Golden Enterprises Inc. (GLDC)

[lukematt]

GLDC: Revolving Door Property


From Golden Enterprises, Inc.’s (symbol: GLDC) Form 10-K for the fiscal year ended May 30, 2008:

“On May 2, 2008, the Company re-acquired the property located at 2930 Kraft Drive in Nashville, TN for $1,715,985. In consideration, the Company cancelled the remaining notes and interest receivable of $1,675,454 due from Tennessee Chips, LLC and paid $40,531 in cash for closing costs.”


Well, I don’t like to see the word “re-acquired” used in relation to a company’s property. It always raises a red flag in my mind that asks, “What is the company doing?” Golden’s 10-K provides no explanation for this transaction, which heightens my suspicions.

Therefore, I decided to conduct a little investigative research.

According to the 2008 10-K’s list of exhibits, specifically item 10.8, the original transaction occurred in October 2000 “whereby Golden Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real Property”.

I next looked at Golden Enterprises, Inc.’s Form 10-K for the fiscal year ended May 31, 2001, where I found this statement:

“Golden Flake on October 25, 2000 completed the sale of the Nashville Manufacturing Plant for $3.8 million. The payment of the purchase price was made $1,710,000 in cash and $2,090,000 in secured notes. The sale of the Nashville Plant concluded the Restructuring Plan which the Company implemented in Janurary of 2000. Pursuant to the Restructuring Plan, the Nashville Plant was closed in fiscal year 2000 and the sale concluded in fiscal year 2001.”


If Golden Flake sold the Nashville plant due to a restructuring plan, their 2008 Form 10-K should explain to shareholders the reason for re-acquiring the plant. Moreover, the 10-K should explicitly state whether Golden Enterprises, Inc. realized a gain or loss on the overall sale (2000) and re-acquisition (2008) transactions.