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, 2014
 
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)
 
   
(State or other jurisdiction of
incorporation or organization) 
(I.R.S. Employer
Identification No.)
 
One Golden Flake Drive
Birmingham, Alabama 35205
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number including area code:  (205) 458-7316

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title Of Class Name of exchange on which registered
Common Stock, Par Value $0.662/3
NASDAQ Stock Market, LLC
 
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes (  )       No (X)

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes (  )   No (X)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes (X)   No (  )

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ( 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)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Act).  (Check One)
Large accelerated filer (  )   Accelerated filer (  )   Non-accelerated filer (  )   Smaller reporting company (X)
 
 
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes (  )    No (X)

State the aggregate market value of the voting common stock held by non-affiliates of the registrant as of November 29, 2013.  Common Stock, Par Value $0.662/3 --$17,770,711

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of July 31, 2014.
 
Class
Common Stock, Par Value $0.662/3
Outstanding at July 31, 2014
11,732,632 shares
                                                                                                   
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the Annual Meeting of Stockholders to be held on September 18, 2014 are incorporated by reference into Part III.

 
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TABLE OF CONTENTS

FORM 10-K ANNUAL REPORT –2014
GOLDEN ENTERPRISES, INC.


     
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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” or the “Company”).

The Company was originally organized under the laws of the State of Alabama as Magic City Food Products, Inc. on June 11, 1946.  On March 11, 1958, it adopted the name Golden Flake, Inc.   The Company was reorganized December 31, 1967 as a Delaware corporation without changing any of its assets, liabilities, or business.  On January 1, 1977, the Company, which had been engaged in the business of manufacturing and distributing potato chips, fried pork skins, cheese curls, and other snack foods, spun off its operating division into a separate Delaware corporation known as Golden Flake Snack Foods, Inc. and adopted its present name of Golden Enterprises, Inc.

Golden Flake Snack Foods, Inc.

General

Golden Flake is a Delaware corporation with its principal place of business and home office located at One Golden Flake Drive, Birmingham, Alabama.  Golden Flake has been a premiere producer, marketer, and distributor of snack products in the Southeastern United States since 1923.  Golden Flake manufactures and distributes a full line of high quality salted snack items, such as potato chips, tortilla chips, corn chips, fried pork skins, baked and fried cheese curls, onion rings, and puff corn.  Golden Flake also sells canned dips, pretzels, peanut butter crackers, cheese crackers, dried meat products, and nuts packaged by other manufacturers using the Golden Flake label.
 
Raw Materials

Golden Flake purchases raw materials used in manufacturing and processing its snack food products from various sources.  A large part of the raw materials used by Golden Flake consists of farm commodities, most notably corn, potatoes and pork skin pellets, 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 or prices and its profits are affected accordingly.  The Company also purchases flexible bags or other suitable wrapping material for the storage, shipment, and presentation of the finished product to our customers.

Distribution

Golden Flake sells its products through both its own sales organization and independent distributors principally to commercial establishments which sell food products in Alabama, Tennessee, Georgia, Mississippi, Louisiana, Kentucky, and South Carolina as well as parts of Florida, North Carolina, Arkansas, Missouri, Oklahoma, Virginia, Indiana, and Texas.  The Golden Flake brand is well-known throughout the Southeast.  The products are distributed to its customers by either company transportation or commercial carrier out of the Birmingham and Ocala plants.

Golden Flake’s products are distributed to a wide variety of grocery store chains, discount stores, convenience stores, restaurants, and other outlets located in our marketing area.  Golden Flake is not dependent on any one or a few major customers.
 
 
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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, many of which are larger in terms of capital and sales volume than is Golden Flake, and at least one national company, the Frito Lay Division of Pepsi Co., Inc..  Golden Flake’s marketing thrust is aimed at selling the highest quality product possible and giving good service to its customers, while being competitive with its prices.  Golden Flake constantly tests the quality of its products for comparison with other similar products of competitors and maintains tight quality controls over its products.  The Company believes that one of its major advantages is the Golden Flake brand, which has been developed and enhanced throughout the history of the company and is now well known within the geographic area served by the Company.  The Company continues to promote the Golden Flake brand through sponsorship agreements, billboard campaigns, advertising, and other efforts.

Intellectual Property

The name “Golden Flake” and its regularly used symbol are federally registered trademarks of the Company.  The Company also owns other trademarks such as “The South’s Original Potato Chip”, a Golden Flake design from 1922, the name “Sweetheat” and certain other trademarks not used on a regular basis.

Employees

As of June 30, 2014, Golden Flake employed approximately 750 employees.  Of these employees, 729 were full-time, while 21 were part-time.  Approximately 414 employees are involved in route sales and sales supervision, approximately 196 are in production, approximately 109 are in management and administrative personnel and 31 are administrative support 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 all of its employees to be a part of the “Golden Flake Family”.

SEC Filings

The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission can be found at the Company’s website located at www.goldenflake.com, under the financial tab.

Environmental Matters

Not applicable.

Significant Events

Not Applicable.

 
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Executive Officers of Registrant
And Its Subsidiary

                 Name and Age Position and Offices with Management
 
 
Mark W. McCutcheon, 59
Mr. McCutcheon is Chairman of the Board, Chief Executive Officer and President of the Company and President of Golden Flake. He was elected Chairman of the Board on July 22, 2010, President and Chief Executive Officer of the Company on April 4, 2001 and President of Golden Flake on November 1, 1998. He has been employed by Golden Flake or the Company since 1980. Mr. McCutcheon is elected to his positions on an annual basis and his present terms of office will expire on May 29, 2015. 
   
Patty Townsend, 56
Ms. Townsend is Chief Financial Officer, Vice President and Secretary of the Company. She was initially 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 terms of office will expire on May 29, 2015.
   
Paul R. Bates, 60
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 terms of office will expire on May 29, 2015.
   
David A. Jones, 62
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 terms of office will expire on May 29, 2015.
 
 
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As a smaller reporting company, the Company is not required to provide a statement of risk factors.  However, we believe this information may be valuable to our shareholders for this filing.  The Company reserves the right to not provide risk factors in the future.

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 Cost Fluctuations

Significant commodity price fluctuations for certain commodities purchased by the Company, particularly potatoes, corn, pork skins, and cooking oils could have a material impact on results of operations.  These price fluctuations can be impacted by various factors including weather conditions, such as flooding or drought.  In an attempt to manage commodity cost fluctuations, 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.

Energy Cost Fluctuations

The Company can also be adversely impacted by changes in the cost of natural gas and other fuel costs, such as gasoline and diesel fuel.  Long term increases in the cost of natural gas and fuel costs could adversely impact and increase 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.

Breaches of Our Information Technology Systems

Company operations use and store sensitive data, including proprietary business information and personally identifiable information, in secure data centers and on our networks. The Company could face a number of threats to its data centers and networks of unauthorized access, security breaches and other system disruptions. It is critical to the Company that its infrastructure remains secure and is perceived by customers to be secure. The Company uses encryption and authentication technologies to secure the transmission and storage of data. Despite its security measures, information technology systems may be vulnerable to attacks by hackers or other disruptive problems. Any such security breach may compromise information used or stored on the Company’s networks and may result in significant data losses or theft of our or our customers' proprietary business information or personally identifiable information. A cybersecurity breach could negatively affect the Company’s reputation. In addition, a cyber attack could result in other negative consequences, including remediation costs, disruption of internal operations, increased cybersecurity protection costs, lost revenues or litigation, which could have a material adverse effect on the business, results of operations and financial condition of the Company.
 
 
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Product Liability

The Company is subject to a risk of product liability if the Company’s products actually or allegedly result, or are alleged to result, in bodily injury. While the Company maintains what it believes to be reasonable limits of stop loss insurance coverage to appropriately respond to such liability exposures, large product liability claims, if made, could exceed our insurance coverage limits. There can be no assurance that we will not incur significant costs in relation to such claims in the future.

Risks Relating to the Company’s Common Stock and the Securities Market

The trading price of shares of the Company’s common stock may be affected by many factors and the price of shares of its common stock could decline.  As a publicly traded company, the trading price of the Company’s common stock has fluctuated significantly in the past. The future trading price of the Company’s common stock may be volatile and could be subject to material price fluctuations.


Not Applicable.


The headquarters of the Company are located in Birmingham, Alabama at One Golden Flake Drive.  The properties of Golden Flake are described below.

Manufacturing Plants and Office Headquarters

The main plant and office headquarters of Golden Flake are also located in Birmingham, Alabama, at One Golden Flake Drive and are situated on approximately 40 acres of land.  This facility consists of three buildings which have a total of approximately 300,000 square feet of floor area.  The Birmingham plant manufactures a full line of Golden Flake products.  Golden Flake also has a garage and vehicle maintenance service center from which it services, maintains, repairs, and rebuilds its fleet and delivery trucks in Birmingham.

Golden Flake also has a manufacturing plant in Ocala, Florida.  This plant was placed in service in November 1984.  The Ocala plant consists of approximately 100,000 square feet of floor area and is located on a 28-acre site on Silver Springs Boulevard.  The Company manufactures tortilla chips and potato chips from this facility.

Management believes that our Company’s facilities for the production of our products are suitable and adequate, that they are being appropriately utilized in line with past experience, and that they have sufficient production capacity for their present intended purposes.  The extent of utilization of such facilities varies based upon seasonal demand for our products.  It is not possible to measure with any degree of certainty or uniformity the productive capacity and extent of utilization of these facilities.  However, management believes that additional production can be obtained at the existing facilities by adding personnel and capital equipment by adding shifts of personnel or expanding the facilities.  We continuously review our anticipated requirements for facilities and, on the basis of that review, may from time to time acquire additional facilities and/or dispose of existing facilities.
 
 
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Both manufacturing plants and the office headquarters are owned by Golden Flake and are owned free and clear of any debt.

Distribution Warehouses

Golden Flake owns central 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; Macon, Georgia; Panama City, Tallahassee, and Pensacola, Florida; and New Orleans, Louisiana.  The warehouses vary in size from 2,400 to 8,000 square feet.  All central branch warehouses are owned free and clear of any debts.  The Company also rents satellite warehouse branches throughout its distribution area.


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.


Not applicable.

 
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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 on the NASDAQ Global Market under the symbol GLDC.  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, 2014 and May 31, 2013 and the amount of dividends paid per share in each quarter.  Our Board of Directors will consider the amount of future cash dividends on a quarterly basis.
              
    Market Price   
   
High
   
Low
   
Dividend
 
Quarter
Year Ended 2014
 
Price
   
Price
   
Paid
Per share
 
First quarter      (13 weeks ended August 30, 2013)
  $ 3.67     $ 3.36     $ .0313  
Second quarter (13 weeks ended November 29, 2013)
    4.36       3.46       .0313  
Third quarter    (13 weeks ended February 28, 2014)
    4.30       3.85       .0313  
Fourth quarter   (13 weeks ended May 30, 2014)
    4.90       4.10       .0313  
                         
                         
   
High
   
Low
   
Dividend
 
Quarter
Year Ended 2013
 
Price
   
Price
   
Paid
Per share
 
First quarter      (13 weeks ended August 31, 2012)
  $ 3.54     $ 3.32     $ .0313  
Second quarter (13 weeks ended November 30, 2012)
    3.50       3.16       .0313  
Third quarter    (13 weeks ended March 1, 2013)
    3.61       3.25       .0313  
Fourth quarter   (13 weeks ended May 31, 2013)
    3.64       3.37       .0313  

As of July 25, 2014, there were approximately 838 shareholders of record.

Securities Authorized For Issuance under Equity Compensation Plans

None.

Issuer Purchases of Equity Securities

The Company did not purchase any shares of its common stock during the fiscal year ended May 30, 2014.


Not required due to Smaller Reporting Company status.
 
 
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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 canned dips, pretzels, peanut butter crackers, cheese crackers, dried meat products, and nuts packaged by other manufacturers using the Golden Flake label.

No single product or product line accounts for more than 50% of the Company’s sales, which affords some protection against loss of volume due to a crop failure of major agricultural raw materials or failure to procure an adequate supply of pork skin pellets.  Raw materials used in manufacturing and processing the Company’s snack food products are purchased on the open market, under contract through brokers and directly from growers.  A large part of the raw materials used by the Company consists of farm commodities which are subject to precipitous changes in supply and price.  Weather varies from season to season and directly affects both the quality and supply of farm commodities available.  The Company has no control of the agricultural aspects and its profits are affected accordingly.

The Company sells its products through both its own sales organization and independent distributors principally to commercial establishments that sell food products primarily in the Southeastern United States.  The products are distributed through the independent distributors and Company route representatives who are supplied with selling inventory by the Company’s trucking fleet.  All of the route representatives are employees of the Company and use the Company’s direct-store delivery system.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, the preparation of which is in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that in certain circumstances affect amounts reported in the consolidated financial statements.  In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due considerations to materiality.  The Company does not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below.  However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates.  Other accounting policies and estimates are detailed in Note 1 of the Notes To Consolidated Financial Statements in this 10-K.
 
 
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Revenue Recognition

The Company recognizes sales and related costs upon delivery or shipment of products to its customers, including independent distributors.  Sales are reduced by returns from 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 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, 2014 and May 31, 2013, the Company had accounts receivables in the amount of $11,341,024 and $10,459,706, net of an allowance for doubtful accounts of $70,000 and $70,000, respectively.  The Company did not have any major customer write-offs this year that were not covered by credit insurance.

Inventories

Inventories are stated at the lower of cost or market.  Cost is computed on the first-in, first out method.

Accrued Expenses

Management estimates certain expenses in an effort to record those expenses in the period incurred. The Company’s significant estimates relate to insurance expenses. The Company is self-insured for certain casualty losses relating to automobile liability, general liability, workers’ compensation, property losses, and medical claims.  The Company also has stop loss insurance 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 actuary uses various actuarial assumptions including compensation trends, health care cost trends, and discount rates. The third-party actuary also uses historical information for claims frequency and severity in order to establish loss development factors.

The actuarial calculation includes a factor to account for changes in inflation, health care costs, compensation and litigation cost trends, as well as estimated future incurred claims.  This year, the Company utilized a 50% confidence level for estimating the ultimate outstanding casualty liability based on the actuarial report.  This assumes that approximately 50% of each claim should be equal to or less than the ultimate liability recorded based on the historical trends experienced by the Company.  If the Company chose a 75% factor, the liability would have been increased by approximately $0.3 million.  If the Company chose a 90% factor, the liability would have increased by approximately $0.5 million.

This year the Company used a 4% investment rate to discount the estimated claims based on the historical payout pattern during 2014 and 2013.  A one percentage point change in the discount rate would have impacted the liability by approximately $34,000.

 
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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, 2014, the Company’s casualty reserve was $1,349,181 and at May 31, 2013 the casualty reserve was $1,315,853.

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 Commitments

The Company has a letter of credit in the amount of $1,850,000 outstanding at May 30, 2014 and $1,900,000 at May 31, 2013.  The letter of credit supports the Company’s commercial self-insurance program.

The Company has a line-of-credit agreement with a local bank that permits borrowing up to $3 million.  The line-of-credit is subject to the Company’s continued credit worthiness and compliance with the terms and conditions of the loan agreement with the bank.  The Company’s line-of-credit debt at May 30, 2014 was $2,528,511 with an interest rate of 3.25%, leaving the Company with $471,489 of credit availability.  The Company’s line-of-credit debt at May 31, 2013 was $1,725,289 with an interest rate of 3.25%, leaving the Company with $1,274,711 of credit availability.

The Company’s current ratio (current assets divided by current liabilities) was 1.32 to 1.00 and 1.30 to 1.00 at May 30, 2014 and May 31, 2013, 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 decreased by 1.0% in fiscal year 2014 and increased by 1.0% in fiscal year 2013.

Cost of sales as a percentage of net sales amounted to 51.3% and 51.5% in 2014 and 2013, respectively.

Selling, general and administrative expenses were 46.7% of net sales in 2014 and 46.8% of net sales in 2013.

Operating income for the fiscal year decreased 22.2% compared to last fiscal year, driven by increased selling and administrative expenses a large portion of which was attributable to Reorganization costs associated with a workforce reduction in November 2013.  Nonrecurring restructuring charges associated with the workforce reduction were $1,026,980 for the last fiscal year.

 
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The Company’s effective tax rates for 2014 and 2013 were 42.2% and 47.9%, respectively.  Note 6 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, 2014 and May 31, 2013:
 
   
Manufactured Products-Resale Products
 
                         
                         
   
2014
   
2013
 
                         
Sales
       
%
         
%
 
Manufactured Products
  $ 110,130,309       81.0 %   $ 108,848,686       79.3 %
Resale Products
    25,766,586       19.0 %     28,496,030       20.7 %
Total
  $ 135,896,895       100.0 %   $ 137,344,716       100.0 %
                                 
                                 
Gross Margin
         
%
           
%
 
Manufactured Products
  $ 55,489,556       50.4 %   $ 54,727,249       50.3 %
Resale Products
    10,742,719       41.7 %     11,830,040       41.5 %
Total
  $ 66,232,275       48.7 %   $ 66,557,289       48.5 %
 
Liquidity and Capital Resources

Working capital was $4,865,358 and $4,276,373 at May 30, 2014 and May 31, 2013, respectively.  Net cash provided by operations amounted to $3,263,728 and $4,607,029 in fiscal years May 30, 2014 and May 31, 2013, respectively. During 2014, 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 approximately $5,000,000 in fiscal year 2015.

Cash dividends of $1,466,581 and $1,467,879 were paid in 2014 and 2013, respectively.

The Company did not purchase any shares of treasury stock in fiscal 2014 while cash of $6,860 was used to purchase 2,000 shares of treasury stock in fiscal 2013.

During fiscal 2014, the Company’s debt proceeds net of re-paid debt was $410,372 versus $73,670 during fiscal 2013.

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.

 
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Inflation

Certain costs and expenses of the Company are affected by inflation. The Company’s prices for its products over the past several fiscal years have remained relatively flat. The Company plans to contend with the effect of further inflation through efficient purchasing, improved manufacturing methods, pricing, and by monitoring and controlling expenses.

Environmental Matters

Golden Flake’s waste water treatment plant is an environmentally-friendly way to dispose of process water at the Birmingham plant.  The treatment plant has allowed Golden Flake to release the processing water into a neighboring creek which has improved the flow of water in the creek and has positively impacted the environment in the area surrounding the plant.  The treatment plant has also helped to reduce expenses associated with sewer charges since this has replaced the previous system which disposed of the process water through the public sewer system.

Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Actual results could differ materially from those forward-looking statements.  Factors that may cause actual results to differ materially include price competition, industry consolidation, raw material costs, fuel costs, and effectiveness of sales and marketing activities, as described in this 10-K. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date which they are made.

Recent Developments

During the most recent fiscal year, the Company completed implementation of the enterprise resource planning (ERP) system.  This system provides management with real time information to improve forecasting, enhance order and revenue tracking, and integrate our manufacturing, sales and marketing, human resources, and financial applications.  The depreciation and amortization costs associated with this system will result in an increase in selling, general, and administrative expenses with an after tax effect currently estimated to be approximately $163,000 per year or a reduction in net income of $.02 per share.  The Company expects future cost savings from the implementation of the ERP System due to decreased labor expenses and increase in work flow, supply chain and performance management efficiencies.

During the third quarter of fiscal 2014, the Company took necessary steps to streamline its management structure. As a result, the Company reduced its workforce by approximately 2% and incurred gross restructuring charges of $1,026,980 consisting of severance costs related to the workforce reduction. As all of the restructuring activities were completed in the third quarter of fiscal 2014, the Company does not expect to recognize additional costs in future periods relating to these actions.  This one time restructuring change reduced net income by approximately $.09 per share.

Recently Issued Accounting Pronouncements

See Note 1 to the consolidated financial statements included in Item 8 for a summary of recently issued accounting pronouncements.


Not applicable as Company is a Smaller Reporting Company.

 
15

 


The consolidated financial statements of the registrant and its subsidiary for the year ended May 30, 2014, consisting of the following, are contained herein:

Consolidated Balance Sheets
- As of May 30, 2014 and May 31, 2013
Consolidated Statements of Income
- May 30, 2014 and May 31, 2013
Consolidated Statements of Changes in Stockholders’ Equity
- May 30, 2014 and May 31, 2013
Consolidated Statements of Cash Flows
- May 30, 2014 and May 31, 2013
Notes to Consolidated Financial Statements
- May 30, 2014 and May 31, 2013
 
 
16

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors and Stockholders
Golden Enterprises, Inc.


We have audited the accompanying consolidated balance sheets of Golden Enterprises, Inc. and subsidiary (“the Company”) as of May 30, 2014 and May 31, 2013, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended.  Our audits also included the financial statement schedule of Golden Enterprises, Inc. and subsidiary listed in Item 15(a).  These financial statements and financial statement schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements and schedule 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 financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall 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 financial position of Golden Enterprises, Inc. and subsidiary as of May 30, 2014 and May 31, 2013, and the 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, the  financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
 

 
 
DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
   
   
Birmingham, Alabama
August 7, 2014
 

 
17

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of May 30, 2014 and May 31, 2013
 
ASSETS
             
   
2014
   
2013
 
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 1,160,630     $ 757,111  
                 
Receivables:
               
Trade accounts
    11,333,609       10,363,221  
Other
    77,415       166,485  
      11,411,024       10,529,706  
Less: Allowance for doubtful accounts
    70,000       70,000  
      11,341,024       10,459,706  
                 
Inventories:
               
Raw materials
    2,123,313       1,872,541  
Finished goods
    3,536,326       3,083,272  
      5,659,639       4,955,813  
                 
Prepaid expenses
    1,277,861       1,554,737  
Deferred income taxes
    559,672       596,267  
Total current assets
    19,998,826       18,323,634  
                 
                 
PROPERTY, PLANT AND EQUIPMENT
               
Land
    2,769,499       2,769,499  
Buildings
    18,804,228       18,793,928  
Machinery and equipment
    66,295,760       64,749,661  
Transportation equipment
    7,304,711       6,709,355  
      95,174,198       93,022,443  
Less: Accumulated depreciation
    69,502,854       65,927,389  
                 
      25,671,344       27,095,054  
OTHER ASSETS
               
Cash surrender value of life insurance
    602,353       695,761  
Other
    1,207,743       1,642,030  
                 
Total other assets
    1,810,096       2,337,791  
                 
TOTAL
  $ 47,480,266     $ 47,756,479  
 
See Accompanying Notes to Consolidated Financial Statements
 
 
18

 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
             
             
   
2014
   
2013
 
             
CURRENT LIABILITIES
           
Checks outstanding in excess of bank balances
  $ 1,971,076     $ 1,442,915  
Accounts payable
    3,719,102       4,809,066  
Current portion of long-term debt
    369,979       392,850  
Line of credit outstanding
    2,528,511       1,725,289  
Accrued income tax
    378,659       53,475  
Other accrued expenses
    5,953,171       5,427,017  
Salary continuation plan
    212,970       196,649  
                 
Total current liabilities
    15,133,468       14,047,261  
                 
LONG-TERM LIABILITIES
               
Note payable-bank, non-current
    4,944,233       5,314,213  
Salary continuation plan
    920,184       1,032,810  
Deferred income taxes
    2,969,389       3,304,451  
                 
Total long-term liabilities
    8,833,806       9,651,474  
                 
                 
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
    18,728,462       19,273,214  
Treasury shares -at cost (2,096,161 shares)
    (10,932,619 )     (10,932,619 )
                 
                 
Total stockholders' equity
    23,512,992       24,057,744  
                 
                 
                 
                 
                 
TOTAL
  $ 47,480,266     $ 47,756,479  
 
 
19

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

   
2014
   
2013
 
             
Net sales
  $ 135,896,895     $ 137,344,716  
Cost of sales
    69,664,620       70,787,427  
Gross margin
    66,232,275       66,557,289  
                 
Selling, general and administrative expenses
    63,396,380       64,233,593  
Restructuring charges
    1,026,980       -  
                 
Operating income
    1,808,915       2,323,696  
                 
Other (expenses) income:
               
Gain on sale of assets
    22,693       61,040  
Interest expense
    (336,592 )     (311,098 )
Other income
    98,872       102,917  
                 
Total other (expenses) income
    (215,027 )     (147,141 )
                 
Income before income taxes
    1,593,888       2,176,555  
                 
   Provision for income taxes
    672,059       1,042,518  
                 
Net income
  $ 921,829     $ 1,134,037  
                 
PER SHARE OF COMMON STOCK
               
  Basic earnings
  $ 0.08     $ 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, 2014 and May 31, 2013

         
Additional
               
Total
 
   
Common
   
Paid-in
   
Retained
   
Treasury
   
Stockholders'
 
   
Stock
   
Capital
   
Earnings
   
Shares
   
Equity
 
                               
                               
     Balance - June 1, 2012
  $ 9,219,195     $ 6,497,954     $ 19,607,056     $ (10,925,759 )   $ 24,398,446  
                                         
  Net income - 2013
    -       -       1,134,037       -       1,134,037  
  Cash dividends paid
    -       -       (1,467,879 )     -       (1,467,879 )
  Treasury shares purchased
    -       -       -       (6,860 )     (6,860 )
                                         
     Balance - May 31, 2013
    9,219,195       6,497,954       19,273,214       (10,932,619 )     24,057,744  
                                         
  Net income - 2014
    -       -       921,829       -       921,829  
  Cash dividends paid
    -       -       (1,466,581 )     -       (1,466,581 )
                                         
     Balance - May 30, 2014
  $ 9,219,195     $ 6,497,954     $ 18,728,462     $ (10,932,619 )   $ 23,512,992  

See Accompanying Notes to Consolidated Financial Statements
 
 
21

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASHFLOWS
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

   
2014
   
2013
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Cash received from customers
  $ 135,015,577     $ 137,451,083  
Interest income
    1,956       2,007  
Rental income
    29,783       48,222  
Other operating cash payments/receipts
    67,133       52,688  
Cash paid to suppliers and employees for cost of goods sold
    (68,774,050 )     (69,214,257 )
Cash paid for suppliers and employees for selling, general and
               
  administrative
    (62,094,737 )     (62,306,528 )
Income taxes
    (645,342 )     (1,115,088 )
Interest expense
    (336,592 )     (311,098 )
                 
Net cash provided by operating activities
    3,263,728       4,607,029  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of property, plant and equipment
    (2,380,287 )     (4,149,678 )
Proceeds from sale of property, plant and equipment
    48,125       74,514  
                 
Net cash used in investing activities
    (2,332,162 )     (4,075,164 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Debt proceeds
    35,726,909       38,361,199  
Debt repayments
    (35,316,537 )     (38,287,529 )
Change in checks outstanding in excess of bank
               
  balances
    528,162       (267,501 )
Purchases of treasury shares
    -       (6,860 )
Cash dividends paid
    (1,466,581 )     (1,467,879 )
                 
Net cash (used in) financing activities
    (528,047 )     (1,668,570 )
                 
NET INCREASE (DECREASE) IN CASH AND
               
CASH EQUIVALENTS
    403,519       (1,136,705 )
                 
CASH AND CASH EQUIVALENTS AT
               
BEGINNING OF YEAR
    757,111       1,893,816  
                 
CASH AND CASH EQUIVALENTS AT
               
END OF YEAR
  $ 1,160,630     $ 757,111  
 
See Accompanying Notes to Consolidated Financial Statements
 
 
22

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASHFLOWS
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
 
   
2014
   
2013
 
             
             
Net income
  $ 921,829     $ 1,134,037  
Adjustment to reconcile net income to net cash provided
               
by operating activities:
               
Depreciation
    3,778,563       3,538,740  
Deferred income taxes
    (298,467 )     (185,939 )
Gain on sale of property and equipment
    (22,693 )     (61,040 )
Change in receivables-net
    (881,318 )     106,367  
Change in inventories
    (703,826 )     200,985  
Change in  prepaid expenses
    276,876       200,137  
Change in cash surrender value of insurance
    93,408       62,906  
Change in other assets - other
    434,287       (191,298 )
Change in accounts payable
    (1,089,964 )     (1,216,399 )
Change in accrued expenses
    526,154       954,938  
Change in salary continuation plan
    (96,305 )     (49,774 )
Change in accrued income taxes
    325,184       113,369  
                 
Net cash provided by operating activities
  $ 3,263,728     $ 4,607,029  

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, 2014 and May 31, 2013

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.  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.  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 year ended May 30, 2014 included 52 weeks as did the year ended May 31, 2013.
 
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.

 
24

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

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 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.

Due to the complexity of estimating the timing and amounts of insurance claims, the Company uses a third-party actuary to estimate the casualty insurance obligations on an annual basis.  In determining the ultimate loss and reserve requirements, the third-party uses various actuarial assumptions including compensation trends, health care cost trends, and discount rates. The third-party actuary also uses historical information for claims frequency and severity in order to establish loss development factors. The actuarial calculation includes a factor to account for changes in inflation, health care costs, compensation, and litigation cost trends, as well as estimated future incurred claims.  Large fluctuations in claims can have a significant impact on selling, general and administrative expenses.

Advertising
The Company expenses advertising costs as incurred.  These costs are included in selling, general and administrative expenses.  Advertising expense amounted to $7,767,596 and $8,228,325 for the fiscal years 2014 and 2013, 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.
 
 
25

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

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 expenses.  Shipping and handling costs amounted to $3,838,605 and $3,911,142 for the fiscal years 2014 and 2013, 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

There were no new accounting pronouncements that were of significance or potential significance to us.

 
26

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 30, 2014 and May 31, 2013

NOTE 2 – PREPAID EXPENSES

At May 30, 2014 and May 31, 2013, prepaid expenses consist of the following:
 
   
2014
   
2013
 
             
Truck shop supplies
  $ 351,985     $ 445,504  
Insurance deposit
    58,548       82,959  
Prepaid marketplace spending
    274,571       212,026  
Prepaid insurance
    274,389       257,757  
Prepaid taxes and licenses
    88,858       59,203  
Prepaid dues and supplies
    7,742       413,100  
Other prepaid
    221,768       84,188  
                 
    $ 1,277,861     $ 1,554,737  

NOTE 3 – OTHER ACCRUED EXPENSES

At May 30, 2014 and May 31, 2013, other accrued expenses consist of the following:
 
   
2014
   
2013
 
Accrued payroll
  $ 956,839     $ 463,967  
Self insurance liability
    1,349,181       1,315,853  
Accrued vacation
    1,465,871       1,419,726  
Other accrued expenses
    2,181,280       2,227,471  
                 
    $ 5,953,171     $ 5,427,017  

NOTE 4 - LINE OF CREDIT

The Company has a line-of-credit agreement with a local Birmingham bank that permits borrowing up to $3 million.    The line-of-credit is subject to the Company’s continued credit worthiness and compliance with the terms and conditions of the loan agreement.  In October 2013, the line-of-credit was renewed with no changes from the previous year.  The Company’s line-of-credit debt at May 30, 2014 was $2,528,511 with an interest rate of 3.25%, leaving the Company with $471,489 of credit availability.  The Company’s line-of-credit debt at May 31, 2013 was $1,725,289 with an interest rate of 3.25%, leaving the Company with $1,274,711 of credit availability.
 
 
27

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 30, 2014 and May 31, 2013

NOTE 5 – LONG-TERM LIABILITIES

Long-term debt at May 30, 2014 and May 31, 2013 consists of the following:

In March 2009, the Company established a construction line of credit with interest-only payments due through the end of the construction period at a fixed rate of 4.25%. In September 2009, the loan converted to a 10-year, 4.25% fixed rate equipment note, payable in equal monthly installments based on the final amount drawn during the construction period which was $4,000,000. In March 2011, the loan was modified by taking the remaining balance of $3,532,700 and adding another $2,900,000 to finance the implementation of a new Enterprise Resource Planning system. At that time, the interest rate on the loan was adjusted to 3.52% and the terms were re-established at 15 years for the new amount of the loan.
             
   
2014
   
2013
 
Total equipment note payable
  $ 5,314,212     $ 5,671,240  
  Less:  current portion
    (369,979 )     (357,027 )
Total non current portion
  $ 4,944,233     $ 5,314,213  
                 
                 
In January 2010, the Company transferred an existing operating lease from one provider to another. Included in the new lease agreement were 5 transport vehicles that were added as a capital lease. The capital portion of the lease is for a term of 4 years at an annual interest rate of 3.69%.
                 
      2014       2013  
Total capital lease
  $ -     $ 35,823  
  Less:  current portion
    -       (35,823 )
Total non current portion
  $ -     $ -  
                 
                 
      2014       2013  
Total note payable and capital lease
  $ 5,314,212     $ 5,707,063  
  Less:  current portion
    (369,979 )     (392,850 )
Total non current portion
  $ 4,944,233     $ 5,314,213  
 
 
28

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 30, 2014 and May 31, 2013

NOTE 5 – LONG-TERM LIABILITIES- CONTINUED
Other long-term obligations at May 30, 2014 and May 31, 2013 consist of the following:

   
2014
   
2013
 
Salary continuation plan
  $ 1,133,154     $ 1,229,459  
Less:  current portion
    (212,970 )     (196,649 )
Total non current portion
  $ 920,184     $ 1,032,810  
 
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 $143,695 and $131,804 for fiscal 2014 and 2013, respectively.

NOTE 6 – INCOME TAXES

At May 30, 2014 and May 31, 2013 the provision for income taxes consists of the following:
 
   
2014
   
2013
 
Current:
           
  Federal
  $ 786,126     $ 992,003  
  State
    184,400       236,454  
                 
      970,526       1,228,457  
                 
Deferred:
               
  Federal
    (241,758 )     (150,610 )
  State
    (56,709 )     (35,329 )
                 
      (298,467 )     (185,939 )
                 
Total
  $ 672,059     $ 1,042,518  
 
 
29

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 30, 2014 and May 31, 2013

NOTE 6 – INCOME TAXES- CONTINUED
The effective tax rate for continuing operations differs from the expected tax using statutory rates.  A reconciliation between the expected tax and actual tax follows:
 
   
2014
   
2013
 
             
Tax on income at statutory rates
  $ 541,921     $ 740,028  
Increase resulting from:
               
  State income taxes, less Federal income tax effect
    121,704       156,060  
  Other - net
    8,434       146,430  
                 
    Total
  $ 672,059     $ 1,042,518  
 
The tax effects of temporary differences that result in deferred tax assets and liabilities are as follows:
 
   
2014
   
2013
 
Deferred tax assets
           
  Salary continuation plan
  $ 430,599     $ 467,194  
  Accrued vacation
    557,032       539,495  
  Inventory capitalization
    96,923       65,515  
  Allowance for doubtful accounts
    26,600       26,600  
  Other accrued expenses
    284,350       141,511  
                 
    Gross deferred tax assets before valuation allowance
    1,395,504       1,240,315  
     Less valuation allowance
    -       -  
                 
Total deferred tax assets
    1,395,504       1,240,315  
                 
Deferred tax liabilities
               
  Property and equipment
    3,700,884       3,867,929  
  Prepaid expenses
    104,337       80,570  
Total deferred tax liabilities
    3,805,221       3,948,499  
                 
    Net deferred tax liability
  $ 2,409,717     $ 2,708,184  
 
 
30

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended May 30, 2014 and May 31, 2013

NOTE 7 – EMPLOYEE BENEFIT PLANS

The Company has a trusteed “Qualified Profit-Sharing Plan” that was amended and restated effective September 1, 2010, known as the Golden Flake Snack Foods, Inc. 401(k) Retirement Savings Plan (the “Plan”).  Prior to September 1, 2010, the Plan was named the Golden Flake Snack Foods, Inc. 401(k) Salary Reduction Plan.  The Plan’s trustee was changed from New York Life Trust Company to State Street Bank and Trust Company effective September 1, 2010.  Also, the Company appointed Diversified Investment Advisors to provide recordkeeping and general administrative services for the Plan effective September 1, 2010.

The Company’s contributions to the Plan are reviewed and approved by the Board of Directors.  For the year ended June 3, 2011, the Board approved an increase in the Company match from 20% of an employee’s eligible contributions to 25% of an employee’s eligible contributions.  The Company’s 401(k) and Profit Sharing Plan changed to December 31st from May 31st starting in 2014.  Total plan contributions for the years ended May 30, 2014 and May 31, 2013 were $90,956 and $154,760, respectively.

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:

   
2014
   
2013
 
             
Accrued salary continuation plan - beginning of year
  $ 1,229,459     $ 1,279,233  
                 
Benefits accrued
    143,695       131,804  
                 
Benefits paid
    (240,000 )     (181,578 )
                 
Accrued salary continuation plan - end of year
  $ 1,133,154     $ 1,229,459  

 
31

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

NOTE 8 – DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the quoted market prices for those instruments that are actively traded in financial markets.  In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques.  The fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instruments, such as estimates of timing and amount of expected future cash flows.  Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses.  In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument.

The carrying amounts for cash and cash equivalents approximate fair value because of the short maturity, generally less than three months, of these instruments.

The carrying value of the Company’s salary continuation plan and accrued liability approximates fair value because present value is used in accruing this liability.

The Company does not hold or issue financial instruments for trading purposes and has no involvement with forward currency exchange contracts.

 
32

 
 
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

NOTE 9– COMMITMENTS AND CONTINGENCIES

Rental expense was $1,200,883 in 2014 and $1,438,402 in 2013.

The Company has entered into various operating lease agreements to replace aging route vans and transport trucks.  The current annual obligation under this agreement is $480,301.  Future minimum lease commitments for operating leases at May 30, 2014 were as follows:
 
       
2015
    480,301  
2016
    185,058  
2017
    70,075  
2018
    -  
2019
    -  

The Company has a letter of credit in the amount of $1,850,000 outstanding at May 30, 2014 and $1,900,000 at May 31, 2013.  The letter of credit supports the Company’s commercial self-insurance program.  The Company pays an annual commitment fee of 0.75% to maintain the letters of credit.

The Company has entered into various other short term purchase commitments with suppliers for raw materials in the normal course of business.

The Company is subject to routine litigation and claims incidental to its business.  In the opinion of management, such routine litigation and claims should not have a material adverse effect upon the Company’s consolidated financial statements taken as a whole.

NOTE 10 - CONCENTRATIONS OF CREDIT RISK

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables.

The Company maintains deposit relationships with high credit quality financial institutions.  The Company’s trade receivables result primarily from its snack food operations and reflect a broad customer base, primarily large grocery store chains located in the Southeastern United States.  The Company routinely assesses the financial strength of its customers.  As a consequence, concentrations of credit risk are limited.

The Company did not have any major customer write-offs this year that were not covered by credit insurance.
 
 
33

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
For the Fiscal Years Ended May 30, 2014 and May 31, 2013

NOTE 11– SUPPLEMENTARY STATEMENT OF INCOME INFORMATION

The following tabulation gives certain supplementary statement of income information for the years ended May 30, 2014 and May 31, 2013:
 
   
2014
   
2013
 
             
Maintenance and repairs
  $ 6,909,152     $ 6,163,701  
Depreciation
    3,778,563       3,538,740  
Payroll taxes
    2,204,506       2,316,893  
 
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 12– SUBSEQUENT EVENT

On July 25, 2014, the Company sold real property, along with improvements located thereon, that it owned in the city of Decatur, Georgia to a third party purchaser.  The gross sales price paid by the third party purchaser for the real property was $250,000.  Certain selling expenses and real estate commissions were paid by the Company from the gross sales proceeds resulting in net proceeds of approximately $229,044.  The real property had previously been used by the Company as a distribution warehouse, but was no longer needed or used by the Company.

NOTE 13 – RESTRUCTURING CHARGES

During the third quarter of fiscal 2014, the Company took necessary steps to streamline its management structure. As a result, the Company reduced its workforce by approximately 2% and incurred gross restructuring charges of $1,026,980 consisting of severance costs related to the workforce reduction. As all of the restructuring activities were completed in the third quarter of fiscal 2014, the Company does not expect to recognize additional costs in future periods relating to these actions.
 
The activity in the restructuring accrual for the six month period ended May, 2014 is as follows:

Restructuring accrual – December 1, 2013
  $ 1,026,980  
Cash payments
    (535,640 )
Restructuring accrual – May 30, 2014
  $ 491,340  
 
The accrual balance as of May 30, 2014 will be relieved through November 2014, as severance payments are completed. The restructuring accrual is included in the balance of other accrued expenses in the consolidated balance sheet.
 
 
34

 
 
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.


Evaluation of Disclosure Controls and Procedures
 
Our company’s management, under the supervision of and 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, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (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, 2014, 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.

Management’s Assessment 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) and 15d-15(f) promulgated under the Exchange Act 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 principles and includes those policies and procedures that:
 
     Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
 
     Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
 
     Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
 
 
35

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The company’s management assessed the effectiveness of the company’s internal control over financial reporting as of May 30, 2014. 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 management’s assessment, it concluded that, as of May 30, 2014, the company’s internal control over financial reporting was effective based on those criteria set forth.
 
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting
 
No change in our internal controls over financial reporting occurred during the fiscal quarter ended May 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 
Not Applicable.



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 7, the information required by this item is incorporated by reference to the sections entitled “Election of Directors,” “Additional Information Concerning the Board of Directors,”  “Executive Compensation and Other Information,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Code of Conduct and Ethics,” and “Corporate Governance” of the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders to be held September 18, 2014.

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”).  All officers and directors, who were required to file, timely filed required Form 4 and 5 reports.
 
 
36

 


The information required by this item is incorporated by reference to the sections entitled “Executive Compensation” of the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders to be held September 18, 2014.  See Item 5 of this Annual Report on Form 10-K for information concerning the Company’s equity compensation plans.

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 2014 Annual Meeting of Stockholders to be held September 18, 2014.


The information required by this item is incorporated by reference to the section entitled “Certain Related Party Transactions” and “Director Independence” of the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders to be held September 18, 2014.


The information required by this item is incorporated by reference to the section entitled “Independent Accountants” of the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders to be held September 18, 2014.

Prior to September 30, 2014, the Company will file a definitive Proxy Statement with the Securities and Exchange Commission pursuant to Regulation 14A which involves the election of directors.
 
 
37

 


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, 2014 and May 31, 2013

Consolidated Statements of Income- Years ended May 30, 2014 and May 31, 2013

Consolidated Statements of Changes in Stockholders’ Equity- Years ended May 30, 2014 and May 31, 2013

Consolidated Statements of Cash Flows- Years ended May 30, 2014 and May 31, 2013

Notes to Consolidated Financial Statements

   (a)  2. LIST OF FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statements schedule is included in Item 15 (c):

Schedule II- Valuation and Qualifying Accounts

All other schedules are omitted because the information required therein is not applicable, or the information is given in the financial statements and notes thereto.

(a) 3.
     Exhibits
   
(3)
Articles of Incorporation and By-laws of Golden Enterprises, Inc.
   
3.1
Certificate of Incorporation of Golden Enterprises, Inc. (originally known as “Golden Flake, Inc.”) dated December 11, 1967 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission).
   
3.2
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976 (incorporated by reference to Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission).
   
3.3
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 2, 1978 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K filed with the Commission).
   
3.4
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 4, 1979 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K filed with the Commission).
   
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).
 
 
38

 
 
3.6
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 22, 1983 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1983 filed with the Commission).
   
3.7
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 3, 1985 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1985 filed with the Commission).
   
3.8
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 23, 1987 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission).
   
3.9
By-Laws of Golden Enterprises, Inc. (incorporated by reference to Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission).
   
(10)
Material Contracts
   
10.1
A Form of Indemnity Agreement executed by and between Golden Enterprises, Inc. and Each of Its Directors (incorporated by reference as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1987 filed with the Commission).
   
10.2
Amended and Restated Salary Continuation Plans for John S. Stein (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. May 31, 1990 Form 10-K filed with the Commission).
   
10.3
Indemnity Agreement executed by and between the Company and J. Wallace Nall, Jr. (incorporated by reference as Exhibit 19.4 to Golden Enterprises, Inc. May 31, 1991 Form 10-K filed with the Commission).
   
10.4
Salary Continuation Plans - Retirement, Disability and Death Benefits for F. Wayne Pate (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. May 31, 1992 Form 10-K filed with the Commission).
   
10.5
Indemnity Agreement executed by and between the Registrant and F. Wayne Pate (incorporated by reference as Exhibit 19.3 to Golden Enterprises, Inc. May 31, 1992 Form 10-K filed with the Commission).
   
10.9
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).
 
 
39

 
 
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).
   
10.20
 
Amendment to Salary Continuation Plan for Mark W. McCutcheon dated December 30, 2008 (incorporated by reference to Exhibit 10.20 Golden Enterprises, Inc. February 27, 2009 Form 10-Q filed with the Commission).
   
10.24
 
A Form of Indemnity Agreement to be executed by and between Golden Enterprises, Inc. and the following directors: Mark W. McCutcheon, Joann F. Bashinsky, John S. Stein, III, William B. Morton, Jr., Paul R. Bates and David A. Jones  (incorporated by reference to Exhibit 10.24 to Golden Enterprises, Inc. January 13, 2011 Form 10-Q filed with the Commission).
   
10.26 
A Purchase Agreement was executed by and between Golden Flake Snack Foods, Inc. as Seller, and Redwine Property Management, Inc. as Purchaser, with a transfer date of July 25, 2014, for the sale of real property and improvements located thereon in Decatur, Georgia.
   
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
 
 
40

 
 
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).
 
 
101.INS
XBRL Instance Document
 
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document

 
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 15, 2014
Patty Townsend
Vice President, Secretary and Principal Financial Officer
Date
 
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
 
Signature
 
Title
 
Date
 
/s/Mark W. McCutcheon
 
Chairman of the Board, Chief
 
August 15, 2014
Mark W. McCutcheon
 
Executive Officer, and President
   
 
/s/Patty Townsend
 
Vice President, Secretary and
 
August 15, 2014
Patty Townsend
 
Principal Financial Officer
   
 
/s/F. Wayne Pate
 
Director
 
August 15, 2014
F. Wayne Pate
       
 
/s/Edward R. Pascoe
 
Director
 
August 15, 2014
Edward R. Pascoe
       
 
/s/John P. McKleroy, Jr.
 
Director
 
August 15, 2014
John P. McKleroy, Jr.
       
 
/s/John S.P. Samford
 
Director
 
August 15, 2014
John S.P. Samford
       
 
/s/J. Wallace Nall, Jr.
 
Director
 
August 15, 2014
J. Wallace Nall, Jr.
       
 
/s/Joann F. Bashinsky
 
Director
 
August 15, 2014
Joann F. Bashinsky
       
 
/s/Paul R. Bates
 
Executive Vice-President
 
August 15, 2014
Paul R. Bates
 
and Director
   
 
/s/David A. Jones
 
Executive Vice-President
 
August 15, 2014
David A. Jones
 
and Director
   
 
/s/William B. Morton, Jr.
 
Director
 
August 15, 2014
William B. Morton, Jr.
       
 
/s/John S. Stein III
 
Director
 
August 15, 2014
John S. Stein III
       
 
 
42

 

SCHEDULE II


GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

VALUATION AND QUALIFYING ACCOUNTS

For the Fiscal Years Ended May 30, 2014 and May 31, 2013


         
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, 2013
  $ 70,000     $ 0     $ 0     $ 70,000  
                                 
Year ended May 30, 2014
  $ 70,000     $ 0     $ 0     $ 70,000  
                                 

 
43

 


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44

 

 
INDEX TO EXHIBITS
 
 
 
 
Page
     
     
     
3.1
Certificate of Incorporation of Golden Enterprises, Inc. (originally known as “Golden Flake, Inc.”) dated December 11, 1967 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission).
 
     
3.2
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated December 22, 1976 (incorporated by reference to Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission).
 
     
3.3
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 2, 1978 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K filed with the Commission).
 
     
3.4
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 4, 1979 (incorporated by reference to Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K filed with the Commission).
 
     
3.5
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 24, 1982 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1983 Form 10-K filed with the Commission).
 
     
3.6
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 22, 1983 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1983 filed with the Commission).
 
     
3.7
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated October 3, 1985 (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1985 filed with the Commission).
 
     
3.8
Certificate of Amendment of Certificate of Incorporation of Golden Enterprises, Inc. dated September 23, 1987 (incorporated by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission).
 
     
3.9
By-Laws of Golden Enterprises, Inc. (incorporated by reference to Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed with the Commission).
 
     
(10)
Material Contracts
 
     
10.1
A Form of Indemnity Agreement executed by and between Golden Enterprises, Inc. and Each of Its Directors (incorporated by reference as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the quarter ended November 30, 1987 filed with the Commission).
 
     
10.2
Amended and Restated Salary Continuation Plans for John S. Stein (incorporated by reference to Exhibit 19.1 to Golden Enterprises, Inc. May 31, 1990 Form 10-K filed with the Commission).
 
 
 
45

 
 
   
Page
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).
 
     
10.9
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).
 
     
10.20
 
Amendment to Salary Continuation Plan for Mark W. McCutcheon dated December 30, 2008 (incorporated by reference to Exhibit 10.20 Golden Enterprises, Inc. February 27, 2009 Form 10-Q filed with the Commission).
 
     
10.24
 
A Form of Indemnity Agreement to be executed by and between Golden Enterprises, Inc. and the following directors: Mark W. McCutcheon, Joann F. Bashinsky, John S. Stein, III, William B. Morton, Jr., Paul R. Bates and David A. Jones  (incorporated by reference to Exhibit 10.24 to Golden Enterprises, Inc. January 13, 2011 Form 10-Q filed with the Commission)
 
 
     
10.26  A Purchase Agreement was executed by and between Golden Flake Snack Foods, Inc. as Seller, and Redwine Property Management, Inc. as Purchaser, with a transfer date of July 25, 2014, for the sale of real property and improvements located thereon in Decatur, Georgia.   
 
 
46

 
 
14.1
 
Golden Enterprises, Inc.’s Code of Conduct and Ethics adopted by the Board of Directors on April 8, 2004 (incorporated by reference to Exhibit 14.1 Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission).
 
     
(18)
Letter Re: Change in Accounting Principles
 
     
18.1
 
Letter from the Registrant’s Independent Accountant dated August 12, 2005 indicating a change in the method of applying accounting practices followed by the Registrant for the fiscal year ended June 3, 2005 (incorporated by reference to Exhibit 18.1 to Golden Enterprises, Inc.’s June 3, 2005 Form 10-K filed with the Commission).
 
     
21
Subsidiaries of the Registrant ( incorporated by reference to Exhibit 21 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the Commission)   
     
(31)
Certifications
 
     
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
     
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).
 
 
 
47


 
 
 
 
 
 
 
EXHIBIT 10.26

 
 
 
 
 
 

 
 
48

 


Marcus & Millichap

PURCHASE AGREEMENT

THIS DOCUMENT IS MORE THAN A RECEIPT FOR MONEY. IT IS INTENDED TO BE A LEGALLY BINDING AGREEMENT. READ IT CAREFULLY.

Marcus & Millichap Real Estate Investment Services of Atlanta ("Agent"), as agent for Golden Flake Snack Foods, Inc. "Seller"), has received from Redwine Property Management, Inc.(a Georgia Corporation) ("Buyer"), the sum of TEN THOUSAND AND NO/100 dollars ($10,000.00) in the form of a check. This sum is a deposit ("Deposit") to be applied to the purchase price of that certain real property (referred to as the "Property") located in the City of Decatur, County of DeKalb, State of Georgia, and more particularly described as follows:

1212 Paul Edwin Drive Decatur, GA 30032

and more particularly described on Exhibit "A" attached hereto and made a part hereof .

TERMS AND CONDITIONS

Seller agrees to sell the Property, and Buyer agrees to purchase the Property, on the following terms and conditions:

1)
PURCHASE PRICE: The purchase price for the Property is TWO HUNDRED FIFTY THOUSAND AND N0/100 dollars ($250,000.00). The Purchase Price, less the amount of the Deposit paid by Buyer, and subject to appropriate adjustments and prorations as hereinafter provided, shall be paid as follows:

2)
DEPOSIT:

 
Upon execution of the Agreement, Buyer shall deposit the sum of TEN THOUSAND AND NO/100 dollars ($10,000.00) in the form of a check (as referenced above) with:

 
__xxx__ Marcus & Millichap Real Estate Investment Services of Atlanta ("Agent")

 
This sum is a deposit ("Deposit") to be credited against the purchase price of the Property at closing or otherwise used as set forth in this Agreement and shall be held in trust in a separate account by Agent.

 
All notices, demands and instructions with respect to the Deposit must be in writing. In the event that conflicting demands are made or served, the Agent or Holder shall have the absolute right to withhold its performance with respect to the Deposit until it has received written notification satisfactory to the Agent or Holder of an agreement between the parties or by final judgment of the court as to the disposition of the Deposit. All parties to this agreement hereby jointly and severally promise and agree to fully compensate, indemnify and hold Agent or Holder harmless from all liabilities, attorney fees, and other arbitration and litigation costs arising from or related to Agent's or Holder's performance with respect to the Deposit. In the event of conflicting demands, the Agent or Holder may, at its option, institute a suit to determine who is entitled to said Deposit, and the cost of said action, including reasonable attorneys' fees and legal costs incurred by the Agent or Holder, shall be paid out of said Deposit.

3)
TITLE: Buyer shall cause an examination of title to the Property to be made, and a title insurance commitment to be issued by a title company of Buyer's choice (the "Title Company") on the Property. At Buyer's option and expense, Buyer shall cause an accurate survey to be made of the Property by a registered land surveyor of Buyer's choice. Within FIFTEEN (15) calendar days after the Effective Date of this Agreement, Buyer shall deliver a copy of the title commitment to Seller, together with a copy of any survey Buyer shall have prepared, accompanied by a letter to Seller in which Buyer shall either approve in writing any exceptions contained in said title report or specify in writing any exceptions to which Buyer reasonably objects. If Buyer objects to any exceptions, Seller shall, within TEN (10) calendar days after receipt of Buyer's objections, deliver to Buyer written notice that either (i) Seller will, at Seller's expense, attempt to remove the exception(s) to which Buyer has objected before the Closing Date or (ii) Seller is unwilling or unable to eliminate the exception(s). If Seller fails to so notify Buyer or is unwilling or unable to remove any such exception by the Closing Date, Buyer may elect to terminate this Agreement and receive back the entire Deposit, in which event Buyer and Seller shall have no further obligations under this Agreement; or, alternatively, Buyer may elect to purchase the Property subject to such exception(s).
 
 
49

 
 
 
Seller shall convey by general warranty deed to Buyer (or such other person as Buyer may specify) marketable fee simple title subject only to the exceptions approved by Buyer in accordance with this Agreement and shall execute and deposit the above instrument with Buyer's closing attorney within FIVE (5) days of the removal of contingencies. Title shall be insurable by a standard title insurance policy issued by a title insurance company licensed to do business in the State of Georgia.

4)
CLOSING: Closing shall be held on or before THIRTY (30) calendar days from the date this Agreement is agreed to by all parties hereto (the "Closing Date") at a time and place to be determined, and at the time designated by written notice to Buyer and Seller at least five days (5) prior to the Closing Date. At the Closing, Seller shall execute and deliver to Buyer a limited warranty deed subject to those exceptions permitted by this Agreement, and owner's affidavit, a I.R.C. Section 1445 non-foreign affidavit, an affidavit of seller's residence, and a broker's lien affidavit, all in form satisfactory to the Title Company to remove from Buyer's owner's title policy any exceptions for claims for labor and materials, unpaid federal and Georgia taxes arising from the sale, and unpaid real estate broker's commissions, and each party hereto shall execute and deliver such other documents necessary or appropriate to effect and complete the Closing.

 
Rents, real property taxes, premiums on insurance acceptable to Buyer, interest on any debt being assumed or taken subject to by Buyer, and any other expenses of the Property shall be prorated as of the Closing Date. Security deposits, advance rentals, and the amount of any future lease credits shall be credited to Buyer at Closing. If the State or Local municipality requires payment of an intangible tax at closing, Buyer shall pay any and all associated costs. The amount of any assessment which is a lien and not customarily paid with real property taxes shall be (select one “X”) paid by the Seller.

5)
FINANCING CONTINGENCIES:

5a.
NEW FIRST LOAN
5b.
NEW SECOND LOAN
5c.
SHORTFALL CLAUSE
5d.
PURCHASE SUBJECT TO/ASSUMPTION OF FIRST
5e.
PURCHASE SUBJECT TO/ASSUMPTION OF SECOND
5f.
SELLER CARRIES BACK FIRST
5g.
SELLER CARRIES BACK SECOND
5h.
SELLER CARRIES BACK THIRD
--
ALL INCLUSIVE PROMISSORY NOTE AND DEED OF TRUST
5j.X
NO FINANCING CONTINGENCY--- ALL CASH
5k.
OTHER FINANCING

6)
PEST CONTROL CONTINGENCIES:

6a.
Termite
--
Standard
6c.X
NO PEST CONTROL CONTINGENCY - "AS IS"
6d.
OTHER PEST CONTROL.

7)
INSPECTION CONTINGENCIES:

7a.
BOOKS AND RECORDS
7b.X
PHYSICAL INSPECTION
7c.
STATE AND LOCAL LAWS
--
TENANT FINANCIAL INFORMATION (Leased Properties)
7e.
NO INSPECTION CONTINGENCY - "AS IS"
7f.
OTHER INSPECTION

8)
DEPOSIT INCREASE/NON-REFUNDABLE DEPOSIT: Upon removal of the inspection contingencies set forth in paragraphs   N/A    hereof, Buyer's deposit shall become non-refundable and Buyer shall increase the Deposit to  N/A    dollars ($________).  The Deposit shall be credited to the purchase price at Closing unless otherwise provided herein. Should the Property be made unmarketable by Seller, or acts of God, the Deposit shall be returned to Buyer and the deed shall be returned to Seller.
 
 
50

 
 
9)
ESTOPPEL CERTIFICATE CONTINGENCY (Leased Properties): N/A

10)
LEASED PROPERTY PRORATIONS: Rents actually collected (prior to closing) will be prorated as of the Closing Date and rent collected thereafter applied first to rental payments then owed the Buyer and their remainder paid to the Seller. All free rent due any tenant at the close of escrow for rental periods after the closing shall be a credit against the Purchase Price. Other income and expenses shall be prorated as follows: ___***______

11)
PERSONAL PROPERTY: Title to any personal property to be conveyed to Buyer in connection with the sale of the Property shall be conveyed to Buyer by Bill of Sale on the Closing Date free and clear of all encumbrances (except those approved by Buyer as provided above). The price of these items shall be included in the Purchase Price for the Property, and Buyer agrees to accept all such personal property in “as is" condition.

12)
CONDITION OF PROPERTY: It is understood and agreed that the Property is being sold "as is"; that Buyer has, or will have prior to the Closing Date, inspected the Property; and that neither Seller nor Agent makes any representation or warranty as to the physical condition or value of the Property or its suitability for Buyer's intended use.

 
Buyer’s Initials  ________           Seller’s Initials ________        

13)
RISK OF LOSS: Risk of loss to the Property shall be borne by Sell until title has been conveyed to Buyer. In the event that the improvements on the Property are destroyed or materially damaged between the Effective Date of this Agreement and the date title is conveyed to Buyer, Buyer shall have the option of demanding and receiving back the entire Deposit and being released from all obligations hereunder, or alternatively, taking such improvements as Seller can deliver. Upon Buyer's physical inspection and approval of the Property, Seller shall maintain the Property through close of escrow in the same condition and repair as approved, reasonable wear and tear excepted.

14)
POSSESSION:  Possession of the Property shall be delivered to Buyer on Closing Date.

15)
LIQUIDATED DAMAGES: By placing their initials immediately below, Buyer and Seller agree that it would be Impracticable or extremely difficult to fix actual damages in the event of a default by Buyer, that the amount of Buyer's Deposit hereunder (as same may be increased by the terms hereof) is the parities' reasonable estimate of Seller's damages In the event of Buyer's default, and that upon Buyer's default in its purchase obligations under this agreement, not caused by any breach by Seller, Seller shall be released from its obligations to sell the Property and shall retain Buyer's Deposit (as same may be increased by the terms hereof) as liquidated damages, which shall be Seller's sole and exclusive remedy in law or at equity for Buyer's default.

 
Buyer’s Initials  ________           Seller’s Initials ________        

16)
SELLER EXCHANGE: Buyer agrees to cooperate should Seller elect to sell the Property as part of a like-kind exchange under IRC Section 1031. Seller's contemplated exchange shall not impose upon Buyer any additional liability or financial obligation, and Seller agrees to hold Buyer harmless from any liability that might arise from such exchange. This Agreement is not subject to or contingent upon Seller's ability to acquire a suitable exchange property or effectuate an exchange. In the event any exchange contemplated by Seller should fail to occur, for whatever reason, the sale of the Property shall nonetheless be consummated as provided herein.

17)
BUYER EXCHANGE: Seller agrees to cooperate should Buyer elect to purchase the Property as part of a like-kind exchange under IRC Section 1031. Buyer's contemplated exchange shall not impose upon Seller any additional liability or financial obligation, and Buyer agrees to hold Seller harmless from any liability that might arise from such exchange. This Agreement is not subject to or contingent upon Buyer's ability to dispose of its exchange property or effectuate an exchange.  In the event any exchange contemplated by Buyer should fail to occur, for whatever reason, the sale of the Property shall nonetheless be consummated as provided herein.
 
 
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18)
DISCLOSURE OF REAL. ESTATE LICENSURE:

18a.
License disclosure
18b.
License disclosure

 
AUTHORIZATION: Buyer and Seller authorize Agent to disseminate sales information regarding this transaction, including the purchase price of the Property.

19)
AGENCY DISCLOSURE:

19a.
EXCLUSIVE LISTING
19b.
DUAL AGENCY
19c.
SELLER'S AGENT
19.1)
SELLER’S AGENT:  Marcus & Millichap Real Estate Investment Services of Atlanta is the broker representing the Seller (and the Seller only) in this transaction.  Big City Realty (License #18,866) is the broker representing the Buyer (and the Buyer only),

19d.
 
 
20)
OTHER BROKERS: Agent or a broker affiliated with Agent is involved in the disposition of the Property, Agent shall have no liability to Buyer or Seller for the acts or omissions of such other broker, who shall not be deemed to be a subagent of Agent.

21)
LIMITATION OF LIABILITY: Except for gross negligence or willful misconduct, Agent's liability for any breach or negligence in its performance of this Agreement shall be limited to the greater of $50,000 or the amount of compensation actually received by Agent in any transaction hereunder.

22)
SCOPE OF AGENT'S AUTHORITY AND RESPONSIBILITY: Agent shall have no authority to bind either Buyer or Seller to any modification or amendment of this Agreement. Agent shall not be responsible for performing any due diligence or other investigation of the Property on behalf of either Buyer or Seller, or for providing either party with professional advice with respect to any legal, tax, engineering, construction or hazardous materials issues. Except for maintaining the confidentiality of any information regarding Buyer or Seller's financial condition and any future negotiations regarding the terms of this Purchase Agreement, Buyer and Seller agree that their relationship with Agent is at arm's length and is neither confidential nor fiduciary in nature.

23)
BROKER DISCLAIMER: Buyer and Seller acknowledge that, except as otherwise expressly stated herein, Agent has not made any investigation, determination, warranty or representation with respect to any of the following: (a) the financial condition or business prospects of any tenant, or such tenant's intent to continue or renew its tenancy in the Property; (b) the legality of the present or any possible future use of the Property under any federal, state or local law; (c) pending or possible future action by any governmental entity or agency which may affect the Property; (d) the physical condition of the Property, including but not limited to, soil conditions, the structural integrity of the improvements, and the presence or absence of fungi or wood-destroying organisms: (e) the accuracy or completeness of income and expense information and projections, of square footage figures, and of the texts of leases, options, and other agreements affecting the Property; (f) the possibility that lease, options or other documents exist which affect or encumber the Property and which have not been provided or disclosed by Seller; or (g) the presence or location of any hazardous materials on or about the Property, including, but not limited to, asbestos, PCB's, or toxic, hazardous or contaminated substances, and underground storage tanks.

 
Buyer agrees that investigation and analysis of the foregoing matters is Buyer's sole responsibility and that Buyer shall not hold Agent responsible therefore. Buyer further agrees to reaffirm its acknowledgment of this disclaimer at close of escrow and to confirm that it has relied upon no representations Agent in connection with its acquisition of the Property.

 
Buyer’s Initials  ________           Seller’s Initials ________        
 
 
52

 
 
24)
OTHER BUYERS:  Buyer understands that Agent represents other buyer who may have an interest in similar, or the same property that Buyer is considering purchasing. Buyer understands, consents and agrees that Agent, at all times before, during and after his representation of Buyer, may also represent other prospective buyers in the purchase of any property offered for sale. Buyer understands, consent and agrees that, regardless of the particular agency relationship between Buyer and Agent, Agent's representation of other buyers does not constitute a breach of any duty to Buyer.

25)
LEAD-BASED PAINT HAZARDS: N/A

26)
MOLD/ALLERGEN ADVISORY AND DISCLOSURE: Buyer is advised of the possible presence within properties of toxic (or otherwise illness-causing) molds, fungi, spores, pollens and/or other botanical substances and/or allergens (e.g. dust, pet dander, insect material; etc.). These substances may be either visible or invisible, may adhere to walls and other accessible and inaccessible surfaces, may be embedded in carpets or other fabrics, may become airborne, and may be mistaken for other household substances and conditions. Exposure carries the potential of possible health consequences. Agent strongly recommends that Buyer contact the State Department of Health Services for further information on this topic.

 
Buyer is advised to consider engaging the services of an environmental or industrial hygienist (or similar, qualified professional) to inspect and test for the presence of harmful mold, fungi, and botanical allergens and substances as part of Buyer's physical condition inspection of the Property, and Buyer is further advised to obtain from such qualified professionals information regarding the level of health-related risk involved, if any, and the advisability and feasibility of eradication and abatement, if any.

 
Buyer is expressly cautioned that Agent has no expertise in this area and is, therefore, incapable of conducting any level of inspection of the Property for the possible presence of mold and botanical allergens. Buyer acknowledges that Agent has not made any investigation, determination, warranty or representation with respect to the possible presence of mold or other botanical allergens, and Buyer agrees that the investigation and analysis of the foregoing matters is Buyer's sole responsibility and that Buyer shall not hold Agent responsible therefore.

27)
ARBITRATION OF DISPUTES: If a controversy arises with respect to the subject matter of this Purchase Agreement or the transaction contemplated herein (including but not limited to the parties' rights to the Deposit or the payment of commissions as provided herein), Buyer, Seller and Agent agree that such controversy shall be settled by final, binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators) may be entered in any court having jurisdiction thereof. Arbitration shall have the power to resolve any and all disputes between the parties arising out of this Agreement, including the right and power to enforce the Agreement.

 
We have read and understand the foregoing and agree to submit disputes arising out of the matters included in the "Arbitration of Disputes" provision to neutral arbitration.

 
Buyer’s Initials  ________           Seller’s Initials ________        

28)
SUCCESSORS & ASSIGNS: This Agreement and any addenda thereto shall be binding upon and inure to the benefit of the heirs, successors, agents, representatives and assigns of the parties hereto.

29)
ATTORNEYS' FEES: In any litigation, arbitration or other legal proceeding which may arise between any of the parties hereto, including Agent, the prevailing party shall be entitled to recover its costs, including costs of arbitration, and reasonable attorneys' fees in addition to any other relief to which such party may be entitled.

30)
TIME: Time is of the essence of this Agreement.

31)
NOTICES: All notices required or permitted hereunder shall be given to the parties in writing (with a copy to Agent) at their respective addresses as set forth below. Should the date upon which any act required to be performed by this Agreement fall on a Saturday, Sunday or holiday, the time for performance shall be extended to the next business day.
 
 
53

 
 
32)
ADDENDA: Any addendum attached hereto and either signed or initialed by the parties shall be deemed a part hereof. This Agreement, including addenda, if any, expresses the entire agreement of the parties and supersedes any and all previous agreements between the parties with regard to the Property. There are no other understandings, oral or written, which in any way alter or enlarge its terms, and there are no warranties or representations of any nature whatsoever, either express or implied, except as set forth herein. Any future modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

33)
ACCEPTANCE AND EFFECTIVE DATE: Buyers signature hereon constitutes an offer to Seller to purchase the Property on the terms and conditions set forth herein. Unless acceptance hereof is made by Seller's execution of this Agreement and delivery of a fully executed copy to Buyer, either in person or by mail at the address shown below, on or before 6:00 P.M., July 11, 2014, this offer shall be null and void, the Deposit shall be returned to Buyer, and neither Seller nor Buyer shall have any further rights or obligations hereunder. Delivery shall be effective upon personal delivery to Buyer or Buyer's agent or, if by mail, on the next business day following the date of postmark. The "Effective Date" of this Agreement shall be the later of (a) the date on which Seller executes this Agreement, or (b) the data of or written acceptance (by either Buyer or Seller) of the final counter-offer submitted by the other party.

34)
COUNTERPARTS: Buyer and Seller both acknowledge and agree that a facsimile copy of this Agreement with a party's signature is as legally valid and binding as the original Agreement with an original signature, If Buyer is not an individual but a legal entity, Buyer's representative represents that he/she is authorized on behalf of the legal entity to sign this Agreement. THE PARTIES ARE ADVISED TO CONSULT THEIR RESPECTIVE ATTORNEYS WITH REGARD TO THE LEGAL EFFECT AND VALIDITY OF THIS PURCHASE AGREEMENT. THE PARTIES AGREE THAT THIS AGREEMENT CAN BE SIGNED IN COUNTERPART WITH THE SAME LEGAL FORCE AND EFFECT AS IF NOT SIGNED IN COUNTERPART.

35)
GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia.

36)
OTHER TERMS AND CONDITIONS: In addition to any and all other remedies Buyer may have at law if Seller should default under this contract, Buyer shall also have the right to Specific Performance of this contract.

THE PARTIES ARE ADVISED TO CONSULT THEIR RESPECTIVE ATTORNEYS WITH REGARD TO THE LEGAL EFFECT AND VALIDITY OF THIS PURCHASE AGREEMENT.

The undersigned Buyer hereby offers and agrees to purchase the above-described Property for the price and upon the terms and conditions herein stated.

This offer is made by Buyer to Seller on this 23rd day of JUNE, 2014. The undersigned Buyer hereby acknowledges receipt of an executed copy of this Agreement, including the Agency Disclosure contained in Paragraph 20, above.

BUYER:
Redwine Property Management, Inc.
 
ADDRESS:
2282 Wender Drive
 
 
By: Charles D. Redwine II, President
   
Tucker, Georgia 30084
 
 
DATE:
   
TELEPHONE:
770 938 5223
 
 
BUYER:
   
ADDRESS:
   
       
DATE:
   
TELEPHONE:
   
 
SELLER'S ACCEPTANCE AND AGREEMENT TO PAY COMMISSION

The undersigned Seller accepts the foregoing offer and agrees to sell the Property to Buyer for the price and on the term end conditions stated herein. Seller acknowledges receipt of an executed copy of this Agreement and authorizes Agent to deliver an executed copy to Buyer.
 
 
54

 
 
Seller reaffirms its agreement to pay to Agent a real estate brokerage commission pursuant to the terms of that certain Representation Agreement between Agent and Seller which shall remain in full force and effect. Said commission is payable in full on the Closing Date and shall be paid in cash at closing. Closing Attorney is directed to make such payment to Agent from Seller's proceeds of sale. The provisions of this paragraph may not be amended or modified without the written consent of Agent. Agent is made a party to this Agreement for the purpose of enforcing Agent's rights arising hereunder.

Seller acknowledges and agrees that payment of said commission is not contingent upon the closing of the transaction contemplated by this Agreement, and that, in the event completion of the sale is prevented by default of Seller, then Seller shall immediately be obligated to pay to Agent the entire commission. Seller agrees that in the event completion of the sale is prevented by default of Buyer, then Seller shall be obligated to pay to Agent an amount equal to one half of any damages or other monetary compensation (including liquidated damages) collected from Buyer by suit or otherwise as consequence of Buyer's default, if and when such damages or other monetary compensation are collected; provided, however, that the total amount paid to Agent by Seller shall not in any case exceed the brokerage commission hereinabove forth. Seller acknowledges and agrees that the existence of any direct claim which Agent may have against Buyer in the event of Buyers default shall not alter or in any way limit the obligations of Seller to Agent as set forth herein.
SELLER:
Golden Flake Snack Foods, Inc.
 
ADDRESS:
One Golden Flake Drive
 
 
By:  Randy Bates, EVP
   
Birmingham, AL  35205
 
 
DATE:
6/25/14   
TELEPHONE:
205 323-6161
 
 
SELLER:
   
ADDRESS:
   
       
DATE:
   
TELEPHONE:
   

Agent accepts and agrees to the foregoing.
AGENT:
MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES OF ATLANTA
 
 
By:
   
ADDRESS:
1100 Abernathy Rd NE S
 
 
Michael Fasano     
Ste 600
Sandy Springs, GA 30328
 

NO REPRESENTATION IS MADE BY AGENT AS TO THE LEGAL OR TAX EFFECT OR VALIDITY OF ANY PROVISION OF THIS PURCHASE AGREEMENT. A REAL ESTATE BROKER IS QUALIFIED TO GIVE ADVICE ON REAL ESTATE MATTERS. IF YOU DESIRE LEGAL, FINANCIAL OR TAXADVICE, CONSULT YOUR ATTORNEY, ACCOUNTANT OR TAX ADVISOR.
 
 
55

 
 
Exhibit “A”
 
 
 
 
 
Graphic



 
56

 

ADDENDUM #1 TO PURCHASE AGREEMENT BY AND BETWEEN GOLDEN FLAKE SNACK FOODS, INC. (“SELLER”) AND REDWINE PROPERTY MANAGEMENT, INC. (“BUYER”) DATED _______, 2014

1.           The fifth sentence of Section 2 of the Agreement which is captioned “DEPOSIT”, which reads as follows:

“All parties to this agreement hereby jointly and severally promise and agree to fully compensate, indemnify and hold Agent or Holder harmless from all liabilities, attorney fees, and other arbitration and litigation costs arising from or related to Agent's or Holder's performance with respect to the Deposit.”

is hereby deleted in its entirety and the following sentence is substituted in lieu thereof:

Except in the event of Agent’s negligence or willful misconduct, each party to this agreement hereby promises and agrees to fully compensate, indemnify and hold Agent harmless from all liabilities, attorneys’ fees, and other arbitration and litigation costs caused by the acts or omissions of such party and arising from or relating to agent’s performance with respect to the Deposit; provided, however, that the extent of such party’s liability to Agent shall not exceed one-half (1/2) of the amount of Agent’s commission hereunder.
 
  BUYER: 
     
  REDWINE PROPERTIES, INC. 
     
  By:   
    Charles D. Redwine II, President 
     
  SELLER: 
     
 
GOLDEN FLAKE SNACK FOODS, INC.
     
  By:   
    Randy Bates 
    Its Executive President 
 
 
57


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, 2014;

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 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(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 15, 2014

/s/ Mark W. McCutcheon
Mark W. McCutcheon
President and Chief Executive Officer
 
 
58



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, 2014;

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 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(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 15, 2014

/s/ Patty Townsend
Patty Townsend
Vice-President and Chief Financial Officer
 
 
59



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, 2014 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. § 1350, as adopted pursuant to §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 15, 2014



/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.
 
 
60


 
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, 2014 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. § 1350, as adopted pursuant to §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 15, 2014



/s/ Patty Townsend
Patty Townsend
Vice-President and Chief Financial Officer



A signed original of this written statement required by Section 906 has been provided to Golden Enterprises, Inc. and will be retained by Golden Enterprises, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
 
 
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