Edgar Filing: GOLDEN ENTERPRISES INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 2, 2006
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.)

One Golden Flake Drive
Birmingham, Alabama 35205
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number including area code (205) 458-7316

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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 if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ( ) No (X)

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K. (X)

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes ( ) No (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)

State the aggregate market value of the voting common stock held by
non-affiliates of the registrant as of August 4, 2006.
Common Stock, Par Value $0.66(2)/3 --$17,470,091

Indicate the number of shares outstanding of each of the Registrant's Classes of
Common Stock, as of August 4, 2006.
Class Outstanding at August 4, 2006
----- -----------------------------
Common Stock, Par Value $0.66(2)/3 11,835,330 shares

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the Annual Meeting of Stockholders to
be held on September 21, 2006 are incorporated by reference into Part III.

TABLE OF CONTENTS

FORM 10-K ANNUAL REPORT -2006
GOLDEN ENTERPRISES, INC.

Page
----

PART I.

Item 1. Business ...................................................... 3
Item 1A. Risk Factors................................................... 5
Item 2. Properties..................................................... 6
Item 3. Legal Proceedings.............................................. 7
Item 4. Submission of Matters to a Vote of Security Holders............ 8

PART II.

Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities............. 8
Item 6. Selected Financial Data........................................ 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 11
Item 7A. Quantitative and Qualitative Disclosure About Market Risk...... 18
Item 8. Financial Statements and Supplementary Data.................... 18
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.................... 41
Item 9A. Controls and Procedures........................................ 41
Item 9B. Other Information.............................................. 41

PART III.

Item 10. Directors and Executive Officers of the Registrant............. 41
Item 11. Executive Compensation......................................... 41
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters..... 41
Item 13. Certain Relationships and Related Transactions................. 42
Item 14. Principal Accountant Fees and Services......................... 42

PART IV.

Item 15. Exhibits and Financial Statement Schedules..................... 43

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 15, 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,
fried pork skins, baked and fried cheese curls, onion rings and puff corn. These
products are all packaged in flexible bags or other suitable wrapping material.
Golden Flake also sells a line of cakes and cookie items, canned dips, pretzels,
peanut butter crackers, cheese crackers, dried meat products and nuts packaged
by other manufacturers using the Golden Flake label. No single product or
product line accounts for more than 50% of Golden Flake's sales, which affords
some protection against loss of volume due to a crop failure of major
agricultural raw materials.

Raw Materials

Golden Flake purchases raw materials used in manufacturing and processing its
snack food products on the open market and under contract through brokers and
directly from growers. A large part of the raw materials used by Golden Flake
consists of farm commodities which are subject to precipitous change in supply
and price. Weather varies from season to season and directly affects both the
quality and supply available. Golden Flake has no control of the agricultural
aspects and its profits are affected accordingly.

Distribution

Golden Flake sells its products through its own sales organization and
independent distributors to commercial establishments which sell food products
in Alabama and in parts of Tennessee, Kentucky, Georgia, Florida, Mississippi,
Louisiana, North Carolina, South Carolina, Arkansas, Missouri and Texas. The
products are distributed by approximately 468 route salesmen and independent
distributors 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 869 company owned
vehicles to support the route sales system, including 47 tractors and 123
trailers for long haul delivery to the various company warehouses located
throughout its distribution areas, 630 store delivery vehicles and 69 cars and
miscellaneous vehicles.

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 are 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 991 employees. Approximately 585 employees
are involved in route sales and sales supervision, approximately 293 are in
production and production supervision, and approximately 113 are management and
administrative personnel.

Golden Flake believes that the performance and loyalty of its employees are two
of the most important factors in the growth and profitability of its business.
Since labor costs represent a significant portion of Golden Flake's expenses,
employee productivity is important to profitability. Golden Flake considers 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/her 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.

Other Matters

The Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, and amendments to these reports, are available via
the Company's website. The website address is www.goldenflake.com. All required
reports are made available on the website as soon as reasonably practicable
after they are electronically filed with the Securities and Exchange Commission.

Environmental Matters

There have been no material effects of compliance with government provisions
regulating discharge of materials into the environment.

Recent Developments

No significant changes have occurred in the kinds of products manufactured or in
the markets or methods of distribution, and no material changes or developments
have occurred in the business done and intended to be done by Golden Flake.

ITEM 1A. - RISK FACTORS

Important factors that could cause the Company's actual business results,
performance or achievements to differ materially from any forward looking
statements or other projections contained in this Annual Form 10-K Report
include, but are not limited to the principal risk factors set forth below.
Additional risks and uncertainties, including risks not presently known to the
Company, or that it currently deems immaterial, may also impair the Company's
business and or operations. If the events, discussed in these risk factors
occur, the Company's business, financial condition, results of operations or
cash flow could be adversely affected in a material way and the market value of
the Company's common stock could decline.

Competition

Price competition and consolidation within the Snack Food industry could
adversely impact the Company's performance. The Company's business requires
significant marketing and sales effort to compete with larger companies. These
larger competitors sell a significant portion of their products through
discounting and other price cutting techniques. This intense competition
increases the possibility that the Company could lose one or more customers,
lose market share and/or be forced to, increase discounts and reduce pricing,
any of which could have an adverse impact on the Company's business, financial
condition, results of operation and/or cash flow.

Commodity Fluctuations

Significant commodity price fluctuations for certain commodities purchased by
the Company, particularly potatoes, could have a material impact on results of
operations. In an attempt to manage commodity price risk, the Company, in the
normal course of business, enters into contracts to purchase pre-established
quantities of various types of raw materials, at contracted prices based on
expected short term needs. The Company can also be adversely impacted by changes
in the cost of natural gas and other fuel costs. Long term increases in the cost
of natural gas and fuel costs could adversely impact the Company's cost of sales
and selling, marketing and delivery expenses.

There are other risks and factors not described above that could also cause
actual results to differ materially from those in any forward looking statement
made by the Company.

Executive Officers Of Registrant
And Its Subsidiary

Name and Age Position and Offices with Management
------------ ------------------------------------

John S. Stein, 69 Mr. Stein is Chairman of the Board. He was elected
Chairman on June 1, 1996. He served as Chief
Executive Officer from 1991 to April 4, 2001, and as
President from 1985 to 1998 and from June 1, 2000 to
April 4, 2001. Mr. Stein also served as President of
Golden Flake Snack Foods, Inc. from 1976 to 1991. Mr.
Stein retired as an employee with the Company on May
31, 2002. Mr. Stein is elected Chairman annually, and
his present term will expire on June 1, 2007.

Mark W. McCutcheon, 51 Mr. McCutcheon is Chief Executive Officer and President
of the Company and President of Golden Flake Snack
Foods, Inc., a wholly owned subsidiary of the
Company. He was elected President and Chief Executive
Officer of the Company on April 4, 2001 and President
of Golden Flake on November 1, 1998. He has been
employed by Golden Flake since 1980. Mr. McCutcheon
is elected Chief Executive Officer and President of
the Company and President of Golden Flake annually,
and his present terms will expire on June 1, 2007.

Patty Townsend, 48 Ms. Townsend is Chief Financial Officer, Vice President
and Secretary of Golden Enterprises, Inc. and
Controller of Golden Flake Snack Foods, Inc. a wholly
owned subsidiary of the Company. She was elected
Chief Financial Officer, Vice-President and Secretary
of the Company on March 1, 2004 and Controller of
Golden Flake on March 15, 1997. She has been employed
with the Company since 1988. Ms. Townsend is elected
to her positions on an annual basis, and her present
term of office will expire on June 1, 2007.

Randy Bates, 52 Mr. Bates is Executive, Vice-President of Sales,
Marketing and Transportation for Golden Flake. He has
held these positions since October 26, 1998. Mr.
Bates was Vice-President of Sales from October 1,
1994 to 1998. Mr. Bates has been employed by Golden
Flake since March 1979. Mr. Bates is elected to his
positions on an annual basis, and his present term of
office will expire on June 1, 2007.

David Jones, 54 Mr. Jones is Executive Vice-President of Operations,
Human Resources and Quality Control for Golden Flake.
He has held these positions since May 20, 2002. Mr.
Jones was Vice-President of Manufacturing from 1998
to 2002 and Vice-President of Operations from 2000 to
2002. Mr. Jones has been employed by Golden Flake
since 1984. Mr. Jones is elected to his positions on
an annual basis, and his present term of office will
expire on June 1, 2007.

ITEM 2. - PROPERTIES

The headquarters of the Company are located at One Golden Flake Drive,
Birmingham, Alabama 35205. 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 three
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 12 acres of the Birmingham property is undeveloped. This property
is zoned for industrial use and is readily available for future use. The Company
has executed a Purchase and Sale Agreement to sell this property for $1.5
million. The purchaser has until December 23, 2006 to perform its due diligence
in regard to the property and may extend the due diligence inspection period for
two additional 90 days periods which would extend the due diligence inspection
period to June 21, 2007. Purchaser may rescind the Purchase and Sale Agreement
if it is not satisfied with its due diligence investigation. The property is
located in close proximity to the University of Alabama at Birmingham Campus and
purchaser has indicated that it intends to develop the property with student
housing. At this time, the Company does not know whether the purchaser will
close on the Purchase and Sale Agreement and purchase the property.

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, with allowance for future expansion, and is located on a 28-acre
site on Silver Springs Boulevard. The Company manufactures corn chips, tortilla
chips and potato chips from this facility.

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, 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, and Macon
Georgia; Jacksonville, Panama City, Tallahassee and Pensacola, Florida; 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 869 vehicles which includes 630 route trucks, 47
tractors, 123 trailers and 69 cars and miscellaneous vehicles. There are no
liens or encumbrances on Golden Flake's vehicle fleet. Golden Flake also 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,
RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

MARKET AND DIVIDEND INFORMATION

The Company's common stock is traded 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 sale prices for the
common stock during each quarter of the fiscal years ended June 2, 2006 and June
3, 2005 and the amount of dividends paid per share in each quarter. The Company
currently expects that comparable regular cash dividends will be paid in the
future.

Market Price
High Low Dividend
Quarter Price Price Paid
Year Ended 2006 Per share
---------------------------------------------------- -------- -------- ---------
First quarter (13 weeks ended September 2, 2005) $4.890 $3.430 $.0313
Second quarter (13 weeks ended December 2, 2005) 4.850 3.070 .0313
Third quarter (13 weeks ended March 3, 2006) 3.455 2.800 .0313
Fourth quarter (13 weeks ended June 2, 2006) 3.600 2.320 .0313

High Low Dividend
Year Ended 2005 Price Price Paid
---------------------------------------------------- -------- -------- ---------
First quarter (13 weeks ended August 27, 2004) $3.110 $2.330 $.0313
Second quarter (13 weeks ended November 27, 2004) 3.000 2.450 .0313
Third quarter (14 weeks ended March 5, 2005) 4.109 2.010 .0313
Fourth quarter (13 weeks ended June 3, 2005) 4.130 3.170 .0313

As of August 4, 2006, there were approximately 1,500 shareholders of record.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

The following table provides Equity Compensation Plan information under which
equity securities of the Registrant are authorized for issuance:

EQUITY COMPENSATION PLAN INFORMATION

---------------------- ---------------------- --------------------- ---------------------------------------
Plan category Number of securities Weighted-average Number of securities remaining
to be issued upon exercise price of available for future issuance
exercise of out- outstanding options, under equity compensation plans
standing options, warrants and rights (excluding securities reflected in
warrants and rights column (a))
(a) (b) (c)
---------------------- ---------------------- --------------------- ---------------------------------------
Equity compensation
plans approved by 369,000 $3.776 130,000
security holders
---------------------- ---------------------- --------------------- ---------------------------------------
Equity compensation
plans not approved by 0 0 0
security holders
---------------------- ---------------------- --------------------- ---------------------------------------
Total 369,000 $3.776 130,000
---------------------- ---------------------- --------------------- ---------------------------------------

ISSUER PURCHASES OF EQUITY SECURITIES

The Company did not repurchase any shares of its common stock during the fiscal
year ended June 2, 2006.

ITEM 6 - SELECTED FINANCIAL DATA

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

FINANCIAL REVIEW (Dollar amounts in thousands, except per share data)

Operations 2006 2005 2004 2003 2002
---- ---- ---- ---- ----

-------------------------------------------------------------
Net sales (b)............................... $ 106,547 $ 103,144 $ 97,583 $ 96,604 $ 104,335
Gain on sales of assets..................... 139 107 14 304 756
Other income................................ 483 521 499 506 563
-------------------------------------------------------------
Total revenues......................... 107,169 103,772 98,096 97,414 105,654
Cost of sales............................... 57,019 55,400 51,243 50,748 54,326
Selling, general and
administrative expenses................... 49,168 48,022 46,595 47,686 47,653
Interest.................................... 295 255 220 269 189
Income (Loss) before cumulative effect of a
change in accounting policy and income
taxes...................................... 687 95 38 (1,289) 3,486
Federal and state income taxes.............. 398 (110) 84 (361) 1,367
Net income (loss) before cumulative
effect of a change in accounting
policy................................... 289 (15) (46) (928) 2,119
Cumulative effect of a change in accounting
policy net of taxes........................ ----- ----- ----- ----- 413
Net income (loss).................. $ 289 $ (15)$ (46)$ (928)$ 2,532
----------------------------------------------------------------------------------------------------------------
Financial data
Depreciation and amortization............... $ 2,285 $ 2,268 $ 2,347 $ 2,490 $ 2,594
Capital expenditures, net of disposals...... 1,343 2,454 832 287 3,802
Working capital............................. 4,050 5,328 6,697 8337 10,989
Long-term debt.............................. 1,915 2,426 2,327 3,862 5,083
Stockholders' equity........................ 19,716 20,907 22,456 24,078 27,233
Total assets................................ 33,728 34,402 33,623 36,492 40,840
----------------------------------------------------------------------------------------------------------------
Common stock data
Net income (loss) before cumulative
effect of a change in accounting
policy.................................... $ .02 $ (0.00)$ (0.00)$ (0.08)$ 0.18
Cumulative effect of a change in
accounting policy net of taxes............ ----- ----- ----- ----- 0.03
Basic and diluted net income (loss)......... .02 (0.00) (0.00) (0.08) 0.21
Dividends................................... .1250 .1250 .1250 .1875 0.25
Book value.................................. 1.67 1.77 1.89 2.20 2.29
Price range................................. 4.89-2.32 4.15-2.01 3.50-2.15 5.530-1.640 4.550-2.950
----------------------------------------------------------------------------------------------------------------
Financial statistics
Current ratio............................... 1.36 1.54 1.84 2.09 2.37
Net income (loss) as percent of total
revenues................................... .27% 0.00% 0.00% (1.0)% 2.4%
Net income (loss) as percent of
stockholders' equity (a)................... 1.5% 0.00% 0.00% (5.1)% 10.1%
----------------------------------------------------------------------------------------------------------------
Other data
Weighted average common shares
outstanding.............................. 11,835,330 11,846,419 11,879,891 11,883,305 11,898,097
Common shares outstanding at
year end................................. 11,835,330 11,835,330 11,852,830 11,883,305 11,883,305
Approximate number of stockholders.......... 1,500 1,500 1,500 1,500 1,500

(a) Average amounts at beginning and end of fiscal year.
(b) Reflects on all periods presented, the effect on revenues of adopting the
provisions of the Emerging Issues Task Force of the Financial Accounting
Standards Board issue No. 01-9 Accounting for Consideration Given by a Vendor to
a Customer (Including a Reseller of the Vendor's Products) (EITF 01-9)

ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

Management's Discussion and Analysis of
Financial Condition and Results of Operations

The following discussion provides an assessment of the Company's financial
condition, results of operations, liquidity and capital resources and should be
read in conjunction with the accompanying consolidated financial statements and
notes.

OVERVIEW

The Company manufactures and distributes a full line of snack items, such as
potato chips, tortilla chips, corn chips, fried pork skins, baked and fried
cheese curls, onion rings and puff corn. The products are all packaged in
flexible bags or other suitable wrapping material. The Company also sells a line
of cakes and cookie items, canned dips, pretzels, popcorn, 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. 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 available. The
Company has no control of the agricultural aspects and its profits are affected
accordingly.

The Company sells its products through its own sales organization and
independent distributors to commercial establishments that sell food products
primarily in the Southeastern United States. The products are distributed by
approximately 468 route representatives and independent distributors who are
supplied with selling inventory by the Company's trucking fleet. All of the
route representatives are employees of the Company and use the Company's
direct-store delivery system.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Revenue Recognition

The Company recognizes sales and related costs upon delivery or shipment of
products to its customers. Sales are reduced by returns and allowances to
customers.

In November 2001, the Emerging Issues Task Force reached a consensus on Issue
No. 01-09 Accounting for Consideration given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products) effective for annual or interim
periods beginning after December 15, 2001. The issue addresses the recognition,
measurement and income statement classification for certain sales incentives.
The Company implemented this new accounting policy in the fourth quarter of
fiscal 2002. The effect of this accounting change is to adopt this policy as of
the beginning of the fiscal 2002 (June 1, 2001). Certain of these expenses,
including slotting fees, previously classified as selling, general, and
administrative expenses, are now characterized as offsets to net sales.
Reclassifications have been made to prior period financial statements to conform
to current year presentation. Total vendor sales incentives now characterized as
reductions of net sales that previously would have been classified as selling,
general and administrative expenses were approximately $10.5 million, $11.6
million and $11.6 million for the years ended 2006 2005 and 2004, respectively.
There was no resulting impact on net operating results from adopting EITF 01-09.

Change in Accounting Policy

The Company is self-insured for certain casualty losses relating to automobile
liability, general liability, workers' compensation, property losses and medical
claims. The Company also has stop loss coverage to limit the exposure arising
from these claims. Automobile liability, general liability, workers'
compensation, and property losses costs are covered by letters of credit with
the company's claim administrators.

The Company changed its accounting policy in the fourth quarter of fiscal 2005
with regard to the casualty insurance obligations. The Company adopted the use
of a third-party actuary to estimate the casualty insurance obligations on an
annual basis. This change in accounting policy was made to determine the
ultimate loss and reserve requirements through actuarial assumptions including
compensation trends, health care cost trends and discount rates. The third-party
actuary also uses historical information for claims frequency and severity in
order to establish loss development factors. The cumulative effect of this
change in accounting policy did not have a material effect on the financial
statements.

Accounts Receivable

The Company records accounts receivable at the time revenue is recognized.
Amounts for bad debt expense are recorded in selling, general and administrative
expenses on the Consolidated Statements of Operations. The amount of the
allowance for doubtful accounts is based on management's estimate of the
accounts receivable amount that is uncollectible. Management records a general
reserve based on analysis of historical data. In addition, management records
specific reserves for receivable balances that are considered high-risk due to
known facts regarding the customer. The allowance for bad debts is reviewed
quarterly, and it is determined whether the amount should be changed. Failure of
a major customer to pay the Company amounts owed could have a material impact on
the financial statements of the Company. At June 2, 2006 and June 3, 2005, the
Company had accounts receivables in the amount of $8.4 million and $7.7 million,
net of an allowance for doubtful accounts of $0.1 million and $0.2 million,
respectively.

The following table summarizes the Company's customer accounts receivable
profile as of June 2, 2006:

Amount Range No. of Customers
------------ ----------------

Less than $1,000.00.............................. 1,303
$1,001.00-$10,000.00............................. 607
$10,001.00-$100,000.00........................... 116
$100,001.00-$500,000.00.......................... 9
$500,001.00-$1,000,000.00........................ 0
$1,000,001.00-$2,500,000.00...................... 1
-----
Total All Accounts............................... 2,036
=====

Inventories

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

Accrued Expenses

Management estimates certain expenses in an effort to record those expenses in
the period incurred. The most significant estimates relate to a salary
continuation plan for certain key executives of the Company, and to
insurance-related expenses, including self-insurance. In 2005, the Company
adopted the use of a third-party actuary to estimate the casualty insurance
obligations on an annual basis. In determining the ultimate loss and reserve
requirements, the third-party actuary uses various actuarial assumptions
including compensation trends, health care cost trends and discount rates. The
third-party actuary also uses historical information for claims frequency and
severity in order to establish loss development factors.

The actuarial calculation includes a margin of error to account for changes in
inflation, health care costs, compensation and litigation cost trends as well as
estimated future incurred claims. The Company utilized a 75% confidence level
for estimating the ultimate outstanding casualty liability. Approximately 75% of
each claim should be equal to or less than the ultimate liability recorded based
on the historical trends experienced by the Company. If the Company chose a 50%
factor, the liability would have been reduced by approximate $0.2 million. If
the Company chose a 90% factor, the liability would have increased by
approximately $0.2 million.

The Company used 5% and 4% investment rates to discount the estimated claims
based on the historical payout pattern during 2006 and 2005, respectively. A one
percentage point change in the discount rate would have impacted the liability
by approximately $60,500.

Actual ultimate losses could vary from those estimated by the third-party
actuary. The Company believes the reserves established are reasonable estimates
of the ultimate liability based on historical trends.

As of June 2, 2006, the Company's casualty reserve was $1.9 million and at June
3, 2005 the casualty reserve was $1.9 million.

Employee medical insurance accruals are recorded based on medical claims
processed as well as historical medical claims experienced for claims incurred
but not yet reported. Differences in estimates and assumptions could result in
an accrual requirement materially different from the calculated accrual.

OTHER MATTERS

Transactions with related parties, included in Note 13 of the Notes to
Consolidated Financial Statements, are conducted on an arm's-length basis in the
ordinary course of business.

LIQUIDITY AND CAPITAL RESOURCES

Working capital was $4.1 million at June 2, 2006 compared to $5.3 million at
June 3, 2005. Net cash provided by operations amounted to $2.6 million in fiscal
year 2006, $2.4 million in fiscal year 2005 and $2.9 million in fiscal year
2004. During 2006, the principal source of liquidity for the Company's operating
needs was provided from operating activities, credit facilities and cash on
hand.

Additions to property, plant and equipment, net of disposals were $1.3 million,
$2.5 million and $0.8 million in fiscal years 2006, 2005 and 2004, respectively,
and are expected to be about $3.1 million in 2007.

Cash dividends of $1.5 million, $1.5 million and $1.5 million were paid during
fiscal years 2006, 2005, and 2004, respectively.

The amount of cash used to purchase treasury shares in fiscal 2005 was $0.05
million and $0.09 million in fiscal 2004. No cash was used to purchase treasury
shares in fiscal 2006.

During fiscal 2006, the company's debt proceeds net of re-paid debt was ($0.9)
million.

The following table summarizes the significant contractual obligations of the
Company as of June 2, 2006:

Contractual Obligations Total 2007 2008-2009 2010-2011 Thereafter
----------------------- ----- ---- --------- --------- ----------
Long-Term Debt $ 1,003,794 $ 750,176 $ 253,618 $ - $ -
Salary Continuation Plan 1,773,899 112,536 253,870 297,760 1,109,733
----------- ----------- ----------- ----------- -----------
Total Contractual Obligations $ 2,777,693 $ 862,712 $ 507,488 $ 297,760 $ 1,109,733
=========== =========== =========== =========== ===========

Other Commitments

The Company had letters of credit in the amount of $3,084,365 outstanding at
June 2, 2006 to support the Company's commercial self-insurance program.

The Company has a line-of-credit agreement with a local bank that permits
borrowing up to $2 million. The line-of-credit is subject to the Company's
continued credit worthiness and compliance with the terms and conditions of the
advance application. The Company's line of credit debt at June 2, 2006 was
$313,923 with an interest rate of 8.00%.

The Company's current ratio at year end was 1.36 to l.00.

Available cash, cash from operations and available credit under the line of
credit are expected to be sufficient to meet anticipated cash expenditures and
normal operating requirements for the foreseeable future.

OPERATING RESULTS

Net sales increased by 3% in fiscal year 2006, increased by 6% in fiscal year
2005, and increased by 1% in fiscal year 2004. Fiscal 2005 included an extra
week of sales. If the extra week is excluded, the increase in net sales for
fiscal 2006 would have been 5%.

Cost of sales as a percentage of net sales amounted to 53.5% in 2006, 53.7% in
2005, and 52.5% in 2004.

Selling, general and administrative expenses were 46.1% of net sales in 2006,
46.5% in 2005 and 47.7% in 2004.

The Company's effective tax rates for 2006, 2005 and 2004 were 58.0%, 115.7% and
221.3%, respectively. Note 8 to the Consolidated Financial Statements provides
additional information about the provision for income taxes.

OFF-BALANCE SHEET ARRANGEMENT

The Company entered into a five-year term product purchase agreement during the
year ending June 1, 2001 with a supplier. Under the terms of the agreement the
minimum purchase quantity and the purchase price were fixed resulting in a
minimum first year commitment of approximately $2,171,000. After the first year,
the minimum purchase quantity was fixed and the purchase unit price was
negotiable based on the current market. The purchase product agreement as
subsequently amended is described in more detail in Note 13 of the Notes to
Consolidated Financial Statements.

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, investment securities and bank loans, and commodity
prices affecting the cost of its raw materials.

The Company's cash equivalents consist of short-term marketable securities.
Presently these are variable rate money market funds. Its bank loans also carry
variable rates. Assuming year end 2006 variable rate investment levels and bank
loan balances, a one-point change in interest rates would impact interest income
by $80 and interest expense by $10,038.

The Company is subject to market risk with respect to commodities because its
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which it operates. The Company purchases its raw
materials on the open market, under contract through brokers and directly from
growers. Futures contracts have been used occasionally to hedge immaterial
amounts of commodity purchases, but none are presently being used.

INFLATION

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

Higher fuel and commodity costs continue to be a challenge.

ENVIRONMENTAL MATTERS

There have been no material effects of compliance with government provisions
regulating discharge of materials into the environment.

FORWARD-LOOKING STATEMENTS

This discussion contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those forward-looking statements. Factors that may cause
actual results to differ materially include price competition, industry
consolidation, raw material costs and effectiveness of sales and marketing
activities, as described in the Company's filings with Securities and Exchange
Commission.

RECENT DEVELOPMENTS

The Company continues to review and analyze its internal audit program and has
directed senior management to dedicate resources and take steps to strengthen
controls. The company engaged the services of a third party consultant to assist
in its review and analysis. The Company is identifying and implementing actions
to improve the effectiveness of procedures and internal controls, including
enhanced training with respect to financial reporting and disclosure
responsibilities.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The revised SFAS
No. 132 revised employers' disclosures about pension plans and other
postretirement benefit plans. It did not change the measurement or recognition
of those plans required by SFAS No. 87, "Employers' Accounting for Pensions,"
SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits," and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
revised SFAS No. 132 retains the disclosure requirements contained in the
original SFAS No. 132. It requires additional disclosures to those in the
original SFAS No. 132 about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined benefit
postretirement plans. The adoption of this new standard did not have an impact
on the Company's financial position, results of operations or cash flows.

In October, 2004, the American Jobs Creation Act of 2004 (The Act) was enacted
into law. The FASB had issued Staff Position 109-1 and 109-2 to provide
accounting and disclosure guidance relating to the enactment of this Act. The
Act allows for a tax deduction of up to 9% (when fully phased-in) of the lesser
of qualified production activities income" or taxable income as defined in the
Act beginning in 2005. The tax benefits of this deduction are to be recognized
in the year in which they are reported on the tax return. The Act also allows
for a special one-time tax deductions of 85 percent of certain foreign earnings
that are repatriated to a US taxpayer, provided certain criteria are met. The
adoption of the Act did not have a material impact on the Company's financial
position, results of operation or cash flows.

In November 2004, The FASB issued SFAS No. 151, "Inventory Cost or Amendment of
ARB No. 43, Chapter 4." This Statement amends AR 13 No. 43, to clarify abnormal
amounts of facility expense, freight, handling costs and wasted material should
be recognized in current-period charges. In addition, this Statement requires
that allocation of fixed production overhead to the costs on conversion be based
on the normal capacity of the production facilities. This provision is effective
for inventory costs incurred during fiscal years beginning after June 15, 2005.
SAFS No. 151 is not expected to have an impact on the Company's financial
position, results of operations or cash flows.

SFAS No. 95, "Statement of Cash Flows," to require that excess tax benefits be
reported as a financing cash flow rather than as a reduction of taxes paid. The
provisions of the revised statement are effective for financial statements
issued for the first annual reporting period beginning after June 15, 2005, with
early adoption encouraged. The adoption of this standard is not expected to have
a material impact on the company's financial position, results of operations, or
cash flows.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- An Amendment of APB Opinion No. 29." APB Opinion No. 29, "Accounting For
Nonmonetary Transactions," is based on the opinion that exchanges of nonmonetary
assets should be measured based on the fair value of the assets exchanged. SFAS
No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it with a general exception
for exchanges of nonmonetary assets whose results are not expected to
significantly change the future cash flows of the entity. The provisions of this
Statement is effective for nonmonetary asset exchanges occurring in the
Company's fiscal year 2006. The adoption of SFAS No. 153 did not have a material
impact on the Company's financial position, results of operations or cash flows.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3." This
statement carries forward without change the guidance contained in APB Opinion
No. 20 for reporting the correction of an error in previously issued financial
statements and changes the requirements for the accounting for and reporting of
a change in accounting principle. This Statement is effective for accounting
changes and corrections of errors made in fiscal years beginning after December
15, 2005. The adoption of SFAS No. 154 is not expected to have a significant
impact on the Company's results of operations or financial position.

In September 2005, FASB issued its consensus on EITF Issue No. 04-13, Accounting
for Purchases and Sales of Inventory with the Same Counterparty. This consensus
concludes that an entity is required to treat sales and purchases of inventory
between the entity and the same counterparty as one transaction for purposes of
applying APB Opinion No. 29, Accounting for Nonmonetary Transactions, when the
transactions are entered into in contemplation of each other. The consensus
should be applied to new arrangements entered into, or modifications or renewals
of existing arrangements, in the first interim or annual reporting period
beginning after March 15, 2006. This consensus is not expected to have a
material effect on the Company's financial position, results of operation or
cash flows.

In March 2005, the FASB issued FIN No. 47 (FIN47) "Accounting for Conditional
Asset Retirement Obligations, an Interpretation of SFAS No. 143." This
Interpretation clarifies that a conditional retirement obligation refers to a
legal obligation to perform an asset retirement activity in which the timing and
(or) method of settlement are conditional on a future event that may or may not
be within the control of the entity. The obligation to perform the asset
retirement activity is unconditional even though uncertainty exists about the
timing and (or) method of settlement. Accordingly, an entity is required to
recognize a liability for the fair value of a conditional asset retirement
obligation if the fair value of the liability can be reasonably estimated. The
liability should be recognized when incurred, generally upon acquisition,
construction or development of the asset. FIN 47 is effective no later than the
end of the fiscal year ending after December 15, 2005. The Company adopted the
provisions of FIN 47 during the fourth quarter of 2005. The adoption had no
impact on the financial condition, results of operations or cash flows.

ITEM 7 A.- 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 15.

ITEM 8.- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the registrant and its subsidiary for
the year ended June 2, 2006, consisting of the following, are contained herein:

Consolidated Balance Sheets - As of June 2, 2006 and June 3, 2005
Consolidated Statements of Operations - Years ended 2006, 2005, and 2004
Consolidated Statements of Cash Flows - Years ended 2006, 2005, and 2004
Consolidated Statements of Changes in
Stockholders' Equity - Years ended 2006, 2005, and 2004
Notes to Consolidated Financial Statements - Years ended 2006, 2005, and 2004
Quarterly Results of Operations - Years ended 2006, 2005, and 2004

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 June 2, 2006 and June 3, 2005, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the three year period ended June
2, 2006. Our audits also included the financial statement schedule listed at
Item 15(a) Schedule II. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
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 June 2, 2006 and June 3, 2005, and the
consolidated results of their operations and their cash flows for each of the
three years in the three year period ended June 2, 2006, in conformity with
accounting principles generally accepted in the United States of America. Also
in our opinion, such financial statement schedule, when considering in relation
to the basic consolidated financial statements, taken as a whole, presents
fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the financial statements, effective May 29, 2004 the
Company changed its accounting policy with respect to the casualty insurance
liability.

Birmingham, Alabama DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP
July 24, 2006

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of June 2, 2006 and June 3, 2005
ASSETS

2006 2005
---- ----
CURRENT ASSETS
Cash and cash equivalents..................... $ 321,627 $ 371,204

Receivables:
Trade accounts............................ 8,477,457 7,656,766
Other..................................... 19,321 191,165
------------- -------------
8,496,778 7,847,931
Less: Allowance for doubtful accounts..... 133,422 156,467
------------- -------------
8,363,356 7,691,464
Notes receivable, current................. 53,672 49,558
------------- -------------
8,417,028 7,741,022
------------- -------------
Inventories:
Raw materials............................. 1,425,605 1,100,715
Finished goods............................ 2,850,466 2,869,352
------------- -------------

4,276,071 3,970,067
------------- -------------

Prepaid expenses.............................. 1,608,459 2,436,748
Deferred income taxes......................... 669,976 589,946
------------- -------------
Total current assets................... 15,293,161 15,108,987
------------- -------------

PROPERTY, PLANT AND EQUIPMENT
Land.......................................... 3,010,974 3,030,974
Buildings..................................... 16,628,236 16,670,043
Machinery and equipment....................... 36,561,024 35,170,539
Transportation equipment...................... 15,662,458 15,937,371
------------- -------------
71,862,692 70,808,927
Less: Accumulated depreciation............ 58,279,641 56,561,891
------------- -------------

13,583,051 14,247,036
------------- -------------
OTHER ASSETS
Notes receivable, long-term................... 1,716,756 1,770,428
Cash surrender value of life insurance........ 2,431,626 2,581,358
Other......................................... 703,488 693,938
------------- -------------

Total other assets........................ 4,851,870 5,045,724
------------- -------------

TOTAL..................................... $ 33,728,082 $ 34,401,747
============= =============

See Accompanying Notes to Consolidated Financial Statements

LIABILITIES AND STOCKHOLDERS' EQUITY

2006 2005
------------ ------------

CURRENT LIABILITIES
Checks outstanding in excess of bank balances... $ 2,619,026 $ 1,493,153
Accounts payable................................ 2,210,026 2,270,035
Accrued income taxes............................ 509,318 -
Current portion of long-term debt............... 750,177 690,332
Line of credit outstanding...................... 313,923 522,008
Other accrued expenses.......................... 4,727,753 4,701,726
Salary continuation plan........................ 112,536 103,912
------------ ------------

Total current liabilities................... 11,242,759 9,781,166
------------ ------------

LONG-TERM LIABILITIES.............................
Note payable - bank, non-current................ 253,618 1,013,846
Salary continuation plan........................ 1,661,363 1,735,885
Deferred income taxes........................... 854,028 964,047
-------------- ------------

Total long-term liabilities................. 2,769,009 3,713,778
------------ ------------

STOCKHOLDERS' EQUITY..............................
Common stock - $.66 2/3 par value:
Authorized 35,000,000 shares;
issued 13,828,793 shares.................... 9,219,195 9,219,195
Additional paid-in capital...................... 6,497,954 6,497,954
Retained earnings............................... 14,676,759 15,867,248
Treasury shares - at cost (1,993,463 shares in
2006 and 2005)................................. (10,677,594) (10,677,594)
------------ ------------

Total stockholders' equity...................... 19,716,314 20,906,803
------------ ------------

TOTAL....................................... $ 33,728,082 $ 34,401,747
============ ============

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

2006 2005 2004
---- ---- ----

Net sales..................................... $ 106,546,696 $ 103,143,979 $ 97,583,493
Cost of sales................................. 57,018,901 55,399,901 51,243,037
-------------- --------------- ---------------
Gross margin.................................. 49,527,795 47,744,078 46,340,456

Selling, general and administrative expenses.. 49,168,289 48,022,149 46,595,519
-------------- --------------- ---------------

Operating income (loss)....................... 359,506 (278,071) (255,063)
-------------- --------------- ---------------

Other income (expenses):......................
Gain on sale of assets........................ 138,884 107,382 13,861
Interest expense.............................. (294,549) (255,132) (219,608)
Other income.................................. 483,481 520,862 498,613
-------------- --------------- ---------------

Total other income (expenses).............. 327,816 373,112 292,866
-------------- --------------- ---------------

Income before income tax................... 687,322 95,041 37,803
-------------- --------------- ---------------

Provision for income taxes............. 398,386 109,965 83,649
-------------- --------------- ---------------

Net income (loss).......................... $ 288,936 $ (14,924) $ (45,846)
============== =============== ===============

PER SHARE OF COMMON STOCK
Net income.................................... $ 0.02 $ - $ -
Basic earnings................................ $ 0.02 $ - $ -
============== =============== ===============
Diluted earnings.............................. $ 0.02 $ - $ -
============== =============== ===============

See Accompanying Notes to Consolidated Financial Statements

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

Additional Total
Common Paid-in Retained Treasury Stockholders'
Stock Capital Earnings Shares Equity
----------- ---------- ------------ ------------- --------------

Balance - May 30, 2003........... $ 9,219,195 $6,497,954 $ 18,893,553 $ (10,533,177) $ 24,077,525

Net loss - 2004............... - - (45,846) - (45,846)

Cash dividends paid........... (1,484,470) (1,484,470)
Treasury shares purchased..... - - - (91,425) (91,425)
----------- ---------- ------------ ------------- --------------

Balance - May 28, 2004..... 9,219,195 6,497,954 17,363,237 (10,624,602) 22,455,784

Net loss - 2005............... - - (14,924) - (14,924)
-
Cash dividends paid........... - - (1,481,065) - (1,481,065)
Treasury shares purchased..... - - - (52,992) (52,992)
----------- ---------- ------------ ------------- --------------

Balance - June 3, 2005..... 9,219,195 6,497,954 15,867,248 (10,677,594) 20,906,803

Net income - 2006............. - - 288,936 - 288,936
-
Cash dividends paid........... - - (1,479,425) - (1,479,425)
----------- ---------- ------------ ------------- --------------

Balance - June 2, 2006...... $ 9,219,195 $6,497,954 $ 14,676,759 $ (10,677,594) $ 19,716,314
=========== ========== ============ ============= ==============

See Accompanying Notes to Consolidated Financial Statements

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

2006 2005 2004
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers..............................................$ 105,874,804 $102,944,666 $ 97,937,596
Interest income........................................................... 146,072 150,685 154,944
Rental income............................................................. 36,469 32,471 31,948
Other operating cash payments/receipts.................................... 300,940 337,706 311,721
Cash paid to suppliers & employees for cost of goods sold................. (55,762,586) (53,551,622) (49,827,013)
Cash paid for suppliers & employees for selling, general & administrative. (47,888,447) (47,233,583) (45,894,592)
Income taxes.............................................................. 231,982 3,902 430,216
Interest expense.......................................................... (294,549) (255,132) (219,608)
------------- ------------ ------------

Net cash provided by operating activities............................. 2,644,685 2,429,093 2,925,212

CASH FLOWS FROM INVESTING ACTIVITIES........................................
Purchase of property, plant and equipment................................. (1,670,021) (2,700,674) (973,076)
Proceeds from sale of property, plant and equipment....................... 188,221 139,644 155,288
Collection of notes receivable............................................ 49,558 45,760 42,254
------------- ------------ ------------

Net cash used in investing activities................................. (1,432,242) (2,515,270) (775,534)

CASH FLOWS FROM FINANCING ACTIVITIES........................................
Debt proceeds............................................................. 21,525,001 16,952,546 10,304,286
Debt repayments........................................................... (22,433,469) (15,725,922) (11,727,633)
Increase in checks outstanding in excess of bank
balances................................................................ 1,125,873 199,619 136,426
Purchases of treasury shares.............................................. - (52,992) (91,425)
Cash dividends paid....................................................... (1,479,425) (1,481,065) (1,484,470)
------------- ------------ ------------

Net cash used in financing activities................................. (1,262,020) (107,814) (2,862,816)

NET (DECREASE) IN CASH AND
CASH EQUIVALENTS.......................................................... (49,577) (193,991) (713,138)

CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR......................................................... 371,204 565,195 1,278,333
------------- ------------ ------------

CASH AND CASH EQUIVALENTS AT
END OF YEAR...............................................................$ 321,627 $ 371,204 $ 565,195
============= ============ ============

See Accompanying Notes to Consolidated Financial Statements

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

2006 2005 2004
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................................ $ 288,936 $ (14,924) $ (45,846)
Adjustment to reconcile net income (loss) to net cash provided...
by operating activities:
Depreciation............................................... 2,284,669 2,267,718 2,346,880
Deferred income taxes...................................... (190,049) 172,472 (30,251)
Gain on sale of property and equipment..................... (138,884) (107,382) (13,861)
Change in receivables - net.................................... (671,892) (199,313) 354,103
Change in inventories.......................................... (306,004) (267,018) (397,854)
Change in prepaid expenses..................................... 828,289 (143,805) 588,178
Change in cash surrender value of insurance.................... 149,732 67,209 114,172
Change in other assets......................................... (9,550) (104,178) (93,585)
Change in accounts payable..................................... (60,009) 453,156 115,945
Change in accrued expenses..................................... 26,027 366,928 45,350
Change in salary continuation plan............................. (65,898) (61,770) (58,019)
Change in accrued income taxes................................. 509,318 - -
-------------- -------------- -------------

Net cash provided by operating activities.................. $ 2,644,685 $ 2,429,093 $ 2,925,212
============== ============== =============

See Accompanying Notes to Consolidated Financial Statements

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

The accounting and reporting policies of Golden Enterprises, Inc. and subsidiary
("Company") conform to accounting principles generally accepted in the United
States of America and to general principles within the snack foods industry. The
following is a description of the more significant accounting policies:

Nature of the Business
----------------------
The Company manufactures and distributes a full line of snack items that are
sold through its own sales organization and independent distributors to
commercial establishments that sell food products primarily in the Southeastern
United States.

Consolidation
-------------
The consolidated financial statements include the accounts of Golden
Enterprises, Inc. and its wholly-owned subsidiary, Golden Flake Snack Foods,
Inc., (the "Company"). All significant inter-company transactions and balances
have been eliminated.

Revenue Recognition
-------------------
The Company recognizes sales and related costs upon delivery or shipment of
products to its customers. Sales are reduced by returns and allowances to
customers.

Fiscal Year
-----------
The Company ends its fiscal year on the Friday closest to the last day in May.
The years ended June 2, 2006, June 3, 2005 and May 28, 2004 included 52, 53, and
52 weeks, respectively.

Fair Value of Financial Instruments
-----------------------------------
The carrying amount of cash and cash equivalents, receivables, accounts payable
and short and long-term debt approximate fair value.

Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.

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

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 operations.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

Self-Insurance
--------------
The Company is self-insured for certain casualty losses relating to automobile
liability, general liability, workers' compensation, property losses and medical
claims. The Company also has stop loss coverage to limit the exposure arising
from these claims. Automobile liability, general liability, workers'
compensation, and property loss costs are covered by letters of credit with the
company's claim administrators.

As discussed in Note 2, the Company changed its accounting policy with respect
to these casualty insurance liabilities in the fourth quarter of fiscal 2005.
The Company now uses a third-party actuary to estimate the casualty insurance
obligations on an annual basis, using the fully developed actuarial method of
accounting for the self-insurance liability. The third-party actuary also uses
historical information for claims frequency and severity in order to establish
loss development factors.

Advertising
-----------
The Company expenses advertising costs as incurred. These costs are included in
selling, general and administrative expenses in the Consolidated Statement of
Operations. Advertising expense amounted to $5,970,393, $5,503,641 and
$4,609,366 for the fiscal years 2006, 2005 and 2004, respectively.

Income Taxes
------------
Deferred income taxes are provided using the liability method to measure tax
consequences resulting from differences between financial accounting standards
and applicable income tax laws. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.

Segment Information
-------------------
The Company does not identify separate operating segments for management
reporting purposes. The results of operations are the basis on which management
evaluates operations and makes business decisions. The Company's sales are
generated primarily within the Southeastern United States.

Stock Options
-------------
The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees,"
and related interpretations in accounting for all stock option plans. No
stock-based compensation cost has been recognized in operations for stock
options granted because the option exercise price was equal to or more than the
market price of the underlying common stock on the date of grant.

SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure,"
requires the Company to provide pro forma information regarding net income
(loss) as if the compensation cost for the Company's stock option plans had been
determined in accordance with the fair value based method prescribed in SFAS No.
123. To provide the required pro forma information, the Company estimates the
fair value of each stock option at the grant date by using the Black-Scholes
option-pricing model.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Year Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

The following table represents the pro forma effect on net income (loss) and
earnings (loss) per share as if the Company had applied the fair value based
method recognition provisions of SFAS No 123 to stock-based employee
compensation:

Year End
----------------------------------

2006 2005 2004
---- ---- ----
Net income (loss) as reported............................. $ 288,936 $ (14,924) $ (45,846)
Deduct: total stock-based employee compensation expense...
determined under fair value based method for all awards,
net of related tax effects.............................. (10,458) (10,458) (12,291)
---------- ---------- ----------
Pro forma net income (loss)............................. $ 278,478 (25,382) (58,137)
========== ========== ==========

Earnings per share:.......................................
Basic - as reported..................................... $ 0.02 $ - $ -
========== ========== ==========
Basic - Pro forma....................................... $ 0.02 $ - $ -
========== ========== ==========

Diluted - as reported................................... $ 0.02 $ - $ -
========== ========== ==========
Diluted - Pro forma..................................... $ 0.02 $ - $ -
========== ========== ==========

Shipping and Handling Costs
---------------------------
Shipping and handling costs, which include salaries and vehicle operations
expenses relating to the delivery of products to customers by the Company are
classified as Selling, General and Administrative (SG&A) expenses. Shipping and
handling costs classified as SG&A amounted to $2,991,430 million, $2,788,746
million and $2,347,827 million for the fiscal years 2006, 2005 and 2004,
respectively.

Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements
-----------------------------------------
In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The revised SFAS
No. 132 revised employers' disclosures about pension plans and other
postretirement benefit plans.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

It did not change the measurement or recognition of those plans required by SFAS
No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits," and SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The revised SFAS No. 132 retains
the disclosure requirements contained in the original SFAS No. 132. It requires
additional disclosures to those in the original SFAS No. 132 about the assets,
obligations, cash flows, and net periodic benefit cost of defined benefit
pension plans and other defined benefit postretirement plans. The adoption of
this new standard did not have an impact on the Company's financial position,
results of operations or cash flows.

In December 2004, the FASB revised its SFAS No. 123 (SFAS No. 123R), "Accounting
for Stock Based Compensation." The revision established standards for the
accounting of transactions in which an entity exchanges its equity instruments
for goods or services particularly transaction in which an entity obtains
employee services in share based payment transactions. The revised statement
requires a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award. That cost is to be recognized over the period during which the
employee is required to proved service in exchange for the award. Changes in
fair value during the requisite service period are to be recognized as
compensation cost over that period. In addition the revised statement amends
SFAS No. 95, "Statement of Cash Flows," to require that excess tax benefits be
reported as a financing cash flow rather than as a reduction of taxes paid. The
provisions of the revised statement are effective for financial statements
issued for the first annual reporting period beginning after June 15, 2005, with
early adoption encouraged. The adoption of this standard is not expected to have
a material impact on the company's financial position, results of operations, or
cash flows.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

occurring in the Company's fiscal year 2006. The adoption of SFAS No. 153 did
not have a material impact on the Company's financial position, results of
operations or cash flows.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 2 - CHANGE IN ACCOUNTING POLICY
------------------------------------

The Company changed its accounting policy in the fourth quarter of fiscal 2005
with regard to casualty insurance reserves. The effect of this accounting change
was to adopt this policy as of the beginning of fiscal 2005 (May 29, 2004).
Previously, casualty insurance reserves were calculated using the case reserves
method. The Company changed this accounting policy to the fully developed
actuarial method of estimating insurance reserves. This change in accounting
policy was made to improve the quality of the accounting estimate. The fully
developed method reflects future costs inherent in the total population of
claims including claims reported and IBNR (incurred but not reported). The
estimate includes the recognition of inflation trends and the fact that injuries
may become more severe over time. The cumulative effect of this change in
accounting policy did not have a material effect on the financial statements.
The accounting change also increased net income before the cumulative effect in
2005 by $240,028 ($.02) per share.

First Second Third
----------- ---------- -----------
Basic earnings per share
Net income (loss) - as reported $ 0.02 $ - $ (0.04)
Net income (loss) - pro forma 0.01 - (0.01)

Diluted earnings per share
Net income (loss) - as reported $ 0.02 $ - $ (0.04)
Net income (loss) - pro forma 0.01 - (0.01)

NOTE 3- NOTES RECEIVABLE
------------------------

Notes receivable as of June 2, 2006 and June 3, 2005 consist of the following:

2006 2005
---- ----
8% note, due in 120 monthly installments of $3,640
through November 1, 2010, collateralized by property.................... $ 164,608 $ 193,836

8% note, due in 360 monthly installments of $12,474
through November 1, 2030, collateralized by property..................... 1,605,820 1,626,150
------------- -------------
1,770,428 1,819,986
Less current portion................................................ 53,672 49,558
------------- -------------
$ 1,716,756 $ 1,770,428
============= =============
Maturities at Year End
2008..................... 58,126
2009..................... 62,951
2010..................... 68,176
2011..................... 51,630
2012..................... 32,804
Thereafter.................... 1,443,069

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 4 - PREPAID EXPENSES
-------------------------

At June 2, 2006 and June 3, 2005, prepaid expenses consist of the following:

2006 2005
------------- -------------

Prepaid slotting fees........................... $ 177,479 $ 421,198
Other prepaid expenses.......................... 1,430,980 2,015,550
------------- -------------

$ 1,608,459 $ 2,436,748
============= =============

NOTE 5 - OTHER ACCRUED EXPENSES

At June 2, 2006 and June 3, 2005, other accrued
expenses consist of the following:

2006 2005
------------- -------------

Accrued payroll................................. $ 461,050 $ 468,047
Self insurance liability........................ 1,885,500 1,931,800
Accrued vacation................................ 1,402,369 1,410,187
Other accrued expenses.......................... 978,834 891,692
------------- -------------

$ 4,727,753 $ 4,701,726
============= =============

NOTE 6- LINE OF CREDIT
----------------------

The Company has a line of credit agreement with a local bank which permits
borrowing up to $2 million. The balance on the line of credit at June 2, 2006
was $313,923 a rate of 8.00%. The line of credit is subject to the Company's
continued credit worthiness and compliance with the terms and conditions of the
advance application.

NOTE 7 - LONG-TERM LIABILITIES
------------------------------

At June 2, 2006 and June 3, 2005, long-term debt consists of the
following:

2006 2005
------------- -------------
Note payable - bank - payable in equal monthly installments of
$65,108 including interest at the LIBOR index rate plus 1.75%
(6.77% at June 2, 2006) through November 30, 2007, secured
by equipment...................................................... $ 1,003,794 $ 1,704,178

Less: current portion........................................... 750,176 690,332
------------- -------------

$ 253,618 $ 1,013,846
============= =============

2008
-------------

Maturities at June 2, 2006...................................... $ 253,618
=============

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 7- LONG-TERM LIABILITIES - CONTINUED
-----------------------------------------

Other long-term obligations at June 2, 2006 and June 3, 2005 consist of the
following:
2006 2005
------------ ------------

Salary continuation plan............... $ 1,773,899 $ 1,839,797
Less: current portion.................. (112,536) (103,912)
------------ ------------

$ 1,661,363 $ 1,735,885
============ ============

The Company is accruing the present values of the estimated future retirement
payments over the period from the date of the agreements to the retirement
dates, for certain key executives. The Company recognized compensation expense
of approximately $38,058, $34,178 and $30,576 for fiscal 2006, 2005 and 2004,
respectively.

NOTE 8 - INCOME TAXES
---------------------

At June 2, 2006, June 3, 2005 and May 28, 2004 the provision for income taxes
consists of the following:

2006 2005 2004
---------- ---------- ----------
Current:
Federal............................. $ 523,353 $ (55,620) $ 101,350
State............................... 65,082 (6,890) 12,550
---------- ---------- ----------

588,435 (62,510) 113,900
Deferred:
Federal............................. (169,111) 155,191 (27,859)
State............................... (20,938) 17,284 (2,392)
---------- ---------- ----------

(190,049) 172,475 (30,251)
---------- ---------- ----------

Total................................. $ 398,386 $ 109,965 $ 83,649
========== ========== ==========

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 8- INCOME TAXES - CONTINUED
--------------------------------

The effective tax rate for continuing operations differs from the expected tax
using statutory rates. A reconciliation between the expected tax and actual tax
follows:

2006 2005 2004
------------- ------------- -------------

Tax on income at statutory rates.......................... $ 233,689 $ 32,327 $ 12,853
(Decrease) increase resulting from:.......................
State income taxes, less Federal income tax effect...... 42,954 (4,547) 8,741
Tax exempt interest..................................... (881) (1,142) (1,388)
Change in valuation allowance........................... 36,040 57,559 55,000
Other - net............................................. 86,584 25,768 8,443
------------- ------------- -------------

Total................................................. $ 398,386 $ 109,965 $ 83,649
============= ============= =============

The tax effects of temporary differences that result in deferred tax assets and liabilities are as follows:

2006 2005
------------- -------------
Deferred tax assets................................................
Salary continuation plan......................................... $ 650,489 $ 674,654
Accrued vacation................................................. 514,248 517,116
Contribution carryforward........................................ 423,569 383,657
Inventory capitalization......................................... 16,463 21,471
Allowance for doubtful accounts.................................. 48,926 57,377
Other accrued expenses........................................... 155,421 164,241
------------- -------------

Gross defered tax assets before valuation allowance............ 1,809,116 1,818,516
Less valuation allowance....................................... (268,599) (232,559)
------------- -------------

Total deferred tax assets.......................................... 1,540,517 1,585,957
------------- -------------

Deferred tax liabilities...........................................
Property and equipment........................................... 1,659,487 1,805,605
Prepaid expenses................................................. 65,082 154,453
------------- -------------
Total deferred tax liabilities..................................... 1,724,569 1,960,058
------------- -------------

Net deferred tax liability..................................... $ (184,052) $ (374,101)
============= =============

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 9- 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 fifty 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 Board
of Directors. Total plan expenses for the years ended June 2, 2006, June 3,
2005, and May 28, 2004 were $122,641, $129,529 and $94,683 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 June 2, 2006, June 3, 2005 and May 28, 2004 were $-0-. 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 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 at which time the
principal portion of the retirement benefits paid are applied to the liability
previously accrued. The change in the liability for the Salary Continuation Plan
is as follows:

2006 2005
----------- -----------
Accrued Salary Continuation Plan - beginning of
year.............................................. $ 1,839,797 $ 1,901,567

Benefits Accrued................................... 38,058 34,178

Benefits Paid...................................... (103,956) (95,948)
----------- -----------

Accrued Salary Continuation Plan - end of year..... $ 1,773,899 $ 1,839,797
=========== ===========

NOTE 10 - LONG-TERM INCENTIVE PLANS
-----------------------------------

The Company has a long-term incentive plan currently in effect under which
future stock option grants may be issued. This Plan (the 1996 Plan) is
administered by the Stock Option Committee of the Board of Directors, which has
sole discretion, subject to the terms of the Plan, 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 Plan, formulate the terms and conditions of award agreements and make all
other determinations required in the administration thereof. All options
outstanding at the end of the 2006, 2005, and 2004 are exercisable.

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 option 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.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 10 - LONG-TERM INCENTIVE PLANS - CONTINUED
-----------------------------------------------

Five hundred thousand shares of the Company's stock have been reserved for
issuance under this Plan. The following is a summary of transactions:

Shares Under Option 2006 2005 2004
------------------- ------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- -------- -------- --------- ---------- ----------
Outstanding - beginning of year 369,000 $ 3.78 369,000 $ 3.78 369,000 $ 3.78
Granted........................ - - - - - -
Exercised...................... - - - - - -
Forfeited...................... - - - - - -
Cancelled...................... - - - - - -
--------- -------- -------- --------- ---------- ----------

Outstanding - end of year....... 369,000 $ 3.78 369,000 $ 3.78 369,000 $ 3.78
========= ======== ======== ========= ========== ==========

Pro forma information regarding net income and earnings per share is presented
as if the Company had accounted for its employees stock options under the fair
value method. The per share weighted average fair value of the stock options
granted during fiscal 2002 was $.25. The fair value of these options was
estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions: risk-free interest rate 5.05
percent; dividend yield 6.56 percent; expected option life of 5 years; and
expected volatility of 15 percent.

The Black-Scholes options pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect an option's fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of it employee stock options.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 11 - NET INCOME PER SHARE
------------------------------

Basic earnings per common share are computed by dividing earnings available to
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 Statement of Financial Accounting Standards
No. 128, "Earnings per Share". At June 2, 2006, the effect of options was
computed on the 40,000 shares of common stock that were dilutive at that time.
Options on the remaining 329,000 shares were not included in the computation of
diluted earnings per share because the options' exercise price were greater than
the average market price of the common shares and, therefore, the effect would
be antidilutive. At June 3, 2005 and May 28, 2004 options on all 329,000 common
shares were antidilutive. The following reconciles the information used to
compute basic and diluted earnings per share:

Average Common Stock Shares
---------------------------------------
2006 2005 2004
----------- ----------- -----------

Basic weighted average shares outstanding... 11,835,330 11,846,419 11,879,891
Effect of options........................... 329 - -
----------- ----------- -----------

Diluted shares.............................. 11,835,659 11,846,419 11,879,891
=========== =========== ===========

NOTE 12 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------------------------

The Statement of Financial Accounting Standards No. 107, Disclosures About Fair
Value of Financial Instruments requires disclosure of fair value information
about financial instruments, whether or not recognized on the face of the
balance sheet, for which it is practical to estimate that value. SFAS 107
defines fair value as the quoted market prices for those instruments that are
actively traded in financial markets. In cases where quoted market prices are
not available, fair values are estimated using present value or other valuation
techniques. The fair value estimates are made at a specific point in time, based
on available market information and judgments about the financial instrument,
such as estimates of timing and amount of expected future cash flows. Such
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of unrealized
gains or losses. In many cases, the fair value estimates cannot be substantiated
by comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument.

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

The fair value of notes receivable is estimated by using a discount rate that
approximates the current rate for comparable notes. At June 2, 2006 and June 3,
2005 the aggregate fair value was approximately $2,090,955 and $2,364,641
compared to a carrying amount of $1,770 428 and $1,819,986, respectively.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 12 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS -CONTINUED
--------------------------------------------------------------------------

The interest rate on the Company's long-term debt is reset monthly to reflect
the 30 day LIBOR rate. Consequently, the carrying value of the bank debt
approximates fair value.

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

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

NOTE 13 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

Rental expense was $354,261 in 2006, $316,724 in 2005 and $493,028 in 2004. At
June 2, 2006, the Company was not obligated under any significant operating
leases.

The Company leases its airplane to a major shareholder of the Company for
approximately $20,000 per month. The lease provides for their personal use of
the airplane for up to 100 flight hours per year and is for a term of one year
with automatic renewal at the option of either party.

The Company had letters of credit in the amount of $3,084,365 outstanding at
June 2, 2006 to support the Company's commercial self-insurance program. The
Company pays a commitment fee of 0.50% to maintain the letters of credit.

The Company entered into a five-year term product purchase commitment during the
year ending June 1, 2001 with a supplier. Under the terms of the agreement the
minimum purchase quantity and the unit purchase price were fixed resulting in a
minimum first year commitment of approximately $2,171,000. After the first year,
the minimum purchase quantity was fixed and the purchase unit price was
negotiable, based on current market. Subsequently, in September 2002, the
product purchase agreement was amended to fix the purchase unit price and
establish specific annual quantities. The Company, as of June 2, 2006, has no
outstanding long term product purchase commitments.

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

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

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 14 - CONCENTRATIONS OF CREDIT RISK
---------------------------------------

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

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

The Company's notes receivable require collateral and management believes they
are well secured.

NOTE 15 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
-----------------------------------------------------

The following is a summary of the unaudited quarterly results of operations of
the years ended June 2, 2006 and June 3, 2005.

Per Share
Net (Loss) Net (Loss)
Net Sales Income Income
--------------- ------------ ----------

Quarter
2006
----
First........................................... $ 26,031,836 $ (64,242) $ (0.01)
Second.......................................... 25,430,115 (289,031) (0.02)
Third........................................... 26,819,759 490,297 0.04
Fourth.......................................... 28,264,986 151,912 0.01
------------- ---------- ----------
For the year............................... $ 106,546,696 $ 288,936 $ 0.02
============= ========== ==========

2005
----
First........................................... $ 24,766,426 $ 65,737 $ 0.01
Second.......................................... 24,851,760 47,151 -
Third........................................... 27,012,648 (136,754) (0.01)
Fourth.......................................... 26,513,145 8,942 -
------------- ---------- ----------
For the year............................... $ 103,143,979 $ (14,924) $ -
============= ========== ==========

Quarterly net income amounts for 2005 have been adjusted from amounts reported
in the Company's 10-Q's to reflect the change in accounting discussed in Note 2.

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

NOTE 16 - SUPPLEMENTARY STATEMENT OF INCOME INFORMATION
-------------------------------------------------------

The following tabulation gives certain supplementary statement of income
information for continuing operations for the years ended June 2, 2006, June 3,
2005 and May 28, 2004:

2006 2005 2004
------------- ------------ ------------
Maintenance and repairs.......... $ 6,274,607 $ 6,036,556 $ 5,914,221
Depreciation..................... 2,284,669 2,267,718 2,346,880
Payroll taxes.................... 2,341,678 2,379,888 2,241,443
Advertising costs................ 5,970,393 5,503,641 4,609,366

Amounts for other taxes, rents and research and development costs are not
presented because each of such amounts is less than 1% of total revenues.

NOTE 17 - SUBSEQUENT EVENT
--------------------------

A purchase and sales agreement was executed by and between Golden Flake Snack
Foods, Inc. as Seller, and Educational Development Company of America, LLC &
Waterbury Companies, LLC as Purchaser, with an effective date of June 26, 2006,
for the sale of approximately 12 acres of land located adjacent to the Company's
office headquarters and manufacturing plant in Birmingham, Alabama. The purchase
price is $1,500,000.00.

ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

ITEM 9A. - CONTROLS AND PROCEDURES

The Company performed an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
the end of the fiscal year ended June 2, 2006. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that as of the end
of the fiscal year ended June 2, 2006, the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed in
reports that the Company files or submits under the Securities and Exchange Act
of 1934 is recorded, processed, summarized and reported within the specified
time periods.

ITEM 9B. - OTHER INFORMATION

Not Applicable.

PART III

ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

With the exception of information set forth under the caption Executive
Officers of the Registrant and Its Subsidiary which appears in Part I of this
Form 10-K on Page 6, the information required by this item is incorporated by
reference to the sections entitled "Election of Directors," "Additional
Information Concerning the Board of Directors," "Executive Compensation and
Other Information," "Section 16(a) Beneficial Ownership Reporting Compliance"
and "Code of Conduct and Ethics" of the Company's Proxy Statement for the 2006
Annual Meeting of Stockholders to be held September 21, 2006.

ITEM 11. - EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation and Other Information" of the
Company's Proxy Statement for the 2006 Annual Meeting of Stockholders to be held
September 21, 2006. See Item 5 of this Annual Report on Form 10-K for
information concerning the Company's equity compensation plans.

ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated by reference to the
sections entitled "Security Ownership of Certain Beneficial Owners and
Management" and "Section 16(a) Beneficial Ownership Reporting Compliance," of
the Company's Proxy Statement for the 2006 Annual Meeting of Stockholders to be
held September 21, 2006.

ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by reference to the
section entitled "Certain Transactions" of the Company's Proxy Statement for the
2006 Annual Meeting of Stockholders to be held September 21, 2006.

ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the
section entitled "Independent Accountants" of the Company's Proxy Statement for
the 2006 Annual Meeting of Stockholders to be held September 21, 2006.

Prior to September 29, 2006, 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 15.- EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES

(a) 1. LIST OF FINANCIAL STATEMENTS

The following consolidated financial statements of Golden Enterprises, Inc., and
subsidiary required to be included in Item 8 are listed below:

Consolidated Balance Sheets - June 2, 2006 and June 3, 2005

Consolidated Statements of Operations- Years ended June 2, 2006, June 3, 2005
and May 28, 2004

Consolidated Statements of Changes in Stockholders' Equity- Years ended June 2,
2006, June 3, 2005, and May 28, 2004

Consolidated Statements of Cash Flows- Years ended June 2, 2006, June 3, 2005
and May 28, 2004

Notes to Consolidated Financial Statements

(a) 2. LIST OF FINANCIAL STATEMENT SCHEDULES

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

Schedule II- Valuation and Qualifying Accounts

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

(a) 3. Exhibits

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

3.1 Certificate of Incorporation of Golden Enterprises, Inc. (originally
known as "Golden Flake, Inc.") dated December 11, 1967 (incorporated
by reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 2004
Form 10-K filed with the Commission).

3.2 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated December 22, 1976 (incorporated by reference
to Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004 Form 10-K
filed with the Commission).

3.3 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 2, 1978 (incorporated by reference
to Exhibit 3 to Golden Enterprises, Inc. May 31, 1979 Form 10-K
filed with the Commission).

3.4 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 4, 1979 (incorporated by reference
to Exhibit 3 to Golden Enterprises, Inc. May 31, 1980 Form 10-K
filed with the Commission).

3.5 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 24, 1982 (incorporated by
reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1983
Form 10-K filed with the Commission).

3.6 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 22, 1983 (incorporated by
reference to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q
Report for the quarter ended November 30, 1983 filed with the
Commission).

3.7 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 3, 1985 (incorporated by reference
to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for the
quarter ended November 30, 1985 filed with the Commission).

3.8 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated September 23, 1987 (incorporated by
reference to Exhibit 3.1 to Golden Enterprises, Inc. May 31, 1988
Form 10-K filed with the Commission).

3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to
Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K filed
with the Commission).

(10) Material Contracts.

10.1 A Form of Indemnity Agreement executed by and between Golden
Enterprises, Inc. and Each of Its Directors (incorporated by
reference as Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q
Report for the quarter ended November 30, 1987 filed with the
Commission).

10.2 Amended and Restated Salary Continuation Plans for John S. Stein
(incorporated by reference to Exhibit 19.1 to Golden Enterprises,
Inc. May 31, 1990 Form 10-K filed with the Commission).

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

10.4 Salary Continuation Plans - Retirement, Disability and Death
Benefits for F. Wayne Pate (incorporated by reference to Exhibit
19.1 to Golden Enterprises, Inc. May 31, 1992 Form 10-K filed with
the Commission).

10.5 Indemnity Agreement executed by and between the Registrant and F.
Wayne Pate (incorporated by reference as Exhibit 19.3 to Golden
Enterprises, Inc. May 31, 1992 Form 10-K filed with the Commission).

10.6 Golden Enterprises, Inc. 1996 Long-Term Incentive Plan (incorporated
by reference as Exhibit 10.1 to Golden Enterprises, Inc. May 31,
1997 Form 10-K filed with the Commission).

10.7 Equipment Purchase and Sale Agreement dated October 2000 whereby
Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of Golden
Enterprises, Inc., sold the Nashville, Tennessee Plant Equipment
(incorporated by reference as Exhibit 10.1 to Golden Enterprises,
Inc. May 31, 2001 Form 10-K filed with the Commission).

10.8 Real Property Contract of Sale dated October 2000 whereby Golden
Flake Snack Foods, Inc. sold the Nashville, Tennessee Plant Real
Property (incorporated by reference as Exhibit 10.2 to Golden
Enterprises, Inc. May 31, 2001 Form 10-K filed with the Commission).

10.9 Amendment to Salary Continuation Plans, Retirement and Disability
for F. Wayne Pate dated April 9, 2002 (incorporated by reference to
Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2002 Form 10-K
filed with the Commission).

10.10 Amendment to Salary Continuation Plans, Retirement and Disability
for John S. Stein dated April 9, 2002 (incorporated by reference to
Exhibit 10.3 to Golden Enterprises, Inc. May 31, 2002 Form 10-K
filed with the Commission).

10.11 Amendment to Salary Continuation Plan, Death Benefits for John S.
Stein dated April 9, 2002 (incorporated by reference to Exhibit 10.4
to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).

10.12 Retirement and Consulting Agreement for John S. Stein dated April 9,
2002 (incorporated by reference to Exhibit 10.5 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission).

10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002
(incorporated by reference to Exhibit 10.6 to Golden Enterprises,
Inc. May 31, 2002 Form 10-K filed with the Commission).

10.14 Trust Under Salary Continuation Plan for Mark W. McCutcheon dated
May 15, 2002 (incorporated by reference to Exhibit 10.7 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the Commission).

10.15 Lease of aircraft executed by and between Golden Flake Snack Foods,
Inc., a wholly-owned subsidiary of Golden Enterprises, Inc., and
Joann F. Bashinsky dated February 1, 2006.

10.16 Purchase and Sale Agreement executed by and between Golden Flake
Snack Foods, Inc., as Seller, and Educational Development Company of
America, LLC & Waterbury Companies, LLC, as Purchaser, with an
effective date of June 26, 2006, for the sale of approximately 12
acres of land located adjacent to the Company's Office Headquarters
and Manufacturing Plant in Birmingham, Alabama.

(14) Code of Ethics

14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by the
Board of Directors on April 8, 2004 (incorporated by reference to
Exhibit 14.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K
filed with the Commission).

(18) Letter Re: Change in Accounting Principles

18.1 Letter from the Registrant's Independent Accountant dated August 12,
2005 indicating a change in the method of applying accounting
practices followed by the Registrant for the fiscal year ended June
3, 2005 (incorporated by reference to Exhibit 18.1 to Golden
Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the
Commission)

21 Subsidiaries of the Registrant (incorporated by reference to Exhibit
21 to Golden Enterprises, Inc. May 31, 2004 Form 10-K filed with the
Commission)

(31) Certifications

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

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

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

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

(99) Additional Exhibits

99.1 A copy of excerpts of the Last Will and Testament and Codicils
thereto of Sloan Y. Bashinsky, Sr. and of the SYB Common Stock Trust
created by Sloan Y. Bashinsky, Sr. providing for the creation of a
Voting Committee to vote the shares of common stock of Golden
Enterprises, Inc. held by SYB, Inc. and the Estate/Testamentary
Trust of Sloan Y. Bashinsky, Sr. (incorporated by reference to
Exhibit 99.1 to Golden Enterprises, Inc.'s June 3, 2005 Form 10-K
filed with the Commission).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

GOLDEN ENTERPRISES, INC.

By /s/Patty Townsend August 25, 2006
-------------------- ---------------
Patty Townsend Date
Vice President, Secretary and Principal Financial
Officer

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 Board August 25, 2006
---------------------------
John S. Stein

/s/Mark W. McCutcheon Chief Executive August 25, 2006
--------------------------- Officer, President and Director
Mark W. McCutcheon

/s/Patty Townsend Vice President, Secretary and August 25, 2006
--------------------------- Principal Financial Officer
Patty Townsend

/s/F. Wayne Pate Director August 25, 2006
---------------------------
F. Wayne Pate

/s/Edward R. Pascoe Director August 25, 2006
---------------------------
Edward R. Pascoe

/s/John P. McKleroy, Jr. Director August 25, 2006
---------------------------
John P. McKleroy, Jr.

/s/James I. Rotenstreich Director August 25, 2006
---------------------------
James I. Rotenstreich

/s/John S.P. Samford Director August 25, 2006
---------------------------
John S.P. Samford

/s/J. Wallace Nall, Jr. Director August 25, 2006
---------------------------
J. Wallace Nall, Jr.

/s/Joann F. Bashinsky Director August 25, 2006
---------------------------
Joann F. Bashinsky

SCHEDULE II

GOLDEN ENTERPRISES, INC. AND SUBSIDIARY

VALUATION AND QUALIFYING ACCOUNTS

For the Fiscal Years Ended June 2, 2006, June 3, 2005 and May 28, 2004

Additions
Balance at Charged to Balance
Beginning Costs and at End
Allowance for Doubtful Accounts of Year Expenses Deductions of Year
----------------------------------- -------------- -------------- --------------- -------------

Year ended May 28, 2004 $196,100 $131,771 $142,871 $185,000
============== ============== =============== =============

Year ended June 3, 2005 $185,000 $174,455 $202,988 $156,467
============== ============== =============== =============

Year ended June 2, 2006 $156,467 $23,676 $46,721 $133,422
============== ============== =============== =============

INDEX TO EXHIBITS
-----------------
Page
----

3.1 Certificate of Incorporation of Golden Enterprises, Inc.
(originally known as "Golden Flake, Inc.") dated December 11, 1967
(incorporated by reference to Exhibit 3.1 to Golden Enterprises,
Inc. May 31, 2004 Form 10-K filed with the Commission).

3.2 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated December 22, 1976 (incorporated by
reference to Exhibit 3.2 to Golden Enterprises, Inc. May 31, 2004
Form 10-K filed with the Commission).

3.7 Certificate of Amendment of Certificate of Incorporation of Golden
Enterprises, Inc. dated October 3, 1985 (incorporated by reference
to Exhibit 19.1 to Golden Enterprises, Inc. Form 10-Q Report for
the quarter ended November 30, 1985 filed with the Commission).

3.9 By-Laws of Golden Enterprises, Inc. (incorporated by reference to
Exhibit 3.4 to Golden Enterprises, Inc. May 31, 1988 Form 10-K
filed with the Commission).

10.2 Amended and Restated Salary Continuation Plans for John S. Stein
(incorporated by reference to Exhibit 19.1 to Golden Enterprises,
Inc. May 31, 1990 Form 10-K filed with the Commission). Page

Page
----

10.6 Golden Enterprises, Inc. 1996 Long-Term Incentive Plan
(incorporated by reference as Exhibit 10.1 to Golden Enterprises,
Inc. May 31, 1997 Form 10-K filed with the Commission).

10.7 Equipment Purchase and Sale Agreement dated October 2000 whereby
Golden Flake Snack Foods, Inc., a wholly-owned subsidiary of
Golden Enterprises, Inc., sold the Nashville, Tennessee Plant
Equipment (incorporated by reference as Exhibit 10.1 to Golden
Enterprises, Inc. May 31, 2001 Form 10-K filed with the
Commission).

10.9 Amendment to Salary Continuation Plans, Retirement and Disability
for F. Wayne Pate dated April 9, 2002 (incorporated by reference
to Exhibit 10.2 to Golden Enterprises, Inc. May 31, 2002 Form 10-K
filed with the Commission).

10.10 Amendment to Salary Continuation Plans, Retirement and Disability
for John S. Stein dated April 9, 2002 (incorporated by reference
to Exhibit 10.3 to Golden Enterprises, Inc. May 31, 2002 Form 10-K
filed with the Commission).

10.11 Amendment to Salary Continuation Plan, Death Benefits for John S.
Stein dated April 9, 2002 (incorporated by reference to Exhibit
10.4 to Golden Enterprises, Inc. May 31, 2002 Form 10-K filed with
the Commission).

10.12 Retirement and Consulting Agreement for John S. Stein dated April
9, 2002 (incorporated by reference to Exhibit 10.5 to Golden
Enterprises, Inc. May 31, 2002 Form 10-K filed with the
Commission).

10.13 Salary Continuation Plan for Mark W. McCutcheon dated May 15, 2002
(incorporated by reference to Exhibit 10.6 to Golden Enterprises,
Inc. May 31, 2002 Form 10-K filed with the Commission).

Page
----

10.15 Lease of aircraft executed by and between Golden Flake Snack 52
Foods, Inc., a wholly-owned subsidiary of Golden Enterprises,
Inc., and Joann F. Bashinsky dated February 1, 2006.

10.16 Purchase and Sale Agreement executed by and between Golden Flake 59
Snack Foods, Inc., as Seller and Educational Development Company
of America, LLC & Waterbury Companies, LLC, as Purchaser, with an
effective date of June 26, 2006, for the sale of approximately 12
acres of land located adjacent to the Company's Office
Headquarters and Manufacturing Plant in Birmingham, Alabama.

14.1 Golden Enterprises, Inc.'s Code of Conduct and Ethics adopted by
the Board of Directors on April 8, 2004 (incorporated by reference
to Exhibit 14.1 to Golden Enterprises, Inc. May 31, 2004 Form 10-K
filed with the Commission).

(18) Letter Re: Change in Accounting Principles

18.1 Letter from the Registrant's Independent Accountant dated August
12, 2005 indicating a change in the method of applying accounting
practices followed by the Registrant for the fiscal year ended
June 3, 2005 (incorporated by reference to Exhibit 18.1 to Golden
Enterprises, Inc.'s June 3, 2005 Form 10-K filed with the
Commission).

21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 to Golden Enterprises, Inc. May 31, 2004 Form 10-K
filed with the Commission)

31.1 Certification of Chief Executive Officer pursuant to Section 302 69
of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer pursuant to Section 302 70
of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer pursuant to Section 906 71
of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer pursuant to Section 906 72
of the Sarbanes-Oxley Act of 2002.

99.1 A copy of excerpts of the Last Will and Testament and Codicils
thereto of Sloan Y. Bashinsky, Sr. and of the SYB Common Stock
Trust created by Sloan Y. Bashinsky, Sr. providing for the
creation of a Voting Committee to vote the shares of common stock
of Golden Enterprises, Inc. held by SYB, Inc. and the
Estate/Testamentary Trust of Sloan Y. Bashinsky, Sr. (incorporated
by reference to Exhibit 99.1 to Golden Enterprises, Inc.'s June 3,
2005 Form 10-K filed with the Commission).