-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RNblnFvcmQU+smHO+0f9Bme1FWGvTQoefEJdVCAThhIEpAKnA0empj4jjIHoZlyH 3z3NCgHPtFYtMPOgBxQsmQ== 0001157523-04-008150.txt : 20040826 0001157523-04-008150.hdr.sgml : 20040826 20040826164603 ACCESSION NUMBER: 0001157523-04-008150 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040531 FILED AS OF DATE: 20040826 DATE AS OF CHANGE: 20040826 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN ENTERPRISES INC CENTRAL INDEX KEY: 0000042228 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 630250005 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-04339 FILM NUMBER: 04999438 BUSINESS ADDRESS: STREET 1: 2101 MAGNOLIA AVE STE 212 STREET 2: SOUTH CITY: BIRMINGHAM STATE: AL ZIP: 35205 BUSINESS PHONE: 2053266101 MAIL ADDRESS: STREET 1: 2140 11TH AVE SOUTH STREET 2: STE 208 CITY: BIRMINGHAM STATE: AL ZIP: 35205 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN FLAKE INC DATE OF NAME CHANGE: 19761019 FORMER COMPANY: FORMER CONFORMED NAME: MAGIC CITY FOOD PRODUCTS INC DATE OF NAME CHANGE: 19700805 10-K 1 a4708719.txt GOLDEN ENTERPRISES 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 31, 2004 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: Common Capital Stock, Par Value $0.662/3 (TITLE OF CLASS) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__X__ No _____ - Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this Form 10-K. ( ) Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes____ No __X__ State the aggregate market value of the voting stock held by non-affiliates of the registrant as of August 6, 2004. Common Stock, Par Value $0.662/3 - --$11,487,987 Indicate the number of shares outstanding of each of the Registrant's Classes of Common Stock, as of August 6, 2004. CLASS OUTSTANDING AT AUGUST 6, 2004 ----- ----------------------------- Common Stock, Par Value $0.662/3 11,852,830 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Proxy Statement for the Annual Meeting of Stockholders to be held on September 23, 2004 are incorporated by reference into Part III. EXPLANATORY NOTE The Company has restated its consolidated balance sheet for the years ended May 31, 2003 and consolidated statements of operations, cash flows and retained earnings for the years ended May 31, 2003 and 2002 (the "2003 Restatement"). The restatement affects periods prior to 2002. The impact of the restatement on such prior periods was reflected as an adjustment to retained earnings June 1, 2001. The restatement is reported in this Annual Report on Form 10-K for the year ending May 31, 2004 and will be reported in amendments to our Quarterly Reports on Form 10-Q for its quarterly periods ended August 31, 2003, November 30, 2003 and February 29, 2004. The restatement adjustment for years ended May 31, 2003 and 2002 resulted in a reduction in a previously reported net loss of approximately $.5 million and a reduction in a previously reported net income of approximately $.5 million respectively. Basic and diluted loss per share was reduced by $.04 per share for fiscal 2003. Basic and diluted earnings per share declined $.04 for fiscal year 2002. In addition, as a result of the cumulative effect of the restatement, retained earnings has been reduced by $1.9 million and $2.4 million as of May 31, 2003 and 2002 respectively. Also as the result of the cumulative effect of the restatement of periods prior to 2002, the cumulative effect was to reduce opening retained earnings June 1, 2001 by approximately $1.9 million. For a discussion of the individual restatement adjustments, see "Item 8. Financial Statements - Note 2. Restatement of Prior Period Financial Statements" (Years ended May 31, 2003 and 2002). Additionally, see "Item 7. Management's Discussion and Analysis of Financial Condition and Resulting Operations." For more information on the impact of the restatement on years 2001 and 2000, see "Item 6. Selected Financial Data" in Part II of this report. These restatement adjustments reflect a correction of the Company's accounting for accruals for its vacation pay and self-insured health and casualty obligations. The Company determined that there had been an error in its accounting for self-insurance related liabilities. The adjustments required included recognition of previously unrecorded liabilities and reductions in amounts previously recognized as prepaid amounts to an employee benefit trust which was incorrect. The Company also determined that it had not recorded liabilities for earned vacation not yet taken as required by Generally Accepted Accounting Principles (GAAP). The Company did not amend its Annual Report on Form 10-K or Quarterly Reports on Form 10-Q for periods affected by the restatement that ended prior to May 31, 2003, and the financial statements and related financial information contained in such reports should no longer be relied on. All referenced amounts in this Annual Report for prior periods and prior period comparisons reflect the balances and amounts on a restated basis. 3 TABLE OF CONTENTS FORM 10-K ANNUAL REPORT -2004 GOLDEN ENTERPRISES, INC.
PAGE ---- Explanatory Note ........................................................... 3 PART I Item 1 Business ................................................................... 5 Item 2 Properties ................................................................. 7 Item 3 Legal Proceedings .......................................................... 8 Item 4 Submission of Matters to a Vote of Security Holders ........................ 8 PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities .................... 9 Item 6 Selected Financial Data .................................................... 11 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations ............................................ 12 Item 7A Quantitative and Qualitative Disclosure About Market Risk .................. 18 Item 8 Financial Statements and Supplementary Data ................................ 18 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................... 48 Item 9A Controls and Procedures .................................................... 48 Item 9B Other Information .......................................................... 48 PART III Item 10 Directors and Executive Officers of the Registrant ......................... 48 Item 11 Executive Compensation ..................................................... 49 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ................ 49 Item 13 Certain Relationships and Related Transactions ............................. 49 Item 14 Principal Accountant Fees and Services ..................................... 49 PART IV. Item 15. Exhibits and Financial Statement Schedules ................................. 50
4 PART I ITEM 1. - BUSINESS Golden Enterprises, Inc. (the "Company") is a holding company which owns all of the issued and outstanding capital stock of Golden Flake Snack Foods, Inc., a wholly-owned operating subsidiary company ("Golden Flake"). Golden Enterprises is paid a fee by Golden Flake for providing management services for it. The Company was originally organized under the laws of the State of Alabama as Magic City Food Products, Inc. on June 11, 1946. On March 11, 1958, it adopted the name Golden Flake, Inc. On June 15, 1963, the Company purchased Don's Foods, Inc. a Tennessee corporation which was merged into the Company on December 10, 1966. The Company was reorganized December 31, 1967 as a Delaware corporation without changing any of its assets, liabilities or business. On January 1, 1977, the Company, which had been engaged in the business of manufacturing and distributing potato chips, fried pork skins, cheese curls and other snack foods, spun off its operating division into a separate Delaware corporation known as Golden Flake Snack Foods, Inc. and adopted its present name of Golden Enterprises, Inc. The Company owns all of the issued and outstanding capital stock of Golden Flake Snack Foods, Inc. GOLDEN FLAKE SNACK FOODS, INC. GENERAL Golden Flake Snack Foods, Inc. ("Golden Flake") is a Delaware corporation with its principal place of business and home office located at One Golden Flake Drive, Birmingham, Alabama. Golden Flake manufactures and distributes a full line of salted snack items, such as potato chips, tortilla chips, corn chips, fried pork skins, baked and fried cheese curls, onion rings and buttered popcorn. These products are all packaged in flexible bags or other suitable wrapping material. Golden Flake also sells a line of cakes and cookie items, canned dips, pretzel, peanut butter crackers, cheese crackers, dried meat products and nuts packaged by other manufacturers using the Golden Flake label. No single product or product line accounts for more than 50% of Golden Flake's sales, which affords some protection against loss of volume due to a crop failure of major agricultural raw materials. RAW MATERIALS Golden Flake purchases raw materials used in manufacturing and processing its snack food products on the open market and under contract through brokers and directly from growers. A large part of the raw materials used by Golden Flake consists of farm commodities which are subject to precipitous change in supply and price. Weather varies from season to season and directly affects both the quality and supply available. Golden Flake has no control of the agricultural aspects and its profits are affected accordingly. DISTRIBUTION Golden Flake sells its products through its own sales organization and independent distributors to commercial establishments which sell food products in Alabama and in parts of Tennessee, Kentucky, Georgia, Florida, Mississippi, Louisiana, North Carolina, South Carolina, Arkansas and Missouri. The products are distributed by approximately 436 route salesmen who are supplied with selling inventory by the Company's trucking fleet which operates out of Birmingham, Alabama, Nashville, Tennessee, and Ocala, Florida. All of the route salesmen are employees of Golden Flake and use the direct store door delivery method. Golden Flake is not dependent upon any single customer, or a few customers, the loss of any one or more of which would have a material adverse effect on its business. No single customer accounts for more than 10% of its total sales. Golden Flake has a fleet of 866 company owned vehicles to support the route sales system, including 43 tractors and 123 trailers for long haul delivery to the various company warehouses located throughout its distribution areas, 632 store delivery vehicles and 68 cars and miscellaneous vehicles. 5 COMPETITION The snack foods business is highly competitive. In the area in which Golden Flake operates, many companies engage in the production and distribution of food products similar to those produced and sold by Golden Flake. Most, if not all, of Golden Flake's products are in direct competition with similar products of several local and regional companies and at least one national company, the Frito Lay Division of Pepsi Co., Inc., which is larger in terms of capital and sales volume than is Golden Flake. Golden Flake is unable to state its relative position in the industry. Golden Flake's marketing thrust is aimed at selling the highest quality product possible and giving good service to its customers, while being competitive with its prices. Golden Flake constantly tests the quality of its products for comparison with other similar products of competitors and maintains tight quality controls over its products. EMPLOYEES Golden Flake employs approximately 1,095 employees. Approximately 643 employees are involved in route sales and sales supervision, approximately 306 are in production and production supervision, and approximately 146 are management and administrative personnel. Golden Flake believes that the performance and loyalty of its employees are the most important factors in the growth and profitability of its business. Since labor costs represent a significant portion of Golden Flake's expenses, employee productivity is important to profitability. Golden Flake considers its relations with its employees to be excellent. Golden Flake has a 401(k) Profit Sharing Plan and an Employee Stock Ownership Plan designed to reward the long term employee for his loyalty. In addition, the employees are provided medical insurance, life insurance, and an accident and sickness salary continuance plan. Golden Flake believes that its employee wage rates are competitive with those of its industry and with prevailing rates in its area of operations. OTHER MATTERS The Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, are available via the Company's website. The website address is www.goldenflake.com. All required reports are made available on the website as soon as reasonably practicable after they are electronically filed with the Securities and Exchange Commission. ENVIRONMENTAL MATTERS There have been no material effects of compliance with government provisions regulating discharge of materials into the environment. RECENT DEVELOPMENTS No significant changes have occurred in the kinds of products manufactured or in the markets of methods of distribution, and no material changes or developments have occurred in the business done and intended to be done by Golden Flake. 6
EXECUTIVE OFFICERS OF REGISTRANT AND ITS SUBSIDIARY NAME AND AGE POSITION AND OFFICES WITH MANAGEMENT ------------ ------------------------------------ John S. Stein, 67 Mr. Stein is Chairman of the Board. He was elected Chairman on June 1, 1996. He served as Chief Executive Officer from 1991 to April 4, 2001, and as President from 1985 to 1998 and from June 1, 2000 to April 4, 2001. Mr. Stein also served as President of Golden Flake Snack Foods, Inc. from 1976 to 1991. Mr. Stein retired as an employee with the Company on May 31, 2002. Mr. Stein is elected Chairman annually, and his present term will expire on May 31, 2005. Mark W. McCutcheon, 49 Mr. McCutcheon is Chief Executive Officer and President of the Company and President of Golden Flake Snack Foods, Inc., a wholly owned subsidiary of the Company. He was elected President and Chief Executive Officer of the Company on April 4, 2001 and President of Golden Flake on November 1, 1998. He has been employed by Golden Flake since 1980. Mr. McCutcheon is elected Chief Executive Officer and President of the Company and President of Golden Flake annually, and his present terms will expire on May 31, 2005. Patty Townsend, 46 Ms. Townsend is Chief Financial Officer, Vice President and Secretary of Golden Enterprises, Inc. and Controller of Golden Flake Snack Foods, Inc. a wholly owned subsidiary of the Company. She was elected Chief Financial Officer, Vice-President and Secretary of the Company March 1, 2004 and Controller of Golden Flake on March 15, 1997. She has been employed with the Company since 1988. Ms. Townsend is elected to her position on an annual basis, and her present term of office will expire on May 31, 2005. Randy Bates, 50 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 May 31, 2005. David Jones, 52 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 May 31, 2005.
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. 7 GOLDEN FLAKE MANUFACTURING PLANTS AND OFFICE HEADQUARTERS The main plant and office headquarters of Golden Flake are located at One Golden Flake Drive, Birmingham, Alabama, and are situated on approximately 40 acres of land which is serviced by a railroad spur track. This facility consists of 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. Golden Flake maintains a garage and vehicle maintenance service center from which it services, maintains, repairs and rebuilds its fleet and delivery trucks. Golden Flake has adequate employee and fleet parking. Approximately 17 acres of the Birmingham property is undeveloped. This property is zoned for industrial use and is readily available for future use. Plans for the utilization of this property have not been finalized. Golden Flake also has a manufacturing plant in Ocala, Florida. This plant was placed in service in November 1984. The plant consists of approximately 100,000 square feet, with allowance for future expansion, and is located on a 28-acre site on Silver Springs Boulevard. The Company manufactures corn chips, tortilla chips and potato chips from this facility. The manufacturing plants, office headquarters and additional lands are owned by Golden Flake free and clear of any debts. DISTRIBUTION WAREHOUSES Golden Flake owns branch warehouses in Birmingham, Montgomery, Midfield, Demopolis, Fort Payne, Muscle Shoals, Huntsville, Phenix City, Tuscaloosa, Mobile, Dothan and Oxford, Alabama; Gulfport and Jackson, Mississippi; Chattanooga, Knoxville, and Memphis, Tennessee; Decatur, Marietta, and Macon Georgia; Jacksonville, Panama City, Tallahassee and Pensacola, Florida; Baton Rouge and New Orleans, Louisiana; and Little Rock, Arkansas. The warehouses vary in size from 2,400 to 8,000 square feet. All distribution warehouses are owned free and clear of any debts. VEHICLES Golden Flake owns a fleet of 866 vehicles which includes 632 route trucks, 43 tractors, 123 trailers and 68 cars and miscellaneous vehicles. There are no liens or encumbrances on Golden Flake's vehicle fleet. Golden Flake also owns a 1987 Cessna Citation II aircraft. ITEM 3. - LEGAL PROCEEDINGS There are no material pending legal proceedings against the Company or its subsidiary other than ordinary routine litigation incidental to the business of the Company and its subsidiary. ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. 8 PART II ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS GOLDEN ENTERPRISES, INC. AND SUBSIDIARY MARKET AND DIVIDEND INFORMATION The Company's common stock is traded in the over-the-counter market under the "NASDAQ" symbol, GLDC, and transactions are reported through the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System. The following tabulation sets forth the high and low sale prices for the common stock during each quarter of the fiscal years ended May 31, 2004 and 2003 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 -------------------- DIVIDEND PAID QUARTER HIGH LOW PER SHARE - ----------- ---- --- -------------- FISCAL 2004 First ........................................................ $2.890 $2.150 $.0313 Second ....................................................... 2.750 2.370 .0313 Third ........................................................ 3.500 2.340 .0313 Fourth ....................................................... 3.430 2.400 .0313 FISCAL 2003 First ........................................................ $4.490 $3.710 $.0625 Second ....................................................... 5.530 2.760 .0625 Third ........................................................ 4.100 2.160 .0313 Fourth ....................................................... 2.500 1.640 .0313
As of August 6, 2004, there were approximately 1,500 shareholders of record. 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 - ---------------------------------------------------------------------------------------------------------------------------------- (a) (b) (c) Number of securities remaining Number of securities to be available for future issuance issued upon exercise of out- Weighted-average exercise under equity compensation plans standing options, warrants price of outstanding options, (excluding securities reflected in Plan category and rights warrants and rights column (a)) - ---------------------------------------------------------------------------------------------------------------------------------- Equity compensation plans 369,000 $3.776 130,000 approved by security holders - ---------------------------------------------------------------------------------------------------------------------------------- Equity compensation plans 0 0 0 not approved by security holders - ---------------------------------------------------------------------------------------------------------------------------------- Total 369,000 $3.776 130,000 - ----------------------------------------------------------------------------------------------------------------------------------
9 ISSUER PURCHASES OF EQUITY SECURITIES The following table provides information of the repurchase by the Company of shares of its common stock during the fourth quarter of fiscal year ended May 31, 2004: (d) Maximum (c) Total Number Number (or of Shares Approximate Dollar Purchased as Part Value) of Shares (b) of that May Yet Be (a) Total Average Publicly Purchased Under Number of Price paid Announced Plans the Plans or Period Shares Purchased per Share or Programs Programs - ----------------------------------------------------------------------------------------------------------------- March 1 to -0- -0- -0- -0- March 31 - ----------------------------------------------------------------------------------------------------------------- April 1 to 30,475(1) $3.00(1) -0- -0- April 30 - ----------------------------------------------------------------------------------------------------------------- May 1 to -0- -0- -0- -0- May 31 - ----------------------------------------------------------------------------------------------------------------- Total 30,475 $3.00 -0- -0- - -----------------------------------------------------------------------------------------------------------------
- ------------------ (1) On April 21, 2004, the Company purchased 30,475 shares of its common stock for $3.00 per share through a private purchase transaction. 10 ITEM 6 - SELECTED FINANCIAL DATA GOLDEN ENTERPRISES, INC. AND SUBSIDIARY FINANCIAL REVIEW (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Year Ended May 31, 2003 2002 2001 2000 2004 Restated Restated Restated Restated ------------ ------------ ----------- ----------- ----------- Net sales (b) ........................ $ 97,583 $ 96,604 $ 104,335 $ 102,797 $ 113,227 Gain on sales of assets .............. 14 304 756 599 250 Other income ......................... 499 506 563 691 67 --------------------------------------------------------------------------- Total revenues .................. 8,096 97,414 105,694 104,087 113,544 Cost of sales ........................ 51,243 50,748 54,326 53,631 57,460 Selling, general and administrative expenses ............ 46,595 47,686 47,653 46,333 52,100 Interest ............................. 220 269 189 85 -- Restructuring charge ................. -- -- -- -- 2.565 (Loss) income before cumulative effect of a change in accounting policy and income taxes ............................ 38 (1,289) 3,486 4,038 1,419 Federal and state income taxes ....... 84 (361) 1,367 1,386 642 Net (loss) income before cumulative effect of a change in accounting policy ............................ (46) (928) 2,119 2,653 777 Cumulative effect of a change in accounting policy net of taxes ............................ -- -- 413 -- -- Net (loss) income ........... $ (46) $ (928) $ 2,532 $ 2,653 $ 777 --------------------------------------------------------------------------- FINANCIAL DATA Depreciation and amortization ........ $ 2,347 $ 2,490 $ 2,594 $ 2,436 $ 3,230 Capital expenditures, net of disposals 829 287 3,802 1,294 149 Working capital ...................... 6,697 8,818 10,989 12,909 14,028 Long-term debt ....................... 2,327 3,862 5,083 1,807 1,807 Stockholders' equity ................. 22,456 24,078 27,233 27,865 28,641 Total assets ......................... 33,623 36,492 40,840 40,243 41,814 --------------------------------------------------------------------------- COMMON STOCK DATA Net (loss) income before cumulative effect of a change in accounting policy ............................. $ (0.00) $ (0.08) $ 0.18 $ 0.22 $ 0.06 Cumulative effect of a change in accounting policy net of taxes ..... -- -- 0.03 -- -- Basic and diluted net (loss) income .. (0.00) (0.08) 0.21 0.22 0.06 Dividends ............................ .1250 .1875 0.25 0.25 0.24 Book value ........................... 1.89 2.20 2.29 2.33 2.37 Price range .......................... 3.50-2.15 5.530-1.640 4.550-2.950 4.750-2.875 4.125-2.313 --------------------------------------------------------------------------- FINANCIAL STATISTICS Current ratio ........................ 1.84 2.09 2.37 2.58 2.43 Net (loss) income as percent of total revenues ................... 0.00% (1.0)% 2.4% 2.5% 0.7% Net (loss) income as percent of stockholders' equity (a) ............. (0.00)% (5.1)% 10.1% 9.0% 3.9% --------------------------------------------------------------------------- OTHER DATA Weighted average common shares outstanding ....................... 11,879,891 11,883,305 11,898,097 11,965,671 12,154,057 Common shares outstanding at year end .......................... 11,852,830 11,883,305 11,883,305 11,932,741 12,065,000 Approximate number of stockholders ......................... 1,500 1,500 1,500 1,500 1,600
(a) Average amounts at beginning and end of fiscal year. (b) Reflects on all periods presented, the effect on revenues of adopting the provisions of the Emerging Issues Task Force of the Financial Accounting Standards Board issue No. 01-9 Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products) (EITF 01-9) 11 Golden Enterprises Selected Financial Data The 2004 Restatement adjustments affecting the years 2001 and 2000 are set forth in the following table:
2001 2000 ----------------------- --------------------- As As Previously As Previously As Reported Restated Reported Restated ----------------------- --------------------- Income statement data; Net sales $ 102,797 102,797 $ 113,227 113,227 Net Income 2,700 2,653 1,243 777 Basic and diluted net income per share 0.23 0.22 0.10 0.06 Financial position data (at May 31): Total assets $ 39,247 40,243 $ 41,333 41,814 Stockholders' equity 29,800 27,865 30,528 28,641
The 2004 restatement adjustments affecting the years 2001 and 2000 are adjustments with respect to self insurance accruals and accrued compensated absences, as described in "Item 8. Financial Statements - Note 2. Restatement of Previously Issued Financial Statements." 11-A 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 Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in this Item 7 has been revised to reflect the May 31, 2003 10-K/A Amendment No. 1 "Restatement." The purpose of this discussion is to provide additional information about Golden Enterprises, Inc., its financial condition and the results of its operations. Readers should refer to the consolidated financial statements and other financial data presented throughout this report to fully understand the following discussion and analysis. RESTATEMENT The Company has restated its consolidated balance sheet for the years ended May 31, 2003 and consolidated statements of operations, cash flows and retained earnings for the years ended May 31, 2003 and 2002 (the "2003" Restatement). The restatement affects periods prior to 2002. The impact of the restatement on such prior periods was reflected as an adjustment to retained earnings June 1, 2001. The restatement is reported in this Annual Report on Form 10-K for the year ending May 31, 2004 and will be reported in amendments to our Quarterly Reports on form 10-Q for its quarterly periods ended August 31, 2003, November 30, 2003 and February 29, 2004. The restatement adjustment for years ended May 31, 2003 and 2002 resulted in a reduction in a previously reported net loss of approximately $.5 million and a reduction in a previously reported net income of approximately $.5 million respectively. Basic and diluted loss per share was reduced by $.04 per share for fiscal 2003. Basic and diluted earnings per share declined $.04 for fiscal year 2002. In addition, as a result of the cumulative effect of the restatement, retained earnings has been reduced by $1.9 million and $2.4 million as of May 31, 2003 and 2002 respectively. Also, as the result of the cumulative effect of the restatement of periods prior to 2002, the cumulative effect was to reduce opening retained earnings June 1, 2001 by approximately $1.9 million. For a discussion of individual adjustment items, see "Item 8- Financial Statements- Note 2 Restatement." 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 buttered popcorn. 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, 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 which are subject to precipitous changes in supply and price. Weather varies from season to season and directly affects both the quality and supply available. The Company has no control of the agricultural aspects and its profits are affected accordingly. 12 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 approximately 436 route representatives 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 from these estimates. 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. In November 2001, the Emerging Issues Task Force reached a consensus on Issue No. 01-09 Accounting for Consideration given by a Vendor to a Customer (Including a Reseller of the Vendor's Products) effective for annual or interim periods beginning after December 15, 2001. The issue addresses the recognition, measurement and income statement classification for certain sales incentives. The Company implemented this new accounting policy in the fourth quarter of fiscal 2002. The effect of this accounting change is to adopt this policy as of the beginning of the fiscal 2002 (June 1, 2001). Certain of these expenses, including slotting fees, previously classified as selling, general, and administrative expenses, are now characterized as offsets to net sales. Reclassifications have been made to prior period financial statements to conform to current year presentation. Total vendor sales incentives now characterized as reductions of net sales that previously would have been classified as selling, general and administrative expenses were approximately $11.6 million, $12.8 million and $11.7 million for the years ended 2004, 2003 and 2002, respectively. There was no resulting impact on net operating results from adopting EITF 01-09. Change in Accounting Policy The Company changed its accounting policy in the fourth quarter of fiscal 2002 with regard to slotting fees. The effect of this accounting change was to adopt this policy as of the beginning of fiscal 2002 (June 1, 2001). Previously, slotting fees were expensed as incurred. The Company changed this accounting policy to capitalize and amortize such costs over the expected benefit period, which is generally one year. This change in accounting policy was made to more closely match the cost of the shelf space obtained with the slotting fees with the revenues produced by the shelf space. The cumulative effect of this change in accounting policy resulted in a non-cash cumulative adjustment of $413,401 ($0.03 per share), net of taxes. The accounting change also increased net income before the cumulative effect in 2002 by $197,141 ($0.02 per share). 13 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. Management records a general reserve based on analysis of historical data. In addition, management 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 31, 2004 and 2003 the Company had accounts receivables in the amount of $7.5 million and $7.8 million, net of an allowance for doubtful accounts of $0.2 million and $0.2 million, respectively. 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 material expenses in an effort to record those expenses in the period incurred. The most material accrued estimates relate to a salary continuation plan for certain key executives of the Company, and to insurance-related expenses, including self-insurance. Workers' compensation and general liability insurance accruals are recorded based on insurance claims processed as well as historical claims experience for claims incurred, but not yet reported. These estimates are based on historical loss development factors. 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 assumption could result in an accrual requirement materially different from the calculated accrual. OTHER MATTERS Transactions with related parties, reported in Note 14 of the Notes to Consolidated Financial Statements, are conducted on an arm's-length basis in the ordinary course of business. LIQUIDITY AND CAPITAL RESOURCES Working capital was $6.7 million at May 31, 2004 compared to $8.3 million at May 31, 2003. Net cash provided by operations amounted to $2.9 million in fiscal year 2004, $4.6 million in fiscal year 2003 and $1.9 million in fiscal year 2002. The decrease in net cash provided by operations is primarily related to changes in receivables, inventories and accounts payable offset by the net loss for fiscal year 2004 of $45,846 compared to the net loss for fiscal year 2003 of $927,765. Additions to property, plant and equipment, net of disposals were $0.8 million, $0.3 million and $3.8 million in fiscal years 2004, 2003 and 2002, respectively, and are expected to be about $1.9 million in 2005. Cash dividends of $1.5 million, $2.2 million and $3.0 million were paid during fiscal years 2004, 2003, and 2002, respectively. The quarterly dividend was reduced to $.03125 from $.0625 in the third quarter of fiscal 2003 in response to a decrease in earnings. 14 The amount of cash used to purchase treasury shares in fiscal 2004 was $0.09 million. No cash was used to purchase treasury shares in fiscal 2003 and $0.2 million was used in 2002. During fiscal 2004, the company re-paid debt, net of borrowings, of $1.4 million. The following table summarizes the significant contractual obligations of the Company as of May 31, 2004:
CONTRACTUAL OBLIGATIONS TOTAL 2005 2006-2007 2008-2009 THEREAFTER - ----------------------- ----- ---- --------- --------- ---------- Long-Term Debt $ 999,562 $ 477,980 $ 521,582 $ -0- $ -0- Purchase Commitment 2,096,000 1,491,000 605,000 -0- -0- Salary Continuation Plan 1,901,567 95,948 216,448 253,870 1,335,301 --------- ------ ------- ------- --------- Total Contractual Obligations $ 4,997,129 $ 2,064,928 $ 1,343,030 $ 253,870 $ 1,335,301 ========= ========= ========= ======= =========
Other Commitments The Company had letters of credit in the amount of $1,758,987 outstanding at May 31, 2004 to support the Company's commercial self-insurance program. The Company has a line-of-credit agreement with a local bank that permits borrowing up to $1 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. Long-term liabilities as a percentage of total capitalization was 12.3% at May 31, 2004. The Company's current ratio at year end was 1.84 to l.00. 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 1.0% in fiscal year 2004, decreased by 7.4% in fiscal year 2003, and increased by 1.5% in fiscal year 2002. The increase in fiscal 2004 was primarily due to less promotional payments to vendors that were subtracted from sales as required by EITF 01-9. The decrease in fiscal 2003 was due to a general sales weakness in the U.S. salty snacks category, particularly during the first part of the fiscal year. Cost of sales as a percentage of net sales amounted to 52.5% in 2004, 52.5% in 2003, and 52.1% in 2002. Cost of sales stabilized in 2004 and the percentage increase in cost of sales for fiscal 2003 was caused by the lower sales volume and higher commodity prices and energy cost. The cost decrease in 2002 was due primarily to lower energy costs. Selling, general and administrative expenses were 47.7% of net sales in 2004, 49.4% in 2003, and 45.7% in 2002. The 1.7% decrease for fiscal 2004 is attributed to the increase in net sales and a decrease in vendor sales incentives. The higher percentage cost for fiscal 2003 was due to significant increases in employee medical, workers' compensation, general and auto liability insurance costs, and energy costs. The more favorable cost percentage for fiscal 2002 was primarily due to lower selling and delivery cost brought about by the exiting of the fringe sales regions in Central Florida as part of the fiscal 2000 restructuring plan. The Company's effective tax rates for 2004, 2003, and 2002 were 221.3%, (27.9%) and 39.2%, respectively. Note 9 to the Consolidated Financial Statements provides additional information about the provision for income taxes. 15 OFF-BALANCE SHEET ARRANGEMENT The Company entered into a five-year term product purchase agreement during the year ending May 31, 2001 with a supplier. Under the terms of the agreement the minimum purchase quantity and the purchase price were fixed resulting in a minimum first year commitment of approximately $2,171,000. After the first year, the minimum purchase quantity was fixed and the purchase unit price, was negotiable based on the current market. The purchase product agreement as subsequently amended is described in more detail in Note 14 of the Notes to Consolidated Financial Statements. 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, investment securities and bank loans, and commodity prices affecting the cost of its raw materials. The Company's cash equivalents consist of short-term marketable securities. Presently these are variable rate money market funds. Its bank loans also carry variable rates. Assuming year end 2004 variable rate investment levels and bank loan balances, a one-point change in interest rates would impact interest income by $1,520 and interest expense by $9,996. 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. INFLATION Certain costs and expenses of the Company are affected by inflation, and the Company's prices for its products over the past several years have remained relatively flat. The Company will contend with the effect of further inflation through efficient purchasing, improved manufacturing methods, pricing, and by monitoring and controlling expenses. ENVIRONMENTAL MATTERS There have been no material effects of compliance with government provisions regulating discharge of materials into the environment. FORWARD-LOOKING STATEMENTS This discussion contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those forward-looking statements. Factors that may cause actual results to differ materially include price competition, industry consolidation, raw material costs and effectiveness of sales and marketing activities, as described in the Company's filings with Securities and Exchange Commission. RECENT DEVELOPMENTS The Company restated its previously issued financial statements for the three years ended May 31, 2003. The restatement affected periods prior to May 31, 2001. The impact of the restatement on such prior periods was reflected as an adjustment to opening retained earnings as of June 1, 2000. The restatement was reported in amendment No. 1 to the retained earnings as of June 1, 2000. The restatement was reported in amendment No. 1 to the Company's Annual Report on Form 10-K/A for the year ended May 31, 2003. The Company also restated the Company's Quarterly Reports on Form 10-Q/A for the quarterly periods ended August 31, 2003, November 30, 2003 and February 29, 2004 with restated comparative information for comparative periods of the previous year. 16 In connection with their audits of the restatement of previously issued annual financial statements and the consolidated financial statements for the year ended May 31, 2004, the Company's independent auditors identified and communicated to the Company and the Audit Committee "material weaknesses" (as defined under audit standards adopted by the Public Company Accounting Oversight Board) relating to the Company's accounting and public reporting of significant matters and management review and oversight of certain accounting matters. In the past year, the Company undertook to review and analyze its internal audit program and has directed senior management to dedicate resources and take steps to strengthen controls. The company engaged the services of a third party consultant to assist in its review and analysis. The Company intends to identify and implement actions to improve the effectiveness of procedures and internal controls, including enhanced training with respect to financial reporting and disclosure responsibilities. RECENT ISSUED ACCOUNTING PRONOUNCEMENTS Effective June 1, 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets to be held and used, to be disposed of other than by sale and to be disposed of by sale. The adoption of this standard did not have a material impact on the Company's financial position, results of operations or cash flows. In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated with Exit or Disposal Activities." SFAS No 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Costs covered by SFAS No. 146 includes lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operations, plant closing or other exit or disposal activity. SFAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company adopted SFAS No. 146 on June 1, 2003 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation" to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company has adopted the disclosure requirements of SFAS No. 148 effective May 31, 2003 in its consolidated financial statements. The Company will continue to account for stock-based compensation using the methods detailed in the stock-based compensation accounting policy as described earlier. In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This statement amends and clarifies the accounting and reporting for derivative instruments, including embedded derivatives, and for hedging activities under SFAS No. 133, "Accounting for Derivative instruments and Hedging Activities." SFAS No. 149 amends SFAS No. 133 to reflect the decisions made as part of the Derivatives Implementation Group and in other FASB projects or deliberations. SFA No. 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designed after June 30, 2003 and did not have an impact on the Company. In January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN No. 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 became effective February 1, 2003 for variable interest entities created after January 31, 2003, and July 31, 2003 for variable interest entities created prior to February 1, 2003. In December 2003, the FASB issued a revised FIN 46. The revised standard, FIN 46R, modifies or clarifies various provisions of FIN 46 and incorporates many FASB Staff Positions previously issued by the FASB. This standard replaces the original FIN 46 that was issued in January 2003. The adoption of these new standards did not have an impact on the Company's financial position, results of operations or cash flows. 17 In December 2003, the FASB issued a revised SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The revised SFAS No. 132 revised employers' disclosures about pension plans and other post retirement benefit plans. It did not change the measurement or recognition of those plans required by SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The revised SFAS No. 132 retains the disclosure requirements contained in the original SFAS No. 132. It requires additional disclosures to those in the original SFAS No. 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The adoption of this new standard did not have an impact on the Company's financial position, results of operations or cash flows. In December 2003, the SEC released Staff Accounting Bulletin ("SAB") 104. SAB 104 revises or rescinds portions of the interpretative guidance included in SEC Topic 13, "Revenue Recognition," in order to make this interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The principal revisions relate to the rescission of material no longer necessary because of private sector developments in U.S. generally accepted accounting principles. SAB 104 also rescinds the Revenue Recognition in Financial Statements Frequently Asked Questions and Answers document issued in conjunction with Topic 13. Selected portions of that document have been incorporated into Topic 13. The adoption of this new standard did not have an impact on the Company's financial position, results of operations or cash flows. ITEM 7 A.- QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations- Market Risk beginning on page 16. ITEM 8.- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the registrant and its subsidiary for the year ended May 31, 2004, consisting of the following, are contained herein: Consolidated Balance Sheets - May 31, 2004 and 2003 Consolidated Statements of Operations - Years ended May 31, 2004, 2003 and 2002 Consolidated Statements of - Years ended May 31, 2004, 2003 Cash Flows and 2002 Consolidated Statements of Changes -Years ended May 31, 2004, 2003 in Stockholders' Equity and 2002 Notes to Consolidated Financial Statements - Years ended May 31, 2004, 2003 and 2002 Quarterly Results of Operations - Years ended May 31, 2004, and 2003 18 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Golden Enterprises, Inc. We have audited the accompanying consolidated balance sheets of Golden Enterprises, Inc. and subsidiary as of May 31, 2004 and 2003, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended May 31, 2004. Our audits also included the financial statement schedule listed at Item 16(a)2. 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 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended May 31, 2004, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, such financial statement schedule, when considering in relation to the basic consolidated financial statements, taken as a whole, presents fairly, in all material respects, the information set forth therein. As described in Note 2, Restatement of prior period financial statements, the Company has restated previously issued financial statements. As discussed in Note 3 to the financial statements, effective June 1, 2001 the Company changed its accounting policy with respect to slotting fees. Birmingham, Alabama DUDLEY, HOPTON-JONES, SIMS & FREEMAN, PLLP July 21, 2004 19 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS May 31, 2004 and 2003 ASSETS Restated 2004 2003 ----------- ----------- CURRENT ASSETS Cash and cash equivalents ............. $ 565,195 $ 1,278,333 Receivables: Trade accounts ...................... 7,445,741 7,835,874 Other ............................... 231,410 206,480 ----------- ----------- 7,677,151 8,042,354 Less: Allowance for doubtful accounts 185,000 196,100 ----------- ----------- 7,492,151 7,846,254 Notes receivable, current ........... 45,760 42,253 ----------- ----------- 7,537,911 7,888,507 ----------- ----------- Inventories: Raw materials ....................... 1,198,534 1,016,050 Finished goods ...................... 2,504,515 2,289,145 ----------- ----------- 3,703,049 3,305,195 ----------- ----------- Prepaid expenses ...................... 2,292,943 2,881,121 Deferred income taxes ................. 618,803 652,153 ----------- ----------- Total current assets ............... 14,717,901 16,005,309 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT Land .................................. 3,030,974 3,030,974 Buildings ............................. 16,925,279 16,897,204 Machinery and equipment ............... 35,159,507 41,478,108 Transportation equipment .............. 15,170,308 15,113,558 70,286,068 76,519,844 Less: Accumulated depreciation ...... 56,439,726 61,158,271 ----------- ----------- 13,846,342 15,361,573 ----------- ----------- OTHER ASSETS Notes receivable, long-term ........... 1,819,986 1,865,747 Cash surrender value of life insurance 2,648,567 2,762,739 Other ................................. 589,760 496,175 ----------- ----------- Total other assets .................. 5,058,313 5,124,661 ----------- ----------- TOTAL ............................... $33,622,556 $36,491,543 =========== =========== 20 LIABILITIES AND STOCKHOLDERS' EQUITY
Restated 2004 2003 ------------ ------------- CURRENT LIABILITIES Checks outstanding in excess of bank balances ......... $ 1,293,534 $ 1,157,108 Accounts payable ...................................... 1,816,879 1,700,934 Current portion of long-term debt ..................... 477,980 432,142 Other accrued expenses ................................ 4,334,798 4,289,448 Salary continuation plan .............................. 95,948 88,595 ------------ ------------ Total current liabilities ........................... 8,019,139 7,668,227 ------------ ------------ LONG-TERM LIABILITIES Note payable - bank, non-current ...................... 521,582 1,990,767 Salary continuation plan .............................. 1,805,619 1,870,991 Deferred income taxes ................................. 820,432 884,033 ------------ ------------ Total long-term liabilities ......................... 3,147,633 4,745,791 ------------ ------------ 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 ..................................... 17,363,237 18,893,553 Treasury shares - at cost (1,975,963 shares in 2004 and 1,945,488 shares in 2003) ........................... (10,624,602) (10,533,177) ------------ ------------ Total stockholders' equity ............................ 22,455,784 24,077,525 ------------ ------------ TOTAL ............................................... $ 33,622,556 $ 36,491,543 ============ ============
21 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended May 31, 2004, 2003 and 2002
Restated Restated 2004 2003 2002 ------------ ------------ ------------- Net sales ................................................. $ 97,583,493 $ 96,604,461 $ 104,335,234 Cost of sales ............................................. 51,243,037 50,747,626 54,325,919 ------------ ------------ ------------- Gross margin .............................................. 46,340,456 45,856,835 50,009,315 Selling, general and administrative expenses .............. 46,595,519 47,686,174 47,653,164 ------------ ------------ ------------- Operating (loss) income ................................... (255,063) (1,829,339) 2,356,151 ------------ ------------ ------------- Other income (expenses): Gain on sale of assets .................................... 13,861 304,221 756,259 Interest expense .......................................... (219,608) (268,489) (190,159) Other income .............................................. 498,613 506,296 563,383 ------------ ------------ ------------- Total other income (expenses) ........................... 292,866 542,028 1,129,483 ------------ ------------ ------------- Income (Loss) income before cumulative effect of a change in accounting policy and income taxes .................. 37,803 (1,287,311) 3,485,634 ------------ ------------ ------------- Provision for income taxes ............................. 83,649 (359,546) 1,366,930 ------------ ------------ ------------- Net (loss) income before cumulative effect of a change in accounting policy ...................................... (45,846) (927,765) 2,118,704 Cumulative effect of a change in accounting policy, net of taxes of $262,037 ....................... -- -- 413,401 ------------ ------------ ------------- Net (loss) income ....................................... $ (45,846) $ (927,765) $ 2,532,105 ============ ============ ============= PER SHARE OF COMMON STOCK Net (loss) income before cumulative effect of a change in accounting policy .................................... $ -- $ (0.08) $ 0.18 Cumulative effect of a change in accounting policy, net of taxes .................................... -- -- 0.03 ------------ ------------ ------------- Basic earnings ............................................ $ -- $ (0.08) $ 0.21 ============ ============ ============= Diluted earnings .......................................... $ -- $ (0.08) $ 0.21 ============ ============ =============
See Accompanying Notes to Consolidated Financial Statements 22 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Years Ended May 31, 2004, 2003 and 2002
Additional Total Common Paid-in Retained Treasury Stockholders' Stock Capital Earnings Shares Equity ---------- ----------- ------------ ------------ ------------ Balance - May 31, 2001 as restated ... $9,219,195 6,499,554 22,491,346 (10,345,168) 27,864,927 Net income - 2002 ................. -- -- 2,532,105 -- 2,532,105 Cash dividends paid ............... -- -- (2,974,005) -- (2,974,005) Treasury shares purchased ......... -- -- -- (193,419) (193,419) Stock options exercised ........... -- (1,600) -- 5,410 3,810 ---------- ----------- ------------ ------------ ------------ Balance - May 31, 2002 as restated 9,219,195 6,497,954 22,049,446 (10,533,177) 27,233,418 Net loss - 2003 ................... -- -- (927,765) -- (927,765) Cash dividends paid ............... -- -- (2,228,128) -- (2,228,128) Balance - May 31, 2003 as restated $9,219,195 $ 6,497,954 $ 18,893,553 $(10,533,177) $ 24,077,525 ---------- ----------- ------------ ------------ ------------ Net loss - 2004 ................... -- -- (45,846) -- (45,846) Cash dividends paid ............... -- -- (1,484,470) -- (1,484,470) Treasury shares purchased ......... -- -- -- (91,425) (91,425) ---------- ----------- ------------ ------------ ------------ Balance - May 31, 2004 ............ $9,219,195 $ 6,497,954 $ 17,363,237 $(10,624,602) $ 22,455,784 ========== =========== ============ ============ ============
See Accompanying Notes to Consolidated Financial Statements 23 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended May 31, 2004, 2003 and 2002
Restated Restated 2004 2003 2002 --------- --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income ............................................ $(45,846) $(927,765) $2,532,105 Adjustment to reconcile net (loss) income to net cash provided by operating activities: Cumulative effect of a change in accounting policy ........ -- -- (413,401) Depreciation .............................................. 2,346,880 2,490,329 2,593,621 Deferred income taxes ..................................... (30,251) 1,433 36,641 Gain on sale of property and equipment .................... (13,861) (304,221) (756,261) Decrease (increase) in receivables - net .................... 354,103 1,570,347 (408,060) Decrease (increase) in inventories .......................... (397,854) 1,443,303 (428,026) Decrease (increase) in prepaid expenses .................... 588,178 783,358 (1,667,703) Decrease in cash surrender value of insurance ............... 114,172 22,597 50,614 Increase in other assets .................................... (93,585) (19,214) (42,334) Increase (decrease) in accounts payable ..................... 115,945 (488,795) 265,301 Increase in accrued expenses ................................ 45,350 60,940 90,449 (Decrease) increase in salary continuation plan ............. (58,019) (54,805) 86,568 --------- --------- --------- Net cash provided by operating activities ................. 2,925,212 4,577,507 1,939,514 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment .................... (973,076) (851,111) (5,236,601) Proceeds from sale of property, plant and equipment .......... 155,288 399,690 1,301,160 Collection of notes receivable ............................... 42,254 119,636 42,399 Investment securities available-for-sale: Proceeds from disposals ...................................... -- -- 625,326 --------- --------- --------- Net cash used in investing activities ..................... (775,534) (331,785) (3,267,716) --------- --------- ---------
See Accompanying Notes to Consolidated Financial Statements 24 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED Years Ended May 31, 2004, 2003 and 2002
Restated Restated 2004 2003 2002 ------------ ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES Debt proceeds .............................................. 10,304,286 11,543,824 7,806,676 Debt repayments ............................................ (11,727,633) (13,121,345) (4,666,346) Increase (decrease) in checks outstanding in excess of bank balances ................................................ 136,426 535,782 (931,135) Purchases of treasury shares ............................... (91,425) -- (193,419) Proceeds from exercise of stock options .................... -- -- 3,810 Cash dividends paid ........................................ (1,484,470) (2,228,128) (2,974,005) ------------ ------------ ----------- Net cash used in financing activities ................... (2,862,816) (3,269,867) (954,419) ------------ ------------ ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........................................... (713,138) 975,855 (2,282,621) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .......................................... 1,278,333 302,478 2,585,099 ------------ ------------ ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR ................................................ $ 565,195 $ 1,278,333 $ 302,478 ============ ============ =========== SUPPLEMENTAL INFORMATION Cash paid during the year for: Income taxes .............................................. $ (430,216) $ (626,349) $ 2,343,597 Interest .................................................. 219,608 268,489 190,159 Noncash items: Equipment traded in ....................................... -- 22,123 --
25 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS May 31, 2004, 2003 and 2002 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 principles 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 intercompany transactions and balances have been eliminated. REVENUE RECOGNITION The Company recognizes sales and related costs upon delivery or shipment of products to its customers. Sales are reduced by returns and allowances to customers. REVENUE CLASSIFICATION CHANGES In November 2001, the Emerging Issues Task Force reached a consensus on Issue No. 01-09 Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products) effective for annual or interim periods beginning after December 15, 2001. The issue addresses the recognition, measurement and income statement classification for certain sales incentives. The Company implemented this new accounting policy in the fourth quarter of fiscal 2002. The effect of this accounting change is to adopt this policy as of the beginning of the fiscal 2002 (June 1, 2001). Certain of these expenses, including slotting fees, previously classified as selling, general, and administrative expenses, are now characterized as offsets to net sales. Reclassifications have been made to prior period financial statements to conform to current year presentation. Total vendor sales incentives now characterized as reductions of net sales that previously would have been classified as selling, general and administrative expenses were approximately $11.6 million, $12.8 million and $11.7 million for the years ended 2004, 2003 and 2002, respectively. There was no resulting impact on net operating results from adopting EITF 01-09. 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. 26 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. For financial reporting purposes, depreciation and amortization have been provided principally on the straight-line method over the estimated useful lives of the respective assets. Accelerated methods are used for tax purposes. Expenditures for maintenance and repairs are charged to operations as incurred; expenditures for renewals and betterments are capitalized and written off by depreciation and amortization charges. Property retired or sold is removed from the asset and related accumulated depreciation accounts and any profit or loss resulting therefrom is reflected in the statements of operations. SELF-INSURANCE The Company is self-insured for certain 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. Self-insurance claims filed and claims incurred but not reported are accrued based upon management's estimates of the aggregate liability for uninsured claims incurred. Automobile liability, general liability, workers' compensation, and property losses costs are covered by letters of credit with the Company's claims administrators. ADVERTISING The Company expenses advertising costs as incurred. These costs are included in selling, general and administrative expenses in the Consolidated Statement of Operations. Advertising expense amounted to $4,452,926, $5,031,409 and $4,371,719 for the fiscal years 2004, 2003 and 2002, 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 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 applies APB Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for all stock option plans. No stock-based compensation cost has been recognized in operations for stock options granted because the option exercise price was equal to or more than the market price of the underlying common stock on the date of grant. SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," requires the Company to provide pro forma information regarding net income (loss) as if the compensation cost for the Company's stock option plans had been determined in accordance with the fair value based method prescribed in SFAS No. 123. To provide the required pro forma information, the Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. 27 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The following table represents the pro forma effect on net income (loss) and earnings (loss) per share as if the Company had applied the fair value based method recognition provisions of SFAS No 123 to stock-based employee compensation:
Years Ended May 31, --------------------------------------- Restated Restated 2004 2003 2002 Net (loss) income as reported ............................. $(45,846) $ (927,765) $ 2,532,105 Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects ............................. (12,291) (12,660) (52,289) -------- ----------- ----------- Pro forma net (loss) income ............................ $(58,137) (940,425) 2,479,816 ======== =========== =========== (Loss) earnings per share: Basic - as reported .................................... $ -- $ (0.08) $ .21 ======== =========== =========== Basic - Pro forma ...................................... $ -- $ (0.08) $ 21 ======== =========== =========== Diluted - as reported .................................. $ -- $ (0.08) $ .21 ======== =========== =========== Diluted - Pro forma .................................... $ -- $ (0.08) $ .21 ======== =========== ===========
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 $2.3 million, $2.3 million and $2.5 million for the fiscal years 2004, 2003 and 2002, 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. RECENT ISSUED ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development or normal use of assets. The Company adopted SFAS No. 143 on June 1, 2003 and the adoption did not have a material impact on the Company's consolidated financial statements. 28 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Effective June 1, 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets to be held and used, to be disposed of other than by sale and to be disposed of by sale. The adoption of this standard did not have a material impact on the Company's financial position, results of operations or cash flows. In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated with Exit or Disposal Activities." SFAS No 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Costs covered by SFAS No. 146 includes lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operations, plant closing or other exit or disposal activity. SFAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company adopted SFAS No. 146 on June 1, 2003 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation" to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company has adopted the disclosure requirements of SFAS No. 148 effective May 31, 2003 in its consolidated financial statements. The Company will continue to account for stock-based compensation using the methods detailed in the stock-based compensation accounting policy as described earlier. In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This statement amends and clarifies the accounting and reporting for derivative instruments, including embedded derivatives, and for hedging activities under SFAS No. 133, "Accounting for Derivative instruments and Hedging Activities." SFAS No. 149 amends SFAS No. 133 to reflect the decisions made as part of the Derivatives Implementation Group and in other FASB projects or deliberations. SFA No. 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designed after June 30, 2003 and did not have an impact on the Company. In January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN No. 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 became effective February 1, 2003 for variable interest entities created after January 31, 2003, and July 31, 2003 for variable interest entities created prior to February 1, 2003. In December 2003, the FASB issued a revised FIN 46. The revised standard, FIN 46R, modifies or clarifies various provisions of FIN 46 and incorporates many FASB Staff Positions previously issued by the FASB. This standard replaces the original FIN 46 that was issued in January 2003. The adoption of these new standards did not have an impact on the Company's financial position, results of operations or cash flows. 29 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED In December 2003, the FASB issued a revised SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The revised SFAS No. 132 revised employers' disclosures about pension plans and other postretirement benefit plans. It did not change the measurement or recognition of those plans required by SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The revised SFAS No. 132 retains the disclosure requirements contained in the original SFAS No. 132. It requires additional disclosures to those in the original SFAS No. 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The adoption of this new standard did not have an impact on the Company's financial position, results of operations or cash flows. In December 2003, the SEC released Staff Accounting Bulletin ("SAB") 104. SAB 104 revises or rescinds portions of the interpretatative guidance included in SEC Topic 13, "Revenue Recognition," in order to make this interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The principal revisions relate to the rescission of material no longer necessary because of private sector developments in U.S. generally accepted accounting principles. SAB 104 also rescinds the Revenue Recognition in Financial Statements Frequently Asked Questions and Answers document issued in conjunction with Topic 13. Selected portions of that document have been incorporated into Topic 13. The adoption of this new standard did not have an impact on the Company's financial position, results of operations or cash flows. RECLASSIFICATIONS Certain items included in prior years' consolidated financial statements have been reclassified to conform to current year presentation. NOTE 2 - RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS Prior period financial statements have been restated to reflect adjustments to the Company's financial information previously reported on Form 10-K for the years ended May 31, 2003, and 2002. The Company's 2003 quarterly information and comparative 2002 information has also been restated to reflect adjustments to the Company's previously reported financial information on Form 10-Q. The restatement affected periods prior to 2002. The impact of the restatement on such prior periods has reflected as an adjustment to retained earnings as of June 1, 2001. In addition, the restatement impacts the first, second and third quarters of 2004. The restated amounts for these quarters are presented in Note 16, Quarterly Results of Operations (Unaudited). Each of the restatement adjustments is an "error" within the meaning of APB Opinion 20, Accounting Changes. 30 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003, and 2002 NOTE 2 - RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS - CONTINUED The Following table presents the impact of the restatement adjustments on net earnings for the years ended May 31, 2003, 2002 and retained earnings as of June 1, 2001:
Retained Earnings Year Ended May 31, June 1, --------------------------- ----------- 2003 2002 2001 ----------- ----------- ----------- Net (loss) income as originally reported $(1,412,145) $ 3,008,948 $24,426,345 Adjustments (pretax): Self-insurance liability 669,136 (523,974) (1,445,533) Compensated absences 47,826 8,398 (1,609,890) Other Items 237,373 (237,373) -- ----------- ----------- ----------- Total Adjustments (pretax) 954,335 (752,949) (3,055,423) Tax effect of restatement adjustments (469,955) 276,106 1,120,424 ----------- ----------- ----------- Total net adjustments 484,380 (476,843) (1,934,999) ----------- ----------- ----------- Net (loss) income as restated $ (927,765) $ 2,532,105 $22,491,346 =========== =========== =========== Per share of Common Stock: Net Loss- Basic as originally reported $ (0.12) $ 0.25 Effect of net adjustments 0.04 (0.04) ----------- ----------- Net (loss) income - Basic as restated $ (0.08) 0.21 =========== =========== Net (loss) income - Diluted as originally reported $ (0.12) $ 0.25 Effect of net adjustments 0.04 (0.04) ----------- ----------- Net (loss) income - Diluted as restated $ (0.08) $ 0.21 =========== ===========
31 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003, and 2002 NOTE 2 -RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS - CONTINUED Self-Insurance liability: The Company determined that there had been an error in its accounting for self-insurance related liabilities. The adjustments required included recognition of previously unrecorded liabilities and reductions in amounts previously recognized as prepaid amounts to an employee trust which were incorrect. Compensated absences: The Company determined that it had not recorded liabilities for earned vacation not yet taken as required by GAAP. Other items: This category includes adjustments previously identified but deemed to be immaterial. Adjustments in this category change the timing of the items that were previously recognized. Income tax adjustments: As a result of the restatement adjustments, the Company recognized an additional federal and state deferred valuation allowance of $120,000 in 2003. The remaining amounts pertain to the tax effects of the error correction themselves. The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Operations for each of the years ended May 31, 2003 and 2002.
Year Ended May 31, 2003 Year Ended May 31, 2002 ---------------------------- --------------------------- As Originally As Originally Reported As Restated Reported As Restated ---------------------------- --------------------------- Net sales $ 96,367,088 $ 96,604,461 $104,572,608 $104,335,234 Cost of goods sold 51,191,313 50,747,626 54,257,812 54,325,919 Selling, general and administrative expenses 47,959,449 47,686,174 47,205,695 47,653,164 Other income (expenses) 542,028 542,028 1,129,483 1,129,483 ------------ ------------ ------------ ------------ (Loss) income before cumulative effect of a change in accounting policy and income taxes (2,241,646) (1,287,311) 4,238,584 3,485,634 Provision for income taxes (829,501) (359,546) 1,643,037 1,366,930 ------------ ------------ ------------ ------------ Net (loss) income before cumulative effect of a change in accounting policy (1,412,145) (927,765) 2,595,547 2,118,704 Cumulative effect of a change in accounting policy, net of taxes of $262,037 -- -- 413,401 413,401 ------------ ------------ ------------ ------------ Net (loss) income $ (1,412,145) $ (927,765) $ 3,008,948 $ 2,532,105 ============ ============ ============ ============ Net (loss) income per share- basic $ (0.12) $ (0.08) $ 0.25 $ 0.21 Average shares outstanding 11,883,305 11,883,305 11,898,097 11,898,097 Net (loss) income per share- diluted $ (0.12) $ (0.08) $ 0.25 $ 0.21 Average shares outstanding 11,883,305 11,883,305 11,900,893 11,900,893
32 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003, and 2002 NOTE 2 -RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS - CONTINUED The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet at May 31, 2003.
May 31, 2003 ---------------------------- As Originally Reported As Restated ---------------------------- ASSETS Current assets Cash and cash equivalents $ 1,278,333 $ 1,278,333 Receivables: Trade accounts 7,835,874 7,835,874 Other 299,142 206,480 Allowance for doubtful accounts (196,100) (196,100) Notes receivable, current 42,253 42,253 Inventories 3,305,195 3,305,195 Prepaid expenses 3,645,298 2,881,121 Deferred income taxes -- 652,153 ------------ ------------ Total current assets 16,209,995 16,005,309 ------------ ------------ Property, plant and equipment 15,361,573 15,361,573 Notes receivable, long-term 1,865,747 1,865,747 Cash surrender value of life insurance 2,762,739 2,762,739 Other 496,175 496,175 ------------ ------------ TOTAL ASSETS $ 36,696,229 $ 36,491,543 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Checks outstanding in excess of bank balances $ 1,157,108 $ 1,157,108 Accounts payable 1,700,934 1,700,934 Current portion of long-term debt 432,142 432,142 Other accrued expenses 2,381,975 4,289,448 Deferred income taxes 304,698 -- Salary continuation plan 88,595 88,595 ------------ ------------ Total current liabilities 6,065,452 7,668,227 ------------ ------------ Note payable - bank, non-current 1,990,767 1,990,767 Salary continuation plan 1,870,991 1,870,991 Deferred income taxes 764,032 884,033 ------------ ------------ TOTAL LIABILITIES 10,691,242 12,414,018 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 20,821,015 18,893,553 Treasury shares - at cost (1,945,488 shares) (10,533,177) (10,533,177) ============ ============ TOTAL STOCKHOLDERS' EQUITY 26,004,987 24,077,525 ============ ============ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,696,229 $ 36,491,543
33 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 3 - CHANGE IN ACCOUNTING POLICY The Company changed its accounting policy in the fourth quarter of fiscal 2002 with regard to slotting fees. The effect of this accounting change was to adopt this policy as of the beginning of fiscal 2002 (June 1, 2001). Previously, slotting fees were expensed as incurred. The Company changed this accounting policy to capitalize and amortize such costs over the expected benefit period, which is generally one year. This change in accounting policy was made to more closely match the cost of the shelf space obtained with the slotting fees with the revenues produced by the shelf space. The cumulative effect of this change in accounting policy resulted in a noncash cumulative adjustment of $413,401 ($0.03 per share), net of taxes. The accounting change also increased net income before the cumulative effect in 2002 by $197,141 ($0.02 per share). NOTE 4 - NOTES RECEIVABLE Notes receivable as of May 31, 2004 and 2003 consist of the following:
2004 2003 ---------- ----------- 8% note, due in 120 monthly installments of $3,640 through November 1, 2010, collateralized by property .........................$ 220,823 $ 245,743 8% note, due in 360 monthly installments of $12,474 through November 1, 2030, collateralized by property .......................... 1,644,923 1,662,257 ---------- ----------- 1,865,746 1,908,000 Less current portion ..................................................... 45,760 42,253 ---------- ----------- $1,819,986 $1,865,747 ========== =========== Maturities at May 31, 2006 ........ $ 49,558 2007 ........ 53,672 2008 ........ 58,126 2009 ........ 62,951 2010 ........ 68,176 Thereafter ....... 1,527,503
34 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 5 - PREPAID EXPENSES At May 31, prepaid expenses consist of the following:
Restated 2004 2003 ---------- ---------- Prepaid slotting fees ............................................... $ 376,295 $ 333,799 Other prepaid expenses .............................................. 1,916,648 2,547,322 ---------- ---------- $2,292,943 $2,881,121 ========== ==========
NOTE 6 - OTHER ACCRUED EXPENSES At May 31, other accrued expenses consist of the following:
Restated 2004 2003 ---------- ---------- Accrued payroll ..................................................... $ 450,214 $ 448,250 Self insurance liability ............................................ 1,969,332 1,832,591 Accrued vacation .................................................... 1,463,539 1,461,005 Other accrued expenses .............................................. 451,713 547,602 ---------- ---------- $4,334,798 $4,289,448 ========== ==========
NOTE 7 - LINE OF CREDIT The Company has a line of credit agreement with a local bank which permits borrowing up to $1 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. NOTE 8 - LONG-TERM LIABILITIES Long-term debt consist of the following:
2004 2003 ---------- ---------- Note payable - bank - payable in equal monthly installments of $41,688 including interest at the LIBOR index rate plus 1.75% (2.85% at May 31, 2004) through April 3, 2011, secured by equipment $ 999,562 $2,422,909 Less: current portion ........................................... 477,980 432,142 ---------- ---------- $ 521,582 $1,990,767 ========== ==========
35 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 8 - LONG-TERM LIABILITIES - CONTINUED Maturities at May 31, 2006 ........... $491,782 2007 ........... 29,800 Other long-term obligations at May 31, 2004 and 2003, consist of the following:
2004 2003 ---------- ---------- Salary continuation plan .................................... $1,901,567 $1,959,586 Less current portion ........................................ (95,948) (88,595) ---------- ---------- $1,805,619 $1,870,991 ========== ==========
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 approximately $30,576, $27,000 and $127,341 for fiscal 2004, 2003 and 2002, respectively. NOTE 9 - INCOME TAXES The provision for income taxes consists of the following:
Restated Restated 2004 2003 2002 --------- ---------- ----------- Federal ................................ $ 101,350 $ (320,635) $ 1,416,947 State .................................. 12,550 (40,342) 175,379 --------- ---------- ----------- 113,900 (360,977) 1,592,326 Federal ................................ (27,859) 1,272 (200,560) State .................................. (2,392) 159 (24,836) --------- ---------- ----------- (30,251) 1,431 (225,396) --------- ---------- ----------- $ 83,649 $ (359,546) $ 1,366,930 ========= ========== ===========
36 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 9 - 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:
Restated Restated 2004 2003 2002 -------- --------- ---------- Tax on income at statutory rates ........................... $ 12,853 $(437,685) $1,185,116 (Decrease) increase resulting from: State income taxes, less Federal income tax effect ....... 8,741 (26,894) 149,000 Tax exempt interest ...................................... (1,388) (1,356) (9,303) Change in valuation allowance ............................ 55,000 120,000 -- Other - net .............................................. 8,443 (13,611) 42,117 -------- --------- ---------- Total ................................................... $ 83,649 $(359,546) $1,366,930
The tax effects of temporary differences that result in deferred tax assets and liabilities are as follows:
Restated 2004 2003 ----------- ------------ Deferred tax assets Salary continuation plan ............................................... $ 697,305 $ 718,580 Accrued vacation ....................................................... 536,680 535,751 Contribution carryforward .............................................. 229,588 121,491 Inventory capitalization ............................................... 65,688 58,922 Allowance for doubtful accounts ........................................ 67,840 71,910 Other accrued expenses ................................................. 86,582 107,974 ----------- ------------ Gross defered tax assets before valuation allowance ................... 1,683,683 1,614,628 Less valuation allowance .............................................. (175,000) (120,000) ----------- ------------ Total deferred tax assets ................................................ 1,508,683 1,494,628 ----------- ------------ Deferred tax liabilities Property and equipment ................................................. 1,572,325 1,604,103 Prepaid expenses ....................................................... 137,987 122,405 ----------- ------------ Total deferred tax liabilities ........................................... 1,710,312 1,726,508 ----------- ------------ Net deferred tax liability ............................................ $ (201,629) $ (231,880) =========== ============
37 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 10 - EMPLOYEE BENEFIT PLANS The Company has trusteed "Qualified Profit-Sharing Plans" that were amended and restated effective June 1, 1996 to add a 401(k) salary reduction provision. Under this provision, employees can contribute up to fifteen percent of their compensation to the plan on a pretax basis subject to regulatory limits; and the Company, at its discretion, can match up to 4 percent of the participants' compensation. The annual contributions to the plans are determined by the Board of Directors. Total plan expenses for the years ended May 31, 2004, 2003 and 2002 were $94,683, $231,332, and $177,405, respectively. The Company has an Employee Stock Ownership Plan that covers all full-time employees. The annual contributions to the plan are amounts determined by the Board of Directors of the Company. Annual contributions are made in cash or common stock of the Company. The Employee Stock Ownership Plan expenses for the years ended May 31, 2004, 2003 and 2002 were $-0-. Each participant's account is credited with an allocation of shares acquired with the Company's annual contributions, dividends received on ESOP shares and forfeitures of terminated participants' nonvested accounts. The Company has a salary continuation plan with certain of its key officers whereby monthly benefits will be paid for a period of fifteen years following retirement. The Company is accruing the present value of such retirement benefits until the key officers reach normal retirement age 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:
2004 2003 ----------- ----------- Accrued Salary Continuation Plan - beginning of year ............. $ 1,959,586 $ 2,014,391 Benefits Accrued ................................................. 30,576 27,000 Benefits Paid .................................................... (88,595) (81,805) ----------- ------------ Accrued Salary Continuation Plan - end of year ................... $ 1,901,567 $ 1,959,586 =========== ============
NOTE 11 - LONG - TERM INCENTIVE PLANS The Company has a long-term incentive plan currently in effect under which future stock option grants may be issued. This Plan (the 1996 Plan) is administered by the Stock Option Committee of the Board of Directors, which has 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, formulate the terms and conditions of award agreements and make all other determinations required in the administration thereof. All options outstanding at the end of the 2004, 2003, and 2002 are exercisable. The 1996 Plan provides for the granting of Incentive Stock Options as defined under the Internal Revenue Code. Under the Plan, grants may be made to selected officers and employees, of incentive stock option 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. 38 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 11 - 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:
Shares Under Option 2004 2003 2002 -------------------- ----------------------- -------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ------- -------- ------- --------- -------- --------- Outstanding - beginning of year ........... 369,000 $ 3.78 369,000 $ 3.78 40,000 $ 3.50 Granted ................................ -- -- -- -- 330,000 3.81 Exercised .............................. -- -- -- -- (1,000) 3.81 Forfeited .............................. -- -- -- -- -- -- Cancelled .............................. -- -- -- -- -- -- ------- -------- ------- --------- -------- --------- Outstanding - end of year ................. 369,000 $ 3.78 369,000 $ 3.78 369,000 $ 3.78 ======= ======== ======= ========= ======== =========
Pro forma information regarding net income and earnings per share is presented as if the Company had accounted for its employees stock options under the fair value method. The per share weighted average fair value of the stock options granted during fiscal 2002 was $.25. The fair value of these options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate 5.05 percent; dividend yield 6.56 percent; expected option life of 5 years; and expected volatility of 15 percent. No options were granted during 2004 or 2003. The Black-Scholes options pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect an option's fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of it employee stock options. 39 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 12 - 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". Options to purchase 369,000 shares of common stock at May 31, 2004 and 2003 were not included in the computation of diluted earnings per share because the options' exercise price were greater than the average market price of the common shares and, therefore, the effect would be antidulitive. The following reconciles the information used to compute basic and diluted earnings per share:
Average Common Stock Shares ----------------------------------------------- 2004 2003 2002 Basic weighted average shares outstanding .............................. 11,879,891 11,883,305 11,898,097 Effect of options ...................................................... -- -- 2,796 ---------- ---------- ---------- Diluted shares 11,879,891 11,883,305 11,900,893 ========== ========== ==========
NOTE 13 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practical to estimate that value. SFAS 107 defines fair value as the quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques. The fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument, such as estimates of timing and amount of expected future cash flows. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains The carrying amounts for cash and cash equivalents approximate fair value because of the short maturity, generally less than three months, of these instruments. The fair value of notes receivable is estimated by using a discount rate that approximates the current rate for comparable notes. At May 31, 2004 and 2003 the aggregate fair value was approximately $2,437,778 and $2,507,357 compared to a carrying amount of $1,865,746 and $1,908,000, respectively. 40 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 13 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS -CONTINUED The interest rate on the Company's bank debt is reset monthly to reflect the 30 day LIBOR rate. Consequently, the carrying value of the bank debt approximates fair value. The carrying value of the Company's salary continuation plan and accrued liability approximates fair value because present value is used in accruing this liability. The Company does not hold or issue financial instruments for trading purposes and has no involvement with forward currency exchange contracts. NOTE 14 - COMMITMENTS AND CONTINGENCIES Rental expense was $493,028 in 2004, $498,031 in 2003, and $547,742 in 2002. At May 31, 2004, the Company was obligated under certain operating leases for buildings, office space and equipment. In May of 2004, the Company terminated a lease for equipment from a company which is principally owned by a major shareholder of Golden Enterprises, Inc. The lease was terminated through a purchase of the equipment for $160,000. The Company leases its airplane to a major shareholder of the Company for approximately $20,000 per month. The lease provides for his personal use of the airplane for up to 100 flight hours per year and is for a term of one year with automatic renewal at the option of either party. The Company had letters of credit in the amount of $1,758,987 outstanding at May 31, 2004 to support the Company's commercial self-insurance program. The Company pays a commitment fee of 0.375% to maintain the letters of credit. The Company entered into a five-year term product purchase commitment during the year ending May 31, 2001 with a supplier. Under the terms of the agreement the minimum purchase quantity and the unit purchase price were fixed resulting in a minimum first year commitment of approximately $2,171,000. After the first year, the minimum purchase quantity was fixed and the purchase unit price was negotiable, based on current market. Subsequently, in September 2002, the product purchase agreement was amended to fix the purchase unit price and establish specific annual quantities. As of May 31, 2004 the Company's outstanding purchase commitments were as follows: Years ending May 31, Amount ------------- --------- 2005 ...................... $1,491,000 2006 ...................... 605,000 The Company has entered into various other short term purchase commitments with suppliers for raw materials in the normal course of business. 41 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 15 -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's notes receivable require collateral and buyer investment and management believes they are well secured. NOTE 16 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the unaudited quarterly results of operations of the years ended May 31, 2004 and 2003.
RESTATED RESTATED RESTATED Per Share Net (Loss) Net (Loss) Net Sales Income Income ----------- ---------- -------- Quarter - -------- 2004 - ----- First ...................................... $24,580,778 $ 431,692 $ 0.04 Second ..................................... 23,296,981 (196,021) (0.02) Third ...................................... 24,102,358 (606,028) (0.05) Fourth ..................................... 25,603,376 324,511 0.03 ----------- --------- -------- For the year .......................... $97,583,493 $ (45,846) $ -- =========== ========= ======== 2003 - ----- First ...................................... $24,840,321 $ 222,230 $ 0.01 Second ..................................... 23,491,688 (385,437) (0.03) Third ...................................... 24,021,750 (483,635) (0.04) Fourth ..................................... 24,250,702 (280,923) (0.02) ----------- --------- -------- For the year .......................... $96,604,461 $(927,765) $ (0.08) =========== ========= ========
42 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED May 31, 2004, 2003 and 2002 NOTE 17 - SUPPLEMENTARY STATEMENT OF INCOME INFORMATION The following tabulation gives certain supplementary statement of income information for continuing operations for the years ended May 31, 2004, 2003 and 2002:
2004 2003 2002 ---------- ---------- ---------- Maintenance and repairs ............... $5,914,221 $5,625,851 $5,290,498 Depreciation .......................... 2,346,880 2,490,329 2,593,621 Payroll taxes ......................... 2,241,443 2,337,330 2,473,871 Advertising costs ..................... 4,452,926 5,031,409 4,371,719
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. NOTE 18 - SUBSEQUENT EVENT The Company signed a line of credit note with a financial institution with a limit of $2,262,500 on July 6, 2004. The interest rate will be a monthly variable rate based on the LIBOR rate plus 1.75%. The purpose of the line of credit is to pay off the current line of credit and to purchase new vehicles. The line of credit note expires on November 30, 2004, at which time the Company plans to convert the line of credit into a note with a fixed monthly payment and maturity date which will be collateralized by the above equipment purchased. 43 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY SUPPLEMENTAL FINANCIAL INFORMATION Selected quarterly financial data for the fiscal years ended May 31, 2004 and 2003 (unaudited) (Dollar amounts in thousands, except per share data) For a description of the restatement items, which also affect the unaudited quarterly date, see Note 2, Restatement of Previously Issued Financial Statements, to these restated consolidated financial statements.
Restated ---------------------------------------- First Second Third Fourth 2004 Quarter Quarter Quarter Quarter ----------- ----------- ------------ ---------- Total revenues $ 24,581 $ 23,297 $ 24,102 $ 25,603 =========== =========== ============ ========== Income before income taxes $ 685 $ (324) $ (976) $ 652 =========== =========== ============ ========== Net income $ 432 $ (196) $ (606) $ 325 =========== =========== ============ ========== Net income per share $ .04 $ (0.02) $ (0.05) $ .03 =========== =========== ============ ========== Cash dividends per share $ .0313 $ .0313 $ .0313 $ .0313 =========== =========== ============ ========== As Originally Reported -------------------------------------- First Second Third 2004 Quarter Quarter Quarter Total revenues $ 24,581 $ 23,297 $ 24,102 =========== ========== ========= Income before income taxes $ 413 $ (518) $ (887) =========== ========== ========= Net income $ 259 $ (319) $ (550) =========== ========== ========= Net income per share $ .02 $ (0.03) $ (0.05) =========== ========== ========= Cash dividends per share $ .0313 $ .0313 $ .0313 =========== ========== =========
44 Effect of restatement adjustments on previously issued 2004 Quarterly Financial Statements
Quarter Ended ------------------------------------- August 31 Nov 30 Feb 29 2004 2003 2003 2004 --------- --------- ---------- Net Income (loss) as originally reported $ 259 $ (319) $ (550) Adjustments (pre-tax): Accrued vacation liability -- (1) (1) --------- --------- ---------- Self insurance liability 273 195 (88) Total adjustments (pre-tax) 273 194 (89) Total taxes 100 71 (33) --------- --------- ---------- Total net adjustments 173 123 (56) --------- --------- ---------- Net income as restated $ 432 $ (196) $ (606) ========= ========= ========== Per share of Common Stock: Net income (loss)-Basic as originally reported $ 0.02 $ (0.03) $ (0.05) Effect of net adjustments 0.02 0.01 -- --------- --------- ---------- Net income-Basic as restated $ 0.04 $ (0.02) $ (0.05) ========= ========= ========= Net income-Dilluted as originally reported $ 0.02 $ (0.03) $ (0.05) Efect of net adjustments 0.02 0.01 -- --------- --------- ---------- Net income-Dilluted as restated $ 0.04 $ (0.02) $ (0.05) ========= ========= =========
45
2003 Restated -------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ----------- ----------- ---------- ---------- Total revenues $ 24,840 $23,492 $ 24,022 $ 24,251 =========== ======== ======== ========== Income before income taxes $ 346 $ (624) $ (779) $ (230 =========== ======== ======== ========== Net income $ 222 $ (385) $ (484) $ (281 =========== ======== ======== ========== Net income per share $ .02 $ (0.03) $ (0.04) $ (0.02 =========== ======== ======== ========== Cash dividends per share $ 0.0625 $ .0625 $ .0313 $ .0313 =========== ======== ======== ========== 2003 As Originally Reported -------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Total revenues $ 24,803 $23,425 $ 23,955 $ 24,184 =========== ======== ======== ========== Income before income taxes $ (58) $ (618) $ (701) $ (865) =========== ======== ======== ========== Net income $ (34) $ (382) $ (434) $ (562) =========== ======== ======== ========== Net income per share $ 0.00 $ (0.03) $ (0.04) $ (0.05) =========== ======== ======== ========== Cash dividends per share $ 0.0625 $ .0625 $ .0313 $ .0313 =========== ======== ======== ==========
46 Effect of restatement adjustments on previously issued 2004 Quarterly Financial Statements
2003 Quarter Ended -------------------------------------------------------- August 31 Nov 30 Feb 29 31-May 2002 2002 2003 2003 --------- --------- ------ --------- Net (loss) income as originally reported $ (34) $ (382) $ (434) $ (562) Adjustments (pre-tax): Accrued vacation liability 11 11 11 15 Self insurance liability 356 (84) (156) 553 Other 37 68 67 67 --------- -------- ------ ------ Total adjustments (pre-tax) 404 (5) (78) 635 Total taxes 148 (2) (28) 354 --------- -------- ------ ------ Total net adjustments 256 (3) (50) 281 --------- -------- ------ ------ Net income as restated $ 222 $ (385) $ (484) $ (281) ========= ======== ====== ====== Per share of Common Stock: Net income (loss)-Basic as originally reported $ -- $ (0.03) $(0.04) $(0.05) Effect of net adjustments 0.02 -- -- 0.03 --------- -------- ------ ------ Net income-Basic as restated $ 0.02 $ (0.03) $(0.04) $(0.02) ========= ======== ====== ====== Net income-Dilluted as originally reported $ -- $ (0.03) $(0.04) $(0.05) Efect of net adjustments 0.02 -- -- 0.03 --------- -------- ------ ------ Net income-Dilluted as restated $ 0.02 $ (0.03) $(0.04) $(0.02) ========= ======== ====== ======
47 ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. ITEM 9 A. - CONTROLS AND PROCEDURES The Company performed an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the fiscal year ended May 31, 2004. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the fiscal year ended May 31, 2004, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in reports that the Company files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the specified time periods. During the performance of the audit for the fiscal year ended May 31, 2004, the Company's independent auditors, Dudley, Hopton-Jones, Sims & Freeman, PLLP (the "Auditor"), identified and communicated to the Company material weaknesses relating to the Company's accounting for its vacation pay (which was not in conformity with generally accepted accounting principles ("GAAP")) and self insured obligations. The Company was not accruing for earned vacation pay and its liabilities were understated for certain incurred as well as incurred but not reported self-insured casualty claims and health costs. Based upon the forgoing, the Company has restated its audited financial statements for fiscal year 2003 and for the first three quarters of fiscal year 2004 to properly account for accruals for its vacation pay and self-insured health and casualty obligations. The Company believed, during the years being restated, that it was correctly following proper accounting practices. For a full discussion of the restatements, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company has accepted the recommendations of its Auditor to reduce the recurrence of material weaknesses and is implementing policies and procedures to strengthen the Company's internal controls, including, among other things, the following: (1) developing written policies and procedures to be followed with respect to accounting for vacation pay and self-insured obligations; (2) formally designating management level personnel responsible for accounting for vacation pay and self-insured obligations; (3) expanding internal audit activities to include a quarterly examination of vacation pay and self-insured obligations; (4) implementing a fully developed actuarially based method of measuring liabilities related to self-insured obligations; and (5) implementing quarterly communications among management, internal auditor, and the Audit Committee prior to filing Forms 10-Q. Other than as described above, there has not been any change in the Company's internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9 B. - OTHER INFORMATION Not Applicable. PART III ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT With the exception of information 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 entitled "Election of Directors," "Additional Information Concerning the Board of Directors," "Executive Compensation and Other Information" and "Code of Conduct and Ethics" of the Company's Proxy Statement for the 2004 Annual Meeting of Stockholders to be held September 23, 2004. 48 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 2004 Annual Meeting of Stockholders to be held September 23, 2004. 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 2004 Annual Meeting of Stockholders to be held September 23, 2004. ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated by reference to the section entitled "Certain Transactions" of the Company's Proxy Statement for the 2004 Annual Meeting of Stockholders to be held September 23, 2004. 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 2004 Annual Meeting of Stockholders to be held September 23, 2004. Prior to September 28, 2004, the Company will file a definitive Proxy Statement with the Securities and Exchange Commission pursuant to Regulation 14A which involves the election of directors. 49 PART IV ITEM 15.- EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) 1. and 2. LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements of Golden Enterprises, Inc., and subsidiary required to be included in Item 8 are listed below: Consolidated Balance Sheets - May 31, 2004 and 2003 Consolidated Statements of Operations- Years ended May 31, 2004, 2003, and 2002 Consolidated Statements of Changes in Stockholders' Equity- Years ended May 31, 2004, 2003 and 2002 Consolidated Statements of Cash Flows- Years ended May 31, 2004, 2003 and 2002 Notes to Consolidated Financial Statements The following consolidated financial statements schedule is included in Item 16 (d): Schedule II- Valuation and Qualifying Accounts All other schedules are omitted because the information required therein is not applicable, or the information is given in the financial statements and notes thereto. Section 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. 3.2 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976. 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). 50 (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). 10.7 Lease of Aircraft executed by and between Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Sloan Y. Bashinsky, Sr. (incorporated by reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31, 1999 Form 10-K filed with the Commission). 10.8 Equipment Purchase and Sale Agreement dated October 2000 whereby Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., sold the Nashville, Tennessee Plant Equipment (incorporated by reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31, 2001 Form 10-K filed with the Commission). 10.9 Real Property Contract of Sale dated October 2000 whereby Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real Property (incorporated by reference as Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2001 Form 10-K filed with the Commission). 10.10 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). 10.11 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). 50-A 10.12 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). 10.13 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). 10.14 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). 10.15 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). (14) Code of Ethics 14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the Board of Directors on April 8, 2004. (21) Subsidiaries of the Registrant (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. (b) Exhibits. See (a) 3. above. (c) Financial Statement Schedules. The response to this portion of Item 15, is submitted under Item 15(a) 1. and 2. above. 50-B 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 26, 2004 - ----------------------------------------------------------- --------------- 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/ JOHN S. STEIN Chairman of Board August 26, 2004 - ------------------------------------ JOHN S. STEIN /S/ MARK W. MCCUTCHEON Chief Executive August 26, 2004 - ------------------------------------ Officer, President and Director MARK W. MCCUTCHEON /S/ PATTY TOWNSEND Vice President, Secretary and August 26, 2004 - ------------------------------------ Principal Financial Officer PATTY TOWNSEND /S/ F. WAYNE PATE Director August 26, 2004 - ------------------------------------ F. WAYNE PATE /S/ EDWARD R. PASCOE Director August 26, 2004 - ------------------------------------ EDWARD R. PASCOE /S/ JOHN P. MCKLEROY, JR. Director August 26, 2004 - ------------------------------------ JOHN P. MCKLEROY, JR. /S/ JAMES I. ROTENSTREICH Director August 26, 2004 - ------------------------------------ JAMES I. ROTENSTREICH Director August 26, 2004 - ------------------------------------ JOHN S.P. SAMFORD Director August 26, 2004 - ------------------------------------ J. WALLACE NALL, JR. /S/ JOANN F. BASHINSKY Director August 26, 2004 - ------------------------------------ JOANN F. BASHINSKY
51 SCHEDULE II GOLDEN ENTERPRISES, INC. AND SUBSIDIARY VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED MAY 31, 2002, 2003 AND 2004
Additions Balance at Charged to Balance Beginning Costs and at End Allowance for Doubtful Accounts of Year Expenses Deductions of Year - -------------------------------------------- -------------- -------------- --------------- ------------- Year ended May 31, 2002 $346,100 $(113,175) $36,825 $196,100 ============== ============== =============== ============= Year ended May 31, 2003 $196,100 $224,722 $224,722 $196,100 ============== ============== =============== ============= Year ended May 31, 2004 $196,100 $131,771 $142,871 $185,000 ============== ============== =============== =============
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INDEX TO EXHIBITS PAGE 3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally known as "Golden Flake, Inc.") dated December 11, 1967. 56 3.2 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976. 67 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). 10.1 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).
53
PAGE ---- 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). 10.7 Lease of Aircraft executed by and between Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Sloan Y. Bashinsky, Sr. (incorporated by reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31, 1999 Form 10-K filed with the Commission). 10.8 Equipment Purchase and Sale Agreement dated October 2000 whereby Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., sold the Nashville, Tennessee Plant Equipment (incorporated by reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31, 2001 Form 10-K filed with the Commission). 10.9 Real Property Contract of Sale dated October 2000 whereby Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real Property (incorporated by reference as Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2001 Form 10-K filed with the Commission). 10.10 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). 10.11 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). 10.12 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). 10.13 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). 10.14 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). 10.15 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). 14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the Board of Directors on April 8, 2004. 70 21 Subsidiaries of the Registrant 74
54
PAGE ---- 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 76 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 77 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 78 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 79
55 EX-3.1 2 a4708719ex31.txt CERTIFICATE OF INCORPORATION Exhibit 3.1 Exhibit 3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally known as "Golden Flake, Inc.') dated December 11, 1967 56 CERTIFICATE OF INCORPORATION OF GOLDEN FLAKE, INC. FIRST. The name of the corporation is GOLDEN FLAKE, INC. SECOND. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purposes to be conducted or promoted is: To buy, sell, and manufacture food and food products and containers, to pack and process food and food products of any kind or description whatsoever, and to hold, improve, rent, lease or deal with same in any lawful manner whatsoever, and to sell or otherwise part with the title to any part or parts of all of the property acquired by said corporation in any lawful way whatsoever; to act as agent, broker, factor or any other lawful capacity, for any other corporation or corporations, or person or persons for hire, commission, or any other lawful way; to engage in or conduct any mercantile, manufacturing, mining, prospecting, or any other lawful business or enterprise; to guarantee and endorse the debts and obligations of others. 57 To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. 58 To borrow or raise moneys for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation's property and assets, or any interest therein, wherever situated. 59 In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. FOURTH. The total number of shares of stock which the corporation shall have authority to issue is two million (2,000,000) of which stock one million four hundred thousand (1,400,000) shares of the par value of One Dollar ($1.00) each, amounting in the aggregate to One Million Four Hundred Thousand Dollars ($1,400,000.00) shall be Class A Common stock and of which six hundred thousand (600,000) shares of the par value of One Dollar ($1.00) each, amounting in the aggregate to Six Hundred Thousand Dollars ($600,000.00) shall be Class B Common stock. The designations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof are as follows: The Class B Common stock shall consist of three series designated B 1 Common stock, B 2 Common stock and B 3 Common stock. 60 The B 1 Common stock shall consist of two hundred thousand (200,000) shares and shall at the option of the corporation or at the option of the respective holders be convertible after three (3) years from the date of issue, into fully paid and non-assessable shares of Class A Common stock, upon the surrender to the corporation of the certificates for B 1 Common stock so to be converted, duly endorsed in blank for transfer, in the ratio of one (1) share of B 1 Common stock for one (1) share of Class A Common stock. The B 2 Common stock shall consist of two hundred thousand (200,000) shares and shall at the option of the corporation or at the option of the respective holders be convertible after six (6) years from the date of issue, into fully paid and non-assessable shares of Class A Common stock, upon the surrender to the corporation of the certificates for B 2 Common stock so to be converted, duly endorsed in blank for transfer, in the ratio of one (1) share of B 2 Common stock for one (1) share of Class A Common stock. The B 3 Common stock shall consist of two hundred thousand (200,000) shares and shall at the option of the corporation or at the option of the respective holders be convertible after nine (9) years from the date of issue, into fully paid and non-assessable shares of Class A Common stock, upon the surrender to the corporation of the certificates for B 3 Common stock so to be converted, duly endorsed in blank for transfer, in the ratio of one (1) share of B 3 Common stock for one (1) share of Class A Common stock. 61 The holders of the Class B Common stock shall not be entitled to dividends. When, as and if declared by the Board of Directors of the corporation, and payable at such time or times as the Board of Directors may determine, any dividend declared by the Board of Directors shall be declared and paid upon the outstanding shares of Class A Common stock. In the event of any liquidation, dissolution or winding up of the affairs of the corporation, whether voluntary or involuntary, all assets and funds of the corporation available for distribution to its stockholders shall be distributed and paid over to the holders of the Class A Common stock and Class B Common stock in equal amounts per share and without preference or priority of one class of stock over the other. The Class A Common stock and the Class B Common stock shall have equal voting power. FIFTH. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS B.J. Consono 100 West Tenth Street Wilmington, Delaware F.J. Obara, Jr. 100 West Tenth Street Wilmington, Delaware A.D. Grier 100 West Tenth Street Wilmington, Delaware SIXTH. The corporation is to have perpetual existence. SEVENTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. 62 To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or in the by-laws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; provided, however, the by-laws may provide that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called upon such notice as is required by statute, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 63 EIGHTH. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. NINTH. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. 64 TENTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. ELEVENTH. This certificate of incorporation shall be effective on December 22, 1967. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 11th day of December, 1967. /S/ B. J. CONSONO -------------------------- /S/ F. J. OBARA, JR. --------------------------- /S/ A. D. GRIER --------------------------- 65 STATE OF DELAWARE ) ) COUNTY OF NEW CASTLE ) BE IT REMEMBERED that on this 11th day of December, A. D. 1967, personally came before me, a Notary Public for the State of Delaware, B. J. Consono, F. J. Obara, Jr. and A. D. Grier, all of the parties to the foregoing certificate of incorporation, known to me personally to be such, and severally acknowledged the said certificate to be the act and deed of the signers respectively and that the facts stated therein are true. GIVEN under my hand and seal of office the day and year aforesaid. /S/ A. DANA ATWELL --------------------------------------- Notary Public A. DANA ATWELL NOTARY PUBLIC APPOINTED OCT. 28, 1967 STATE OF DELAWARE TERM TWO YEARS 66 EX-3.2 3 a4708719ex32.txt CERTIFICATE OF AMENDMENT Exhibit 3.2 Exhibit 3.2 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976. 67 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF GOLDEN FLAKE, INC. THIS IS TO CERTIFY: THAT GOLDEN FLAKE, INC. is a corporation created by and existing under the laws of the State of Delaware, the resident agent in charge of its principal office in the State of Delaware being THE CORPORATION TRUST COMPANY, 100 West Tenth Street, Wilmington, Delaware: THAT the Board of Directors of said corporation did adopt a resolution setting forth a proposed amendment to its Certificate of Incorporation and declaring its advisability; THAT thereafter, at the Regular Annual Meeting of the Stockholders of the corporation held on September 22, 1976, the proposed amendment was unanimously adopted: that the said amendment is as follows: BE IT RESOLVED, that Article FIRST of the Company's Certificate of Incorporation be amended in its entirety to read as follows, instead of as originally written: "FIRST. The name of the corporation is `GOLDEN ENTERPRISES, INC.'" AND FURTHER THAT the said Amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and that the capital of this corporation will not be reduced under or by reason of the said Amendment. IN WITNESS WHEREOF, the said corporation has caused this certificate to be made and signed by its President and Chief Operating Officer and Assistant Secretary and its seal to be affixed hereto. This, the 22nd day of December, 1976. GOLDEN FLAKE, INC. By /S/ J. WALLACE NALL -------------------------- Its President and Chief Operating Officer ATTEST: /S/ JOHN SHANNON -------------------------- Its Assistant Secretary 68 STATE OF ALABAMA ) : JEFFERSON COUNTY ) BE IT REMEMBERED that on this 22nd day of December, 1976, before me, the subscriber, a Notary Public in and for the State and County aforesaid, personally appeared J. WALLACE NALL, President and Chief Operating Officer of GOLDEN FLAKE, INC., the corporation mentioned in the foregoing certificate, known to me and acknowledged the said certificate to be his act and deed and the act and deed of said corporation, and that the seal thereto affixed was the sale of the said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove written. /S/ HAZEL A. MCCOOL -------------------------------- Notary Public My Commission Expires: 11/8/78 ------- 69 EX-14 4 a4708719ex141.txt Exhibit 14.1 Exhibit 14.1 - Golden Enterprises, Inc.'s Code of Conduct and Ethics Adopted By the Board of Directors on April 8, 2004 70 GOLDEN ENTERPRISES, INC.'S CODE OF CONDUCT AND ETHICS This Code of Conduct and Ethics has been adopted by the Board of Directors of Golden Enterprises, Inc. (the "Company") to promote honest and ethical conduct and to deter wrongdoing. This Code of Conduct and Ethics applies to the Company's directors, officers and employees. References in this Code of Conduct and Ethics to the Company means the Company and its subsidiary, Golden Flake Snack Foods, Inc. This Code of Conduct and Ethics shall also serve as the Company's Code of Ethics for Senior Financial Officers (CEO, CFO, principal accounting officer or controller, or persons with similar functions) for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 (the "Act") and the rules promulgated thereunder. The directors, officers and employees of the Company shall, in the performance of their duties for the Company, to the best of their knowledge and ability promote: o honest and ethical conduct of the Company's directors, officers and employees, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with or submits to the SEC and in other public communications made by the Company; o compliance with all applicable governmental laws, rules and regulations that apply to the Company and its directors, officers and employees; o prompt reporting of any violation of this Code of Conduct and Ethics to the persons set forth below; o accountability for adherence to this Code of Conduct and Ethics; o prompt reporting of any complaint concerning accounting and auditing matters to the persons identified in the Company's Employee Complaint Procedures for Accounting and Auditing Matters; o the prohibition of actual or apparent conflicts of interest between personal and business relationships, such as holding a substantial equity, debt, or other financial interest in any competitor, supplier or customer of the Company, or having a substantial personal financial interest in any transaction involving the purchase or sale by the Company of any products, materials, equipment, services or property. Notwithstanding the foregoing, it is not a conflict of interest to enter into any transactions involving Company-sponsored programs, or transactions which are conducted on an arm's length basis in the ordinary course of business and are on terms equal to or better than those available from non-officers, directors or employees, or to make investments in competitors, suppliers or customers that are listed on a national or international securities exchange so long as the total value of the investment is not more than one percent (1%) of the outstanding stock of the corporation; 71 o the prohibition of simultaneous employment with or serving as a director of a competitor of the Company or any activity that is intended to or that such person reasonably expects to advance a competitor's interests at the expense of the Company's interests. No director, officer or employee may market products or services in competition with the Company's current or potential business activities; o the prohibition of employment by, or service as a director for a supplier of the Company. No director, officer or employee may accept money or benefits of any kind from a third party as compensation or payment for any advice or services that he or she may provide to a client, supplier or anyone else in connection with its business with the Company; o the prohibition of any usurpation of any business or investment opportunity for personal gain through the use of corporate property or information or his or her position at the Company, such as from a competitor or actual or potential supplier or business associate of the Company (including a principal, officer, director or employee of any of the above). Such an opportunity should be considered an investment opportunity for the Company in the first instance. These prohibitions shall also apply to any spouse, minor child or stepchild or child or stepchild sharing a home with the director, officer or employee. Any such actual or apparent conflicts of interest shall be brought to the attention of the CEO and/or Board of Directors as set forth below. The CEO shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code of Conduct and Ethics, except in the event of a violation by the CEO or a director of the Company, in which event such determination shall be made by the Board of Directors (acting without the violating director if applicable). Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code of Conduct and Ethics, and may include written notices to the individual involved that a determination has been made that there has been a violation, censure of the individual involved, demotion or re-assignment of the individual involved, suspension with or without pay or benefits and termination of the individual's directorship or employment. In the event that any person participates in or plans to participate in any conduct which is an actual, alleged, potential or suspected violation of this Code of Conduct and Ethics, such person should report such conduct to the CEO, except in the event of a violation by the CEO or a director of the Company, in which event the conduct should be reported to the Board of Directors. In the event that any person wishes to report a violation of this Code of Conduct and Ethics by someone other than himself/herself, such a report may be made directly, confidentially and/or anonymously, to the CEO, except in the event of a violation by the CEO or a director of the Company, in which event the conduct should be reported to the Board of Directors, through regular U.S. mail or courier delivery service such as Federal Express or UPS, as follows: IF TO THE CEO IF TO THE BOARD OF DIRECTORS - ------------- ---------------------------- Mr. Mark McCutcheon Board of Directors of Golden Enterprises, Inc. President and CEO c/o Spain & Gillon, LLC, General Counsel Golden Enterprises, Inc. Attn: John P. McKleroy, Jr., Esq. One Golden Flake Drive 2117 2nd Ave. No. Birmingham, Alabama 35205 Birmingham, Alabama 35203 72 To be the most helpful and in order to facilitate a prompt and thorough investigation, reports of violations should include as much specific and factual information as possible. Prompt and appropriate action will be taken as warranted. The Company will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of their employment based upon any lawful actions of such employee with respect to good faith reporting of violations. The CEO shall consider any request by an employee of the Company for a waiver of this Code of Conduct and Ethics, and the Board of Directors shall consider any such request for a waiver by a director or an executive officer and any amendments to this Code of Conduct and Ethics, and all such waivers or amendments shall be disclosed promptly as required by law. This Code of Conduct and Ethics is a statement of certain fundamental principles, policies and procedures that govern the Company's directors, officers and employees in the conduct of the Company's business. It is not intended to and does not create any rights in any director, officer, employee, customer, supplier, competitor, shareholder or any other person or entity, nor does this Code of Conduct and Ethics supercede or replace any Company employee personnel manuals, handbooks or other Company policies. The Code of Conduct and Ethics shall be subject to periodic review and revision by the Board as necessary or appropriate. The Board shall have the authority to make any interpretations regarding the operation of this Code of Conduct and Ethics. 73 EX-21 5 a4708719ex21.txt SUBSIDIARIES OF THE REGISTRANT Exhibit 21 Exhibit 21 Subsidiaries of the Registrant 74 Exhibit 21 Subsidiaries of the Registrant SUBSIDIARIES STATE OF INCORPORATION Golden Flake Snack Foods, Inc. Delaware [The Sloan Major Agency, Inc., an Alabama corporation, is a wholly-owned subsidiary of Golden Flake Snack Foods, Inc.] 75 EX-31.1 6 a4708719ex311.txt CERTIFICATION EXHIBIT 31.1 CERTIFICATION BY MARK W. MCCUTCHEON PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Mark W. McCutcheon, certify that: 1. I have reviewed this Annual Report on Form 10-K of Golden Enterprises, Inc., for the fiscal year ended May 31, 2004; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 26, 2004 /S/ MARK W. MCCUTCHEON - ------------------------------------- Mark W. McCutcheon President and Chief Executive Officer 76 EX-31.2 7 a4708719ex312.txt CERTIFICATION EXHIBIT 31.2 CERTIFICATION BY PATTY TOWNSEND PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Patty Townsend, certify that: 1. I have reviewed this Annual Report on Form 10-K of Golden Enterprises, Inc., for the fiscal year ended May 31, 2004; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 26, 2004 /S/ PATTY TOWNSEND - ------------------------------------------ Patty Townsend Vice-President and Chief Financial Officer 77 EX-32.1 8 a4708719ex321.txt CERTIFICATION EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Golden Enterprises, Inc. (the "Company") on Form 10-K for the fiscal year ended May 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark W. McCutcheon, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 26, 2004 /S/ MARK W. MCCUTCHEON - ------------------------------------- Mark W. McCutcheon President and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Golden Enterprises, Inc. and will be retained by Golden Enterprises, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 78 EX-32.2 9 a4708719ex322.txt CERTIFICATION EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Golden Enterprises, Inc. (the "Company") on Form 10-K for the fiscal year ended May 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Patty Townsend, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 26, 2004 /S/ PATTY TOWNSEND - ------------------------------------------ Patty Townsend Vice-President and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to Golden Enterprises, Inc. and will be retained by Golden Enterprises, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 79 -----END PRIVACY-ENHANCED MESSAGE-----