10-K 1 0001.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.000-04339 GOLDEN ENTERPRISES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 63-0250005 (I.R.S Employer Identification No.) Suite 212, 2101 Magnolia Avenue, South Birmingham, Alabama (Address of Principal Executive Offices) 35205 (Zip Code) Registrant's Telephone Number including area code (205) 326-6101 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 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. [X] State the aggregate market value of the voting stock held by non-affiliates of the registrant as of August 4, 2000. Common Stock, Par Value $0.66 2/3 - $13,633,625 Indicate the number of shares outstanding of each of the Registrant's Classes of Common Stock, asof August 4, 2000. Class Common Stock, Par Value $0.66 2/3 Outstanding at August 4, 2000 11,973,000 Shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Proxy Statement for the year ended May 31, 2000 are incorporated by reference into Part III. TABLE OF CONTENTS FORM 10-K ANNUAL REPORT - 2000 GOLDEN ENTERPRISES, INC. PART I Page Item 1. Business 3 Item 2. Properties 5 Item 3. Legal Proceedings 6 Item 4. Submission of Matters to a Vote of Security Holders 6 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 7 Item 6. Selected Financial Data 8 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 9 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 11 Item 8. Financial Statements and Supplementary Data 11 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29 PART III Item 10. Directors and Executive Officers of the Registrant 29 Item 11. Executive Compensation 29 Item 12. Security Ownership of Certain Beneficial Owners and Management 29 Item 13. Certain Relationships and Related Transactions 29 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 30 PART I ITEM 1. - BUSINESS Golden Enterprises, Inc. (the "Company") is a holding company which owns all of the issued and outstanding capital stock of Golden Flake Snack Foods, Inc., a wholly-owned operating subsidiary company ("Golden Flake"). Golden Enterprises is paid a fee by Golden Flake for providing management services for it. The Company was originally organized under the laws of the State of Alabama as Magic City Food Products, Inc. on June 11, 1946. On March 11, 1958, it adopted the name Golden Flake, Inc. On June 25, 1963, the Company purchased Don's Foods, Inc., a Tennessee corporation which was merged into the Company on December 10, 1966. The Company was reorganized December 31, 1967 as a Delaware corporation without changing any of its assets, liabilities or business. On January 1, 1977, the Company, which had been engaged in the business of manufacturing and distributing potato chips, fried pork skins, cheese curls and other snack foods, spun off its operating division into a separate Delaware corporation known as Golden Flake Snack Foods, Inc. and adopted its present name of Golden Enterprises, Inc. The Company owns all of the issued and outstanding capital stock of Golden Flake Snack Foods, Inc. Golden Flake Snack Foods, Inc. General Golden Flake Snack Foods, Inc. ("Golden Flake") is a Delaware corporation with its principal place of business and home office located at One Golden Flake Drive, Birmingham, Alabama. Golden Flake manufacture's and distributes a full line of salted snack items, such as potato chips, tortilla chips, corn chips, fried pork skins, baked and fried cheese curls, onion rings and buttered popcorn. These products are all packaged in flexible bags or other suitable wrapping material. Golden Flake also sells a line of cakes and cookie items, canned dips, pretzels, Peanut butter crackers, cheese crackers, dried meat products, and nuts packaged by other manufacturers using the Golden Flake label. No single product or product line accounts for more than 50% of Golden Flake's sales, which affords some protection against loss of volume due to a crop failure of major agricultural raw materials. Raw Materials Golden Flake purchases raw materials used in manufacturing and processing its snack food products on the open market and under contract through brokers and directly from growers. A large part of the raw materials used by Golden Flake consists of farm commodities which are subject to precipitous change in supply and price. Weather varies from season to season and directly affects both the quality and supply available. Golden Flake has no control of the agricultural aspects and its profits are affected accordingly. Distribution Golden Flake sells its products through its own sales organization and independent distributors to commercial establishments which sell food products in Alabama and in parts of Tennessee, Kentucky, Georgia, Florida, Mississippi, Louisiana, North Carolina, South Carolina, Arkansas and Missouri. The products are distributed by approximately 453 route salesmen who are supplied with selling inventory by the Company's trucking fleet which operates out of Birmingham, Alabama, Nashville, Tennessee, and Ocala, Florida. All of the route salesmen are employees of Golden Flake and use the direct store door delivery method. Golden Flake is not dependent upon any single customer, or a few customers, the loss of any one or more of which would have a material adverse effect on its business. No single customer accounts for more than 10% of its total sales. Golden Flake has a fleet of 792 company owned vehicles to support the route sales system, including 34 tractors and 100 trailers for long haul delivery to the various company warehouses located throughout its distribution areas, 593 store delivery vehicles and 65 cars and miscellaneous vehicles. Golden Flake also leases 6 tractors. Competition The snack foods business is highly competitive. In the area in which Golden Flake operates, many companies engage in the production and distribution of food products similar to those produced and sold by Golden Flake. Most, if not all, of Golden Flake's products are in direct competition with similar products of several local and regional companies and at least one national company, the Frito Lay Division of Pepsi Co., Inc., which is larger in terms of capital and sales volume than is Golden Flake. Golden Flake is unable to state its relative position in the industry. Golden Flake's marketing thrust is aimed at selling the highest quality product possible and giving good service to its customers, while being competitive with its prices. Golden Flake constantly tests the quality of its products for comparison with other similar products of competitors and maintains tight quality controls over its products. Employees Golden Flake employs approximately 1,200 employees. Approximately 700 employees are involved in route sales and sales supervision, approximately 400 are in production and production supervision, and approximately 100 are management and administrative personnel. Golden Flake believes that the performance and loyalty of its employees are the most important factors in the growth and profitability of its business. Since labor costs represent a significant portion of Golden Flake's expenses, employee productivity is important to profitability. Golden Flake considers its relations with its employees to be excellent. Golden Flake has a 401(k) Profit Sharing Plan and an Employee Stock Ownership Plan designed to reward the long term employee for his loyalty. In addition, the employees are provided medical insurance, life insurance, and an accident and sickness salary continuance plan. Golden Flake believes that its employee wage rates are competitive with those of its industry and with prevailing rates in its area of operations. Environmental Matters There have been no material effects of compliance with government provisions regulating discharge of materials into the environment. Recent Developments Since the beginning of its last fiscal year, Golden Flake has implemented a restructuring plan approved by the Board of Directors in January 2000 whereby the Nashville plant which primarily manufactured low fat snacks was closed, a voluntary retirement package was offered to a group of qualified employees, and the Company-operated distribution system for Golden Flake Brand products in three fringe sales regions in Central Florida was discontinued. Further details concerning the Restructuring Plan are presented in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operation. Other than these changes, no significant changes have occurred in the kinds of products manufactured or in the markets or methods of distribution, and no material changes or developments have occurred in the business done and intended to be done by Golden Flake. Executive Officers Of Registrant And Its Subsidiary Name and Age Position and Offices with Management John S. Stein 63 Mr. Stein is Chairman of the Board, Chief Executive Officer and President of the Company. He was elected Chief Executive Officer on June 1, 1991, Chairman on June 1, 1996 and reassumed the position ofPresident on June 1, 2000. He also served as President of the Company from 1985 to November 1998. Mr. Stein served as President of Golden Flake Snack Foods, Inc. from 1976 to September 20, 1991. Mr Stein has been employed with the Company and its subsidiaries since 1961. Mr. Stein is elected Chairman, Chief Executive Officer and President annually, and his present term will expire on May 31, 2001. John H. Shannon, 63 Mr. Shannon has been employed with the Company since 1962, He was elected Controller in 1976, Secretary in 1978 and Vice-President in 1979, and has served in these capacities since then. Mr. Shannon is elected to his positions on an annual basis, and his present term of office will expire on May 31, 2001. Mark W. McCutcheon, 45 Mr. McCutcheon is President of Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of the Company. He was elected President on November 1, 1998, and has been employed by Golden Flake since 1980. During his employment, he has served as Plant Manager of the Ocala, Florida Plant, Plant Manager of the Birmingham, Alabama Plant, Vice President of Manufacturing, Vice President of Operations, and Executive Vice President. Mr. McCutcheon is elected President annually, and his present term will expire on May 31, 2001. ITEM 2. - PROPERTIES The headquarters of the Company are located at Suite 212, 2101 Magnolia Avenue South, Birmingham Alabama 35205. The Company occupies approximately 1300 square feet of office space under lease. The properties of the subsidiary are described below. Golden Flake Manufacturing Plants and Office Headquarters The main plant and office headquarters of Golden Flake are located at One Golden Flake Drive, Birmingham, Alabama, and are situated on approximately 40 acres of land which is serviced by a railroad spur track. This facility consists of 3 buildings which have a total of approximately 300,000 square feet of floor area. The plant manufactures a full line of Golden Flake products. Golden Flake maintains a garage and vehicle maintenance service center from which it services, maintains, repairs and rebuilds its fleet and delivery trucks. Golden Flake has adequate employee and fleet parking. Approximately 17 acres of the Birmingham property is undeveloped. This property is zoned for industrial use and is readily available for future use. Plans for the utilization of this property have not been finalized. Golden Flake has a manufacturing plant in Nashville, Tennessee, which is located at 2930 Kraft Drive. The building is of masonry construction and has approximately 70,000 square feet of floor space. The plant was closed on May 31, 2000. Prior to its closing, Golden Flake had manufactured potato chips, baked tortilla chips and pretzels at this location. The Company also owns two acres of land across the street from the Nashville Plant which had been used for parking. The plant, equipment and parking lot are being marketed for sale and/or lease. 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 and is located on a 56-acre site on Silver Springs Boulevard. The Company manufactures corn chips, tortilla chips and potato chips from this facility. This manufacturing plant, with allowance for future expansion, will use approximately 27 acres of the 56-acre site. The remaining 29 acres are undeveloped and are readily available for future use for commercial and/or light industrial development. Plans for the utilization of this property have not been finalized. The manufacturing plants, office headquarters and additional lands are owned by Golden Flake free and clear of any debts. Distribution Warehouses Golden Flake owns branch warehouses in Birmingham, Montgomery, Pelham, Midfield, Demopolis, Fort Payne, Muscle Shoals, Huntsville, Phenix City, Tuscaloosa, Mobile, Dothan and Oxford, Alabama; Gulfport and Jackson, Mississippi; Chattanooga, Knoxville and Memphis, Tennessee; Decatur, Marietta, Forest Park and Macon, Georgia; Jacksonville, Panama City, Tallahassee and Pensacola, Florida; Baton Rouge and New Orleans, Louisiana; and Little Rock, Arkansas. The warehouses vary in size from 2,400 to 8,000 square feet. All distribution warehouses are owned free and clear of any debts. Vehicles Golden Flake owns a fleet of 792 vehicles which includes 593 route trucks, 34 tractors, 100 trailers and 65 cars and miscellaneous vehicles. There are no liens or encumbrances on Golden Flake's vehicle fleet. Golden Flake also leases 6 tractors and owns a 1987 Cessna Citation II aircraft. ITEM 3. - LEGAL PROCEEDINGS There are no material pending legal proceedings against the Company or its subsidiary other than ordinary routine litigation incidental to the business of the Company and its subsidiary. ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. PART II ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS GOLDEN ENTERPRISES, INC. AND SUBSIDIARY MARKET AND DIVIDEND INFORMATION The Company's common stock is traded in the over-the-counter market under the "NASDAQ" symbol, GLDC, and transactions are reported through the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System. The following tabulation sets forth the high and low sales prices for the common stock during each quarter of the fiscal years ended May 31, 2000 and 1999 and the amount of dividends paid per share in each quarter. The Company currently expects that comparable regular cash dividends will be paid in the future. Market Price Dividends Paid Quarter High Low Per Share Fiscal 2000 First $ 4 1/8 $ 3 1/16 $ .06 Second 4 2 17/32 .06 Third 4 2 5/16 .06 Fourth 3 3/8 2 3/4 .06 Fiscal 1999 First $ 6 5/8 $ 5 3/8 $ .12 Second 6 5/8 5 .12 Third 5 7/8 3 1/2 .06 Fourth 4 1/4 2 1/2 .06 As of August 4, 2000, there were approximately 1,600 shareholders of record. ITEM 6. - SELECTED FINANCIAL DATA GOLDEN ENTERPRISES, INC. AND SUBSIDIARY FINANCIAL REVIEW (Dollar amounts in thousands, except per share data) Year Ended May 31, 2000 1999 1998 1997 1996 Operations Net sales and other operating income $126,936 $129,564 $ 129,363 $138,427 $ 127,150 Investment income 67 66 160 286 675 Total revenues 127,003 129,630 129,523 138,713 127,825 Cost of sales 57,146 60,283 58,923 63,548 57,331 Selling, general and administrative expenses 65,138 67,671 64,728 69,845 65,419 Interest - - - - - Restructuring charge 2,565 - - - - Income before income taxes 2,154 1,676 5,872 5,320 5,075 Federal and state income taxes 911 603 2,171 1,832 1,700 Net income 1,243 1,073 3,701 3,488 3,375 Financial data Depreciation and amortization $ 3,230 $ 3,309 $ 3,183 $ 2,853 $ 2,486 Capital expenditures, net of disposals 149 1,861 3,666 3,611 6,216 Working capital 15,915 11,642 13,516 15,887 19,053 Long-term debt. 1,807 1,579 1,285 1,049 823 Stockholders' equity 30,528 32,504 36,089 38,253 40,582 Total assets. 41,433 41,912 46,925 49,569 48,846 Common stock data Basic and diluted net income $ .10 $ .09 $ .30 $ .29 $ .28 Dividends .24 .36 .48 .48 .47 Book value 2.53 2.67 2.96 3.13 3.32 Price range 4 1/8-2 5/16 6 5/8-2 1/2 7 3/4-6 3/4-6 7/8 9 3/4-6 3/4 Financial statistics Current ratio 3.12 2.99 2.79 2.90 4.37 Net income as percent of total revenues 1.0% 0.8% 2.9% 2.5% 2.6% Net income as percent of stockholders' equity (a). 3.9% 3.1% 10.0% 8.8% 8.0% Other data Weighted average common shares outstanding 12,154,057 12,171,043 12,205,950 12,205,950 12,243,283 Common shares outstanding at year-end 12,065,000 12,160,950 12,205,950 12,205,950 12,205,950 Approximate number of stockholders 1,600 1,600 1,600 1,800 1,800 (a) Average amounts at beginning and end of fiscal year. Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations GOLDEN ENTERPRISES, INC AND SUBSIDIARY Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Working capital was $15.9 million at May 31, 2000 compared to $11.6 million at May 31, 1999. Net cash provided by operations amounted to $8.4 million in fiscal year 2000, $2.1 million in fiscal year 1999 and $7.6 million in fiscal year 1998. There was a net cash usage of $4.4 million to increase investment securities this year compared to a net decrease in investment securities providing $3.0 million in cash in 1999, and $0.9 million in 1998. Additions to property, plant and equipment, net of disposals, were $0.1 million, $1.9 million, and $3.7 million in fiscal years 2000, 1999, and 1998, respectively, and are expected to be about $1.5 million in 2001. Cash dividends of $2.9 million, $4.4 million and $5.9 million were paid during fiscal years 2000, 1999, and 1998, respectively. Cash in the amount of $0.3 million was used to purchase treasury shares in fiscal years 2000 and 1999, and no cash was used for this purpose during fiscal year 1998. Long-term liabilities as a percentage of total capitalization was 5.3% at May 31, 2000. The Company's current ratio at the year end was 3.12 to 1.00. Operating Results Net sales and other operating income decreased by 2.0% in fiscal year 2000, increased by 0.2% in fiscal year 1999 and decreased by 6.5% in fiscal year 1998. The sales decrease for fiscal 2000 was primarily a result of discontinuing the Company-operated distribution of Golden Flake Branded products in three fringe sales regions in central Florida as part of the restructuring plan which is explained further in a separate section of this Management's Discussion. Although sales for 1999 were approximately equal to those for 1998, it was necessary to increase discount spending considerably in order to keep sales at the 1998 level. The drop in sales for 1998 from 1997 was primarily caused by decisions made by three major accounts in reaction to very aggressive spending by a competitor. The Company's investment income was 3.1% of income before income taxes in 2000, 4.0% in 1999, and 2.7% in 1998. Investment income has dropped considerably over the past three years because of the decrease in investment securities which were sold to finance capital expenditures that were incurred in developing several new products. At May 31, 2000, investment securities had increased to $4.42 million from $0.06 million at May 31, 1999, so investment income should be higher in fiscal year 2001. Cost of sales as a percentage of net sales amounted to 45.3% in 2000, 46.8% in 1999, and 45.9% in 1998. Favorable trends in commodity prices and packaging cost were the major factors causing the improvement in cost of sales for 2000. Selling general and administrative expenses were 51.6% of sales in 2000, 52.6% in 1999, and 50.4% in 1998. The improvement in fiscal 2000 was primarily due to lower selling and delivery cost brought about by the exiting of the three fringe sales regions in central Florida as part of the restructuring plan. An increase in discount spending in fiscal 1999 was the major reason for the unfavorable comparison with 1998. In 1998 there was a significant reduction in advertising and promotional expenses which produced a favorable comparison with 1997 expenses. The Company's effective income tax rates for 2000, 1999, and 1998 were 42.3%, 36.0% and 37.0%, respectively. Note five to the consolidated financial statements provides additional information about the provision for income taxes. Market Risk The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which the company is exposed are interest rates on its investment securities, and commodity prices, affecting the cost of its raw materials. The Company's investment securities consist of short-term marketable securities. Presently these are variable rate money market mutual funds and municipal obligations. Assuming year-end 2000 variable rate investment levels, a one-point change in interest rates would impact interest income by $39,104. 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. Year 2000 The Company incurred no material adverse effect related to Year 2000 issues. Inflation Certain costs and expenses of the Company are affected by inflation, and the Company's prices for its products over the last nine years have remained relatively flat. The Company will contend with the effect of further inflation through efficient purchasing, improved manufacturing methods, pricing, and by monitoring and controlling expenses. Environmental Matters There have been no material effects of compliance with governmental provisions regulating discharge of materials into the environment. Restructuring Charges The restructuring charge of $2,564,892 recognized in the fourth quarter relates to a restructuring plan approved by the Board of directors in January 2000 whereby the Nashville plant which primarily manufactured low fat snacks was closed, a voluntary retirement package was offered to a group of qualified employees, and the Company-operated distribution system for Golden Flake Brand products in three fringe sales regions in Central Florida was discontinued. The following is a summary of the one-time restructuring charge to expense for the year ended May 31, 2000. Employee termination benefits $ 1,335,550 Other Charges 1,229,342 Total restructuring charge $ 2,564,892 Net after tax $ 1,607,892 Per share $ .13 The employee related termination benefits of $1,335,550 primarily includes severance costs for 104 employees, 10 of which accepted the voluntary retirement package, 71 of which were employed in the three fringe sales regions of Central Florida and 23 of which were employed at the Nashville plant. The other charges of $1,229,342 consisted primarily of gains and losses on disposal of property and equipment and the cost related to the exiting of sales regions in Central Florida. The net book value of $3,324,683, carried on the balance sheet as "net assets held for disposition," is for the property and equipment at the closed Nashville plant for which a sale is actively being pursued. Forward-Looking Statements This discussion contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those forward-looking statements. Factors that may cause actual results to differ materially include price competition, industry consolidation, raw material costs and effectiveness of sales and marketing activities, as described in the Company's filings with the Securities and Exchange Commission. ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations- Market Risk beginning on page 9. ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the registrant and its subsidiary for the year ended May 31, 2000, consisting of the following, are contained herein: Consolidated Balance Sheets - May 31, 2000 and 1999 Consolidated Statements of Income - Years ended May 31, 2000, 1999 and 1998 Consolidated Statements of - Years ended May 31, 1000, 1999 and 1998 Cash Flows Consolidated Statements of Changes - Years ended May 31, 2000, 1999 and 1998 in Stockholders' Equity Notes to Consolidated Financial Statements - Years ended May 31, 2000, 1999 and 1998 Quarterly Results of Operations - Years ended May 31, 2000 and 1999 [This page left blank intentionally.] REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Golden Enterprises, Inc. We have audited the accompanying consolidated balance sheets of Golden Enterprises, Inc. and subsidiary as of May 31, 2000 and 1999, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended May 31, 2000. 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden Enterprises, Inc. and subsidiary as of May 31, 2000 and 1999, and the consolidated results of their operations and their cash flows for each of the three years in the period ended May 31, 2000, in conformity with generally accepted accounting principles. Birmingham, Alabama July 6, 2000 DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP CONSOLIDATED BALANCE SHEETS May 31, 2000 and 1999 ASSETS 2000 1999 Current Assets: Cash and cash equivalents $ 835,074 $ 227,120 Investment securities available-for-sale 4,421,843 61,941 Receivables: Trade accounts 9,015,975 10,143,145 Other 188,319 203,378 9,204,294 10,346,523 Less: Allowance for doubtful accounts 600,000 111,000 8,604,294 10,235,523 Inventories: Raw materials 1,743,910 2,224,946 Finished goods 2,298,435 2,403,663 4,042,345 4,628,609 Prepaid expenses 2,203,930 2,348,975 Net assets held for disposition 3,324,683 - Total current assets 23,432,169 17,502,168 Property, Plant and equipment: Land 3,528,054 3,790,600 Buildings 17,021,709 19,456,338 Machinery and equipment 34,205,642 42,770,602 Transportation equipment 16,381,683 17,077,882 71,137,088 83,095,422 Less accumulated depreciation 56,017,880 61,570,336 15,119,208 21,525,086 Other Assets 2,881,880 2,884,498 $ 41,433,257 $ 41,911,752 See Accompanying Notes to Consolidated Financial Statements. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 Current Liabilities: Checks outstanding in excess of bank balances $ 620,465 $ 962,474 Accounts payable 4,998,328 3,689,615 Other accrued expenses 1,737,359 952,366 Deferred income taxes 123,605 255,820 Current installments of long-term liabilities 37,648 - Total current liabilities 7,517,405 5,860,275 Long-term liabilities 1,806,633 1,579,453 Deferred income taxes 1,581,252 1,968,005 Commitments and Contingencies - - Stockholders' Equity: Common stock - $.66 2/3 par value: Authorized 35,000,000 shares; issued 13,828,793 shares 9,219,195 9,219,195 Additional paid-in capital 6,499,554 6,499,554 Retained earnings 24,686,435 26,361,690 Treasury shares - at cost (1,763,793 shares in 2000 and 1,667,843 shares in 1999). Accumulated other comprehensive income - - Total stockholders' equity 30,527,967 32,504,019 Total $ 41,433,257 $ 41,911,752 (9,877,217) (9,576,420) CONSOLIDATED STATEMENTS OF INCOME Years ended May 31, 2000, 1999 and 1998 2000 1999 1998 Revenues: Net sales $ 126,182,156 $ 128,740,552 $ 128,496,511 Other income, including gain on sale of property and equipment of $250,180 in 2000, $536,709 in 1999 and $450,923 in 1998 753,385 823,363 866,327 Investment income 67,454 66,567 159,956 Total revenues 127,002,995 129,630,482 129,522,794 Cost And Expenses: Cost of sales 57,146,571 60,283,113 58,922,656 Selling, general and administrative expenses 64,627,686 67,416,243 64,172,339 Contributions to employee 401(k) profit-sharing and employee stock ownership plans 510,000 255,020 556,240 Restructuring charge 2,564,892 - - Total costs and expenses 124,849,149 127,954,376 123,651,235 Income before income taxes 2,153,846 1,676,106 5,871,559 Provision for income taxes: Currently payable: Federal 1,242,000 526,000 1,800,000 State 188,000 91,000 282,000 Deferred taxes (519,000) (14,000) 89,000 Total provision for income taxes 911,000 603,000 2,171,000 Net income $ 1,242,846 $ 1,073,106 $ 3,700,559 Per share of common stock: Basic earnings per share $ 0.10 $ 0.09 $ 0.30 Basic weighted shares outstanding 12,154,057 12,171,043 12,205,950 Diluted earnings per share $ 0.10 $ 0.09 $ 0.30 Diluted weighted shares outstanding 12,154,057 12,171,411 12,205,950 See Accompanying Notes to Consolidated Financial Statements. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended May 31, 2000, 1999, and 1998 2000 1999 1998 Cash flows from operating activities: Net income $ 1,242,846 $ 1,073,106 $ 3,700,559 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,230,321 3,309,182 3,183,490 Salary continuation benefits 227,180 294,910 235,368 Deferred income taxes (519,000) (14,000) (89,000) Gain on sale of property and equipment (250,180) (536,709) (450,923) Change in operating assets and liabilities Decrease in receivables - net 1,631,229 973,263 769,681 Decrease in inventories 586,264 155,959 612,272 Decrease (increase) in prepaid expenses 145,045 (449,681) 301,288 Decrease (increase) in other assets - long-term 2,618 (17,817) (47,763) Increase (decrease) in accounts payable 1,308,713 (2,106,083) (825,385) (Decrease) in accrued income taxes - (213,813) (19,792) Increase (decrease) in accrued expenses 784,993 (351,983) 43,314 Increase in current installments of long-term liabilities 37,648 - - Net cash provided by operating activities 8,427,677 2,116,334 7,591,109 Cash flows from investing activities: Purchase of property, plant and equipment (1,065,586) (2,036,114) (3,725,447) Proceeds from sale of property, plant and equipment 1,166,672 712,244 510,135 Investment securities available-for-sale: Purchases (6,909,902) (4,147,450) (9,649,257) Proceeds from disposals 2,550,000 7,162,973 10,576,211 Net cash (used in) provided by investing activities (4,258,816) (2,288,358) 1,691,653 Cash flows from financing activities: (Decrease) increase in checks outstanding in excess of bank balances (342,009) 962,474 - Purchases of treasury shares (300,797) (274,887) - Cash dividends paid (2,918,101) (4,383,323) (5,858,856) Net cash (used in) financing activities (3,560,907) (3,695,736) (5,858,856) Net increase (decrease) in cash and cash equivalents 607,954 112,251 (556,105) Cash and cash equivalents at beginning of year 227,120 114,869 670,974 Cash and cash equivalents at end of year $ 835,074 $ 227,120 $ 114,869 Supplemental information: Cash paid during the year for: Income taxes $ 1,349,392 $ 1,053,696 $ 2,102,972 Interest $ - $ - $ - See Accompanying Notes to Consolidated Financial Statements. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Years ended May 31, 2000, 1999 and 1998 Additional Common Paid-in Retained Stock Capital Earnings Balance, June 1, 1997 $ 9,219,195 $ 6,499,554 $31,830,204 Net income - 1998 - - 3,700,559 Changes in unrealized gain (losses) on securities available-for-sale - - - Comprehensive income Cash dividends declared - $.48 per share - - (5,858,856) Balance, May 31, 1998 9,219,195 6,499,554 29,671,907 Net income - 1999 - - 1,073,106 Changes in unrealized gain (losses) on securities available-for-sale - - - Comprehensive income Cash dividends declared - $ .36 per share - - - (4,383,323) Treasury shares purchased - - - Balance, May 31, 1999 9,219,195 6,499,554 26,361,690 Net income - 2000 - - 1,242,846 Changes in unrealized gain (losses) on securities available-for-sale - - - Comprehensive income - - - Cash dividends declared - $.24 per share - - - (2,918,101) Treasury shares purchased - - - Balance, May 31, 2000 $ 9,219,195 $ 6,499,554 $24,686,435 Accumulated Other Com Total Compre Treasury prehensive Stockholders' hensive Shares Income Equity Income Balance, June 1, 1997 $(9,301,533) $5,373 $38,252,793 Net income - 1998 - - 3,700,559 $3,700,559 Changes in unrealized gain (losses) on securities available for sale - (5,373) (5,373) (5,373) Comprehensive income $3,695,186 Cash dividends declared - $.48 per shares - - - (5,858,856) Balance, May 31, 1998 (9,301,533) - 36,089,123 Net Income - 1999 - - 1,073,106 $1,073,106 Changes in unrealized gain (losses) on securities available-for-sale - - - - Comprehensive income $1,073,106 Cash dividends declared - $.36 per share - - - (4,383,323) Treasury shares purchased (274,887) - (274,887) Balance, May 31, 1999 (9,576,420) - 32,504,019 Net income - 2000 - - 1,242,846 $1,242,846 Changes in unrealized gain (losses) on securities available-for-sale - - - - Comprehensive income - - - $1,242,846 Cash dividends declared - $.24 per share - - (2,918,101) Treasury shares purchased (300,797) - (300,797) Balance, May 31, 2000 $(9,877,217) - $30,527,967 See Accompanying Notes to Consolidated Financial Statements. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS May 31, 2000, 1999 and 1998 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation The consolidated financial statements include the accounts of Golden Enterprises, Inc. and its wholly- owned subsidiary: Golden Flake Snack Foods, Inc., (the "Company"). All significant intercompany transactions and balances have been eliminated. Revenue Recognition The Company recognizes sales and related costs upon delivery or shipment of products to its customers. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Investment Securities Investment securities at May 31, 2000 are principally instruments of municipalities and of short-term mutual municipal funds. The Company currently classifies all investment securities as available-for-sale. Securities accounted for as available-for-sale includes bonds, notes, common stock and non- redeemable preferred stock not classified as either held-to-maturity or trading. Securities classified as available-for-sale are required to be reported at fair value with unrealized gains and losses, net of taxes, excluded from earnings and shown separately as a component of accumulated other comprehensive income within stockholders' equity. Realized gains and losses on the sale of securities available-for-sale are determined using the specific-identification method. Inventories Inventories are stated at the lower of cost or market. Cost is computed on the first-in, first-out method. The opening and closing inventories used in computing cost of sales are as follows: Date Amount May 31, 1998 $ 4,784,568 May 31, 1999 4,628,609 May 31, 2000 4,042,345 Property, Plant and Equipment Property, plant and equipment are stated at cost. For financial reporting purposes, depreciation and amortization have been provided principally on the straight-line method over the estimated useful lives of the respective assets. Accelerated methods are used for tax purposes. Expenditures for maintenance and repairs are charged to operations as incurred; expenditures for renewals and betterments are capitalized and written off by depreciation and amortization charges. Property retired or sold is removed from the asset and related accumulated depreciation accounts and any profit or loss resulting there-from is reflected in the statements of income. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Employee Benefit Plans The Company has trusteed "Qualified Profit-Sharing Plans" that were amended and restated effective June 1, 1996 to add a 401(k) salary reduction provision. Under this provision , employees can contribute up to fifteen percent of their compensation to the plan on a pretax basis subject to regulatory limits; and the Company, at its discretion, can match up to 4 percent of the participants ' compensation. The annual contributions to the plans are determined by the applicable Board of Directors. Total plan expenses for the years ended May 31, 2000, 1999 and 1998 were $255,000, $255,020 and $505,179, respectively. The Company has an Employee Stock Ownership Plan that covers all full-time employees. The annual contributions to the plan are amounts determined by the Board of Directors of the Company. Annual contributions are made in cash or common stock of the Company. The Employee Stock Ownership Plan expenses for the years ended May 31, 2000, 1999 and 1998 were $255,000, $ -0- and $51,061, respectively. Each participant's account is credited with an allocation of shares acquired with the Company's annual contributions, dividends received on ESOP shares and forfeitures of terminated participants' nonvested accounts. The contributions to the 401(k) Profit-Sharing Plans and the Employees Stock Ownership Plan may not exceed fifteen percent of the total compensation of all participating employees. The Company expects to continue these plans indefinitely; however, the rights to modify, amend or terminate the plans have been reserved. The Company has a salary continuation plan with certain of its key officers whereby monthly benefits will be paid for a period of fifteen years following retirement. The Company is accruing the present value of such retirement benefits until the key officers reach normal retirement age. Stock Options and Long-Term Incentive Plans The Company has a stock option plan and a long-term incentive plan currently in effect under which future grants may be issued: the 1988 Stock Option and Stock Appreciation Plan (the 1988 Plan) and the 1996 Long-Term Incentive Plan (the 1996 Plan). The Plans are administered by the Stock Option Committee of the Board of Directors, which has sole discretion, subject to the terms of the Plans, to determine those employees including executive officers, eligible to receive awards and the amount and type of such awards. The Stock Option Committee also has the authority to interpret the Plans, formulate the terms and conditions of award agreements, and make all other determinations required in the administration thereof. The 1988 Plan provides that non-qualified stock options and stock appreciation rights may be granted to key employees for up to 400,000 shares of the Company's common stock. The options and stock appreciation rights are exercisable three years after date of grant. The option price may be less than, equal to or greater than the fair market value of the stock on the date of grant. Each stock appreciation right entitles the option holder, upon exercise of the related stock option, to receive from the Company the amount of the appreciation in the underlying common stock as determined by the excess of the fair market value of a share of common stock on the exercise date of the related stock option over the option price. The options and stock appreciation rights granted, if not exercised, will expire three months from the date they are exercisable. As of May 31, 2000, options and stock appreciation rights had been granted for 145,000 shares (net of 13,000 shares forfeited) at an option price of $6 per share and for 79,500 shares (net of 6,000 shares forfeited) at an option price of $5 per share. 36,500 shares were exercised at $5 per share during the fiscal year ended May 31, 1995. There were no stock options and stock appreciation rights outstanding under this Plan at May 31, 2000, 1999 and 1998; however, there were 175,500 shares available for granting of additional options. The 1988 Plan expires July 6, 2002 except as to options and stock appreciation rights outstanding on that date; but, the rights to amend, suspend or terminate the Plan have been reserved. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Stock Options and Long-Term Incentive Plans - Continued The 1996 Plan provides for the granting of "Incentive Stock Options" as defined under the Internal Revenue Code. Under the Plan, grants may be made to selected officers and employees, of incentive stock options with a term not exceeding ten years from the issue date and at a price not less than the fair market value of the Company's stock at the date of grant. Five hundred thousand shares of the Company's stock have been reserved for issuance under this Plan. Incentive Stock Options have been granted for 340,000 shares leaving 160,000 shares available for future options. Following is a summary of transactions: Shares Under Option 2000 1999 1998 Outstanding - beginning of the year 340,000 300,000 300,000 Granted (-) 40,000 (-) Exercised (-) (-) (-) Forfeited (-) (-) (-) Outstanding - end of year 340,000 340,000 300,000 The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB25") and related Interpretation in accounting for its Employee Stock Options rather than the Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. Under APB25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. Proforma information regarding net income and earnings per share is presented as if the Company had accounted for its employee stock options under the fair value method. The fair value for these options was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions for 1999 (no options were granted in 2000 and 1998); risk-free interest rates of 6.33 percent; dividend yields of 5.2 per-cent; expected option life of 5 years; volatility factors of expected market price of the Company's stock of 0.150. The Black-Scholes options pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect an option's fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The Company's actual and proforma information is as follows: 2000 1999 1998 Net income: As reported $ 1,242,846 $ 1,073,106 $ 3,700,559 Proforma 1,242,846 1,062,098 3,700,559 Basic earnings per share: As reported $ .10 $ .09 $ .30 Proforma .10 .09 .30 Diluted earnings per share: As reported $ .10 $ .09 $ .30 Proforma 10 .09 .30 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Income Taxes Deferred income taxes are recorded on the differences between the tax bases of assets and liabilities and the amounts at which they are reported in the consolidated financial statements. Recorded amounts are adjusted to reflect changes in income tax rates and other tax law provisions as they become enacted. For further information concerning the provision for income taxes see Note 5. Net Income Per Share During 1996, the FASB issued Statement of Financial Accounting Standards No. 128, Earnings Per Share. SFAS 128 specifies the computation, presentation and disclosure requirements for earnings per share, replacing the presentation of primary earnings per share with the presentation of basic earnings per share. The only difference in the two methods for computing the Company's per share amounts is attributable to outstanding options, under the stock options and long-term incentive plans. The effect of the stock options was determined using the treasury stock method. Consolidated net income as reported was not affected. Shares used to compute diluted earnings per share are as follows: Average Common Stock Shares 2000 1999 1998 Basic weighted shares outstanding 12,154,057 12,171,043 12,205,950 Effects of options - 368 - Diluted shares 12,154,057 12,171,411 12,205,950 Disclosures about Fair Value of Financial Instruments The Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practical to estimate that value. SFAS 107 defines fair value as the quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques. The fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument, such as estimates of timing and amount of expected future cash flows. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument. The carrying amounts for cash and cash equivalents approximate fair value because of the short maturity, generally less than three months, of these instruments. The fair values of investment securities have been determined using values supplied by independent pricing services and are disclosed together with carrying amounts in Note 2. The carrying value of the Company's long-term liabilities approximates fair value because present value is used in accruing this liability. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Disclosures About Fair Value of Financial Instruments - Continued The Company does not hold or issue financial instruments for trading purposes and has no involvement with forward currency exchange contracts. Comprehensive Income In June 1997, the FASB issued the Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income which establishes reporting and presentation standards for comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances arising from non-owner sources. The adoption of SFAS 130 and the restatement of prior periods for comparative financial statements did not have a material impact on the financial statements of the Company. Segment Information Also in June 1997, the FASB issued the Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information. SFAS 131 requires that financial and descriptive information be disclosed for each reportable operating segment based on the management approach. The management approach focuses on financial information that an enterprise's decision makers use to assess performance and make decisions about resource allocations. The statement also prescribes the enterprise-wide disclosures to be made about products, services, geographic areas and major customers. The adoption of SFAS 131 did not have a material impact on the financial statements of the Company. Pension and Postretirement Benefits The Company has adopted the revised disclosure requirements of the Statement of Financial Accounting Standards No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits. SFAS 132 standardizes the disclosure requirements for pensions and other postretirement benefits, eliminates certain disclosures and requires additional information on changes in benefit obligations and fair values of plan assets. The adoption of SFAS 132 did not have a material impact on the financial statements of the Company. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Issued Accounting Standards In June 1998, the FASB issued the Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133, as amended by SFAS 137, is effective for the fiscal year beginning June 1, 2000. SFAS 133 establishes accounting and reporting standards for derivative instruments including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that the Company recognize all derivative instruments as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. The Company has not made a determination of the impact adoption will have on the financial statements of the Company. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 2 - INVESTMENT SECURITIES The amortized cost, gross unrealized gains and losses and fair value of the investment securities available-for- sale as of May 31, 2000 and 1999, are as follows: May 31, 2000 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Municipal obligations $ 511,471 $ - $ - $ 511,471 Mutual funds 3,910,372 - - 3,910,372 $4,421,843 $ - $ - $4,421,843 May 31, 1999 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Mutual funds $ 61,941 $ - $ - $ 61,941 Maturities of investment securities classified as available-for-sale at May 31, 2000 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to recall or prepay obligations with or without call or prepayment penalties. Amortized Cost Fair Value Investment securities available-for-sale: Due within one year $4,350,591 $4,350,591 Due after one year through three years 71,252 71,252 Due after three years through five years - - Total $4,421,843 $4,421,843 Proceeds from sales of investment securities available-for-sale during fiscal 2000 and 1999 were $2,550,000 and $7,162,973, respectively. Gross gains of $-0- and losses of $6,792 for fiscal 2000 and 1999, respectively, were realized on those sales. NOTE 3 - RESTRUCTURING CHARGES The restructuring charge of $2,564,892 recognized in the fourth quarter relates to a restructuring plan approved by the Board of Directors in January 2000 whereby the Nashville plant which primarily manufactured low fat snacks was closed, a voluntary retirement package was offered to a group of qualified employees, and the Company-operated distribution system for Golden Flake Brand products in three fringe sales regions in Central Florida was discontinued. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 3 - RESTRUCTURING CHARGES - Continued The following is a summary of the one-time restructuring charge to expense for the year ended May 31, 2000. Employee termination benefits $ 1,335,550 Other charges 1,229,342 Total restructuring charge. $ 2,564,892 Net after tax $ 1,607,892 Per share $ .13 The employee related termination benefits of $1,335,550 primarily includes severance costs for 104 employees, 10 of which accepted the voluntary retirement package, 71 of which were employed in the three fringe sales regions of Central Florida and 23 of which were employed at the Nashville plant. The other charges of $1,229,342 consisted primarily of gains and losses on disposal of property and equipment and the cost related to the exiting of sales regions in Central Florida. The net book value of $3,324,683, carried on the balance sheet as "net assets held for disposition," is for the property and equipment at the closed Nashville plant for which a sale is actively being pursued. NOTE 4 - LONG -TERM LIABILITIES Long-term liabilities consisted of salary continuation benefits accrued under the Company's salary continuation plan in the amounts of $1,806,633 and $1,579,453 at May 31, 2000 and 1999, respectively. Aggregate annual maturities of long-term liabilities within each of the next five fiscal years following May 31, 2000 are as follows: 2001 2002 2003 2004 2005 Maturities $ 37,648 $ 40,773 $ 44,157 $ 47,822 $ 51,791 NOTE 5 - INCOME TAXES The effective tax rate for continuing operations differs from the expected tax using statutory rates. A reconciliation between the expected tax and the actual income tax expense follows: 2000 1999 1998 Tax on income at statutory rates $ 732,000 $ 570,000 $ 1,996,000 Increase (decrease) resulting from: State income taxes, less Federal income tax benefit 124,000 60,000 186,000 Tax exempt interest (20,000) (20,000) (29,000) Other - net 75,000 (7,000) 18,000 Total $ 911,000 $ 603,000 $ 2,171,000 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 5 - INCOME TAXES - Continued The tax effects of temporary differences that result in deferred tax assets and liabilities are as follows: 2000 1999 Property and equipment $ 2,426,752 $ 2,535,505 Accrued expenses (538,895) (311,680) Addition to allowance for doubtful accounts (183,000) - Total $1,704,857 $ 2,223,825 The income tax effects of changes in temporary differences are as follows: 2000 1999 1998 Property and equipment $ (109,000) $ 91,000 $ 176,500 Accrued expenses (227,000) (105,000) (87,500) Addition to allowance for doubtful accounts (183,000) - - Total $ (519,000) $ (14,000 $ 89,000 NOTE 6 - COMMITMENTS AND CONTINGENCIES Rental expenses were $498,307 in 2000, $662,565 in 1999 and $656,727 in 1998. At May 31, 2000, the Company was obligated under certain leases (which have not been capitalized) for buildings, office space and equipment. The following amounts represent future payment commitments under these leases: Years Ending Building and May 31, Office Space Equipment Total 2001 $17,000 $120,000 $137,000 2002 - 30,000 30,000 2003 - - - The subsidiary of the Company leases equipment for approximately $10,000 per month from a company which is principally owned by a major shareholder of Golden Enterprises, Inc. The terms of these leases are equal to or better than those available from unaffiliated third parties. The subsidiary of the Company leases its airplane to a major stockholder of the Company for approximately $20,000 per month. The lease provides for his personal use of the airplane for up to 100 flight hours per year and is for a term of one year with automatic renewal at the option of either party. The terms of this lease are equal to or better than those available to an unrelated third party. The Company had letters of credit in the amount of $2,200,000 outstanding at May 31, 2000, and May 31, 1999 to support the Company's commercial self-insurance program. The Company pays a commitment fee of 0.375% to maintain the letters of credit. NOTE 7 - CONCENTRATIONS OF CREDIT RISK The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company maintains its cash accounts primarily with banks located in Alabama. The total cash balances are insured by the F.D.I.C. up to $100,000 per bank. The Company had cash balances on deposit with an Alabama bank at May 31, 2000 that exceeded the balance insured by the F.D.I.C. in the amount of $1,092,679. The Company's trade receivables result primarily from its snack food operations and reflect a broad customer base, primarily large grocery store chains located in the southeastern United States. The Company routinely assesses the financial strength of its customers. As a consequence, concentrations of credit risk are limited. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE 8 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the unaudited quarterly results of operations of the years ended May 31, 2000, 1999 and 1998: Per Share Total Revenues Net Income Net Income Quarter 2000 First $ 31,690,046 $ 552,601 $ 0.05 Second 30,773,777 532,998 0.04 Third 33,219,908 1,029,365 0.08 Fourth 31,319,264 (872,118) (0.07) For the year $127,002,995 $1,242,846 $ 0.10 1999 First $ 31,668,331 $ 586,164 $ 0.05 Second 30,926,099 104,646 0.01 Third 34,080,883 185,177 0.01 Fourt h 32,955,169 197,119 0.02 For the year $129,630,482 $1,073,106 $ 0.09 1998 First $ 32,608,207 $1,172,986 $ 0.10 Second 30,920,499 629,399 0.05 Third 32,577,407 796,083 0.06 Fourth 33,416,681 1,102,091 0.09 For the year $129,522,794 $3,700,559 $ 0.30 NOTE 9 - SUPPLEMENTARY STATEMENT OF INCOME INFORMATION The following tabulation gives certain supplementary statement of income information for continuing operations for years ended May 31, 2000, 1999 and 1998: 2000 1999 1998 Maintenance and repairs $ 5,889,306 $ 5,939,882 $ 6,133,748 Depreciation and amortization 3,230,321 3,309,182 3,183,490 Payroll taxes 2,599,980 2,769,228 2,737,153 Advertising costs 19,106,839 19,132,322 16,747,607 Amounts for depreciation and amortization of intangible assets, royalties, other taxes, rents and research and development costs are not presented because each of such amounts is less than 1% of total revenues. GOLDEN ENTERPRISES, INC. AND SUBSIDIARY SUPPLEMENTAL FINANCIAL INFORMATION Selected quarterly financial data for the fiscal years ended May 31, 1000 and 1999 (unaudited) (Dollar amounts in thousands, except per share data) First Second Third Fourth Quarter Quarter Quarter Quarter 2000 Total revenues $ 31,690 $ 30,774 $ 33,220 $ 31,319 Income before income taxes $ 878 $ 845 $ 1,639 $ (1,208) Net income $ 553 $ 553 $ 1,029 $ (872) Net income per share $ .05 $ .04 $ .08 $ (0.07) Cash dividends per share $ .06 $ .06 $ .06 $ .06 1999 Total revenues $ 31,668 $ 30,926 $ 34,081 $ 33,955 Income before income taxes $ 897 $ 153 $ 292 $ 334 Net income $ 586 $ 105 $ 185 $ 197 Net income per share $ .05 $ .01 $ .01 $ .02 Cash dividends per share $ .12 $ .12 $ .06 $ .06 ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. PART III ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ITEM 11. - EXECUTIVE COMPENSATION ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS With the exception of a description of Executive Officers of The Registrant which appears on page 5 herein, Part III is omitted because prior to September 28, 2000, the Company will file a definitive Proxy Statement with the Securities and Exchange Commission pursuant to Regulation 14A which involves the election of directors. PART IV ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. and 2. LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements of Golden Enterprises, Inc. and subsidiary required to be included in Item 8 are listed below: Consolidated Balance Sheets - May 31, 2000 and 1999 Consolidated Statements of Income - Years ended May 31, 2000, 1999 and 1998 Consolidated Statements of Changes in Stockholders' Equity - Years ended May 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows - Years ended May 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements The following consolidated financial statements schedule is included in Item 14 (d): Schedule II - Valuation and Qualifying Accounts All other schedules are omitted because the information required therein is not applicable, or the information is given in the financial statements and notes thereto. 3. Exhibits: (b) Report on Form 8-K - The Registrant did not file a Form 8-K report during the last quarter of the period covered by this report. (c) Exhibits. See (a) 3. above. (d) Financial Statement Schedules. The response to this portion of Item 14, is submitted under Item 14.(a) 1. and 2. above. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GOLDEN ENTERPRISES, INC. By August 25, 2000 John H. Shannon Date Vice President, Principal Financial Officer and Controller Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date John S. Stein Chairman of the Board, August 25, 2000 Chief Executive Officer, President and Director John H. Shannon Vice President, Secretary, August 25, 2000 Principal Financial Officer and Controller F. Wayne Pate Director August 25, 2000 Edward R. Pascoe Director August 25, 2000 John P. McKleroy, Jr. Director August 25, 2000 James I. Rotenstreich Director August 25, 2000 John S. P. Samford Director August 25, 2000 D. Paul Jones, Jr. Director August 25, 2000 J. Wallace Nall, Jr. Director August 25, 2000 Joann F. Bashinsky Director August 25, 2000 Mark W. McCutcheon Director August 25, 2000 GOLDEN ENTERPRISES, INC. AND SUBSIDIARY VALUATION AND QUALIFYING ACCOUNTS Years ended May 31, 1998, 1999, and 2000 Additions Balance at Charged to Balance Beginning Costs and at End Allowance for Doubtful Accounts of Year Expenses Deductions of Year Year ended May 31, 1998 $ 10,000 $ 72,527 $ 7,527 $ 75,000 Year ended May 31, 1999 $ 75,000 $ 153,459 $ 117,459 $ 111,000 Year ended May 31, 2000 $ 111,000 $ 690,983 $ 201,983 $ 600,000 [This page left blank intentionally.] 35 DOCUMENT TYPE EX-27 10K TEXT ARTICLE MULTIPLIER TABLE S PERIOD TYPE 12 MONTHS FISCIAL-YEAR-END MAY-31-2000 PERIOD END MAY-31-2000 CASH $ 835,074.00 SECURITIES $ 4,421,843.00 RECEIVABLES $ 9,204,294.00 ALLOWANCES $ 600,000,00 INVENTORY $ 4,042,345.00 CURRENT-ASSETS $ 23,432,169.00 PROPERTY, PLANT & EQUIPMENT $ 71,137,088.00 DEPRECIATION $ 56,017,880.00 TOTAL ASSETS $ 41,433,257.00 CURRENT LIABILITIES $ 7,517,405.00 BONDS .00 COMMON $ 9,219,195.00 PREFERRED MANDATORY .00 PREFERRED .00 OTHER $ 21,308,772.00 TOTAL LIABILITY AND EQUITY $ 41,433,257.00 SALES $126,182,156.00 TOTAL REVENUES $127,002,995.00 CGS $ 57,146,571.00 TOTAL COSTS $124,849,149.00 OTHER EXPENSES .00 LOSS PROVISION $ 489,000.00 INTEREST EXPENSE .00 INCOME PRETAX $ 2,153,846.00 INCOME TAX $ 911,000.00 INCOME-CONTINUING $ 1,242,846.00 DISCONTINUED .00 EXTRAORDINARY CHANGES .00 NET-INCOME $ 1,242,846.00 EPS PRIMARY .10 EPS-DILUTED .10