-----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, LJDqrL2SieQXRaxwKL6MdPLyENYHpfx95XDBpfiCUIkAgRzDTUoMhCDid+d5utF7 9b+F13xueQlMwLHnCEHNJQ== 0001157523-08-007074.txt : 20080825 0001157523-08-007074.hdr.sgml : 20080825 20080825143140 ACCESSION NUMBER: 0001157523-08-007074 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20080530 FILED AS OF DATE: 20080825 DATE AS OF CHANGE: 20080825 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: 081036505 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 a5762084.txt GOLDEN ENTERPRISES, INC. 10-K 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 30, 2008 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 (Zip Code) Executive Offices) 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 $0.66 2/3 (Title of Class) Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ( ) No (X) Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ( ) No (X) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this Form 10-K. ( ) Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 1 2b-2 of the Act). (Check One) Large accelerated filer ( ) Accelerated filer ( ) Non-accelerated filer ( ) Smaller reporting company (X) Indicate by check mark whether the Registrant is a shell company (as defined in Rule 1 2b-2 of the Exchange Act). Yes ( ) No (X) State the aggregate market value of the voting common stock held by non-affiliates of the registrant as of August 1, 2008. Common Stock, Par Value $0.66 2/3 -- $10,301,386 Indicate the number of shares outstanding of each of the Registrant's Classes of Common Stock, as of August 1, 2008. Class Outstanding at August 1, 2008 ----- ----------------------------- Common Stock, Par Value $0.66 2/3 11,779,001 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Proxy Statement for the Annual Meeting of Stockholders to be held on September 25, 2008 are incorporated by reference into Part III. TABLE OF CONTENTS FORM 10-K ANNUAL REPORT -2008 GOLDEN ENTERPRISES, INC. Page ---- PART I. Item 1. Business 3 Item 1A. Risk Factors 6 Item 1B. Unresolved Staff Comments 6 Item 2. Properties 7 Item 3. Legal Proceedings 7 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 8 Item 6. Selected Financial Data 10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 15 Item 8. Financial Statements and Supplementary Data 15 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 35 Item 9A. Controls and Procedures 36 Item 9B. Other Information 37 PART III. Item 10. Directors and Executive Officers and Corporate Governance 37 Item 11. Executive Compensation 37 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 38 Item 13. Certain Relationships and Related Transactions and Director Independence 38 Item 14. Principal Accountant Fees and Services 38 PART IV. Item 15. Exhibits and Financial Statement Schedules 38 2 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 puff corn. These products are all packaged in flexible bags or other suitable wrapping material. Golden Flake also sells a line of cakes and cookie items, canned dips, pretzels, peanut butter crackers, cheese crackers, dried meat products and nuts packaged by other manufacturers using the Golden Flake label. No single product 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 quantity of supply available. Golden Flake has no control over 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, Missouri and Texas. The products are distributed by approximately 470 route salesmen and independent distributors 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 delivery system. Golden Flake is not dependent upon any single 3 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 799 company owned vehicles to support the route sales system, including 34 tractors and 124 trailers for long haul delivery to the various company warehouses located throughout its distribution areas, 574 store delivery vehicles and 67 cars and miscellaneous vehicles. Competition The snack foods business is highly competitive. In the area in which Golden Flake operates, many companies engage in the production and distribution of food products similar to those produced and sold by Golden Flake. Most, if not all, of Golden Flake's products are in direct competition with similar products of several local and regional companies and at least one national company, the Frito Lay Division of Pepsi Co., Inc., which are 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 822 employees. Approximately 448 employees are involved in route sales and sales supervision, approximately 260 are in production and production supervision, and approximately 114 are management and administrative personnel. Golden Flake believes that the performance and loyalty of its employees are two of the most important factors in the growth and profitability of its business. Since labor costs represent a significant portion of Golden Flake's expenses, employee productivity is important to profitability. 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/her 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. Significant Event On May 2, 2008, the Company re-acquired the property located at 2930 Kraft Drive in Nashville, TN for $1,715,985. In consideration, the Company cancelled the remaining notes and interest receivable of $1,675,454 due from Tennessee Chips, LLC and paid $40,531 in cash for closing costs. 4 Recent Developments The Company continues to make changes in its distribution system to offset escalating fuel and commodity costs. The Company is increasing its distribution through independent operators and distributors and re-aligning Company owned routes. Executive Officers Of Registrant And Its Subsidiary Name and Age Position and Offices with Management ------------ ------------------------------------ John S. Stein, 71 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 June 5, 2009. Mark W. McCutcheon, 53 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 June 5, 2009. Patty Townsend, 50 Ms. Townsend is Chief Financial Officer, Vice President and Secretary of Golden Enterprises, Inc. She was elected Chief Financial Officer, Vice-President and Secretary of the Company on March 1, 2004. She has been employed with the Company since 1988. Ms. Townsend is elected to her positions on an annual basis, and her present term of office will expire on June 5, 2009. Randy Bates, 54 Mr. Bates is Executive, Vice-President of Sales, Marketing and Transportation for Golden Flake. He has held these positions since October 26, 1998. Mr. Bates was Vice-President of Sales from October 1, 1994 to 1998. Mr. Bates has been employed by Golden Flake since March 1979. Mr. Bates is elected to his positions on an annual basis, and his present term of office will expire on June 5, 2009. David Jones, 56 Mr. Jones is Executive Vice-President of Operations, Human Resources and Quality Control for Golden Flake. He has held these positions since May 20, 2002. Mr. Jones was Vice-President of Manufacturing from 1998 to 2002 and Vice-President of Operations from 2000 to 2002. Mr. Jones has been employed by Golden Flake since 1984. Mr. Jones is elected to his positions on an annual basis, and his present term of office will expire on June 5, 2009. 5 ITEM 1A. - RISK FACTORS Important factors that could cause the Company's actual business results, performance or achievements to differ materially from any forward looking statements or other projections contained in this Annual Form 10-K Report include, but are not limited to the principal risk factors set forth below. Additional risks and uncertainties, including risks not presently known to the Company, or that it currently deems immaterial, may also impair the Company's business and or operations. If the events, discussed in these risk factors occur, the Company's business, financial condition, results of operations or cash flow could be adversely affected in a material way and the market value of the Company's common stock could decline. Competition Price competition and consolidation within the Snack Food industry could adversely impact the Company's performance. The Company's business requires significant marketing and sales effort to compete with larger companies. These larger competitors sell a significant portion of their products through discounting and other price cutting techniques. This intense competition increases the possibility that the Company could lose one or more customers, lose market share and/or be forced to increase discounts and reduce pricing, any of which could have an adverse impact on the Company's business, financial condition, results of operation and/or cash flow. Commodity and Energy Cost Fluctuations Significant commodity price fluctuations for certain commodities purchased by the Company, particularly potatoes, could have a material impact on results of operations. In an attempt to manage commodity price risk, the Company, in the normal course of business, enters into contracts to purchase pre-established quantities of various types of raw materials, at contracted prices based on expected short term needs. The Company can also be adversely impacted by changes in the cost of natural gas and other fuel costs. Long term increases in the cost of natural gas and fuel costs could adversely impact the Company's cost of sales and selling, marketing and delivery expenses. There are other risks and factors not described above that could also cause actual results to differ materially from those in any forward looking statement made by the Company. ITEM 1B. - UNRESOLVED STAFF COMMENTS Not Applicable. 6 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. 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. 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 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; Knoxville and Memphis, Tennessee; Decatur, Marietta and Macon, Georgia; Jacksonville, Panama City, Tallahassee and Pensacola, Florida and New Orleans, Louisiana. The warehouses vary in size from 2,400 to 8,000 square feet. All distribution warehouses are owned free and clear of any debts. Vehicles Golden Flake owns a fleet of 799 vehicles which includes 574 route trucks, 34 tractors, 124 trailers and 67 cars and miscellaneous vehicles. Golden Flake also owns a 1987 Cessna Citation II aircraft. There are no liens or encumbrances on Golden Flake's vehicle fleet or 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. 7 ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. PART II ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Golden Enterprises, Inc. and Subsidiary Market and Dividend Information The Company's common stock is traded 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 30, 2008 and June 1, 2007 and the amount of dividends paid per share in each quarter. The Company currently expects that comparable regular cash dividends will be paid in the future.
Market Price High Low Dividend Quarter Price Price Paid Year Ended 2008 Per share --------------------------------------------------- --------- --------- --------- First quarter (13 weeks ended August 31, 2007) $3.25 $2.83 $.0313 Second quarter (13 weeks ended November 30, 2007) 3.49 2.65 .0313 Third quarter (13 weeks ended February 29, 2008) 3.23 2.45 .0313 Fourth quarter (13 weeks ended May 30, 2008) 2.95 2.21 .0313 High Low Dividend Quarter Price Price Paid Year Ended 2007 Per share --------------------------------------------------- --------- --------- --------- First quarter (13 weeks ended September 1, 2006) $3.25 $2.61 $.0313 Second quarter (13 weeks ended December 1, 2006) 3.65 2.95 .0313 Third quarter (13 weeks ended March 2, 2007) 3.25 2.77 .0313 Fourth quarter (13 weeks ended June 1, 2007) 3.21 2.81 .0313
As of August 1, 2008, there were approximately 1,130 shareholders of record. Shareholder Return Performance Graph The following graph illustrates, for the period commencing May 31, 2003, and ending May 30, 2008, the yearly percentage change in the cumulative total shareholder return on the Company's common stock as compared with the cumulative total returns of other companies included within the NASDAQ Stock Market (U.S. Companies) Index and the Company's Peer Group. The Company has selected a Peer Group consisting of the four publicly-traded companies named below which are in the snack food industry. Most of the Company's direct competitors and peers are privately-held companies or subsidiaries or divisions of larger publicly-held companies so that the available members of the Peer Group are limited. 8 [PLEASE SEE ATTACHED PDF FOR GRAPH] This graph assumes that $100 was invested in the Company's common stock on May 31, 2003, in the NASDAQ Stock Market (U.S. Companies) Index and in the Peer Group, which consisted of Lance, Inc., J & J Snack Foods Corp., Tasty Baking Co. and Ralcorp Holdings, Inc. and that dividends were re-invested. 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: 9
EQUITY COMPENSATION PLAN INFORMATION - -------------------------------------------------------------------------------------------------------- Number of securities Plan category Number of securities Weighted-average remaining available to be issued upon exercise price of for future issuance exercise of out- outstanding options, under equity compensation standing options, warrants and rights plans (excluding warrants and rights securities reflected in column (a)) (a) (b) (c) - -------------------------------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------------------------------
Issuer Purchases Of Equity Securities The Company purchased 46,423 shares of its common stock during the fiscal year ended May 30, 2008. ITEM 6. - SELECTED FINANCIAL DATA Not required due to Smaller Reporting Company status. 10 ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GOLDEN ENTERPRISES, INC. AND SUBSIDIARY Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion provides an assessment of the Company's financial condition, results of operations, liquidity and capital resources and should be read in conjunction with the accompanying consolidated financial statements and notes. Overview The Company manufactures and distributes a full line of snack items, such as potato chips, tortilla chips, corn chips, fried pork skins, baked and fried cheese curls, onion rings and puff corn. The products are all packaged in flexible bags or other suitable wrapping material. The Company also sells a line of cakes and cookie items, canned dips, pretzels, popcorn, peanut butter crackers, cheese crackers, dried meat products and nuts packaged by other manufacturers using the Golden Flake label. No single product or product line accounts for more than 50% of the Company's sales, which affords some protection against loss of volume due to a crop failure of major agricultural raw materials. Raw materials used in manufacturing and processing the Company's snack food products are purchased on the open market and under contract through brokers and directly from growers. A large part of the raw materials used by the Company consists of farm commodities which are subject to precipitous changes in supply and price. Weather varies from season to season and directly affects both the quality and quantity of supply available. The Company has no control of the agricultural aspects and its profits are affected accordingly. The Company sells its products through its own sales organization and independent distributors to commercial establishments that sell food products primarily in the Southeastern United States. The products are distributed by route representatives and independent distributors who are supplied with selling inventory by the Company's trucking fleet. All of the route representatives are employees of the Company and use the Company's direct-store delivery system. Critical Accounting Policies And Estimates The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, the preparation of which in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that in certain circumstances affect amounts reported in the consolidated financial statements. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due considerations to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. 11 Revenue Recognition The Company recognizes sales and related costs upon delivery or shipment of products to its customers. Sales are reduced by returns and allowances to customers. Accounts Receivable The Company records accounts receivable at the time revenue is recognized. Amounts for bad debt expense are recorded in selling, general and administrative expenses on the Consolidated Statements of Operations. The amount of the allowance for doubtful accounts is based on management's estimate of the accounts receivable amount that is uncollectible. The Company records a general reserve based on analysis of historical data. In addition, the Company records specific reserves for receivable balances that are considered high-risk due to known facts regarding the customer. The allowance for bad debts is reviewed quarterly, and it is determined whether the amount should be changed. Failure of a major customer to pay the Company amounts owed could have a material impact on the financial statements of the Company. At May 30, 2008 and June 1, 2007, the Company had accounts receivables in the amount of $7.9 million and $8.5 million, net of an allowance for doubtful accounts of $0.1 million and $0.1 million, respectively. The Company purchased credit insurance during the year which reduced the allowance for doubtful accounts to $70,000. Without credit insurance, the allowance for doubtful accounts would have been $88,835 compared to $112,915 last year. The following table summarizes the Company's customer accounts receivable profile as of May 30, 2008: Amount Range No. of Customers ------------ ---------------- Less than $1,000.00 1,118 $1,001 .00-$10,000.00 558 $10,001 .00-$100,000.00 113 $100,001 .00-$500,000.00 8 $500,001 .00-$1 ,000,000.00 1 $1,000,001 .00-$2,500,000.00 0 - Total All Accounts 1,798 ===== Inventories Inventories are stated at the lower of cost or market. Cost is computed on the first-in, first out method. Accrued Expenses Management estimates certain expenses in an effort to record those expenses in the period incurred. The Company's significant estimates relate to insurance-related expenses. The Company is self-insured for certain casualty losses relating to automobile liability, general liability, workers' compensation, property losses and medical claims. The Company also has stop loss coverage to limit the exposure arising from these claims. Automobile liability, general liability, workers' compensation, and property losses costs are covered by letters of credit with the company's claim administrators. The Company uses a third-party actuary to estimate the casualty insurance obligations on an annual basis. In determining the ultimate loss and reserve requirements, the third-party uses various actuarial assumptions including compensation trends, health care cost trends and discount rates. The third-party 12 actuary also uses historical information for claims frequency and severity in order to establish loss development factors. The actuarial calculation includes a margin of error to account for changes in inflation; health care costs, compensation and litigation cost trends as well as estimated future incurred claims. The Company utilized a 75% confidence level for estimating the ultimate outstanding casualty liability. Approximately 75% of each claim should be equal to or less than the ultimate liability recorded based on the historical trends experienced by the Company. If the Company chose a 50% factor, the liability would have been reduced by approximate $0.3 million. If the Company chose a 90% factor, the liability would have increased by approximately $0.3 million. The Company used a 5% investment rate to discount the estimated claims based on the historical payout pattern during 2008 and 2007. A one percentage point change in the discount rate would have impacted the liability by approximately $49,800. Actual ultimate losses could vary from those estimated by the third-party actuary. The Company believes the reserves established are reasonable estimates of the ultimate liability based on historical trends. As of May 30, 2008, the Company's casualty reserve was $1.9 million and at June 1, 2007 the casualty reserve was $1.9 million. Employee medical insurance accruals are recorded based on medical claims processed as well as historical medical claims experienced for claims incurred but not yet reported. Differences in estimates and assumptions could result in an accrual requirement materially different from the calculated accrual. Other Matters Transactions with related parties, included in Note 12 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 $3.9 and $4.3 million at May 30, 2008 and June 1, 2007, respectively. Net cash provided by operations amounted to $3.4 and $4.6 million in fiscal years May 30, 2008 and June 1, 2007, respectively. During 2008, the principal source of liquidity for the Company's operating needs was provided from operating activities, credit facilities and cash on hand. Additions to property, plant and equipment are expected to be about $1.8 million in 2009. Cash dividends of $1.5 million were paid in 2008 and 2007, respectively. Cash was used to purchase 46,423 shares of treasury stock in fiscal 2008 and no cash was used to purchase treasury shares in 2007. During fiscal 2008, the Company's debt proceeds net of re-paid debt was $0.6 million. Other Commitments The Company had letters of credit in the amount of $2.3 million outstanding at May 30, 2008 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 $2 million. The line-of-credit is subject to the Company's continued credit worthiness and compliance with the terms and conditions of the advance application. The Company's line of credit debt at May 30, 2008 was $1.5 million with an interest rate of 7.75%. 13 The Company's current ratio was 1.35 to 1.00 and 1.37 to 1.00 at May 30, 2008 and June 1, 2007, respectively. Available cash, cash from operations and available credit under the line of credit are expected to be sufficient to meet anticipated cash expenditures and normal operating requirements for the foreseeable future. Operating Results Net sales increased by 2.3% in fiscal year 2008 and 4.0% in fiscal year 2007. Cost of sales as a percentage of net sales amounted to 5 1.8% and 52.3% in 2008 and 2007, respectively. Selling, general and administrative expenses were 46.8% of net sales in 2008 and 46.5% of net sales in 2007. The Company's effective tax rates for 2008 and 2007 were 40.5% and 39.8%, respectively. Note 7 to the Consolidated Financial Statements provides additional information about the provision for income taxes. The following tables compare manufactured products to resale products for the fiscal years ended May 30, 2008 and June 1, 2007: Manufactured Products-Resale Products 2008 2007 ---------------------- ---------------------- Sales % % Manufactured Products $ 91,864,474 81.0% $ 88,827,471 80.1% Resale Products 21,515,358 19.0% 21,999,454 19.9% ------------- ----- ------------- ----- Total $ 113,379,832 100.0% $ 110,826,925 100.0% Gross Margin % % Manufactured Products $ 47,571,929 51.8% $ 45,757,596 51.5% Resale Products 7,042,636 32.7% 7,091,931 32.2% ------------- ----- ------------- ----- Total $ 54,614,565 48.2% $ 52,849,527 47.7% Market Risk The principal market risks (i.e. the risk of loss arising from adverse changes in market rates and prices) to which the Company is exposed are interest rates on its cash equivalents and bank loans, fuel costs and commodity prices affecting the cost of its raw materials. The Company is subject to market risk with respect to commodities because its ability to recover increased costs through higher pricing may be limited by the competitive environment in which it operates. The Company purchases its raw materials on the open market, under contract through brokers and directly from growers. Futures contracts have been used occasionally to hedge immaterial amounts of commodity purchases, but none are presently being used. 14 Inflation Certain costs and expenses of the Company are affected by inflation. While, the Company's prices for its products over the past several years have remained relatively flat, the Company has been able to increase prices during the fiscal year. The Company will contend with the effect of further inflation through efficient purchasing, improved manufacturing methods, pricing, and by monitoring and controlling expenses. Higher fuel and commodity costs continue to be a challenge. Environmental Matters There have been no material effects of compliance with government provisions regulating discharge of materials into the environment. Forward-Looking Statements This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those forward-looking statements. Factors that may cause actual results to differ materially include price competition, industry consolidation, raw material costs, fuel costs and effectiveness of sales and marketing activities, as described in the Company's filings with Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date which they are made. Recent Developments The Company, in compliance with Section 404 of the Sarbanes-Oxley Act of 2002 has completed the management assessment of its internal controls. See Item 9A for further details. Recently Issued Accounting Pronouncements See Note 1 to the consolidated financial statements included in Item 8 for a summary of recently issued accounting pronouncements. ITEM 7 A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable as Company is a Smaller Reporting Company. ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the registrant and its subsidiary for the year ended May 30, 2008, consisting of the following, are contained herein: Consolidated Balance Sheets - As of May 30, 2008 and June 1, 2007 Consolidated Statements of Operations - Fiscal years ended 2008 and 2007 Consolidated Statements of Changes in Stockholders' Equity - Fiscal years ended 2008 and 2007 Consolidated Statements of Cash Flows - Fiscal years ended 2008 and 2007 Notes to Consolidated Financial Statements - Fiscal years ended 2008 and 2007 Quarterly Results of Operations - Fiscal years ended 2008 and 2007 15 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 30, 2008 and June 1, 2007, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years then ended. Our audits also included the financial statement schedule listed at Item 15(a) Schedule II. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden Enterprises, Inc. and subsidiary as of May 30, 2008 and June 1, 2007, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We were not engaged to examine management's assertion about the effectiveness of Golden Enterprises, Inc. and subsidiary's internal control over financial reporting as of May 30, 2008 included in the Company's Item 9A "Controls and Procedures" in the Annual Report on Form 10-K and, accordingly, we do not express an opinion thereon. DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP Birmingham, Alabama July 30, 2008 16 This page is intentionally left blank 17
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS As of May 30, 2008 and June 1, 2007 ASSETS 2008 2007 ---- ---- CURRENT ASSETS Cash and cash equivalents $ 442,756 $ 706,852 Receivables: Trade accounts 8,009,482 8,559,984 Other 1,065 11,358 -------------- -------------- 8,010,547 8,571,342 Less: Allowance for doubtful accounts 70,000 112,915 -------------- -------------- 7,940,547 8,458,427 Notes receivable, current - 58,126 -------------- -------------- 7,940,547 8,516,553 -------------- -------------- Inventories: Raw materials 1,467,400 1,340,389 Finished goods 2,870,698 3,035,285 -------------- -------------- 4,338,098 4,375,674 -------------- -------------- Prepaid expenses 1,642,959 1,622,900 Deferred income taxes 649,420 583,179 -------------- -------------- Total current assets 15,013,780 15,805,158 -------------- -------------- PROPERTY, PLANT AND EQUIPMENT Land 3,048,284 2,962,283 Buildings 18,452,583 16,641,960 Machinery and equipment 39,246,446 37,563,985 Transportation equipment 12,566,732 15,112,873 -------------- -------------- 73,314,045 72,281,101 Less: Accumulated depreciation 58,684,709 59,324,468 -------------- -------------- 14,629,336 12,956,633 -------------- -------------- OTHER ASSETS Notes receivable, long-term - 1,658,630 Cash surrender value of life insurance 1,805,982 2,253,412 Other 786,947 651,595 -------------- -------------- Total other assets 2,592,929 4,563,637 -------------- -------------- TOTAL $ 32,236,045 $ 33,325,428 ============== ==============
See Accompanying Notes to Consolidated Financial Statements 18
LIABILITIES AND STOCKHOLDERS' EQUITY 2008 2007 ---- ---- CURRENT LIABILITIES Checks outstanding in excess of bank balances $ 817,370 $ 1,385,663 Accounts payable 3,567,939 3,760,499 Accrued income taxes 160,619 318,198 Current portion of long-term debt - 270,625 Line of credit outstanding 1,484,368 622,950 Other accrued expenses 4,989,684 5,060,758 Salary continuation plan 131,993 121,877 -------------- -------------- Total current liabilities 11,151,973 11,540,570 -------------- -------------- LONG-TERM LIABILITIES Salary continuation plan 1,499,421 1,582,437 Deferred income taxes 620,077 752,298 -------------- -------------- Total long-term liabilities 2,119,498 2,334,735 -------------- -------------- 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 14,060,942 14,410,568 Treasury shares - at cost (2,039,886 shares in 2008 and 1,993,463 in 2007) (10,813,517) (10,677,594) -------------- -------------- Total stockholders' equity 18,964,574 19,450,123 -------------- -------------- TOTAL $ 32,236,045 $ 33,325,428 ============== ==============
19 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Fiscal Years Ended May 30, 2008 and June 1, 2007 2008 2007 ---- ---- Net sales $ 113,379,832 $ 110,826,925 Cost of sales 58,765,267 57,977,398 -------------- -------------- Gross margin 54,614,565 52,849,527 Selling, general and administrative expenses 53,056,631 51,481,437 -------------- -------------- Operating income 1,557,934 1,368,090 -------------- -------------- Other income (expenses): Gain on sale of assets 133,654 488,174 Interest expense (223,683) (273,209) Other income 426,895 432,084 -------------- -------------- Total other income (expenses) 336,866 647,049 -------------- -------------- Income before income tax 1,894,800 2,015,139 -------------- -------------- Provision for income taxes 767,232 801,905 -------------- -------------- Net income $ 1,127,568 $ 1,213,234 ============== ============== PER SHARE OF COMMON STOCK Basic earnings $ 0.10 $ 0.10 Diluted earnings $ 0.10 $ 0.10 See Accompanying Notes to Consolidated Financial Statements 20
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the Fiscal Years Ended May 30, 2008 and June 1, 2007 Additional Total Common Paid-in Retained Treasury Stockholders' Stock Capital Earnings Shares Equity ----- ------- -------- ------ ------ Balance - June 3, 2006 $ 9,219,195 $ 6,497,954 $ 14,676,759 $ (10,677,594) $ 19,716,314 Net income - 2007 - - 1,213,234 - 1,213,234 Cash dividends paid - - (1,479,425) - (1,479,425) ------------- ------------- ------------- ------------- ------------- Balance - June 1, 2007 9,219,195 6,497,954 14,410,568 (10,677,594) 19,450,123 Net income - 2008 - - 1,127,568 - 1,127,568 Cash dividends paid - - (1,477,194) - (1,477,194) Treasury shares purchased (135,923) (135,923) ------------- ------------- ------------- ------------- ------------- Balance - May 30, 2008 $ 9,219,195 $ 6,497,954 $ 14,060,942 $ (10,813,517) $ 18,964,574 ============= ============= ============= ============= =============
See Accompanying Notes to Consolidated Financial Statements 21
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Fiscal Years Ended May 30, 2008 and June 1, 2007 2008 2007 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 113,897,712 $ 110,731,854 Interest income 134,799 144,687 Rental income 39,411 31,974 Other operating cash payments/receipts 252,685 255,423 Cash paid to suppliers and employees for cost of goods sold (57,303,625) (54,923,539) Cash paid for suppliers and employees for selling, general and administrative (52,238,187) (50,336,873) Income taxes (1,123,273) (1,007,958) Interest expense (223,683) (273,209) -------------- -------------- Net cash provided by operating activities 3,435,839 4,622,359 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (2,303,219) (1,731,230) Proceeds from sale of property, plant and equipment 140,795 577,355 Collection of notes receivable 53,107 53,672 -------------- -------------- Net cash used in investing activities (2,109,317) (1,100,203) CASH FLOWS FROM FINANCING ACTIVITIES Debt proceeds 21,356,450 23,163,475 Debt repayments (20,765,658) (23,587,618) Decrease in checks outstanding in excess of bank balances (568,293) (1,233,363) Purchases of treasury shares (135,923) - Cash dividends paid (1,477,194) (1,479,425) -------------- -------------- Net cash used in financing activities (1,590,618) (3,136,931) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (264,096) 385,225 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 706,852 321,627 -------------- -------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 442,756 $ 706,852 ============== ==============
See Accompanying Notes to Consolidated Financial Statements 22
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: 2008 2007 ---- ---- Net income $ 1,127,568 $ 1,213,234 Adjustment to reconcile net income (loss) to net cash provided by operating activities: Depreciation 2,287,025 2,268,468 Deferred income taxes (198,462) (14,933) Gain on sale of property and equipment (133,654) (488,174) Change in receivables - net 517,880 (95,071) Change in inventories 37,576 (99,603) Change in prepaid expenses (20,059) (14,441) Change in cash surrender value of insurance 447,430 178,214 Change in other assets (135,352) 51,892 Change in accounts payable (192,560) 1,550,473 Change in accrued expenses (71,074) 333,005 Change in salary continuation plan (72,900) (69,585) Change in accrued income taxes (157,579) (191,120) -------------- -------------- Net cash provided by operating activities $ 3,435,839 $ 4,622,359 ============== ============== Non-cash portion of property plant and equipment transactions $ 1,675,454 $ - ============== ============== (Notes and interest receivable from Tennessee Chips As part of Nashville plant re-purchase (See Note 2))
See Accompanying Notes to Consolidated Financial Statements 23 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- The accounting and reporting policies of Golden Enterprises, Inc. and subsidiary ("Company") conform to accounting principles generally accepted in the United States of America and to general practices within the snack foods industry. The following is a description of the more significant accounting policies: Nature of the Business - ---------------------- The Company manufactures and distributes a full line of snack items that are sold through its own sales organization and independent distributors to commercial establishments that sell food products primarily in the Southeastern United States. Consolidation - ------------- The consolidated financial statements include the accounts of Golden Enterprises, Inc. and its wholly-owned subsidiary, Golden Flake Snack Foods, Inc., (the "Company"). All significant inter-company transactions and balances have been eliminated. Revenue Recognition - ------------------- The Company recognizes sales and related costs upon delivery or shipment of products to its customers. Sales are reduced by returns and allowances to customers. Accounts Receivable - ------------------- The Company records accounts receivable at the time revenue is recognized. Amounts for bad debt expense are recorded in selling, general and administrative expenses on the consolidated statements of income. The determination of the allowance for doubtful accounts is based on management's estimate of uncollectible accounts receivables. The Company records a general reserve based on analysis of historical data. In addition, management records specific reserves for receivable balances that are considered at higher risk due to known facts regarding the customer. Fiscal Year - ----------- The Company ends its fiscal year on the Friday closest to the last day in May. The years ended May 30, 2008 and June 1, 2007 included 52 weeks. Fair Value of Financial Instruments - ----------------------------------- The carrying amounts of cash and cash equivalents, receivables, accounts payable and short-term debt approximate fair value. Cash and Cash Equivalents - ------------------------- The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Inventories - ----------- Inventories are stated at the lower of cost or market. Cost is computed on the first-in, first-out method. Property, Plant and Equipment - ----------------------------- Property, plant and equipment are stated at cost. For financial reporting purposes, depreciation and amortization have been provided principally on the straight-line method over the estimated useful lives of the respective assets. Accelerated methods are used for tax purposes. 24 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED - --------------------------------------------------------------- Expenditures for maintenance and repairs are charged to operations as incurred; expenditures for renewals and betterments are capitalized and written off by depreciation and amortization charges. Property retired or sold is removed from the asset and related accumulated depreciation accounts and any profit or loss resulting therefrom is reflected in the statements of operations. Self-Insurance - -------------- The Company is self-insured for certain casualty losses relating to automobile liability, general liability, workers' compensation, property losses and medical claims. The Company also has stop loss coverage to limit the exposure arising from these claims. Automobile liability, general liability, workers' compensation, and property losses costs are covered by letters of credit with the company's claim administrators. The Company uses a third-party actuary to estimate the casualty insurance obligations on an annual basis. In determining the ultimate loss and reserve requirements, the third-party uses various actuarial assumptions including compensation trends, health care cost trends and discount rates. The third-party actuary also uses historical information for claims frequency and severity in order to establish loss development factors. The actuarial calculation includes a margin of error to account for changes in inflation, health care costs, compensation and litigation cost trends as well as estimated future incurred claims. Advertising - ----------- The Company expenses advertising costs as incurred. These costs are included in selling, general and administrative expenses in the Consolidated Statement of Operations. Advertising expense amounted to $5.4 million and $6.0 million for the fiscal years 2008 and 2007, respectively. Income Taxes - ------------ Deferred income taxes are provided using the liability method to measure tax consequences resulting from differences between financial accounting standards and applicable income tax laws. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Segment Information - ------------------- The Company does not identify separate operating segments for management reporting purposes. The results of operations are the basis on which management evaluates operations and makes business decisions. The Company's sales are generated primarily within the Southeastern United States. Stock Options - ------------- The Company has granted stock options to management in previous years, though none were granted during fiscal years ended May 30, 2008 or June 1, 2007. See Note 9 for further discussion of our stock option awards. 25 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Year Ended May 30, 2008 and June 1, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED - --------------------------------------------------------------- Shipping and Handling Costs - --------------------------- Shipping and handling costs, which include salaries and vehicle operations expenses relating to the delivery of products to customers by the Company are classified as Selling, General and Administrative (SG&A) expenses. Shipping and handling costs classified as SG&A amounted to $3.4 million and $3.3 million for the fiscal years 2008 and 2007, respectively. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements - ----------------------------------------- In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 157 is not expected to have a material impact on our financial condition, results of operations or cash flows. In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities: Including an amendment of FASB Statement No. 115." SFAS No. 159 permits entities to measure many financial instruments and certain other items at fair value with changes in fair value reported in earnings. The FASB issued SFAS No. 159 to mitigate earnings volatility that arises when financial assets and liabilities are measured differently, and to expand the use of fair value measurement for financial instruments. SFAS No. 159 is effective for our fiscal year beginning May 31, 2008. The adoption of SFAS No. 159 is not expected to have a material impact on our financial condition, results of operations or cash flows. 26 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 2 - NOTES RECEIVABLE - ------------------------- Notes receivable as of May 30, 2008 and June 1, 2007 consist of the following: 2008 2007 ---- ---- 8% note, due in 120 monthly installments of $3,640 through November 1, 2010, collateralized by property $ - $ 132,955 8% note, due in 360 monthly installments of $12,474 through November 1, 2030, collateralized by property - 1,583,801 ----------- ----------- - 1,716,756 Less current portion - 58,126 ----------- ----------- $ - $ 1,658,630 =========== =========== During the year, the Company received cash payments totaling $53,107. On May 2, 2008, the Company re-acquired, the property located at 2930 Kraft Drive in Nashville, TN for $1,715,985. In consideration, the Company cancelled the remaining notes and interest receivable of $1,675,454 and paid $40,531 in cash for closing costs. NOTE 3 - PREPAID EXPENSES - ------------------------- At May 30, 2008 and June 1, 2007, prepaid expenses consist of the following: 2008 2007 ---- ---- Prepaid slotting fees $ 202,391 $ 220,437 Other prepaid expenses 1,440,568 1,402,463 ----------- ----------- $ 1,642,959 $ 1,622,900 =========== =========== NOTE 4 - OTHER ACCRUED EXPENSES - ------------------------------- At May 30, 2008 and June 1, 2007, other accrued expenses consist of the following: 2008 2007 ---- ---- Accrued payroll $ 462,581 $ 457,398 Self insurance liability 1,877,100 1,865,200 Accrued vacation 1,414,678 1,230,385 Other accrued expenses 1,235,325 1,507,775 ----------- ----------- $ 4,989,684 $ 5,060,758 =========== =========== 27 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 5 - LINE OF CREDIT - ----------------------- The Company has a line of credit agreement with a local bank which permits borrowing up to $2 million. The balance on the line of credit at May 30, 2008 was $1.5 million a rate of 7.75%. 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 6 - LONG-TERM LIABILITIES - ------------------------------ At May 30, 2008 and June 1, 2007, long-term debt consists of the following: Note payable - bank - payable in equal monthly 2008 2007 installments of $65,108 including interest at the ---- ---- LIBOR index rate plus 1.75% (7.07% at June 1, 2007) through November 30, 2007, secured by equipment $ - $ 270,625 Less: current portion - 270,625 ----------- ----------- $ - $ - =========== =========== Other long-term obligations at May 30, 2008 and June 1, 2007 consist of the following: 2008 2007 ---- ---- Salary continuation plan $ 1,631,414 $ 1,704,314 Less: current portion (131,993) (121,877) ----------- ----------- $ 1,499,421 $ 1,582,437 =========== =========== 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 $48,976 and $42,951 for fiscal 2008 and 2007, respectively. 28 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 7 - INCOME TAXES - --------------------- At May 30, 2008 and June 1, 2007 the provision for income taxes consists of the following: 2008 2007 ---- ---- Current: Federal $ 858,851 $ 727,167 State 106,843 89,671 ----------- ----------- 965,694 816,838 Deferred: Federal (176,597) (13,288) State (21,865) (1,645) ----------- ----------- (198,462) (14,933) ----------- ----------- Total $ 767,232 $ 801,905 =========== =========== 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: 2008 2007 ---- ---- Tax on income at statutory rates $ 644,232 $ 685,147 (Decrease) increase resulting from: State income taxes, less Federal income tax effect 70,516 59,183 Tax exempt interest (2,533) (1,818) Change in valuation allowance (137,710) (49,249) Other - net 192,727 108,642 ----------- ----------- Total $ 767,232 $ 801,905 =========== =========== 29 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 7 - INCOME TAXES- CONTINUED - -------------------------------- The tax effects of temporary differences that result in deferred tax assets and liabilities are as follows: 2008 2007 ---- ---- Deferred tax assets Salary continuation plan $ 598,239 $ 624,972 Accrued vacation 518,762 451,182 Contribution carry forward 285,826 346,179 Inventory capitalization 30,971 25,167 Allowance for doubtful accounts 25,669 41,406 Other accrued expenses 148,235 146,258 ----------- ----------- Gross deferred tax assets before valuation allowance 1,607,702 1,635,164 Less valuation allowance (81,640) (219,350) ----------- ----------- Total deferred tax assets 1,526,062 1,415,814 ----------- ----------- Deferred tax liabilities Property and equipment 1,422,502 1,504,099 Prepaid expenses 74,217 80,834 ----------- ----------- Total deferred tax liabilities 1,496,719 1,584,933 ----------- ----------- Net deferred tax liability $ 29,343 $ (169,119) =========== =========== NOTE 8 - EMPLOYEE BENEFIT PLANS - ------------------------------- The Company has trusteed "Qualified Profit-Sharing Plans" that were amended and restated effective June 1, 1996 to add a 401 (k) salary reduction provision. Under this provision, employees can contribute up to fifty percent of their compensation to the plan on a pretax basis subject to regulatory limits; and the Company, at its discretion, can match up to 4% of the participants' compensation. The annual contributions to the plans are determined by the Board of Directors. Total plan contributions for the years ended May 30, 2008 and June 1, 2007 were $131,319 and $121,583, respectively. The Company has an Employee Stock Ownership Plan that covers all full-time employees. The annual contributions to the plan are amounts determined by the Board of Directors of the Company. Annual contributions are made in cash or common stock of the Company. Contributions to the Employee Stock Ownership Plan for the years ended May 30, 2008 and June 1, 2007 were $0 and $0, respectively. Each participant's account is credited with an allocation of shares acquired with the Company's annual contributions, dividends received on Employee Stock Ownership Plan shares and forfeitures of terminated participants' non-vested accounts. 30 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30 2008 and June 1, 2007 NOTE 8 - EMPLOYEE BENEFIT PLANS - CONTINUED - ------------------------------------------- The Company has a salary continuation plan with certain of its key officers whereby monthly benefits will be paid for a period of fifteen years following retirement. The Company is accruing the present value of all retirement benefits until the key officers reach normal retirement age at which time the principal portion of the retirement benefits paid are applied to the liability previously accrued. The change in the liability for the Salary Continuation Plan is as follows: 2008 2007 ---- ---- Accrued salary continuation plan - beginning of year $ 1,704,314 $ 1,773,899 Benefits accrued 48,977 42,951 Benefits paid (121,877) (112,536) ----------- ----------- Accrued salary continuation plan - end of year $ 1,631,414 $ 1,704,314 =========== =========== NOTE 9 - 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 2008 and 2007 are exercisable. The 1996 Plan provides for the granting of Incentive Stock Options as defined under the Internal Revenue Code. Under the Plan, grants of incentive stock options may be made to selected officers and employees, with a term not exceeding ten years from the issue date and at a price not less than the fair market value of the Company's stock at the date of grant. 31 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 9 - 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: 2008 2007 ---- ---- Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price Outstanding - beginning of year 369,000 $ 3.78 369,000 $ 3.78 Granted - - - - Exercised - - - - Forfeited - - - - Cancelled - - - - --------- --------- --------- --------- Outstanding - end of year 369,000 $ 3.78 369,000 $ 3.78 ========= ========= ========= ========= The Company adopted SFAS 123R as of June 3, 2006. SFAS 123R establishes standards for accounting of transactions in which an entity exchanges its equity instruments for goods or services, such as when an entity obtains employee services in share-based payment transactions. The revised statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Changes in fair value during the required service period are to be recognized as compensation cost over the period. In addition, SFAS 123R amends SFAS No. 95, "Statement of Cash Flows," to require that excess tax benefits be reported as a financing cash flow rather than as a reduction of taxes paid. When the Company adopted SFAS 1 23R, they elected the modified prospective application method and prior period amounts have not been restated. As of June 3, 2006, all outstanding options were fully vested. Additionally, no options were granted during the fiscal years ended May 30, 2008 or June 1, 2007. Prior to the effective date of SFAS 123R, the Company followed Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretation for stock options granted to employees and directors. The Company adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." The proforma disclosures previously permitted under SFAS 123 are no longer an alternative to financial statement recognition. The Company continues to account for any portion of previously granted awards using the accounting principle originally applied to those awards, APB Opinion No. 25, Accounting for Stock Issued to Employees. 32 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 10 - NET INCOME PER SHARE - ------------------------------ Basic earnings per common share are computed by dividing earnings available to stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects per share amounts that would have resulted if dilutive potential common stock equivalents had been converted to common stock, as prescribed by Statement of Financial Accounting Standards No. 128, "Earnings per Share". At May 30, 2008 and June 1, 2007, options on all 369,000 shares were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. The following reconciles the information used to compute basic and diluted earnings per share: Average Common Stock Shares --------------------------- 2008 2007 ---- ---- Basic weighted average shares outstanding 11,815,621 11,835,330 Effect of options - - ----------- ----------- 11,815,621 11,835,330 =========== =========== NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - --------------------------------------------------------------- The Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments" requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practical to estimate that value. SFAS 107 defines fair value as the quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques. The fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instruments, such as estimates of timing and amount of expected future cash flows. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument. The carrying amounts for cash and cash equivalents approximate fair value because of the short maturity, generally less than three months, of these instruments. The fair value of notes receivable is estimated by using a discount rate that approximates the current rate for comparable notes. At May 30, 2008 and June 1, 2007 the aggregate fair value was approximately $0 and $2.0 million compared to a carrying amount of $0 million and $1.7 million, respectively. 33 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS -CONTINUED - -------------------------------------------------------------------------- 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 12 - COMMITMENTS AND CONTINGENCIES - --------------------------------------- Rental expense was $0.8 million in 2008 and $0.4 million in 2007. The Company has entered into various operating lease agreements to replace aging route vans. The current annual obligation under this agreement is $896,857. Future minimum lease commitments for operating leases at May 30, 2008 were as follows: 2009 $ 896,857 2010 896,857 2011 896,857 2012 827,823 2013 435,909 The Company leases its airplane to a director who is also chairman of the board of directors of SYB, Inc., a major shareholder of the Company for approximately $20,000 per month. The lease provides for her personal use of the airplane for up to 100 flight hours per year and is for a term of one year with automatic annual renewals unless terminated by either party. The Company had letters of credit in the amount of $2.3 million outstanding at May 30, 2008 compared to $2.7 million at June 1, 2007, to support the Company's commercial self-insurance program. The Company pays a commitment fee of 0.50% to maintain the letters of credit. The Company has entered into various other short term purchase commitments with suppliers for raw materials in the normal course of business. The Company is subject to routine litigation and claims incidental to its business. In the opinion of management, such routine litigation and claims should not have a material adverse effect upon the Company's consolidated financial statements taken as a whole. 34 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For the Fiscal Years Ended May 30, 2008 and June 1, 2007 NOTE 13 - 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 purchased credit insurance during the year which reduced the allowance for doubtful accounts to $70,000. Without credit insurance, the allowance for doubtful accounts would have been $88,835 compared to $112,915 last year. NOTE 14 - SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION - ----------------------------------------------------------- The following tabulation gives certain supplementary statement of operations information for continuing operations for the years ended May 30, 2008 and June 1, 2007: 2008 2007 ---- ---- Maintenance and repairs $ 6,334,758 $ 6,394,349 Depreciation 2,287,025 2,268,468 Payroll taxes 2,364,913 2,312,079 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 15 - SIGNIFICANT EVENT - --------------------------- On May 2, 2008, the Company re-acquired the property located at 2930 Kraft Drive in Nashville, TN for $1,715,985. In consideration, the Company cancelled the remaining notes and interest receivable of $1,675,454 and paid $40,531 in cash for closing costs. ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. 35 ITEM 9A. - CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our company's management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of May 30, 2008. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of May 30, 2008, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Internal Control Over Financial Reporting Management's Annual Report on Internal Control Over Financial Reporting The management of the company is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is defined in Rule 13a-15(f) or 1 5d- 15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals and includes those policies and procedures that: o Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; o Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and o Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 36 The company's management assessed the effectiveness of the company's internal control over financial reporting as of May 30, 2008. In making this assessment, the company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its Internal Control-Integrated Framework. Based on our assessment, management concluded that, as of May 30, 2008, the company's internal control over financial reporting is effective based on those criteria set forth. The annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report. Changes in Internal Control Over Financial Reporting No change in our internal controls over financial reporting occurred during the fiscal quarter ended May 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. - OTHER INFORMATION Not Applicable. PART III ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE With the exception of information as follows and as set forth under the caption Executive Officers of the Registrant and Its Subsidiary which appears in Part I of this Form 10-K on Page 5, the information required by this item is incorporated by reference to the sections of the Company's Proxy Statement entitled "Election of Directors," "Additional Information Concerning the Board of Directors," "Executive Compensation and Other Information," "Section 16(a) Beneficial Ownership Reporting Compliance", "Code of Conduct and Ethics" and "Corporate Governance" for the 2008 Annual Meeting of Stockholders to be held September 25, 2008. Section 16A Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act, as amended, requires the Company's officers and directors and persons who own more than 10% of the Company's outstanding Common Stock to file reports of ownership with the Securities and Exchange Commission ("SEC"). There were no directors, officers or more than 10% stockholders of the Company who failed to timely file a Form 4 or 5 except for Edward R. Pascoe, who filed a Form 4 reporting a transaction involving the sale of 9,000 common shares, two days late on July 11, 2008. 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 2008 Annual Meeting of Stockholders to be held September 25, 2008. See Item 5 of this Annual Report on Form 10-K for information concerning the Company's equity compensation plans. 37 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 2008 Annual Meeting of Stockholders to be held September 25, 2008. ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by this item is incorporated by reference to the section entitled "Certain Transactions" and "Director Independence" of the Company's Proxy Statement for the 2008 Annual Meeting of Stockholders to be held September 25, 2008. 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 2008 Annual Meeting of Stockholders to be held September 25, 2008. Prior to September 30, 2008, the Company will file a definitive Proxy Statement with the Securities and Exchange Commission pursuant to Regulation 14A which involves the election of directors. PART IV ITEM 15.- EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) 1. LIST OF FINANCIAL STATEMENTS The following consolidated financial statements of Golden Enterprises, Inc., and subsidiary required to be included in Item 8 are listed below: Consolidated Balance Sheets - May 30, 2008 and June 1, 2007 Consolidated Statements of Operations- Years ended May 30, 2008 and June 1, 2007 Consolidated Statements of Changes in Stockholders' Equity- Years ended May 30, 2008 and June 1, 2007 Consolidated Statements of Cash Flows- Years ended May 30, 2008 and June 1, 2007 Notes to Consolidated Financial Statements (a) 2. LIST OF FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements schedule is included in Item 15 (c): Schedule II- Valuation and Qualifying Accounts 38 All other schedules are omitted because the information required therein is not applicable, or the information is given in the financial statements and notes thereto. (a) 3. Exhibits (3) Articles of Incorporation and By-laws of Golden Enterprises, Inc. 3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally known as "Golden Flake, Inc.") dated December 11, 1967 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission). 3.2 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976 (incorporated by reference to Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission). 3.3 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 2, 1978 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K filed with the Commission). 3.4 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 4, 1979 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K filed with the Commission). 3.5 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 24, 1982 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1983 Form 10-K filed with the Commission). 3.6 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 22, 1983 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1983 filed with the Commission). 3.7 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 3, 1985 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1985 filed with the Commission). 3.8 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 23, 1987 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission). 3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission). (10) Material Contracts. 10.1 A Form of Indemnity Agreement executed by and between Golden Enterprises, Inc. and Each of Its Directors (incorporated by reference as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1987 filed with the Commission). 10.2 Amended and Restated Salary Continuation Plans for John S. Stein (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. May 31, 1990 Form 10-K filed with the Commission). 39 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 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). 10.8 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). 10.9 Amendment to Salary Continuation Plans, Retirement and Disability for F. Wayne Pate dated April 9, 2002 (incorporated by reference to Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.10 Amendment to Salary Continuation Plans, Retirement and Disability for John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.3 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.11 Amendment to Salary Continuation Plan, Death Benefits for John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.4 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.12 Retirement and Consulting Agreement for John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.5 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002 (incorporated by reference to Exhibit 10.6 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.14 Trust Under Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002 (incorporated by reference to Exhibit 10.7 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.15 Lease of aircraft executed by and between Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Joann F. Bashinsky dated February 1, 2006 (incorporated by reference to Exhibit 10.15 to Golden Enterprises, Inc. June 2, 2006 Form 10-K filed with the Commission). 40 10.16 Real Property Purchase and Sale Agreement dated May 2, 2008 whereby Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc. re-acquired certain real property in Nashville, Tennessee. (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 (incorporated by reference to Exhibit 14.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission). (18) Letter Re: Change in Accounting Principles 18.1 Letter from the Registrant's Independent Accountant dated August 12, 2005 indicating a change in the method of applying accounting practices followed by the Registrant for the fiscal year ended June 3, 2005 (incorporated by reference to Exhibit 18.1 to Golden Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the Commission) 21 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission) (31) Certifications 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (99) Additional Exhibits 99.1 A copy of excerpts of the Last Will and Testament and Codicils thereto of Sloan Y. Bashinsky, Sr. and of the SYB Common Stock Trust created by Sloan Y. Bashinsky, Sr. providing for the creation of a Voting Committee to vote the shares of common stock of Golden Enterprises, Inc. held by SYB, Inc. and the Estate/Testamentary Trust of Sloan Y. Bashinsky, Sr. (incorporated by reference to Exhibit 99.1 to Golden Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the Commission). 41 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GOLDEN ENTERPRISES, INC. By /s/Patty Townsend August 22, 2008 - --------------------- --------------- 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 22, 2008 - --------------------------------- John S. Stein /s/Mark W. McCutcheon Chief Executive August 22, 2008 - --------------------------------- Officer, President Mark W. McCutcheon and Director /s/Patty Townsend Vice President, August 22, 2008 - --------------------------------- Secretary and Patty Townsend Principal Financial Officer /s/F. Wayne Pate Director August 22, 2008 - --------------------------------- F. Wayne Pate /s/Edward R. Pascoe Director August 22, 2008 - --------------------------------- Edward R. Pascoe /s/John P. McKleroy, Jr. Director August 22, 2008 - --------------------------------- John P. McKleroy, Jr. /s/James I. Rotenstreich Director August 22, 2008 - --------------------------------- James I. Rotenstreich /s/John S.P. Samford Director August 22, 2008 - --------------------------------- John S.P. Samford /s/J. Wallace Nall, Jr. Director August 22, 2008 - --------------------------------- J. Wallace Nall, Jr. /s/Joann F. Bashinsky Director August 22, 2008 - --------------------------------- Joann F. Bashinsky 42 SCHEDULE II GOLDEN ENTERPRISES, INC. AND SUBSIDIARY VALUATION AND QUALIFYING ACCOUNTS For the Fiscal Years Ended May 30, 2008 and June 1, 2007
Additions Balance at Charged to Balance Beginning Costs and at End Allowance for Doubtful Accounts of Year Expenses Deductions of Year - ---------------------------------- =========== =========== =========== =========== Year ended June 1, 2007 $133,422 $ 41,823 $ 62,330 $112,915 =========== =========== =========== =========== Year ended May 30, 2008 $112,915 $ --- $ 42,915 $ 70,000 =========== =========== =========== ===========
43 INDEX TO EXHIBITS ----------------- 3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally known as "Golden Flake, Inc.") dated December 11, 1967 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission). 3.2 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976 (incorporated by reference to Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission). 3.3 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 2, 1978 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K filed with the Commission). 3.4 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 4, 1979 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K filed with the Commission). 3.5 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 24, 1982 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1983 Form 10-K filed with the Commission). 3.6 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 22, 1983 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1983 filed with the Commission). 3.7 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 3, 1985 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1985 filed with the Commission). 3.8 Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 23, 1987 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission). 3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission). 10.1 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). 44 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 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). 10.8 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). 10.9 Amendment to Salary Continuation Plans, Retirement and Disability for F. Wayne Pate dated April 9, 2002 (incorporated by reference to Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.10 Amendment to Salary Continuation Plans, Retirement and Disability for John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.3 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.11 Amendment to Salary Continuation Plan, Death Benefits for John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.4 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.12 Retirement and Consulting Agreement for John S. Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.5 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002 (incorporated by reference to Exhibit 10.6 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 45 10.14 Trust Under Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002 (incorporated by reference to Exhibit 10.7 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission). 10.15 Lease of aircraft executed by and between Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and Joann F. Bashinsky dated February 1, 2006 (incorporated by reference to Exhibit 10.15 to Golden Enterprises, Inc. June 2, 2006 Form 10-K filed with the Commission). 10.16 Real Property Purchase and Sale Agreement dated May 2, 2008 whereby Golden 47 Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc. re-acquired certain real property in Nashville, Tennessee. 14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the Board of Directors on April 8, 2004 (incorporated by reference to Exhibit 14.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission). (18) Letter Re: Change in Accounting Principles 18.1 Letter from the Registrant's Independent Accountant dated August 12, 2005 indicating a change in the method of applying accounting practices followed by the Registrant for the fiscal year ended June 3, 2005 (incorporated by reference to Exhibit 18.1 to Golden Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the Commission). 21 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission) 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes- 57 Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes- 58 Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes- 59 Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes- 60 Oxley Act of 2002. 99.1 A copy of excerpts of the Last Will and Testament and Codicils thereto of Sloan Y. Bashinsky, Sr. and of the SYB Common Stock Trust created by Sloan Y. Bashinsky, Sr. providing for the creation of a Voting Committee to vote the shares of common stock of Golden Enterprises, Inc. held by SYB, Inc. and the Estate/Testamentary Trust of Sloan Y. Bashinsky, Sr. (incorporated by reference to Exhibit 99.1 to Golden Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the Commission). 46 EX-10.16 2 a5762084ex10_16.txt EXHIBIT 10.16 Exhibit 10.16 Real Property Purchase and Sale Agreement dated May 2, 2008 whereby Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden Enterprises, Inc. re-acquired certain real property in Nashville, Tennessee. 47 PROPERTY CONTRACT OF SALE THIS CONTRACT OF SALE is hereby made and entered into by and between TENNESSEE CHIPS, LLC, a Tennessee limited liability company (herein called "Seller") and GOLDEN FLAKE SNACK FOODS, INC., a Delaware corporation (hereinafter referred to as "Purchaser"). WITNESSETH: For and in consideration of the sum of Ten ($10.00) Dollars, as earnest money paid, and in part payment of the purchase price, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller hereby agrees to sell to Purchaser, and Purchaser hereby agrees to purchase from Seller, a certain tract of real property located in Davidson County, Tennessee, together with any improvements thereon and all easements, covenants, licenses, and other rights appurtenant to said real property, said real property being generally described as follows: Land, building, fixtures and improvements located at 2930 Kraft Drive, Nashville, Tennessee. A complete legal description of said real property is attached hereto as Exhibit "A". All property and interests of Seller to be conveyed hereunder are herein sometimes collectively called the "Property." THIS SALE SHALL BE MADE UPON THE FOLLOWING TERMS AND CONDITIONS: 1. Purchase Price. Seller has executed a First Real Property Note in the original principal balance of $1,700,000.00 dated October 25, 2000 payable to Purchaser and a Second Real Property Note in the original principal balance of $300,000.00 dated October 25, 2000 payable to Purchaser. The First Real Property Note and Second Real Property Note are herein collectively referred to as the "Notes". As of May 2, 2008, the unpaid principal balance together with accrued but unpaid interest under the Notes will be $1,675,454.14. The Notes are secured by (i) a Deed of Trust executed by Seller, Trustor, to Shelton Hatcher, Trustee, for the benefit of Purchaser, Beneficiary, dated October 25, 2000 and recorded with Davidson County, Tennessee in Instrument No. 20001108-0111123 ("Deed of Trust") and (ii) UCC-1 Financing Statements naming Tennessee Chips, LLC, Debtor and Golden Flake Snack Foods, Inc., Secured Party of record in Instrument No. 20001108-0111124, Instrument No. 20001117-0114132, and Instrument No. 20070424-0048390, Register's Office for Davidson County, Tennessee ("UCC-1 Financing Statements"). As full consideration for the purchase of the Property, Purchaser shall, at closing, execute and deliver to Seller a satisfaction and release document reciting that the Notes have been paid and satisfied in full and satisfying and releasing the Deed of Trust and UCC-1 Financing Statements. The earnest money and the satisfaction and release of the Note and Deed of Trust shall constitute the full Purchase Price for the Property. 48 2. Deed and Conveyance of Property. (a) On January 12, 2007, Tennessee Chips, LLC, without the prior written approval of Golden Flake Snack Foods, Inc., executed a Quitclaim Deed to the Property to Ronald B. Buchanan, Trustee, which Quitclaim Deed is of record in Instrument No. 20070125-0010088, Register's Office for Davidson County, Tennessee. In order to perform under the terms and conditions of this Contract, Seller agrees to cause Ronald B. Buchanan, Trustee, to execute a Special Warranty Deed to the Property to Purchaser and thereby convey the Property to the Purchaser subject only to the "Permitted Exceptions" as listed on Exhibit "B" attached hereto. Moreover, Seller agrees to cause Ronald B. Buchanan, Trustee, to comply with and satisfy the Schedule B-Section I requirements of the Title Commitment referred to herein, including, but not limited to, the following items under Schedule B-Section I: Items 1, 3, and 4 to the satisfaction of Purchaser and the Title Insurer. (b) At the Closing, the Seller shall cause Ronald B. Buchanan, Trustee, to execute and deliver to the Purchaser a special warranty deed ("Warranty Deed") selling and conveying to Purchaser fee simple title to the Property and warranting good and marketable title to the same free and clear of all liens and encumbrances other than the Permitted Exceptions as listed on Exhibit "B" attached hereto (The form of the "Warranty Deed" is attached as Exhibit "C"). 3. Title Insurance. (a) Purchaser has obtained, at Purchaser's expense, title insurance commitment No. 526324, dated April 21, 2008 ("Title Commitment") issued by Chicago Title Insurance Company (the "Title Insurer") providing for the issuance of an Owner's title insurance policy in favor of Purchaser as Owner, insuring fee simple title in Purchaser in the amount of the Purchase Price, which Commitment shall be certified and updated to the Closing Date. Purchaser will accept and Seller will cause Ronald B. Buchanan, Trustee, to convey title to the Property to Purchaser subject only to the exceptions to title as set forth under Item 3 and Items 5 through and including Item 10 of Schedule B-Section II of the Title Commitment and the 2007 property taxes, which exceptions are also listed on Exhibit "B" attached hereto as the "Permitted Exceptions". Purchaser shall pay for the title insurance policy to be issued in favor of Purchaser. 4. Survey. Prior to Closing, Purchaser may, at his option and at his expense obtain an accurate survey of the Property to be prepared by a surveyor licensed in the State of Tennessee, certified to Purchaser, Seller and the Title Insurer, correctly reflecting the existence and location of all easements, right-of-ways, public roads, highway access, encroachments, improvements and other matters affecting the Property. The survey shall contain a certification as to the flood zone classification and 100 year flood elevation. If a survey is obtained by Purchaser, it shall furnish a copy to Seller. 5. Seller Representations. Seller hereby agrees and represents that as of the date of this Contract and as of the Date of Closing, the following statements are and shall be true: 49 (a) Seller is a validly existing Tennessee limited liability company. Ronald B. Buchanan, Trustee, holds fee simple title to the Property, subject only to the Permitted Exceptions. Seller has full right to sell the Property, and this Contract is the duly authorized and binding act of Seller. (b) Except for the lease to Purchaser, there are no lease option agreements, service contracts, licenses, or other contracts which affect the Property, except for any such agreements listed on Exhibit 5(b). (c) All taxes and assessments constituting a lien upon the Property have been paid in full or shall be paid at or prior to closing. Seller has not been notified of any future improvements by any public authority, any part of the costs of which might be assessed against the Property. (d) To the best of Seller's knowledge, there are no laws, ordinances, or restrictions, or any changes contemplated therein, any judicial or administrative actions, any actions by adjacent landowners, any natural or artificial conditions upon the Property, any hazardous materials or conditions at or near the Property, or any other facts or conditions known to Seller which would have an adverse effect upon the Property or its value, or which might delay the immediate development of the Property, which facts or conditions have not been disclosed in writing to Buyer or disclosed by the Title Commitment. (e) To the best of Seller's knowledge, the Property has not been damaged or affected by flood or storm runoff water. (f) Except for the deteriorating condition of the roof, there shall be no material adverse change in the title, physical condition, and/or any other matter warranted or represented herein related to the Property between the date hereof and the date of closing. (g) Seller's only asset is the Property. (h) Seller has no unpaid debts, liabilities or obligations due and payable or which may become due and payable relating to the Property except as set forth on Exhibit 5(h) attached hereto. (i) Seller has never filed for bankruptcy nor had any involuntary petition filed against it or made any assignment for the benefit of its creditors. (j) There are no liens on the Property and no potential liens exist that may arise from mechanic's or materialmen's liens and there are not other creditors with potential lien claims against the Property. (k) The present fair market value of the Property in its present physical condition is approximately equal to the unpaid indebtedness under the Notes. 50 Except for the roof, Seller shall continue all routine maintenance and repair of the Property including that for the grounds, parking and drive areas, and all improvements, until the Closing Date. 6. Closing of Sale. The Closing shall be held on the 2nd date of May, 2008 (the "Closing Date"). The Closing shall occur at the offices of Chicago Title Insurance Company, 725 Cool Springs Blvd., Suite 160, Franklin, Tennessee 37067, or such other place as the parties may mutually agree. In the event the conditions precedent specified in paragraph 9 herein below are not satisfied on or prior to the Closing Date, then unless the contingencies not satisfied are waived in writing by Purchaser, this Contract shall be terminated and the earnest money deposit shall be returned to Purchaser. Purchaser shall not be required to close except upon satisfaction prior to closing of the conditions precedent specified in paragraph 9 below. At closing, all documents necessary for conveyance of the Property and issuance of the Title Insurance Policy to Purchaser by the Title Insurer shall be executed and delivered, all subject to the approval of Purchaser and the Title Insurer. Seller at closing shall execute and deliver all instruments reasonably deemed necessary by Purchaser and the Title Insurer to accomplish this transaction. 7. Prorations. Real estate taxes for the year in which closing occurs shall be assumed by the Purchaser. Any back taxes shall be paid by Purchaser. Any special assessments or roll-back taxes which may be a lien against the Property at the date of closing, or which are assessed for a period prior to closing, shall be paid by Seller. 8. Possession. Possession shall pass with delivery of deed, provided, however, Seller shall have until May 15, 2008, to remove from the Property the remaining equipment purchased from Seller by Prime Choice Foods. 9. Conditions Precedent to Purchaser's Obligations. Purchaser's obligations hereunder are expressly made subject to the satisfaction by Seller of each of the agreements and covenants set forth herein which are to be performed by Seller. In the event any of the agreements and covenants of Seller have not been satisfied, or waived in writing, as of the Closing Date, Purchaser may, at its sole election, terminate this Contract by notice of such to Seller, in which event Seller shall promptly refund the earnest money paid by Purchaser. 10. Default. Should Purchaser default in the performance of this Contract, then the earnest money paid shall be retained by Seller as liquidated damages, and Purchaser shall have no further liability hereunder, either for damages or specific performance. 11. Miscellaneous. This Contract is binding upon the heirs, successors, and assigns of the respective parties, and constitutes the entire agreement between the parties. Captions are for convenience only and shall not limit the scope or intent of this agreement, or any part hereof. Any notice required or allowed hereunder shall be hand-delivered or sent by United States certified mail, return receipt requested, postage prepaid, as follows: 51 To Purchaser: Mr. Mark W. McCutcheon President Golden Flake Snack Foods, Inc. One Golden Flake Drive Birmingham, Alabama 35233 Fax Number: (205) 458-7335 Copy to: John P. McKleroy, Jr. Spain & Gillon, L.L.C. The Zinszer Building 2117 2nd Avenue North Birmingham, Alabama 35203 Fax number: (205) 324-8866 To Seller: Mr. Steve Peak C/O Ronald B. Buchanan Suite 101 165 Indian Lake Blvd. Hendersonville, Tennessee 37075 Fax Number: (615) 822-1684 Copy to: Ronald B. Buchanan Suite 101 165 Indian Lake Blvd. Hendersonville, Tennessee 37075 Fax Number: (615) 822-1684 Where the circumstances require, the singular shall refer to the plural and the plural to the singular, and the use of one gender shall be applicable to all genders. This instrument is severable such that the invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of the remaining provisions. This Contract and the rights hereunder are not assignable, and the provisions hereof shall survive the closing. 52 12. Environmental Assessments. Any environmental assessments required by the Purchaser, his representatives or agents, shall be paid for by the Purchaser and a copy shall be furnished to the Seller. 13. Condition of Property. Seller makes no representations or warranties regarding the condition of the Property except to the extent expressly and specifically set forth herein. Purchaser has had the opportunity to determine, both personally and through or with a representative of Purchaser's choosing, any and all conditions of the Property material to Purchaser's decision to buy the Property. Except as otherwise stated in this Agreement, Purchaser accepts the Property in their present "AS IS" condition. 14. Casualty Loss and Condemnation. If, prior to Closing, the Property or any part thereof shall be destroyed or materially damaged by fire or other casualty, or condemned that is in excess of $100,000.00, Purchaser shall have the option either to terminate this Agreement or to consummate the transaction contemplated by this Agreement notwithstanding such condemnation, destruction or material damage. If Purchaser elects to consummate the transaction contemplated by this Agreement, Seller shall be entitled to receive the condemnation proceeds or settle the loss under all policies of insurance applicable to the destruction or damage and receive the proceeds of insurance applicable thereto, and Purchaser shall, at Closing receive a credit against the Purchase Price equal to the amount of such insurance or condemnation proceeds received by Seller. If Purchaser elects to terminate this Agreement as a result of a casualty loss or condemnation in excess of $100,000, the Earnest Money shall be returned to Purchaser, in which event this Agreement shall, without further action of the parties, become null and void and neither party shall have any rights or obligations under this Agreement. If, prior to Closing, there is any other damage or destruction or condemnation that is less than $100,000.00 to the Property or any part thereof, Seller shall either repair such damage prior to Closing or allow Purchaser a credit against the Purchase Price of the Equipment or Real Property, whichever is damaged or condemned, in an amount equal to the reasonably estimated cost of repair. 15. No Brokers. SELLER AND PURCHASER EACH REPRESENTS TO THE OTHER THAT IT HAS NO AGREEMENT TO PAY ANY COMMISSION TO ANY BROKER AS A RESULT OF THIS AGREEMENT OR SALE AND EACH PARTY AGREES TO INDEMNIFY, HOLD HARMLESS AND DEFEND THE OTHER FROM ANY AND ALL CLAIMS FROM REAL ESTATE BROKERS, AGENTS OR OTHER PARTIES CLAIMING TO BE ENTITLED TO A FEE, COMMISSION OR OTHER COMPENSATION FROM THE INDEMNIFYING PARTY AS A RESULT OF THE EXECUTION OF THIS AGREEMENT OR THE SALE CONTEMPLATED HEREIN. THE OBLIGATIONS OF THIS PARAGRAPH SHALL SURVIVE THE CLOSING. 16. Attorney's Fees and Recording Fees. The Seller shall be responsible for payment of its attorney's fees. Purchaser shall be responsible for payment of its attorney's fees. The recording fees and taxes imposed upon recordation of the deed shall be paid by Purchaser. (Signatures appear on the next page) 53 IN WITNESS WHEREOF, the parties have executed this Contract to be effective as of the last date written below. Seller: TENNESSEE CHIPS, LLC /s/ Steve Peak By: - ----------------------------------- Steve Peak Its: Member and Chief Manager Purchaser: GOLDEN FLAKE SNACK FOODS, INC. /s/ Mark W. McCutcheon By: - ----------------------------------- Mark W. McCutcheon Its: President STATE OF ____________ ) __________ COUNTY ) I, the undersigned authority, a notary public in and for said county in said state, hereby certify that Steve Peak, whose name is signed to the foregoing instrument in his capacity as Member and Chief Manager of Tennessee Chips, LLC., a Tennessee limited liability company, and who is known to me, acknowledged before me on this day that, being informed of the contents of said instrument, he executed the same voluntarily on the day the same bears date as the act of said corporation. Given under my hand and official seal this the _____ day of ________________, 2008. Notary Public My Commission Expires: -------------------- STATE OF ALABAMA ) JEFFERSON COUNTY ) I, the undersigned authority, a notary public in and for said county in said state, hereby certify that Mark W. McCutcheon, whose name is signed to the foregoing instrument in his capacity as President of Golden Flake Snack Foods, Inc., a Delaware corporation, and who is known to me, acknowledged before me on this day that, being informed of the contents of said instrument, he executed the same voluntarily on the day the same bears date as the act of said corporation. Given under my hand and official seal this the _____ day of ________________, 2008. Notary Public My Commission Expires: -------------------- 54 EXHIBIT "A" LEGAL DESCRIPTION ----------------- Parcel I: - --------- Land in Davidson County, Tennessee, being Lot No. 21 and the northerly one-half (1/2) of Lot 20 on the Map of Sidco Subdivision, of record in Book 2133, page 115, Register's Office for said County. Said Lot No. 21 and the northerly one-half (1/2) of Lot No. 20 adjoin and front together 150 feet on the easterly boundary of Kraft Drive and run back between parallel lines, 315 feet to a dead line. Parcel II: - ---------- Land in Davidson County, Tennessee, being Lot No. 22 and the southerly one-half of Lot 23 on the Map of Sidco Subdivision, of record in Book 2133, page 115, Register's Office for said County. Said Lots No. 22 and part of 23 front 150 feet on the easterly side of Kraft Drive and extend back between parallel lines 315 feet to the center line of the L. & N. lead track. Being the same property conveyed to Ronald B. Buchanan, Trustee, with full power to sell, mortgage or convey without joinder of beneficiary by Quitclaim Deed from Tennessee Chips, LLC, of record in Instrument No. 20070125-0010088, Register's Office for Davidson County, Tennessee. 55 EXHIBIT "B" PERMITTED EXCEPTIONS -------------------- 1. Taxes for the year of 2007 are unpaid and delinquent. Taxes for the year 2008 are a lien, not yet due and payable. 2. Subject to all matters shown on the Plan of Sidco Subdivision of record in Plat Book 2133, Page 115, as amended in Book 5842, page 627, Register's Office for Davidson County, Tennessee. 3. Restrictive Covenant of record in Book 6513, page 24, said Register's Office, as partially released by instrument of record in Book 8719, page 650, said Register's Office. 4. Mutual Easement of record in Book 5958, Page 861, Register's Office for Davidson County, Tennessee. 5. Easement for sanitary sewers and/or storm drainage granted Metropolitan Government of Nashville and Davidson County, Tennessee, of record in Book 4017, page 327, Register's Office for Davidson County, Tennessee. Exception to Easement as of record in Book 5846, Page 715, Register's Office for Davidson County, Tennessee. 6. Rights reserved with reference to uranium, thorium and all other material essential to production of fissionable materials as is fully set out in deed of record in Book 2152, page 347, Register's Office for Davidson County, Tennessee. 7. Easements as set out in instrument of record in Book 2293, page 555, Register's Office of Davidson County, Tennessee. 56 EX-31.1 3 a5762084ex31_1.txt EXHIBIT 31.1 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. ("registrant"), for the fiscal year ended May 30, 2008; 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 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 1 3a-1 5(e) and 1 5d-1 5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13 a-15(f) and 1 5d-1 5(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) 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 control 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 control over financial reporting. Date: August 22, 2008 /s/Mark W. McCutcheon - --------------------- Mark W. McCutcheon President and Chief Executive Officer 57 EX-31.2 4 a5762084ex31_2.txt EXHIBIT 31.2 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. ("registrant"), for the fiscal year ended May 30, 2008; 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 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 1 3a-1 5(e) and 1 5d-1 5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13 a-15(f) and 1 5d-1 5(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) 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 control 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 control over financial reporting. Date: August 22, 2008 /s/Patty Townsend - ----------------- Patty Townsend Vice-President and Principal Financial Officer 58 EX-32.1 5 a5762084ex32_1.txt EXHIBIT 32.1 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 30, 2008 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 22, 2008 /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. 59 EX-32.2 6 a5762084ex32_2.txt EXHIBIT 32.2 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 30, 2008 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 22, 2008 /s/Patty Townsend - ----------------- Patty Townsend Vice-President and Principal 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. 60 10-K 7 graph.pdf GRAPH begin 644 graph.pdf M)5!$1BTQ+C0-)>+CS],-"C8@,"!O8FH\/"](6S4S-B`Q-#1=+TQI;F5A-IB8&#@9&!@2F$``ODH!E3`!,0L#!P-R&*<4,S`H,3`R_1" MX@`#0X/92AVF39F,`6!A1@8&Q7U0S18``08`_*T'C0T*96YD7!E+U!A9V4O4&%R96YT(#,@,"!2+U)O=&%T M92`P+TUE9&EA0F]X6S`@,"`V,3(@-SDR72]#513=Q;'?V_)GI"5L,-C#5N`L`:0-6QAD1T$40A)"`$20DC8 M!4%$!11%1(2JE3+6;71&3T6=+JYCK0[6?>K2`_4PZN@XM!;7CIT7.$>=3F>F MT^\?[_=\P"@)Z6JM=4P"P"-UJ#/2HS%%A448J0)``,*(`(1 M`#)YK2XM.R$'X)+&2[!:W`G\BYY>!Y!IO2),RL`P\/^)+=?I#0!`&3@'*)2U M:65)H91$^OQ!'&V-+%JGKWG?.8YVL0*C5:!LREGG4*C M,/%IG%?7&94X(ZDX=]6IE?4X7\79I/\W!2K4F"@T5(PE*>NKE`:# M,$,FKY3I%9BD6J.3:1L!F+_SG#BFVF)XD8-%H<'!0G\?T3N%^J^;OU"FWL[3 MD\RYGD'\"V]M/^=7/0J`>!:OS?JWMM(M`(RO!,#RYEN;R_L`,/&^';[XSGWX MIGDI-QAT8;Z^]?7U/FJEW,=4T#?ZGPZ_0.^\S\=TW)OR8''*,IFQRH"9ZB:O MKJHVZK%:G4RNQ(0_'>)?'?CS>7AG*J46C\C#ITRM5>'MUBK4!G6U%E-K M_U,3?V783S0_U[BX8Z\!K]@'L"[R`/*W"P#ET@!2M`W?@=[T+962!S+P-=_A MWOS;`+#8#L8`[O!?G`0C(./ MP0GP1W`>?`FN@5M@$DR#AV`&/`6O(`@B00R("UE!#I`KY`7Y0V(H$HJ'4J$L MJ``J@520%C)"+=`*J`?JAX:A'=!NZ/?04>@$=`ZZ!'T%34$/H.^@ES`"TV$> M;`>[P;ZP&(Z!4^`<>`FL@FO@)K@37@E&!I%19#]R##F+7$$FD4?("Y2(@6=0F?0UP0&P9;@10@C2`F+""I"/:&+,$C82?B( M<(9PC3!->$HD$OE$`3&$F$0L(%80FXF]Q*W$`\3CQ$O$N\19$HED1?(B19#2 M23*2@=1%VD+:1_J,=)DT37I.II$=R/[D!'(A64ON(`^2]Y`_)5\FWR._HK`H MKI0P2CI%06FD]%'&*,IMZA,:C>9$ M"Z5ETM2TY;0AVN]HG].F:"_H'+HG74(OHAOIZ^@?TH_3OZ(_83`8;HQH1B'# MP%C'V,TXQ?B:\=R,:^9C)C53F+69C9@=-KML]IA)8;HR8YA+F4W,0>8AYD7F M(Q:%Y<:2L&2L5M8(ZRCK!FN6S66+V.EL#;N7O8=]CGV?0^*X<>(Y"DXGYP/. 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