UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly (thirteen weeks) period ended November 27, 2015

 

OR

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from   to  
       
Commission file number   0-4339  

 

GOLDEN ENTERPRISES, INC.

 

(Exact name of registrant as specified in its charter)

 

DELAWARE   63-0250005
     
(State or other jurisdiction of   (I.R.S. Employer
  incorporation or organization)   Identification No.)
     
One Golden Flake Drive    
Birmingham, Alabama   35205
(Address of Principle Executive Offices)   (Zip Code)

 

(205) 458-7316

(Registrant’s telephone number, including area code)

 

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

 

Indicate 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 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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of December 31, 2015.

 

    Outstanding at
Class   December 31, 2015
Common Stock, Par Value $0.66 2/3   11,291,757

 

EXCHANGE ACT REPORTS AVAILABLE ON COMPANY WEBSITE

Under “SEC Filings” on the “Financial” page of the Company’s website located at www.goldenflake.com, links to the following filings are made available as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”)” the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statement on Schedule 14A related to the Company’s Annual Shareholders Meeting, and any amendments to those reports or statements filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Act of 1934. You may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website located at http://www.sec.gov that contains the information we file or furnish electronically with the SEC.

 

 

 

 

GOLDEN ENTERPRISES, INC.

 

INDEX

 

        Page No.
         
Part I.   FINANCIAL INFORMATION  
         
Item 1   Financial Statements (unaudited)    
         
    Interim Condensed Consolidated Balance Sheets November 27, 2015 (unaudited) and May 29, 2015   3
         
    Interim Condensed Consolidated Statements of Income (unaudited) Thirteen Weeks and Twenty-Six Weeks Ended November 27, 2015 and November 28, 2014   4
         
    Interim Condensed Consolidated Statements of Cash Flows(unaudited) Twenty-Six Weeks Ended November 27, 2015 and November 28, 2014   5
         
    Notes to Interim Condensed Consolidated Financial Statements (unaudited)   7
         
Item 2   Management’s Discussion and Analysis of Financial Condition and Results of Operations   10
         
Item 3   Quantitative and Qualitative Disclosure About Market Risk   12
         
Item 4   Controls and Procedures   12
         
Part II.   OTHER INFORMATION   13
         
Item 1   Legal Proceedings   13
         
Item 1-A   Risk Factors   13
         
Item 2   Unregistered Sales of Equity Securities and Use of Proceeds   13
         
Item 3   Defaults Upon Senior Securities   13
         
Item 4   Mine Safety Disclosures   13
         
Item 5   Other Information   14
         
Item 6   Exhibits   15

 

 2 
 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

 

    (Unaudited)        
    November 27,     May 29,  
    2015     2015  
ASSETS            
CURRENT ASSETS                
Cash and cash equivalents   $ 2,505,700     $ 1,159,449  
Receivables, net     9,811,750       11,085,689  
Inventories:                
Raw materials and supplies     1,625,752       1,781,397  
Finished goods     3,783,872       3,460,800  
      5,409,624       5,242,197  
                 
Prepaid expenses     1,275,771       1,350,201  
Income taxes receivable     -       476,154  
Deferred income taxes     1,139,433       1,139,433  
Total current assets     20,142,278       20,453,123  
                 
Property, plant and equipment, net     22,985,070       24,488,478  
Other assets     1,491,216       1,603,454  
                 
Total   $ 44,618,564     $ 46,545,055  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
CURRENT LIABILITIES                
Checks outstanding in excess of bank balances   $ 1,522,192     $ 1,068,745  
Accounts payable     3,799,854       4,049,333  
Accrued income taxes     465,782       -  
Current portion of long-term debt     814,884       799,204  
Current portion of capital lease obligation     32,235       -  
Other accrued expenses     4,694,019       5,021,286  
Salary continuation plan     110,465       106,148  
Line of credit outstanding     -       2,823,477  
                 
Total current liabilities     11,439,431       13,868,193  
                 
LONG-TERM LIABILITIES                
Notes payable - bank, non-current     5,751,117       6,213,513  
Capital lease obligation     53,226       -  
Salary continuation plan     920,814       921,882  
Deferred income taxes     3,856,793       3,856,793  
                 
Total long-term liabilities     10,581,950       10,992,188  
                 
STOCKHOLDERS' EQUITY                
Common stock - $.66-2/3 par value:                
35,000,000 shares authorized Issued 13,828,793 shares     9,219,195       9,219,195  
Additional paid-in capital     6,710,298       6,552,973  
Retained earnings     19,804,684       19,049,500  
      35,734,177       34,821,668  
                 
Less:  Cost of common shares in treasury (2,537,036 shares at November 27, 2015 and May 29, 2015)     (13,136,994 )     (13,136,994 )
                 
Total stockholders' equity     22,597,183       21,684,674  
                 
Total   $ 44,618,564     $ 46,545,055  

  

See Accompanying Notes to Interim Condensed Consolidated Financial Statements

 

 3 
 

 

GOLDEN ENTERPRISES, INC. AND SUDSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

   Thirteen   Thirteen   Twenty-Six   Twenty-Six 
   Weeks   Weeks   Weeks   Weeks 
   Ended   Ended   Ended   Ended 
   November 27, 2015   November 28, 2014   November 27, 2015   November 28, 2014 
                     
Net sales  $31,998,047   $32,029,326   $65,730,188   $66,154,362 
Cost of sales   15,903,254    16,463,995    32,445,675    33,466,861 
Gross margin   16,094,793    15,565,331    33,284,513    32,687,501 
                     
Selling, general and administrative expenses   15,037,087    15,401,103    30,688,897    31,426,351 
Operating income   1,057,706    164,228    2,595,616    1,261,150 
                     
Other income (expenses):                    
Gain on sale of assets   6,250    8,862    6,250    252,806 
Interest expense   (86,179)   (90,583)   (185,691)   (230,450)
Other income   8,879    6,489    19,116    23,275 
Total other (expenses) income   (71,050)   (75,232)   (160,325)   45,631 
                     
Income before income taxes   986,656    88,996    2,435,291    1,306,781 
Income  taxes   387,105    48,269    946,142    498,828 
Net income  $599,551   $40,727   $1,489,149   $807,953 
                     
PER SHARE OF COMMON STOCK                    
Basic and diluted earnings  $0.05   $0.00   $0.13   $0.07 
                     
Weighted average number of common stock share outstanding:                    
Basic and diluted   11,291,757    11,732,632    11,291,757    11,732,632 
                     
Cash dividends paid per share of common stock  $0.0338   $0.0313   $0.0650   $0.0625 

 

See Accompanying Notes to Interim Condensed Consolidated Financial Statements

 

 4 
 

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

   Twenty-Six   Twenty-Six 
   Weeks Ended   Weeks Ended 
   November 27, 2015   November 28, 2014 
           
CASH FLOWS FROM OPERATING ACTIVITIES          
           
Cash received from customers  $67,004,127   $66,806,920 
Miscellaneous income   19,116    23,275 
Cash paid to suppliers and employees   (31,645,264)   (31,360,105)
Cash paid for operating expenses   (29,944,607)   (32,038,530)
Income taxes paid   (4,205)   (761,558)
Interest expenses paid   (185,691)   (230,450)
Net cash provided by operating activities   5,243,476    2,439,552 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
           
Purchase of property, plant and equipment   (339,639)   (713,604)
Proceeds from sale of property, plant and equipment   6,250    254,356 
Net cash (used in) investing activities   (333,389)   (459,248)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
           
Debt proceeds   11,672,910    15,825,219 
Debt repayments   (14,943,103)   (16,007,227)
Principal payments under capital lease obligation   (13,125)   - 
Change in checks outstanding in excess of bank balances   453,447    (42,543)
Cash dividends paid   (733,965)   (733,290)
Net cash (used in) financing activities   (3,563,836)   (957,841)
           
Net change in cash and cash equivalents   1,346,251    1,022,463 
Cash and cash equivalents at beginning of period   1,159,449    1,160,630 
Cash and cash equivalents at end of period  $2,505,700   $2,183,093 

 

Supplementary Cash Flow information:

A capital lease obligation of $98,586 was incurred in the period ended August 28, 2015 when Golden Flake Snack Foods, Inc. entered into a lease for new server equipment.

 

 5 
 

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - CONTINUED

 

RECONCILIATION OF NET INCOME TO NET CASH FROM OPERATING ACTIVITIES

 

   Twenty-Six   Twenty-Six 
   Weeks Ended   Weeks Ended 
   November 27, 2015   November 28, 2014 
           
Net Income  $1,489,149   $807,953 
Adjustments to reconcile net income to net cash provided by  operating activities:          
Depreciation and amortization   1,941,633    1,975,180 
Gain on sale of property and equipment   (6,250)   (252,806)
Stock based compensation   157,325    - 
           
Changes in operating assets and liabilities:          
Change in receivables - net   1,273,939    652,558 
Change in inventories   (167,427)   309,766 
Change in prepaid expenses   74,430    (213,042)
Change in other assets   112,238    85,262 
Change in accounts payable   (249,479)   445,177 
Change in accrued expenses   (327,267)   (1,049,570)
Change in salary continuation   3,249    (58,196)
Change in accrued income taxes   941,936    (262,730)
           
Net cash provided by operating activities  $5,243,476   $2,439,552 

 

See Accompanying Notes to Interim Condensed Consolidated Financial Statements

 

 6 
 

 

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

 

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Golden Flake Snack Foods, Inc. is a wholly-owned subsidiary of Golden Enterprises, Inc. The accompanying unaudited interim condensed consolidated financial statements of Golden Enterprises, Inc. (the “Company”, “we”, or “our”), which includes the accounts of Golden Enterprises, Inc. and subsidiary, have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim condensed consolidated financial information and with the instructions to Form 10-Q. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal, recurring accruals) necessary for a fair presentation have been included. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our Form 10-K as of and for the year ended May 29, 2015 which can be found on our website at www.goldenflake.com/financial.html. Our accounting policies are described in Note 1 to those Consolidated Financial Statements. There have been no significant changes to these accounting policies.

 

The consolidated financial position, results of operations, and cash flows for the thirteen weeks and twenty-six weeks ended November 27, 2015 are not necessarily indicative of the results to be expected for the fifty-three week fiscal year ending June 3, 2016.

 

Significant accounting policies:

 

Inventories

Raw materials and finished goods are stated at the lower of cost or market. Cost is computed on the first-in, first-out method.

 

Revenue Recognition

The Company recognizes sales and related costs upon delivery or shipment of products to its customers. Sales are reduced by estimated 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 its reserve based on analysis of historical data while also considering general economic factors and specific reserves for receivable balances that are considered higher risk due to known facts regarding the customer.

 

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

NOTE 2 – NET INCOME PER SHARE

 

Basic earnings per common share, as presented on the interim condensed consolidated statements of income, are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects per share amounts that would have resulted if dilutive potential common stock equivalents had been converted to common stock, as prescribed by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 260, “Earnings per Share”. At November 27, 2015, the previously issued options on 300,000 shares were not included in the computation of diluted earnings per share because the effect of stock options using the treasury stock method was antidilutive. At November 28, 2014, there were no options granted.

 

 7 
 

 

NOTE 3 – PREPAID EXPENSES

 

The following tables summarize the prepaid expenses accounts at November 27, 2015 and May 29, 2015:

 

   November 27, 2015   May 29, 2015 
           
Truck shop supplies  $309,710   $320,622 
Insurance deposit   48,548    48,548 
Prepaid marketplace spending   187,336    201,373 
Prepaid insurance   440,775    369,864 
Prepaid taxes/licenses   43,591    113,042 
Prepaid dues/supplies   135,967    - 
Other   109,844    296,752 
           
   $1,275,771   $1,350,201 

 

NOTE 4 – OTHER ACCRUED EXPENSES

 

The following tables summarize other accrued expenses at November 27, 2015 and May 29, 2015:

 

   November 27, 2015   May 29, 2015 
           
Accrued salary and benefits  $2,846,592   $2,526,338 
Accrued workers compensation   1,122,025    1,472,182 
Accrued other   725,402    1,022,766 
           
   $4,694,019   $5,021,286 

 

NOTE 5 – CONCENTRATIONS OF CREDIT RISK

 

The principal raw materials used in the manufacture of the Company’s snack food products are potatoes, corn, pork skin pellets, vegetable oils, and seasoning. The principal supplies used are flexible film, cartons, trays, boxes, and bags. These raw materials and supplies are generally available in adequate quantities in the open market from sources in the United States and are generally contracted up to a year in advance.

 

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.

 

 8 
 

 

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 during the twenty-six weekends ended November 27, 2015 that were not covered by credit insurance or during the twenty-six weeks ended November 28, 2014.

 

NOTE 6 – LETTER OF CREDIT

 

The Company has a letter of credit with a local bank in the amount of $1,850,000 at November 27, 2015 and May 29, 2015. The letter of credit supports the Company’s commercial self-insurance program.

 

NOTE 7 – LINE OF CREDIT

 

The Company has a line-of-credit agreement with a local bank that permits borrowing up to $3,000,000 at November 27, 2015 and May 29, 2015. The line-of-credit is subject to the Company’s continued credit worthiness and compliance with the terms and conditions of the loan agreement. The Company’s line-of-credit debt as of November 27, 2015 was $0 with an interest rate of 3.25%, leaving the Company with $3,000,000 of credit availability. The Company’s line-of-credit debt as of May 29, 2015 was $2,823,477 with an interest rate of 3.25%, leaving the Company with $176,523 of credit availability.

 

NOTE 8 – LONG TERM LIABILITIES

 

The Company has two notes payable with a local bank as of November 27, 2015. The first note was established as a construction loan in March 2009 to help fund the construction of a process water treatment facility. In March 2011, the loan was modified by taking the remaining balance of $3,532,700 and adding another $2,900,000 to establish a new note payable of $6,432,700 at 3.52% for 15 years to finance the purchase and implementation of a new Enterprise Resource Planning computer software system. The Company has been making monthly payments on the note and intends to repay it at the earliest practicable date, as there are no prepayment penalties. The balance of the note was $4,754,474 as of November 27, 2015, and $4,944,233 as of May 29, 2015. The second note was established in order to fund the purchase of 440,875 shares of treasury stock. This note in the amount of $2,204,375 is dated January 30, 2015 and is to be repaid over 5 years at 3.3%. The balance of the note was $1,811,527 as of November 27, 2015, and $2,068,484 as of May 29, 2015. In July 2015, a capital lease obligation of $98,586 was incurred when the Company entered into a 36 month lease for new server equipment. The balance of the obligation was $85,461 as of November 27, 2015.

 

NOTE 9 – INCOME TAXES

 

The Company’s effective tax rate for the thirteen weeks ended November 27, 2015 was 39.2% compared to 54.2% for the thirteen weeks ended November 28, 2014. The Company’s effective tax rate for the twenty-six weeks ended November 27, 2015 was 38.9% and 38.2% for the comparable period last year. The decrease in the effective tax rate for the thirteen weeks ended November 27, 2015 compared to November 28, 2014 was due to the permanent non-deductibility of certain expenses for income tax purposes in relation to the income before income taxes for the respective thirteen week period.

 

 9 
 

 

ITEM 2

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Management’s discussion and analysis of our consolidated financial condition, results of operations and cash flows are based upon the interim condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). This discussion should be read in conjunction with our recent SEC filings, including our Form 10-K for the year ended May 29, 2015. The preparation of these interim condensed consolidated financial statements requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. Future events and their effects cannot be determined with absolute certainty. Therefore, management’s determination of estimates and judgments about the carrying values of assets and liabilities requires the exercise of judgment in the selection and application of assumptions based on various factors, including experience, current and expected economic conditions and other factors believed to be reasonable under the circumstances. We routinely evaluate our estimates including those considered significant and discussed in detail in our Form 10-K as of and for the year ended May 29, 2015. Actual results may differ from these estimates under different assumptions or conditions and such differences may be material.

 

Overview

 

Golden Enterprises, Inc. (the “Company”, “we”, or “our”) is a holding company that owns all of the issued and outstanding capital stock of Golden Flake Snack Foods, Inc., a wholly-owned subsidiary (“Golden Flake”). 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 and under contract through brokers and directly from growers. A large part of the raw materials used by the Company consists of farm commodities which are subject to precipitous changes in supply and price. Weather varies from season to season and directly affects both the quality and supply 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.

 

Financial Condition

 

Accounts Receivable and Allowance for Doubtful Accounts

 

At November 27, 2015 and May 29, 2015 the Company had accounts receivables in the amount of $9,811,750 and $11,085,689 respectively, net of an allowance for doubtful accounts of $70,000. The change in accounts receivable is primarily due to the timing of collections from some of our largest customers. The Company monitors accounts receivable and collects on a daily basis and strives to keep customer accounts as current as possible.

 

 10 
 

 

Results of Operations

 

Operating Results

 

For the thirteen weeks ended November 27, 2015, net sales decreased 0.1% from the thirteen weeks ended November 28, 2014. For the twenty-six weeks ended November 27, 2015, net sales decreased 0.6% from the comparable period in fiscal 2015. The decrease in the year to date sales is primarily due to the loss of a third party contract that expired at the end of the prior year first quarter. We do not expect to see a continuing trend of declining sales going forward. This year’s second quarter cost of sales was 49.7% of net sales compared to 51.4% for last year’s second quarter. This year’s cost of sales year to date was 49.4% of net sales compared to 50.6% for last year’s year to date. This year’s decrease in cost of sales was primarily due to a reduction in the price of commodities. This year’s second quarter, selling, general and administrative expenses were 47.0% of net sales compared to 48.1% for last year’s second quarter. This year’s selling, general and administrative expenses year to date were 46.7% of net sales compared to 47.5% for last year’s year to date. This year’s decrease in selling, general and administrative expenses was due to reduced fuel cost, reduction in cost associated with our fleet, and efficiencies from our ERP System. The efficiencies gained from the ERP system are expected to continue in the future.

 

The Company’s gain on the sale of assets was $6,250 and $8,862 for the thirteen weeks ended November 27, 2015 and November 28, 2014, respectively, from the sale of used transportation equipment. The Company’s gain on the sale of assets was $6,250 and $252,806 for the twenty-six weeks ended November 27, 2015 and November 28, 2014, respectively, for the sale of used transportation equipment and a distribution warehouse.

 

Liquidity and Capital Resources

 

At November 27, 2015 and May 29, 2015, working capital was $8,702,848 and $6,584,930, respectively. The Company’s current ratio was 1.76 to 1.00 at November 27, 2015 compared to 1.47 to 1.00 at May 29, 2015. The net cash provided by operating activities of $5.2 million was primarily due to increased collections from customers and decreased expenses as described in the Operating Results section above. The Company used approximately $2.8 million of $5.2 million in additional cash flows to reduce the line of credit to a zero balance as of November 27, 2015. The company expects to continue to pay down debt as cash flows permit.

 

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.

 

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 and under contract through brokers or directly from growers. Future contracts have been used occasionally to hedge immaterial amounts of commodity purchases, but none are presently being used.

 

Inflation

 

Certain costs and expenses of the Company are affected by inflation. The Company’s prices for its products over the past several 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.

 

 11 
 

 

 

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, we believe, has improved the flow of water in the creek and has positively impacted the environment in the area surrounding the plant. This treatment plant, we believe, has also helped to reduce expenses associated with sewer charges by the elimination of the disposal of process water through the public sewer system.

 

Forward-Looking Statements

 

This discussion contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those forward-looking statements. Factors that may cause actual results to differ materially include, but are not limited to, price competition, industry consolidation, raw material costs, and effectiveness of sales and marketing activities, as described in the Company’s filings with the Securities and Exchange Commission.

 

ITEM 3

 

QUANTITATIVE AND QUALITATIVE

DISCLOSURE ABOUT MARKET RISK

 

Pursuant to Item 305(e) of Regulation S-K (Section 229.305(e)) the Company is not required to provide the Information under this item, as it is a “Smaller Reporting Company” as defined by Rule 229.10(f)(1).

 

ITEM 4

 

CONTROLS AND PROCEDURES

 

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and in accumulating and communicating such information to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the Company’s second fiscal quarter ended November 27, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, there has been no such change during the period covered by this report.

 

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PART II OTHER INFORMATION

 

ITEM 1

 

LEGAL PROCEEDINGS

 

There are no material pending legal proceedings against the Company or its subsidiary other than routine litigation incidental to the business of the Company and its subsidiary.

 

ITEM 1-A

 

RISK FACTORS

 

The Company, as a “Smaller reporting company”, is not required to provide the information under this item.

 

ITEM 2

 

UNREGISTERED SALES OF EQUITY SECURITIES

AND USE OF PROCEEDS

 

The Company did not sell any equity securities during the period covered by this report.

 

Registrant Purchases of Equity Securities.

 

The Company did not purchase any shares of treasury stock for the quarterly period ended November 27, 2015.

 

ITEM 3

 

DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4

 

MINE SAFETY DISCLOSURES

 

Not applicable.

 

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ITEM 5

 

OTHER INFORMATION

 

Submission of Matters to a Vote of Security Holders.

 

The following information was previously provided in a Form 8-K.

 

On September 17, 2015, Golden Enterprises, Inc. (“Golden Enterprises”) held its 2015 annual meeting of shareholders at its principal executive offices at One Golden Flake Drive, Birmingham, Alabama  35205.  

 

Set forth below are the voting results for each of the matters submitted to a vote of the shareholders:

 

Proposal 1

 

Golden Enterprises’ shareholders elected the following eleven directors to serve a one-year term.  The voting results are set forth below.

 

  For
Joann F. Bashinsky 8,048,018
Paul R. Bates 8,061,717
David A. Jones 8,055,062
Mark W. McCutcheon 8,063,052
John P. McKleroy, Jr. 8,055,542
William B. Morton, Jr. 8,544,729
J. Wallace Nall, Jr. 8,031,009
Edward R. Pascoe 8,538,729
F. Wayne Pate 8,033,500
John S. P. Samford 8,547,338
John S. Stein, III 8,553,495

 

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ITEM 6

 

EXHIBITS

 

(3)Articles of Incorporation and By-laws of Golden Enterprises, Inc.

 

3.1Certificate 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).

 

3.2Certificate 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).

 

3.3Certificate 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).

 

3.4Certificate 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).

 

3.5Certificate 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).

 

3.6Certificate 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).

 

3.7Certificate 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 l0-Q Report for the quarter ended November 30, 1985 filed with the Commission).

 

3.8Certificate 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).

 

3.9By-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.

 

10.1A 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).

 

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10.2Amended 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).

 

10.3Indemnity Agreement executed by and between the Company and S. Wallace Nall, Jr. (incorporated by reference as Exhibit 19.4 to Golden Enterprises, Inc. May 31, 1991 Form 10-K filed with the Commission).

 

10.4Salary 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).

 

10.5Indemnity 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).

 

10.9Amendment 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).

 

10.10Amendment 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).

 

10.11Amendment 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).

 

10.12Retirement 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).

 

10.13Salary 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).

 

10.14Trust 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).

 

10.20Amendment 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).

 

10.24A 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).

 

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14.1Golden 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 with the Commission).

 

21Subsidiaries 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

 

31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

 

31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

 

32.1Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

 

32.2Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(99)Additional Exhibits

 

99.1A 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. May 31, 2005 Form 10-k filed with the Commission).

 

99.2Director Nomination Agreement (incorporated by reference to Exhibit 99.2 to Golden Enterprises’ Form 8-K filed with the commission on October 30, 2015

 

101.INSXBRL Instance Document

 

101.SCHXBRL Taxonomy Extension Schema Document

 

101.CALXBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEFXBRL Taxonomy Extension Definition Linkbase Document

 

101.LABXBRL Taxonomy Extension Label Linkbase Document

 

101.PREXBRL Taxonomy Extension Presentation Linkbase Document

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      GOLDEN ENTERPRISES, INC.
      (Registrant)
       
Dated: January 8, 2016    /s/ Mark W. McCutcheon
      Mark W. McCutcheon
      Chairman of the Board,
      President and
      Chief Executive Officer
       
Dated: January 8, 2016   /s/ Patty Townsend
      Patty Townsend
      Vice-President and
      Chief Financial Officer
      (Principal Accounting Officer)

 

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