10-Q 1 tenqd.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2001 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to___________________ Commission file number __________0-4339_____________________________ GOLDEN ENTERPRISES, INC. (Exact name of registrant as specified in its charter) DELAWARE 63-0250005 _________________________ _____________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite 208, 2140 11th Avenue, South Birmingham, Alabama 35205 _________________________ _____________________________ (205) 933-9300 (Registrant's telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of December 31, 2001. Outstanding at Class December 31, 2001 Common Stock, Par Value $0.66 2/3 11,885,405 GOLDEN ENTERPRISES, INC. INDEX Part I. Financial Information Page No. Consolidated Condensed Balance Sheets - November 30, 2001 and May 31, 2001 3 Consolidated Condensed Statements of Income - Three Months and Six Months ended November 30, 4 2001 and 2000 Consolidated Condensed Statements of Cash Flows - Six Months Ended November 30, 2001 and 2000 5 Notes to Consolidated Condensed Financial Statements 6 Independent Accountant's Report 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8,9 Part II. Other Information 10 GOLDEN ENTERPRISES, INC & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Six Months Ended NOVEMBER 30, NOVEMBER 30, 2001 2000 2001 2000 REVENUES: Net Sales $27,944,719 27,669,893 $56,736,844 $56,979,442 Other Operating revenues $21,830 $530,614 207,933 45,425 Investment income $50,222 $84,871 $116,088 $145,664 Total Revenues $28,016,771 $28,285,378 $57,060,865 $57,370,531 COST AND EXPENSES: Cost of sales $13,006,626 $12,921,727 $26,040,829 $25,648,628 Selling, general and administrative expense $14,099,350 $13,674,390 $28,485,243 $28,028,277 Interest $31,166 $0 $43,531 $0 Total costs and expenses $27,137,142 $26,596,117 $54,569,603 $53,676,905 Income before income taxes $879,629 $1,689,261 $2,491,262 $3,693,626 Income taxes $338,694 $609,960 $928,643 $1,342,214 Net income $540,935 $1,079,301 $1,562,619 $2,351,412 PER SHARE OF COMMON STOCK: Net income $0.05 $0.09 $0.13 $0.20 Weighted Average number of common shares outstanding 11,897,228 11,971,452 11,912,528 $11,985,181 Cash dividend paid per share of common stock $0.0625 $0.0625 $0.1250 $0.1225 See Accompanying Notes to Consolidated Condensed Financial Statements. PART I. FINANCIAL INFORMATION GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS November 30, May 31, 2001 2001 (Unaudited) (Audited) ASSETS Cash and cash equivalents $272,963 $ 710,278 Investment Securities $15,869 $2,500,147 Receivables, net $9,181,057 $9,101,982 Note Receivable, current $44,123 $42,399 Inventories: Raw material and supplies $2,451,882 $1,883,167 Finished goods $4,204,551 $2,856,593 $6,656,433 $4,739,760 Prepaid expense $3,702,935 $2,275,659 Total current assets $19,873,380 $19,370,225 Property, plant and equipment, net $18,074,948 $14,998,142 Long-term Note Receivable $2,005,135 $2,027,636 Other assets $2,851,289 $2,851,289 $42,804,752 $39,247,292 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Checks outstanding in excess of bank balance $2,818,321 $1,552,461 Accounts payable $3,223,937 $29,244,28 Accrued and deferred income taxes $266,584 $260,196 Other accrued expenses $962,759 $941,360 Salary continuation plan $42,431 $40,773 Note payable- bank, current $318,717 $220,387 Total current liabilities $7,632,749 $5,939,605 Long-Term Liabilities: Salary Continuation Plan $1,929,082 $1,887,050 Note payable- bank, non-current $2,629,699 $639,713 Total long-term liabilities: $4,558,781 $2,526,763 Deferred income taxes $905,163 $980,998 Stockholder's Equity: Common Stock - $.66 - 2/3 par value: 35,000,000 shares Authorized Issued 13,828,793 shares $9,219,195 $9,219,195 Additional paid-in capital $6,499,554 $6,499,554 Retained earnings $24,500,358 $24,426,345 $40,219,107 $40,145,094 Less: Cost of common shares in treasury (1,896,052 at May 31, 2001 and 1,939,174 shares at November 30, 2001) -$10,511,048 -$10,345,168 Total stockholders' equity $29,708,059 $29,799,926 Total $42,804,752 $39,247,292 See Accompanying Notes to Consolidated Condensed Financial Statements GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED November 30, November 30, 2001 2000 Cash flows from operating activities: Net income $1,562,619 $2,351,412 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization $1,235,076 $1,234,430 Compensation related to stock plan $0 $0 Salary Continuation Benefits $63,670 $60,595 Deferred income taxes -$75,835 -$78,263 Gain on sale of equipment -$151,912 -$575,344 Changes in operating assets nd liabilities: (Increase) in inventories $1,916,673 -$884,981 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable -$79,075 $843,560 (Increase) in prepaid expenses $1,427,276 -$953,977 Decrease in other assets- long term $1 $1 Increase (decrease) in accounts payable $299,509 -$204,103 Increase in accrued income taxes $6,388 $0 Increase (decrease) in accrued expenses $21,399 -$831,673 Net cash (used) provided by operating activities -$462,109 $961,657 Cash flows from investing activities: Purchase of property, plant and equipment -$4,453,964 -$831,903 Proceeds from sale of equipment $293,994 $130,532 Cash received from disposal of Nashville Plant & Equipment $0 $1,710,000 Net decrease (increase) in investment securities $2,484,278 -$822,868 Net cash (used in) provided by Investing activities -$1,675,692 $185,761 Cash flows from financing activities: Payments of current installments of long-term debt $19,980 -$18,449 Increase in proceeds from bank loan $2,088,316 $0 Purchase of treasury stock -$165,880 -$335,360 Increase in checks outstanding in excess of bank balance $1,265,860 $453,879 Cash dividend paid -$1,488,607 -$1,466,755 Collection of notes receivable $20,777 $0 Net cash provided by (used in) financing activities $1,700,486 -$1,366,685 Net (decrease) in cash and cash equivalents -$437,315 -$219,267 Cash and cash equivalents at beginning of year $710,278 $835,074 Cash and cash equivalents at end of quarter $272,963 $615,807 Supplemental information: Cash paid during the year for: Income taxes $1,409,853 $1,279,038 Interest $43,531 $0 See Accompanying Notes to Consolidated Condensed Financial Statements. GOLDEN ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly its financial position as November 30, 2001 and May 31, 2001 and its results of perations for the three and six months ended November 30, 2001 and 2000 and its cash flows for the six months ended November 30, 2001 and 2000. . The accounting policies followed by the Company are set forth in note 1 to the Company's financial statements in the Annual Report to stockholders for fiscal year ended May 31, 2001, which is incorporated by reference in Form 10-K. 2. The results of operations for the three months and six months ended November 30, 2001 and 2000 are not necessarily indicative of the results to be expected for the full year. INDEPENDENT ACCOUNTANT'S REPORT We have reviewed the accompanying interim consolidated balance sheet of Golden Enterprises, Inc. and subsidiary as of November 30, 2001 and the related interim consolidated statements of income and cash flows for the six-month period then ended. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial statements consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. Birmingham, Alabama January 11, 2002 DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Working Capital was $13.4 million at June 1, 2001 and $12.3 million at the end of the second quarter. Net cash used by operating activities amounted to $0.46 million for the six months this year compared to $0.96 million provided by last year's first six months. Additions to property, plant and equipment, net of disposals, were $4.31 million this year and $0.80 million last year. Cash dividends of $1.49 million were paid during this year's first six months compared to $1.47 million last year. Cash in the amount of $0.17 million was used to purchase treasury stock this year, and $.34 million was used last year, and $2.48 million of cash was provided by a net decrease in investment securities this year compared to a net increase in investment securities using $0.82 million of cash last year. The Company's current ratio was 2.61 to 1.00 at November 30, 2001. Operating Results For the three months ended November 30, 2001, total revenues decreased 0.95% from the comparable period in fiscal 2001. The cost of sales was 46.5% of net sales compared to 46.7% last year. Selling, general and administrative expenses were 50.5% of net sales this year and 49.4% last year. For the year-to-date total revenues decreased 0.54% from the comparable period in fiscal 2001. Cost of sales was 45.9% of net sales compared to 45.3% last year. Selling, general and administrative expenses were 50.2% of net sales this year and 49.5% last year. The Company's second quarter investment income as a percentage of pre-tax income was 5.7% this year compared to 5.0% last year. There was an actual dollar decrease in investment income of 40.8%, and pre-tax income decreased 47.9%. For the six months, investment income was 4.7% of pre-tax income and 3.9% last year. For the six-months, investment income dollars decreased 20.3% and pre-tax income decreased 32.6%. The Company's effective tax rate for the second quarter was 38.5% compared to 36.1 % for last year's second quarter and 37.3% for the six months this year and 36.3% last year. Management's Discussion and Analysis of Financial Condition and Results of Operations Market Risk The principal markets risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which the Company is exposed are interest rates on its investment securities, bank loans, and commodity prices, affecting the cost of its raw materials. The Company's investment securities consist of short-term marketable securities. Presently these are variable rate money market mutual funds, certificates of deposits, and municipal obligations. Its bank loans also carry variable rates. Assuming November 30, 2001 variable rate investment levels and bank loan balances, a one-point change in interest rates would impact interest income by $159 on an annual basis and interest expense by $29,484. The Company is subject to market risk with respect to commodities because its ability to recover increased costs through higher pricing may be limited by the competitive environment in which it operates. The Company purchases its raw materials on the open market, under contract through brokers and directly from growers. Future contracts have been used occasionally to hedge immaterial amounts of commodity purchases but none are presently being used. Forward-Looking Statements This discussion contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those forward-looking statements. Factors that may cause actual results to differ materially include price competition, industry consolidation, raw material costs and effectiveness of sales and marketing activities, as described in the Company's filings with the Securities and Exchange Commission. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K- There were no reports on form 8-K filed for the three months ended November 30, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GOLDEN ENTERPRISES, INC. (Registrant) Dated: January 11, 2002 ______________________________ John S. Stein Chairman Dated: January 11, 2002 ______________________________ John H. Shannon Vice-President/Controller (Principal Accounting Officer)