FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-4339
GOLDEN ENTERPRISES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0250005
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 212, 2101 Magnolia Avenue, South
Birmingham, Alabama 35205
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including area code (205) 326-6101
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Capital Stock, Par Value $0.66 2/3
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X. No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of August 6, 1999.
Common Stock, Par Value $0.66 2/3 -- $17,038,407
Indicate the number of shares outstanding of each of the
Registrant's Classes of Common Stock, as of August 6, 1999.
Class Outstanding at August 6, 1999
--------------------------------- -----------------------------
Common Stock, Par Value $0.66 2/3 12,160,000 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the year ended May
31, 1999 are incorporated by reference into Part III.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT -- 1999
GOLDEN ENTERPRISES, INC.
Page
PART I
Item 1. Business 3
Item 2. Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of
Security Holders 6
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation 9
Item 7A. Quantitative and Qualitative Disclosure
About Market Risk 11
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 29
PART III
Item 10. Directors and Executive Officers of
the Registrant 29
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain Beneficial
Owners and Management 29
Item 13. Certain Relationships and Related Transactions 29
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 30
PART I
ITEM 1. -- BUSINESS
Golden Enterprises, Inc. (the "Company") is a holding company
which owns all of the issued and outstanding capital stock of
Golden Flake Snack Foods, Inc., a wholly-owned operating subsidiary
company ("Golden Flake"). Golden Enterprises is paid a fee by
Golden Flake for providing management services for it.
The Company was originally organized under the laws of the
State of Alabama as Magic City Food Products, Inc. on June 11,
1946. On March 11, 1958, it adopted the name Golden Flake, Inc. On
June 25, 1963, the Company purchased Don's Foods, Inc., a Tennessee
corporation which was merged into the Company on December 10, 1966.
The Company was reorganized December 31, 1967 as a Delaware
corporation without changing any of its assets, liabilities or
business. On January 1, 1977, the Company, which had been engaged
in the business of manufacturing and distributing potato chips,
fried pork skins, cheese curls and other snack foods, spun off its
operating division into a separate Delaware corporation known as
Golden Flake Snack Foods, Inc. and adopted its present name of
Golden Enterprises, Inc.
The Company owns all of the issued and outstanding capital
stock of Golden Flake Snack Foods, Inc.
Golden Flake Snack Foods, Inc.
General
Golden Flake Snack Foods, Inc. ("Golden Flake") is a Delaware
corporation with its principal place of business and home office
located at One Golden Flake Drive, Birmingham, Alabama. Golden
Flake manufactures and distributes a full line of salted snack
items, such as potato chips, tortilla chips, corn chips, pretzels,
fried pork skins, baked and fried cheese curls, peanut butter
crackers, cheese crackers, onion rings and buttered popcorn. These
products are all packaged in flexible bags or other suitable
wrapping material. Golden Flake also sells a line of cakes and
cookie items, canned dips, dried meat products, and nuts packaged
by other manufacturers using the Golden Flake label. No single
product or product line accounts for more than 50% of Golden
Flake's sales, which affords some protection against loss of volume
due to a crop failure of major agricultural raw materials.
Raw Materials
Golden Flake purchases raw materials used in manufacturing and
processing its snack food products on the open market and under
contract through brokers and directly from growers. A large part of
the raw materials used by Golden Flake consists of farm commodities
which are subject to precipitous change in supply and price.
Weather varies from season to season and directly affects both the
quality and supply available. Golden Flake has no control of the
agricultural aspects and its profits are affected accordingly.
Distribution
Golden Flake sells its products through its own sales
organization and independent distributors to commercial
establishments which sell food products in Alabama and in parts of
Tennessee, Kentucky, Georgia, Florida, Mississippi, Louisiana,
North Carolina, South Carolina, Arkansas and Missouri. The products
are distributed by approximately 532 route salesmen who are
supplied with selling inventory by the Company's trucking fleet
which operates out of Birmingham, Alabama, Nashville, Tennessee,
and Ocala, Florida. All of the route salesmen are employees of
Golden Flake and use the direct store door delivery method. Golden
Flake is not dependent upon any single customer, or a few
customers, the loss of any one or more of which would have a
material adverse effect on its business. No single customer
accounts for more than 10% of its total sales. Golden Flake has a
fleet of 917 company owned vehicles to support the route sales
system, including 37 tractors and 100 trailers for long haul
delivery to the various company warehouses located throughout its
distribution areas, 705 store delivery vehicles and 75 cars and
miscellaneous vehicles. Golden Flake also leases 10 trailers and 6
tractors.
Competition
The snack foods business is highly competitive. In the area in
which Golden Flake operates, many companies engage in the
production and distribution of food products similar to those
produced and sold by Golden Flake. Most, if not all, of Golden
Flake's products are in direct competition with similar products of
several local and regional companies and at least one national
company, the Frito Lay Division of Pepsi Co., Inc., which is larger
in terms of capital and sales volume than is Golden Flake. Golden
Flake is unable to state its relative position in the industry.
Golden Flake's marketing thrust is aimed at selling the highest
quality product possible and giving good service to its customers,
while being competitive with its prices. Golden Flake constantly
tests the quality of its products for comparison with other similar
products of competitors and maintains tight quality controls over
its products.
Employees
Golden Flake employs approximately 1,300 employees.
Approximately 750 employees are involved in route sales and sales
supervision, approximately 450 are in production and production
supervision, and approximately 100 are management and
administrative personnel.
Golden Flake believes that the performance and loyalty of its
employees are the most important factors in the growth and
profitability of its business. Since labor costs represent a
significant portion of Golden Flake's expenses, employee
productivity is important to profitability. Golden Flake considers
its relations with its employees to be excellent.
Golden Flake has a 401(k) Profit Sharing Plan and an Employee
Stock Ownership Plan designed to reward the long term employee for
his loyalty. In addition, the employees are provided medical
insurance, life insurance, and an accident and sickness salary
continuance plan. Golden Flake believes that its employee wage
rates are competitive with those of its industry and with
prevailing rates in its area of operations.
Environmental Matters
There have been no material effects of compliance with
government provisions regulating discharge of materials into the
environment.
Recent Developments
Since the beginning of its last fiscal year, Golden Flake has
discontinued distributing its products in the Miami, Florida and
Louisville/Lexington, Kentucky areas. In addition, the Company has
discontinued manufacturing low-fat cheese curls and low-fat potato
chips. Other than these changes, no significant change has occurred
in the kinds of products manufactured or in the markets or methods
of distribution, and no material changes or developments have
occurred in the business done and intended to be done by Golden
Flake.
Executive Officers Of Registrant
And Its Subsidiary
Name and Age Position and Offices with Management
------------ ------------------------------------
John S. Stein, 62 Mr. Stein is Chairman of the Board and
Chief Executive Officer of the Company.
He was elected Chief Executive Officer on
June 1, 1991 and Chairman on June 1,
1996. He served as President of the
Company from 1985 to November 1998. Mr.
Stein served as President of Golden Flake
Snack Foods, Inc. from 1976 to September
20, 1991. Mr. Stein has been employed
with the Company and its subsidiaries
since 1961. Mr. Stein is elected Chairman
and Chief Executive Officer annually, and
his present term will expire on May 31,
2000.
F. Wayne Pate, 64 Mr. Pate is President of the Company. He
was elected President on November 1,
1998. He served as President of Golden
Flake Snack Foods, Inc., a wholly-owned
subsidiary of the Company from September
20, 1991, to November 1, 1998. He has
been employed by Golden Flake since 1968.
During his employment, he has served as
Vice President of Research and
Development, Vice President of
Manufacturing and Executive Vice
President of Manufacturing and Sales. Mr.
Pate is elected President annually, and
his present term will expire on May 31,
2000.
John H. Shannon, 62 Mr. Shannon has been employed with the
Company since 1962. He was elected
Controller in 1976, Secretary in 1978 and
Vice-President in 1979, and has served in
these capacities since then. Mr. Shannon
is elected to his positions on an annual
basis, and his present term of office
will expire on May 31, 2000.
Mark W. McCutcheon, 44 Mr. McCutcheon is President of Golden
Flake Snack Foods, Inc., a wholly-owned
subsidiary of the Company. He was elected
President on November 1, 1998, and has
been employed by Golden Flake since 1980.
During his employment, he has served as
Plant Manager of the Ocala, Florida
Plant, Plant Manager of the Birmingham,
Alabama Plant, Vice President of
Manufacturing, Vice President of
Operations, and Executive Vice President.
Mr. McCutcheon is elected President
annually, and his present term will
expire on May 31, 2000.
ITEM 2. -- PROPERTIES
The office headquarters of the Company are located at Suite
212, 2101 Magnolia Avenue South, Birmingham, Alabama 35205. The
Company occupies approximately 1300 square feet of office space
under lease. The properties of the subsidiary are described below.
Golden Flake
Manufacturing Plants and Office Headquarters
The main plant and office headquarters of Golden Flake are
located at One Golden Flake Drive, Birmingham, Alabama, and are
situated on approximately 40 acres of land which is serviced by a
railroad spur track. This facility consists of 3 buildings which
have a total of approximately 300,000 square feet of floor area.
The plant manufactures a full line of Golden Flake products. Golden
Flake maintains a garage and vehicle maintenance service center
from which it services, maintains, repairs and rebuilds its fleet
and delivery trucks. Golden Flake has adequate employee and fleet
parking.
Approximately 17 acres of the Birmingham property is
undeveloped. This property is zoned for industrial use and is
readily available for future use. Plans for the utilization of this
property have not been finalized.
Golden Flake has a manufacturing plant in Nashville,
Tennessee, which is located at 2930 Kraft Drive. The building is of
masonry construction and has approximately 70,000 square feet of
floor space. Golden Flake manufactures potato chips, baked tortilla
chips and pretzels at this plant. The Company also owns 2 acres of
land across the street from its Nashville plant which is presently
used for parking.
Golden Flake also has a manufacturing plant in Ocala, Florida.
This plant was placed in service in November 1984. The plant
consists of approximately 100,000 square feet and is located on a
56-acre site on Silver Springs Boulevard. The Company manufactures
corn chips, tortilla chips and potato chips from this facility.
This manufacturing plant, with allowance for future expansion, will
use approximately 27 acres of the 56-acre site. The remaining 29
acres are undeveloped and are readily available for future use for
commercial and/or light industrial development. Plans for the
utilization of this property have not been finalized.
The manufacturing plants, office headquarters and additional
lands are owned by Golden Flake free and clear of any debts.
Distribution Warehouses
Golden Flake owns branch warehouses in Birmingham, Montgomery,
Pelham, Midfield, Demopolis, Fort Payne, Muscle Shoals, Huntsville,
Phenix City, Tuscaloosa, Mobile, Dothan and Oxford, Alabama;
Gulfport and Jackson, Mississippi; Chattanooga, Knoxville and
Memphis, Tennessee; Decatur, Marietta, Forest Park and Macon,
Georgia; Jacksonville, Panama City, Clearwater, Tampa, Orlando,
Tallahassee and Pensacola, Florida; Baton Rouge and New Orleans,
Louisiana and Little Rock, Arkansas. The warehouses vary in size
from 2,400 to 8,000 square feet. All distribution warehouses are
owned free and clear of any debts.
Vehicles
Golden Flake owns a fleet of 917 vehicles which includes 705
route trucks, 37 tractors, 100 trailers and 75 cars and
miscellaneous vehicles. There are no liens or encumbrances on
Golden Flake's vehicle fleet. Golden Flake also leases 10 trailers
and 6 tractors and owns a 1987 Cessna Citation II aircraft.
ITEM 3. -- LEGAL PROCEEDINGS
There are no material pending legal proceedings against the
Company or its subsidiary other than ordinary routine litigation
incidental to the business of the Company and its subsidiary.
ITEM 4. -- SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. -- MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
MARKET AND DIVIDEND INFORMATION
The Company's common stock is traded in the over-the-counter
market under the "NASDAQ" symbol, GLDC, and transactions are
reported through the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market System. The following
tabulation sets forth the high and low sales prices for the common
stock during each quarter of the fiscal years ended May 31, 1999
and 1998 and the amount of dividends paid per share in each
quarter. The Company currently expects that comparable regular cash
dividends will be paid in the future.
<TABLE>
<CAPTION>
Market Price
----------------- Dividends Paid
Quarter High Low Per share
------- ------ ------ --------------
<S> <C> <C> <C>
Fiscal 1999
- -----------
First $6 5/8 $5 3/8 $.12
Second 6 5/8 5 .12
Third 5 7/8 3 1/2 .06
Fourth 4 1/4 2 1/2 .06
Fiscal 1998
- -----------
First $7 3/4 $6 3/4 $.12
Second 7 3/4 6 3/4 .12
Third 7 1/4 6 .12
Fourth 7 1/8 6 .12
</TABLE>
As of August 6, 1999, there were approximately 1,600
shareholders of record.
ITEM 6. -- SELECTED FINANCIAL DATA
<TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
FINANCIAL REVIEW (Dollar amounts in thousands, except per share data)
<CAPTION>
Year Ended May 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net sales and other operating income $129,564 $129,363 $138,427 $127,150 $128,771
Investment income 66 160 286 675 674
-------- -------- -------- -------- --------
Total revenues 129,630 129,523 138,713 127,825 129,445
Cost of sales 60,283 58,923 63,548 57,331 56,285
Selling, general and administrative
expenses 67,671 64,728 69,845 65,419 64,863
Interest -- -- -- -- --
Income before income taxes 1,676 5,872 5,320 5,075 8,297
Federal and state income taxes 603 2,171 1,832 1,700 3,146
Income from continuing operations 1,073 3,701 3,488 3,375 5,151
Discontinued operations:
Income from operations of
discontinued business net of
related income taxes -- -- -- -- 3
Net income 1,073 3,701 3,488 3,375 5,154
- -----------------------------------------------------------------------------------------------------
FINANCIAL DATA
Depreciation and amortization $ 3,309 $ 3,183 $ 2,853 $ 2,486 $ 2,856
Capital expenditures, net of disposals 1,861 3,666 3,611 6,216 1,366
Working capital 11,642 13,516 15,887 19,053 25,788
Long-term debt 1,579 1,285 1,049 823 599
Stockholders' equity 32,504 36,089 38,253 40,582 43,490
Total assets 41,912 46,925 49,569 48,846 52,012
- -----------------------------------------------------------------------------------------------------
COMMON STOCK DATA
Income from continuing operations $ .09 $ .30 $ .29 $ .28 $ .42
Basic and diluted net income .09 .30 .29 .28 .42
Dividends .36 .48 .48 .47 .46
Book value 2.67 2.96 3.13 3.32 3.55
Price range 6 5/8-2 1/2 7 3/4-6 9 3/4-6 7/8 9 3/4-6 3/4 8-6 3/4
- -----------------------------------------------------------------------------------------------------
FINANCIAL STATISTICS
Current ratio 2.99 2.79 2.90 4.37 5.26
Net income as percent of total revenues
from continuing operations 0.8% 2.9% 2.5% 2.6% 4.0%
Net income as percent of stockholders'
equity (a) 3.1% 10.0% 8.8% 8.0% 11.6%
- -----------------------------------------------------------------------------------------------------
OTHER DATA
Weighted average common shares
outstanding 12,171,043 12,205,950 12,205,950 12,243,283 12,376,769
Common shares outstanding at
year-end 12,160,950 12,205,950 12,205,950 12,205,950 12,261,950
Approximate number of stockholders 1,600 1,600 1,800 1,800 1,800
<FN>
(a) Average amounts at beginning and end of fiscal year.
</FN>
</TABLE>
ITEM 7. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Working capital was $11.6 million at May 31, 1999 compared to
$13.5 million at May 31, 1998. Net cash provided by operations
amounted to $2.1 million in fiscal year 1999, $7.6 million in
fiscal year 1998, and $6.2 million in fiscal year 1997. An
additional $3.0 million in cash was provided this year by a net
decrease in investment securities compared to $0.9 million in 1998,
and $3.3 million in 1997.
Additions to property, plant and equipment, net of disposals,
were $1.9 million, $3.7 million, and $3.6 million in fiscal years
1999, 1998, and 1997, respectively, and are expected to be about
$2.0 million in 2000.
Cash dividends of $4.4 million, $5.9 million, and $5.8 million
were paid during fiscal years 1999, 1998, and 1997, respectively.
The regular quarterly dividend was changed in January, 1999 from
$.12 to $.06 per share. This change reflects the reduction in
earnings and the need for the Company to increase its reinvestment
in the business.
Cash in the amount of $0.3 million was used to purchase
treasury shares in fiscal year 1999, and no cash was used for this
purpose during fiscal years 1998 and 1997.
Long-term liabilities as a percentage of total capitalization
was 4.4% at May 31, 1999. The Company's current ratio at the year
end was 2.99 to 1.00.
Operating Results
Net sales and other operating income increased by 0.2% in
fiscal year 1999, decreased by 6.5% in fiscal year 1998, and
increased by 8.9% in 1997. Although sales for 1999 were
approximately equal to those for 1998, it was necessary to increase
discount spending considerably in order to keep sales at the 1998
level. The drop in sales for 1998 from 1997 was primarily caused by
decisions made by three major accounts in reaction to very
aggressive spending by a competitor. A sizeable reduction in
discount spending for 1998 also had a negative impact on sales,
but this had a positive effect on profits. The improvement in sales
for fiscal 1997 was due to expansion into new products and market
areas.
The Company's investment income was 4.0% of income before
taxes in 1999, 2.7% in 1998, and 5.4% in 1997. Investment income
has dropped considerably over the past three years because of the
decrease in investment securities which were sold to finance
capital expenditures that were incurred in developing several new
products.
Cost of sales as a percentage of net sales amounted to 46.8%
in 1999, 45.9% in 1998, and 46.1% in 1997. Higher raw material and
packaging cost were the major factors causing the increase in cost
of sales for 1999 after having had fairly stable costs over the
previous three years.
Selling, general and administrative expenses were 52.6% of
sales in 1999, 50.4% in 1998, and 50.7% in 1997. An increase in
discount spending in fiscal 1999 was the major reason for the
unfavorable comparison with 1998. In 1998 there was a significant
reduction in advertising and promotional expenses which produced a
favorable comparison with 1997 expenses. There was an improvement
for 1997 compared to 1996 due to an increase in sales with very
little increase in advertising expense.
The Company's effective income tax rates for 1999, 1998, and
1997 were 36.0%, 37.0%, and 34.4%, respectively. Note 4 to the
consolidated financial statements provides additional information
about the provision for income taxes.
Market Risk
The principal market risks (i.e., the risk of loss arising
from adverse changes in market rates and prices) to which the
Company is exposed are interest rates on its investment securities,
and commodity prices, affecting the cost of its raw materials.
The Company's investment securities consist of short-term
marketable securities. Presently these are variable rate money
market mutual funds. Assuming year-end 1999 variable rate
investment levels, a one-point change in interest rates would
impact interest income by $619.
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. Future contracts have been used occasionally to hedge
immaterial amounts of commodity purchases, but none are presently
being used.
Year 2000 Compliance
All necessary modifications for Year 2000 compliance were
completed by the target date of May 31, 1999. All information
technology systems and non-IT systems are compliant.
All internal testing has been done, but there is some testing
remaining to be done on some of the applications that interface
with other companies. The Company is set to do any of this testing
that is necessary as the other companies involved become ready.
Internal staff has been used primarily for the conversion, and
the cost of the project is estimated to be approximately $60,000
and has been expensed as incurred.
Contingency plans for Year 2000 related interruptions have
been developed and include, but are not limited to replacing
electronic applications with manual processes, identification of
alternate suppliers and increasing raw material and finished goods
inventory levels.
The most likely worse case scenarios for the Company would be
the temporary inability of suppliers to provide raw materials on a
timely basis and of some customers to order and pay on a timely
basis.
To the degree possible, the Company is verifying that other
companies with which its systems interface or rely on are currently
Year 2000 compliant or are in the process of becoming compliant.
While the Company anticipates no major interruption of its business
activities, that will be dependent in part upon the ability of
these third parties to be Year 2000 compliant. Although the Company
is addressing third party issues as explained above, it is not able
to require the compliance actions by such parties. Accordingly,
while the Company believes its actions in this regard should have
the effect of mitigating Year 2000 risks, it cannot completely
eliminate them or estimate the ultimate effect that Year 2000 risks
will have on its operating results.
Inflation
Certain costs and expenses of the Company are affected
adversely by inflation, and the Company's prices for its products
over the last eight years have remained relatively flat. The
Company will contend with the effect of further inflation through
efficient purchasing, improved manufacturing methods, pricing, and
by monitoring and controlling expenses.
Environmental Matters
There have been no material effects of compliance with
governmental provisions regulating discharge of materials into the
environment.
ITEM 7A. -- QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
Included in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Market Risk
beginning on page 9.
ITEM 8. -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and
its subsidiary for the year ended May 31, 1999, consisting of the
following, are contained herein:
Consolidated Balance Sheets -- May 31, 1999 and 1998
Consolidated Statements of Income -- Years ended May 31, 1999, 1998 and 1997
Consolidated Statements of -- Years ended May 31, 1999, 1998 and 1997
Cash Flows
Consolidated Statements of Changes -- Years ended May 31, 1999, 1998 and 1997
in Stockholders' Equity
Notes to Consolidated Financial -- Years ended May 31, 1999, 1998 and 1997
Statements
Quarterly Results of Operations -- Years ended May 31, 1999 and 1998
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Golden Enterprises, Inc.
We have audited the accompanying consolidated balance sheets
of Golden Enterprises, Inc. and subsidiary as of May 31, 1999 and
1998, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in
the period ended May 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated
financial position of Golden Enterprises, Inc. and subsidiary as of
May 31, 1999 and 1998, and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended May 31, 1999, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedules
listed in item 14(a) 2 are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of
the basic financial statements. These schedules for the years ended
May 31, 1999, 1998, and 1997, have been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
Birmingham, Alabama
July 6, 1999 DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
<TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
May 31, 1999 and 1998
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 227,120 $ 114,869
Investment securities available-for-sale 61,941 3,077,464
Receivables:
Trade accounts 10,143,145 10,812,685
Other 203,378 471,101
----------- -----------
10,346,523 11,283,786
Less: Allowance for doubtful accounts 111,000 75,000
----------- -----------
10,235,523 11,208,786
----------- -----------
Inventories:
Raw materials 2,224,946 2,425,367
Finished goods 2,403,663 2,359,201
----------- -----------
4,628,609 4,784,568
----------- -----------
Prepaid expenses 2,348,975 1,899,294
----------- -----------
Total current assets 17,502,168 21,084,981
----------- -----------
Property, plant and equipment:
Land 3,790,600 3,840,514
Buildings 19,456,338 19,503,824
Machinery and equipment 42,770,602 42,018,529
Transportation equipment 17,077,882 16,884,469
----------- -----------
83,095,422 82,247,336
Less: Accumulated depreciation 61,570,336 59,274,250
----------- -----------
21,525,086 22,973,086
----------- -----------
Other Assets 2,884,498 2,866,681
----------- -----------
Total $41,911,752 $46,924,748
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Checks outstanding in excess of bank balances $ 962,474 $ --
Accounts payable 3,689,615 5,795,698
Accrued income taxes -- 213,813
Other accrued expenses 952,366 1,304,349
Deferred income taxes 255,820 254,898
----------- -----------
Total current liabilities 5,860,275 7,568,758
----------- -----------
Long-term liabilities 1,579,453 1,284,543
----------- -----------
Deferred income taxes 1,968,005 1,982,324
----------- -----------
Commitments and Contingencies -- --
Stockholders' Equity:
Common stock -- $.66 2/3 par value:
Authorized 35,000,000 shares;
issued 13,828,793 shares 9,219,195 9,219,195
Additional paid-in capital 6,499,554 6,499,554
Retained earnings 26,361,690 29,671,907
Treasury shares -- at cost (1,667,843 shares
in 1999 and 1,622,843 shares in 1998) (9,576,420) (9,301,533)
Accumulated other comprehensive income -- --
----------- -----------
Total stockholders' equity 32,504,019 36,089,123
----------- -----------
Total $41,911,752 $46,924,748
=========== ===========
<FN>
See Accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Years ended May 31, 1999, 1998 and 1997
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Net sales $128,740,552 $128,496,511 $137,744,137
Other income, including gain on
sale of property and equipment
of $536,709 in 1999, $450,923
in 1998, and $397,772 in 1997 823,363 866,327 682,601
Net investment income 66,567 159,956 286,644
------------ ------------ ------------
Total revenues 129,630,482 129,522,794 138,713,382
------------ ------------ ------------
Costs and expenses:
Cost of sales 60,283,113 58,922,656 63,548,396
Selling, general and administrative
expenses 67,416,243 64,172,339 69,288,269
Contributions to employee 401(k)
profit-sharing and employee
stock ownership plans 255,020 556,240 556,882
------------ ------------ ------------
Total costs and expenses 127,954,376 123,651,235 133,393,547
------------ ------------ ------------
Income before income taxes 1,676,106 5,871,559 5,319,835
------------ ------------ ------------
Provision for income taxes:
Currently payable:
Federal 526,000 1,800,000 1,519,000
State 91,000 282,000 252,000
Deferred taxes (14,000) 89,000 61,000
------------ ------------ ------------
Total provision for income taxes 603,000 2,171,000 1,832,000
------------ ------------ ------------
Net income $ 1,073,106 $ 3,700,559 $ 3,487,835
============ ============ ============
Per share of common stock:
Basic earnings per share $ .09 $ .30 $ .29
Basic weighted shares outstanding 12,171,043 12,205,950 12,205,950
Diluted earnings per share $ .09 $ .30 $ .29
Diluted weighted shares outstanding 12,171,411 12,205,950 12,206,333
<FN>
See Accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended May 31, 1999, 1998 and 1997
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,073,106 $ 3,700,559 $ 3,487,835
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,309,182 3,183,490 2,853,024
Salary continuation benefits 294,910 235,368 225,948
Deferred income taxes (14,000) 89,000 61,000
Gain on sale of property and equipment (536,709) (450,923) (397,772)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable -- net 973,263 769,681 (1,843,864)
Decrease (increase) in inventories 155,959 612,272 (624,468)
(Increase) decrease in prepaid expenses (449,681) 301,288 104,764
(Increase) in other assets -- long-term (17,817) (47,763) (404,980)
(Decrease) increase in accounts payable (2,106,083) (825,385) 2,582,340
(Decrease) increase in accrued income taxes (213,813) (19,792) 233,605
(Decrease) increase in accrued expenses (351,983) 43,314 (57,228)
----------- ----------- -----------
Net cash provided by operating activities 2,116,334 7,591,109 6,220,204
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (2,036,114) (3,725,447) (3,636,960)
Proceeds from sale of property, plant and equipment 712,244 510,135 423,656
Investment securities available-for-sale:
Purchases (4,147,450) (9,649,257) (11,673,398)
Proceeds from disposals 7,162,973 10,576,211 14,938,643
----------- ----------- -----------
Net cash provided by (used in)
investing activities 1,691,653 (2,288,358) 51,941
----------- ----------- -----------
Cash flows from financing activities:
Increase in checks outstanding in excess
of bank balances 962,474 -- --
Purchase of treasury shares (274,887) -- --
Cash dividends paid (4,383,323) (5,858,856) (5,828,344)
----------- ----------- -----------
Net cash (used in) financing activities (3,695,736) (5,858,856) (5,828,344)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 112,251 (556,105) 443,801
Cash and cash equivalents at beginning of year 114,869 670,974 227,173
----------- ----------- -----------
Cash and cash equivalents at end of year $ 227,120 $ 114,869 $ 670,974
=========== =========== ===========
Supplemental information:
Cash paid during the year for:
Income taxes $ 1,053,696 $ 2,101,972 $ 1,103,222
Interest $ -- $ -- $ --
<FN>
See Accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended May 31, 1999, 1998 and 1997
<CAPTION>
Accumulated Total
Additional Other Com- Stock- Compre-
Common Paid-in Retained Treasury prehensive holders' hensive
Stock Capital Earnings Shares Income Equity Income
---------- ---------- ----------- ------------ --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, May 31, 1996 $9,219,195 $6,499,554 $34,170,713 $(9,301,533) $( 6,002) $40,581,927
Net income -- 1997 -- -- 3,487,835 -- -- 3,487,835 $3,487,835
Changes in unrealized
gain (loss) on
securities
available-for-sale -- -- -- -- 11,375 11,375 11,375
----------
Comprehensive income $3,499,210
==========
Cash dividends declared
-- $.48 per share -- -- (5,828,344) -- -- (5,828,344)
---------- ---------- ----------- ----------- -------- -----------
Balance, May 31, 1997 9,219,195 6,499,554 31,830,204 (9,301,533) 5,373 38,252,793
Net income -- 1998 -- -- 3,700,559 -- -- 3,700,559 $3,700,559
Changes in unrealized
gain (loss) on
securities
available-for-sale -- -- -- -- (5,373) (5,373) (5,373)
----------
Comprehensive income $3,695,186
==========
Cash dividends declared
-- $.48 per share -- -- (5,858,856) -- -- (5,858,856)
---------- ---------- ----------- ----------- -------- -----------
Balance, May 31, 1998 9,219,195 6,499,554 29,671,907 (9,301,533) -- 36,089,123
Net income -- 1999 -- -- 1,073,106 -- -- 1,073,106 $1,073,106
Changes in unrealized
gain (loss) on
securities
available-for-sale -- -- -- -- -- -- --
----------
Comprehensive income $1,073,106
==========
Cash dividends declared
-- $.36 per share -- -- (4,383,323) -- -- (4,383,323)
Treasury shares purchased -- -- -- (274,887) -- (274,887)
---------- ---------- ----------- ----------- -------- -----------
Balance, May 31, 1999 $9,219,195 $6,499,554 $26,361,690 $(9,576,420) $ -- $32,504,019
========== ========== =========== =========== ======== ===========
<FN>
See Accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999, 1998 and 1997
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of
Golden Enterprises, Inc. and its wholly-owned subsidiary: Golden
Flake Snack Foods, Inc., (the "Company"). All significant
intercompany transactions and balances have been eliminated.
Revenue Recognition
The Company recognizes sales and related costs upon delivery
or shipment of products to its customers.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash equivalents.
Investment Securities
Investment securities at May 31, 1999 are principally
instruments of municipalities and of short-term mutual municipal
funds. The Company currently classifies all investment securities
as available-for-sale. Securities accounted for as
available-for-sale includes bonds, notes, common stock and
non-redeemable preferred stock not classified as either
held-to-maturity or trading. Securities available-for-sale are
required to be reported at fair value with unrealized gains and
losses, net of taxes, excluded from earnings and shown separately
as a component of accumulated other comprehensive income within
stockholders' equity. Realized gains and losses on the sale of
securities available-for-sale are determined using the
specific-identification method.
Inventories
Inventories are stated at the lower of cost or market. Cost is
computed on the first-in, first-out method. The opening and closing
inventories used in computing cost of sales are as follows:
Date Amount
---- ------
May 31, 1997 $5,396,840
May 31, 1998 4,784,568
May 31, 1999 4,628,609
Property, Plant and Equipment
Property, plant and equipment are stated at cost. For
financial reporting purposes, depreciation and amortization have
been provided principally on the straight-line method over the
estimated useful lives of the respective assets. Accelerated
methods are used for tax purposes.
Expenditures for maintenance and repairs are charged to
operations as incurred; expenditures for renewals and betterments
are capitalized and written off by depreciation and amortization
charges. Property retired or sold is removed from the asset and
related accumulated depreciation accounts and any profit or loss
resulting therefrom is reflected in the statements of income.
Employee Benefit Plans
The Company has trusteed "Qualified Profit-Sharing Plans" that
were amended and restated effective June 1, 1996 to add a 401(k)
salary reduction provision. Under this provision, employees can
contribute up to fifteen percent of their compensation to the plan
on a pretax basis subject to regulatory limits; and the Company, at
its discretion, can match up to 4 percent of the participants'
compensation. The annual contributions to the plans are determined
by the applicable Board of Directors. Total plan expenses for the
years ended May 31, 1999, 1998 and 1997 were $255,020, $505,179 and
$505,622, respectively.
The Company has an Employee Stock Ownership Plan that covers
all full-time employees. The annual contributions to the plan are
amounts determined by the Board of Directors of the Company. Annual
contributions are made in cash or common stock of the Company. The
Employee Stock Ownership Plan expenses for the years ended May 31,
1999, 1998 and 1997 were $-0-, $51,061 and $51,260, respectively.
Each participant's account is credited with an allocation of shares
acquired with the Company's annual contributions, dividends
received on ESOP shares and forfeitures of terminated participants'
nonvested accounts.
The contributions to the 401(k) Profit-Sharing Plans and the
Employees Stock Ownership Plan may not exceed fifteen percent of
the total compensation of all participating employees. The Company
expects to continue these plans indefinitely; however, the rights
to modify, amend or terminate the plans have been reserved.
The Company has a salary continuation plan with certain of its
key officers whereby monthly benefits will be paid for a period of
fifteen years following retirement. The Company is accruing the
present value of such retirement benefits until the key officers
reach normal retirement age.
Stock Options and Long-Term Incentive Plans
The Company has a stock option plan and a long-term incentive
plan currently in effect under which future grants may be issued:
the 1988 Stock Option and Stock Appreciation Plan (the 1988 Plan)
and the 1996 Long-Term Incentive Plan (the 1996 Plan). The Plans
are administered by the Stock Option Committee of the Board of
Directors, which has sole discretion, subject to the terms of the
Plans, to determine those employees including executive officers,
eligible to receive awards and the amount and type of such awards.
The Stock Option Committee also has the authority to interpret the
Plans, formulate the terms and conditions of award agreements, and
make all other determinations required in the administration
thereof.
The 1988 Plan provides that non-qualified stock options and
stock appreciation rights may be granted to key employees for up to
400,000 shares of the Company's common stock. The options and stock
appreciation rights are exercisable three years after date of
grant. The option price may be less than, equal to or greater than
the fair market value of the stock on the date of grant. Each stock
appreciation right entitles the option holder, upon exercise of the
related stock option, to receive from the Company the amount of the
appreciation in the underlying common stock as determined by the
excess of the fair market value of a share of common stock on the
exercise date of the related stock option over the option price.
The options and stock appreciation rights granted, if not
exercised, will expire three months from the date they are
exercisable. As of May 31, 1999, options and stock appreciation
rights had been granted for 145,000 shares (net of 13,000 shares
forfeited) at an option price of $6 per share and for 79,500 shares
(net of 6,000 shares forfeited) at an option price of $5 per share.
36,500 shares were exercised at $5 per share during the fiscal year
ended May 31, 1995. There were no stock options and stock
appreciation rights outstanding under this Plan at May 31, 1999,
1998 and 1997; however, there were 175,500 shares available for
granting of additional options. The 1988 Plan expires July 6, 2002
except as to options and stock appreciation rights outstanding on
that date; but, the rights to amend, suspend or terminate the Plan
have been reserved.
The 1996 Plan provides for the granting of "Incentive Stock
Options" as defined under the Internal Revenue Code. Under the
Plan, grants may be made to selected officers and employees, of
incentive stock options with a term not exceeding ten years from
the issue date and at a price not less than the fair market value
of the Company's stock at the date of grant. Five hundred thousand
shares of the Company's stock have been reserved for issuance under
this Plan. Incentive Stock Options have been granted for 340,000
shares leaving 160,000 shares available for future options.
Following is a summary of transactions:
<TABLE>
<CAPTION>
Shares Under Option
-------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <S>
Outstanding -- beginning of the year 300,000 300,000 --
Granted 40,000 -- 300,000
Exercised (--) (--) (--)
Forfeited (--) (--) (--)
------- ------- -------
Outstanding -- end of year 340,000 300,000 300,000
======= ======= =======
</TABLE>
The Company has elected to follow Accounting Principals Board
Opinion No. 25, Accounting for Stock Issued to Employees ("APB25")
and related Interpretation in accounting for its employee stock
options rather than Financial Accounting Statement No. 123,
Accounting for Stock-Based Compensation. Under APB25, because the
exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no
compensation expense is recognized.
Pro forma information regarding net income and earnings per
share is presented as if the Company had accounted for its employee
stock options under the fair value method. The fair value for these
options was estimated at the date of grant using the Black-Scholes
option pricing model with the following assumptions for 1999 and
1997 (no options were granted in 1998) respectively; risk-free
interest rates of 6.33 percent and 6.62 percent; dividend yields of
5.2 percent and 5.2 percent; expected option life of 5 and 7.5
years; volatility factors of expected market price of the Company's
stock of 0.150 and 0.150.
The Black-Scholes option pricing model was developed for use
in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
an options fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
The Company's actual and pro forma information is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net income:
As reported $1,073,106 $3,700,559 $3,487,835
Pro forma 1,062,098 3,700,559 3,279,935
Basic earnings per share:
As reported $ .09 $ .30 $ .29
Pro forma .09 .30 .27
Diluted earnings per share:
As reported $ .09 $ .30 $ .29
Pro forma .09 .30 .27
</TABLE>
Income Taxes
Deferred income taxes are recorded on the differences between
the tax bases of assets and liabilities and the amounts at which
they are reported in the consolidated financial statements.
Recorded amounts are adjusted to reflect changes in income tax
rates and other tax law provisions as they become enacted. For
further information concerning the provision for income taxes see
Note 4.
Net Income Per Share
During 1996, the FASB issued Statement of Financial Accounting
Standards No. 128, Earnings Per Share, ("FAS128"). FAS128 specifies
the computation, presentation and disclosure requirements for
earnings per share, replacing the presentation of primary earnings
per share with the presentation of basic earnings per share. The
only difference in the two methods for computing the Company's per
share amounts is attributable to outstanding options, under the
stock options and long-term incentive plans. The effect of the
stock options was determined using the treasury stock method.
Consolidated net income as reported was not affected. Shares used
to compute diluted earnings per share are as follows:
<TABLE>
<CAPTION>
Average Common Stock Shares
----------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Basic weighted shares outstanding 12,171,043 12,205,950 12,205,950
Effects of options 368 -- 383
---------- ---------- ----------
Diluted shares 12,171,411 12,205,950 12,206,333
</TABLE>
Disclosures About Fair Value of Financial Instruments
Financial Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments, ("FAS107") requires disclosure of
fair value information about financial instruments, whether or not
recognized on the face of the balance sheet, for which it is
practical to estimate that value. FAS107 defines fair value as the
quoted market prices for those instruments that are actively traded
in financial markets. In cases where quoted market prices are not
available, fair values are estimated using present value or other
valuation techniques. The fair value estimates are made at a
specific point in time, based on available market information and
judgments about the financial instrument, such as estimates of
timing and amount of expected future cash flows. Such estimates do
not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair
value estimates cannot be substantiated by comparison to
independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument.
The carrying amounts for cash and cash equivalents approximate
fair value because of the short maturity, generally less than three
months, of these instruments.
The fair values of investment securities have been determined
using values supplied by independent pricing services and are
disclosed together with carrying amounts in Note 2.
The carrying value of the Company's long-term liabilities
approximates fair value because present value is used in accruing
this liability.
The Company does not hold or issue financial instruments for
trading purposes and has no involvement with forward currency
exchange contracts.
Comprehensive Income
In June 1997, the FASB issued Financial Accounting Statement
No. 130, Reporting Comprehensive Income ("FAS130") which
establishes reporting and presentation standards for comprehensive
income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined as the change
in equity of a business enterprise during a period from
transactions and other events and circumstances arising from
non-owner sources. The adoption of FAS130 in 1999 and the
restatement of prior periods for comparative financial statements
did not have a material impact on the financial statements of the
Company.
Segment Information
Also in June 1997, the FASB issued Financial Accounting
Statement No. 131, Disclosures about Segments of an Enterprise and
Related Information ("FAS131"). FAS131 requires that financial and
descriptive information be disclosed for each reportable operating
segment based on the management approach. The management approach
focuses on financial information that an enterprise's decision
makers use to assess performance and make decisions about resource
allocations. The statement also prescribes the enterprise-wide
disclosures to be made about products, services, geographic areas
and major customers. The adoption of FAS131 in 1999 did not have a
material impact on the financial statements of the Company.
Pension and Postretirement Benefits
In 1999, the Company adopted the revised disclosure
requirements of Financial Accounting Statement No. 132, Employers'
Disclosures about Pensions and Other Postretirement Benefits
("FAS132"). FAS132 standardizes the disclosure requirements for
pensions and other postretirement benefits, eliminates certain
disclosures and requires additional information on changes in
benefit obligations and fair values of plan assets. The adoption of
FAS132 did not have a material impact on the financial statements
of the Company.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board
("FASB") issued Financial Accounting Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities ("FAS133"). The
Company will be required to adopt FAS133 on June 1, 2000. FAS133
establishes accounting and reporting standards for derivative
instruments including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that the
Company recognize all derivative instruments as either assets or
liabilities in the consolidated balance sheet and measure those
instruments at fair value. The Company has not made a determination
of the impact adoption will have on the financial statements of the
Company.
NOTE 2 -- INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses and fair
value of the investment securities available-for-sale are as
follows:
<TABLE>
<CAPTION>
May 31, 1999
------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Mutual funds $ 61,941 $ -- $ -- $ 61,941
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
May 31, 1998
-------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Municipal obligations $ 177,700 $ -- $ -- $ 177,700
Mutual funds 2,899,764 -- -- 2,899,764
----------- ----------- ----------- -----------
Total $ 3,077,464 $ -- $ -- $ 3,077,464
=========== =========== =========== ===========
</TABLE>
Maturities of investment securities classified as
available-for-sale at May 31, 1999 by contractual maturity are
shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to recall or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
--------- ----------
<S> <C> <C>
Investment securities available-for-sale:
Due within one year $ 61,941 $ 61,941
Due after one year through three years -- --
Due after three years through five years -- --
-------- --------
Total $ 61,941 $ 61,941
======== ========
</TABLE>
Proceeds from sales of investment securities available-for-sale
during fiscal 1999 and 1998 were $7,162,973 and
$10,576,211, respectively. Gross losses of $6,792 and gains of $
9,678 for fiscal 1999 and 1998, respectively, were realized on
those sales.
NOTE 3 -- LONG-TERM LIABILITIES
Long-term liabilities consisted of salary continuation
benefits accrued under the Company's salary continuation plan in
the amounts of $1,579,453 and $1,284,543 at May 31, 1999 and 1998,
respectively.
Aggregate annual maturities of long-term liabilities within
each of the next five fiscal years following May 31, 1999 are as
follows: 2000 through 2004, $-0-.
NOTE 4 -- INCOME TAXES
The effective tax rate for continuing operations differs from
the expected tax using statutory rates. A reconciliation between
the expected tax and the actual income tax expense follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Tax on income at statutory rates $ 570,000 $1,996,000 $1,809,000
Increases (decreases) resulting from:
State income taxes, less Federal
income tax benefit 60,000 186,000 166,000
Tax exempt interest (20,000) (29,000) (39,000)
Other -- net (7,000) 18,000 (104,000)
---------- ---------- ----------
Total $ 603,000 $2,171,000 $1,832,000
========== ========== ==========
</TABLE>
The tax effects of temporary differences that result in
deferred tax liabilities are as follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Property and equipment $2,535,505 $2,443,824
Accrued expenses (311,680) (206,602)
---------- ----------
Total $2,223,825 $2,237,222
========== ==========
</TABLE>
The income tax effects of changes in temporary differences are
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Property and equipment $ 91,000 $ 176,500 $ 174,000
Accrued expenses (105,000) (87,500) (113,000)
---------- ---------- ----------
Total $ (14,000) $ 89,000 $ 61,000
========== ========== ==========
</TABLE>
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
Rental expenses were $662,565 in 1999, $656,727 in 1998 and
$702,270 in 1997. At May 31, 1999, the Company was obligated under
certain leases (which have not been capitalized) for buildings,
office space and equipment. The following amounts represent future
payment commitments under these leases:
Years Ending Buildings and
May 31, Office Space Equipment Total
------------ ------------- --------- --------
2000 $17,000 $143,000 $160,000
2001 -- 120,000 120,000
2002 -- 30,000 30,000
The subsidiary of the company leases equipment for
approximately $25,000 per month from a company which is principally
owned by a major shareholder of Golden Enterprises, Inc. The terms
of these leases are equal to or better than those available from
unaffiliated third parties.
The subsidiary of the Company entered into a short-term lease
beginning in February, 1999 to lease its airplane to a major
shareholder of Golden Enterprises, Inc. for approximately $20,000
per month. The lease provides for his personal use of the airplane
for up to 100 flight hours per year and is for a term of one year
with automatic annual renewal at the option of either party. The
terms of this lease are equal to or better than those available to
an unrelated third party.
The Company had letters of credit in the amount of $2,200,000
and $2,189,000 outstanding at May 31, 1999 and May 31, 1998,
respectively, to support the Company's commercial self-insurance
program. The Company pays a commitment fee of 0.375% to maintain
the letters of credit.
NOTE 6 -- CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to
concentrations of credit risk consist primarily of cash equivalents
and trade receivables.
The Company maintains its cash accounts primarily with banks
located in Alabama. The total cash balances are insured by the
F.D.I.C. up to $100,000 per bank. The Company had cash balances on
deposit with an Alabama bank at May 31, 1999 that exceeded the
balance insured by the F.D.I.C. in the amount of $1,082,000.
The Company's trade receivables result primarily from its
snack food operations and reflect a broad customer base, primarily
large grocery 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.
NOTE 7 -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results
of operations of the years ended May 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Per Share
Quarter Total Revenues Net Income Net Income
------- -------------- ----------- ----------
<S> <C> <C> <C>
1999
----
First $ 31,668,331 $ 586,164 $.05
Second 30,926,099 104,646 .01
Third 34,080,883 185,177 .01
Fourth 32,955,169 197,119 .02
------------ ---------- ----
For the year $129,630,482 $1,073,106 $.09
============ ========== ====
1998
----
First $ 32,608,207 $1,172,986 $.10
Second 30,920,499 629,399 .05
Third 32,577,407 796,083 .06
Fourth 33,416,681 1,102,091 .09
------------ ---------- ----
For the year $129,522,794 $3,700,559 $.30
============ ========== ====
1997
----
First $ 34,345,727 $1,198,974 $.10
Second 33,066,321 650,002 .05
Third 35,736,176 471,031 .04
Fourth 35,565,158 1,167,828 .10
------------ ---------- ----
For the year $138,713,382 $3,487,835 $.29
============ ========== ====
</TABLE>
NOTE 8 -- SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
The following tabulation gives certain supplementary statement
of income information for continuing operations for the years ended
May 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs $ 5,939,882 $ 6,133,748 $ 5,328,776
Depreciation and amortization 3,309,182 3,183,490 2,853,024
Payroll taxes 2,769,228 2,737,153 2,867,871
Advertising costs 19,132,322 16,747,607 21,202,756
</TABLE>
Amounts for depreciation and amortization of intangible
assets, royalties, other taxes, rents and research and development
costs are not presented because each of such amounts is less than
1% of total revenues.
<TABLE>
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
SUPPLEMENTARY FINANCIAL INFORMATION
Selected quarterly financial data for the
fiscal years ended May 31, 1999 and 1998 (unaudited)
(Dollar amounts in thousands, except per share data)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1999
Total revenues $31,668 $30,926 $34,081 $32,955
======= ======= ======= =======
Income before income taxes $ 897 $ 153 $ 292 $ 334
======= ======= ======= =======
Net income $ 586 $ 105 $ 185 $ 197
======= ======= ======= =======
Net income per share $ .05 $ .01 $ .01 $ .02
======= ======= ======= =======
Cash dividends per share $ .12 $ .12 $ .06 $ .06
======= ======= ======= =======
1998
Total revenues $32,608 $30,921 $32,577 $33,417
======= ======= ======= =======
Income before income taxes $ 1,842 $ 968 $ 1,224 $ 1,838
======= ======= ======= =======
Net income $ 1,173 $ 630 $ 796 $ 1,102
======= ======= ======= =======
Net income per share $ .10 $ .05 $ .06 $ .09
======= ======= ======= =======
Cash dividends per share $ .12 $ .12 $ .12 $ .12
======= ======= ======= =======
</TABLE>
ITEM 9. -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. -- EXECUTIVE COMPENSATION
ITEM 12. -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
ITEM 13. -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
With the exception of a description of Executive Officers
of The Registrant which appears on page 5 herein, Part III is
omitted because prior to September 28, 1999, the Company will file
a definitive Proxy Statement with the Securities and Exchange
Commission pursuant to Regulation 14A which involves the election
of directors.
PART IV
ITEM 14. -- EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. LIST OF FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES
The following consolidated financial statements of Golden
Enterprises, Inc. and subsidiary required to be included in Item 8
are listed below:
Consolidated Balance Sheets -- May 31, 1999 and 1998
Consolidated Statements of Income -- Years ended May 31, 1999,
1998 and 1997
Consolidated Statements of Changes in Stockholders' Equity --
Years ended May 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows -- Years ended May 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
The following consolidated financial statements schedule is
included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts
All other schedules are omitted because the information required
therein is not applicable, or the information is given in the
financial statements and notes thereto.
3. Exhibits:
10.1 -- A copy of Lease of Aircraft executed by and between
Golden Flake Snack Foods, Inc., a wholly-owned
subsidiary of the Registrant and Sloan Y. Bashinsky,
Sr.
(b) Report on Form 8-K -- The Registrant did not file a Form 8-K
report during the last quarter of the period covered by this
report.
(c) Exhibits. See (a)3. above.
(d) Financial Statement Schedules. The response to this portion
of Item 14, is submitted under Item 14.(a) 1. and 2. above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GOLDEN ENTERPRISES, INC.
By /s/ John H. Shannon August 26, 1999
- ------------------------------------------ ---------------
John H. Shannon Date
Vice President, Principal Financial
Officer and Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated:
Signature Title Date
--------- ----- ----
/s/ John S. Stein Chairman of the Board, August 26, 1999
- -------------------------- Chief Executive
John S. Stein Officer and Director
/s/ John H. Shannon Vice President, Secretary, August 26, 1999
- -------------------------- Principal Financial Officer
John H. Shannon and Controller
/s/ F. Wayne Pate Director August 26, 1999
- --------------------------
F. Wayne Pate
Director August 26, 1999
- --------------------------
Edward R. Pascoe
/s/ John P. McKleroy, Jr. Director August 26, 1999
- --------------------------
John P. McKleroy, Jr.
/s/ James I. Rotenstreich Director August 26, 1999
- --------------------------
James I. Rotenstreich
/s/ John S. P. Samford Director August 26, 1999
- ---------------------------
John S. P. Samford
Director August 26, 1999
- ---------------------------
D. Paul Jones, Jr.
/s/ J. Wallace Nall, Jr. Director August 26, 1999
- --------------------------
J. Wallace Nall, Jr.
/s/ Joann F. Bashinsky Director August 26, 1999
- ---------------------------
Joann F. Bashinsky
Director August 26, 1999
- ----------------------------
Mark W. McCutcheon
<TABLE>
SCHEDULE II
GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
Years ended May 31, 1997, 1998 and 1999
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and at End
Allowance for Doubtful Accounts of Year Expenses Deductions of Year
- ------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Year ended May 31, 1997 $ 10,000 $ 145,853 $ 145,853 $ 10,000
========= ========= ========= =========
Year ended May 31, 1998 $ 10,000 $ 72,527 $ 7,527 $ 75,000
========= ========= ========= =========
Year ended May 31, 1999 $ 75,000 $ 153,459 $ 117,459 $ 111,000
========= ========= ========= =========
</TABLE>
INDEX TO EXHIBITS
Exhibit Number Page
10.1 A copy of Lease of Aircraft executed by and between
Golden Flake Snack Foods, Inc., a wholly-owned
subsidiary of the Registrant and Sloan Y. Bashinsky, Sr. 33
EXHIBIT 10.1
Lease of Aircraft
LEASE OF AIRCRAFT
THIS LEASE OF AIRCRAFT is made effective this 1st day of
February, 1999, by and between GOLDEN FLAKE SNACK FOODS, INC., an
Alabama corporation, whose address is One Golden Flake Drive, P.O.
Box 2447, Birmingham, Alabama 35201 ("Lessor"), and SLOAN Y.
BASHINSKY, SR., a resident of the State of Alabama, whose address
is 3432 Briarcliff Road East, Birmingham, Alabama 35223 ("Lessee").
1. Lessor hereby leases to Lessee, and Lessee leases from
Lessor, subject to the therms and conditions set forth, the
following described aircraft:
Manufacturer Type Registration and/or Serial Number
------------ ---- ---------------------------------
Cessna Citation II N 200GF/550-0556
Together with all equipment and accessories attached thereto
or used in connection therewith (collectively the "Aircraft").
2. Lessor hereby leases the Aircraft to Lessee for the
personal use by Lessee.
3. The term of this Lease is from February 1, 1999 to
January 31, 2000, and shall automatically renew annually
thereafter, unless Lessor or Lessee submits written notice to the
other party of that party's intention to not renew this Lease not
later than thirty (30) days prior to the expiration of the
then-current Lease term.
4. In consideration of this Lease of Aircraft Lessee
covenants, warrants and agrees as follows:
(a) Lease Payments. Lessee shall pay to Lessor for the
non-exclusive possession and use of the Aircraft for up to one
hundred (100) flight hours per year, the sum of Twenty Thousand and
no/100 Dollars ($20,000) per month, payable on the last day of each
month of the Lease term. Lessor acknowledges receipt of the
February 1999 lease payment.
(b) Lessee Shall Furnish Flight Crew. Lessee agrees that
he shall furnish at his sole cost and expenses a flight crew for
each flight of the airplane used by him consisting of a duly
licensed pilot and co-pilot.
(c) Use of Aircraft. Lessee shall safely and carefully use
the Aircraft, and not sell or attempt to sell, remove or attempt to
remove the same or any part thereof from the continental states of
the United States.
(d) Lessee understands and agrees that Lessee's right to
use the Aircraft at a given time must be coordinated with Lessor.
Lessor shall retain the right to use the Aircraft for business
purposes and to lease the Airplane to third parties for personal
and/or business use.
(e) No Liens. Lessee agrees that he will not attempt to
convey or mortgage or create any lien of any kind or character
against the Aircraft or do anything or take any action that might
mature into such alien. Lessee understands and agrees that this
Lease shall not transfer any interest in the Aircraft to Lessee,
and that this Lease is not intended as a security instrument or
security agreement.
(f) Compliance with Laws, etc. Lessee shall, during the
term of this Lease while in possession of the Aircraft and until
return and delivery of the Aircraft to Lessor, abide by and conform
to all laws and governmental and airport orders, rules and
regulations, including any future amendments thereto, controlling
or in any manner affecting the operation, use or occupancy of the
Aircraft or use of airport premises by the Aircraft.
(g) Condition of Aircraft. Lessee accepts the Aircraft in
its present condition.
(h) Indemnity. Lessee shall be responsible for and liable
to Lessor for, and shall indemnify Lessor against, any and all
damage to the Aircraft which occurs from the willful misconduct or
gross negligence of Lessee during the term of this Lease while the
Aircraft is in the possession or control of Lessee.
(i) Remedies upon Breach. Lessee agree that if he violates
any of the aforesaid covenants, terms and conditions, Lessor may,
at its sole option without notice to Lessee or others, terminate
this Lease and take possession of said Aircraft wherever found.
(j) Lessee's Cooperation. Lessee agrees to cooperate with
Lessor in the execution and filing of all documents Lessor deems
necessary or desirable to fulfilling the objectives of this Lease.
(k) No Assignment by Lessee. Lessee shall not assign this
Lease without the prior written consent of Lessor. Lessee is
prohibited and shall not charge any third party for the use of the
Aircraft.
5. In consideration for this Lease of Aircraft, Lessor
covenants, warrants, and agrees as follows:
(a) Lessee may have the use of the Airplane for up to 100
flight hours per year during the term of this Lease.
(b) Taxes and Fees. Lessor shall pay all taxes,
assessments, charges and fees on the Aircraft or its domestic use
imposed by federal, state, municipal or other public or airport
authority.
(c) Insurance. Lessor shall maintain hull and liability
insurance on the Aircraft in amounts and with such companies as
shall be reasonably acceptable to Lessor and Lessee which shall
name Lessee as an additional insured. Notwithstanding the
foregoing, Lessor shall be entitled to reimbursement by Lessee for
damage to the Aircraft resulting from the willful misconduct or
gross negligence of Lessee, his agents, employees, invitees, and
licensees.
(d) Maintenance and Compliance with Laws. Lessor shall
maintain the Aircraft in an airworthy condition and shall abide by
and conform to, and cause others to abide by and conform to, all
laws and governmental and airport orders, rules and regulations,
including any future amendments thereto, controlling or in any
manner affecting operation, use or occupancy of the Aircraft or use
of airport premises by the Aircraft.
6. Miscellaneous.
(a) Notices. Any notice required or permitted to be
delivered hereunder shall be deemed received when sent by United
States Mail, postage prepaid, certified mail, return receipt
requested, addressed to Lessor or Lessee as the case may require at
the addresses stated above.
(b) Laws to Apply. This Contract shall be construed under
and in accordance with the laws of the State of Alabama.
(c) Parties Bound. This Contract shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns.
(d) Prior Agreements Superseded. This Contract constitutes
the sole and only agreement of the parties hereto and supersedes
any prior understandings or written or oral agreements between the
parties respecting the Aircraft.
(e) Relation of Parties. Nothing herein contained shall be
construed to create a relationship of third party beneficiary
hereof or joint venture or any association or other such
relationship between Lessor and Lessee except that of Lessor and
Lessee.
(f) Captions. The paragraph headings or captions appearing
in this Lease are for convenience only, are not a part of this
Lease and are not to be considered in interpreting this Lease.
7. Truth-in-Leasing Clause.
(a) The Lessor hereby represents and warrants that the
Aircraft has been maintained and inspected during the 12 months
preceding the date and execution of this Lease under Federal
Aviation Regulations Part 91. Lessor hereby certifies that the
Aircraft is currently, and shall at all times during the term of
this Lease remain, in compliance with the applicable Federal
Aviation Regulations maintenance and inspection requirements for
the operation to be conducted under this Lease.
(b) The name and address and the signature of the person
responsible for operational control of the Aircraft under this
Lease is as follows:
Name: Don Brown
(Chief Pilot for Lessor)
Address: One Golden Flake Drive
Birmingham, Alabama 35233
Don Brown, by affixing his signature below, hereby certifies
that he understands his responsibilities for compliance with
applicable Federal Aviation Regulations.
/s/ Don W. Brown
----------------
Don Brown
(c) Lessor and Lessee acknowledge that an explanation of
factors bearing on operational control and pertinent Federal
Aviation Regulations can be obtained from the nearest Federal
Aviation Administration (FAA) Flight Standards district office.
IN WITNESS WHEREOF, the parties have hereunto set their hands
and seals on the date first above written.
LESSOR:
GOLDEN FLAKE SNACK FOODS, INC.
By: /s/ Mark W. McCutcheon
----------------------
Its: President
LESSEE:
/s/ Sloan Y. Bashinsky, Sr. L.S.
----------------------------------
Sloan Y. Bashinsky, Sr.
[ACKNOWLEDGMENTS ON NEXT PAGE]
STATE OF ALABAMA )
JEFFERSON COUNTY )
I, the undersigned Notary Public, in and for said County, in
said State, hereby certify that Mark W. McCutcheon whose name as
President of GOLDEN FLAKE SNACK FOODS, INC., an Alabama
corporation, is signed to the foregoing agreement, and who is known
to me, acknowledged before me on this day that, being informed of
the contents of said agreement, he/she as such officer, and with
full authority, executed the same voluntarily, as an act of said
corporation.
Given under my hand and official seal, this the 12th day of
August, 1999.
/s/ Patricia R. Townsend
---------------------------------
NOTARY PUBLIC
My Commission Expires: 12/27/2000
STATE OF ALABAMA )
JEFFERSON COUNTY )
I, the undersigned Notary Public, in and for said County, in
said State, hereby certify that SLOAN Y. BASHINSKY, SR., whose name
is signed to the foregoing agreement, and who is known to me,
acknowledged before me on this day that, being informed of the
contents of said agreement he executed the same voluntarily on the
day the same bears date.
Given under my hand and official seal, this the 12th day of
August, 1999.
/s/ Patricia R. Townsend
---------------------------------
NOTARY PUBLIC
My Commission Expires: 12/27/2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> MAY-31-1999
<CASH> 277,120
<SECURITIES> 61,941
<RECEIVABLES> 10,346,523
<ALLOWANCES> 111,000
<INVENTORY> 4,628,609
<CURRENT-ASSETS> 17,502,168
<PP&E> 83,095,422
<DEPRECIATION> 61,570,336
<TOTAL-ASSETS> 41,911,752
<CURRENT-LIABILITIES> 5,860,275
<BONDS> 00
00
00
<COMMON> 9,219,195
<OTHER-SE> 23,284,824
<TOTAL-LIABILITY-AND-EQUITY> 41,911,752
<SALES> 128,740,552
<TOTAL-REVENUES> 129,630,482
<CGS> 60,283,113
<TOTAL-COSTS> 127,954,376
<OTHER-EXPENSES> 00
<LOSS-PROVISION> 36,000
<INTEREST-EXPENSE> 00
<INCOME-PRETAX> 1,676,106
<INCOME-TAX> 603,000
<INCOME-CONTINUING> 1,073,106
<DISCONTINUED> 00
<EXTRAORDINARY> 00
<CHANGES> 00
<NET-INCOME> 1,073,106
<EPS-BASIC> .09
<EPS-DILUTED> .09
</TABLE>
