, 2006 Form 10-K filed
with the Commission).
10.20 Amendment to Salary Continuation Plan for Mark W.
McCutcheon dated December 30, 2008 (incorporated by
reference to Exhibit 10.20 Golden Enterprises, Inc.
February 27, 2009 Form 10-Q filed with the Commission).
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10.21 Purchase and Sale Agreement executed by and between
Golden Flake Snack Foods, Inc., as Seller, And Rodney D.
Evans and Everett James Crowell, as Purchasers, with an
effective date of December 14, 2009, for the sale of
land and improvements located in Duval County, at 4771
Phyllis St., Jacksonville, Florida (incorporated by
reference to Exhibit 10.21 Golden Enterprises, Inc.
November 27, 2009 Form 10-Q filed with the Commission).
10.22 Purchase and Sale Agreement executed by and between
Golden Flake Snack Foods, Inc., as Seller, and
Airmasters, Inc., as Purchaser, with an effective date
of April 22, 2010, for the sale of a Cessna 551
aircraft, s/n 551-0556. 48
10.23 Termination of aircraft lease executed by and between
Golden Flake Snack Foods, Inc., a wholly-owned
subsidiary of Golden Enterprises, Inc., and Joann F.
Bashinsky dated April 22, 2010. 50
14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics
adopted by the Board of Directors on April 8, 2004
(incorporated by reference to Exhibit 14.1 Golden
Enterprises, Inc. May 31, 2004 Form 10-K filed with the
Commission).
(18) Letter Re: Change in Accounting Principles
18.1 Letter from the Registrant's Independent Accountant dated
August 12, 2005 indicating a change in the method of
applying accounting practices followed by the Registrant
for the fiscal year ended June 3, 2005 (incorporated by
reference to Exhibit 18.1 to Golden Enterprises, Inc.'s
June 3, 2005 Form 10-K filed with the Commission).
21 Subsidiaries of the Registrant ( incorporated by
reference to Exhibit 21 to Golden Enterprises, Inc. May
31, 2004 Form 10-K filed with the Commission)
(31) Certifications
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. 52
31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. 53
32.1 Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. 54
32.2 Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. 55
(99) Additional Exhibits
99.1 A copy of excerpts of the Last Will and Testament and
Codicils thereto of Sloan Y. Bashinsky, Sr. and of the
SYB Common Stock Trust created by Sloan Y. Bashinsky,
Sr. providing for the creation of a Voting Committee to
vote the shares of common stock of Golden Enterprises,
Inc. held by SYB, Inc. and the Estate/Testamentary Trust
of Sloan Y. Bashinsky, Sr. (incorporated by reference to
Exhibit 99.1 to Golden Enterprises, Inc.'s June 3, 2005
Form 10-K filed with the Commission).
4
