UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Quarter Ended April 1,December 30, 2001 Commission file Number 0-1830
BOWL AMERICA INCORPORATED
(Exact name of registrant as specified in its charter.)
MARYLAND 54-0646173
(State of Incorporation) (I.R.S. Employer Identification No.)
6446 Edsall Road, Alexandria, Virginia 22312
(Address of principal executive offices) (Zip Code)
(703)941-6300
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Shares Outstanding at
April 29, 2001January 27, 2002
Class A Common Stock, 3,478,9763,660,882
$.10 par value
Class B Common Stock 1,416,4271,487,236
$.10 par value
ITEM 1. FINANCIAL STATEMENTS
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
PART I - FINANCIAL INFORMATION(Unaudited)
Thirteen Weeks Ended Thirty-nineTwenty-six Weeks Ended
April 01, March 26, April 01, March 26,December 30, December 31, December 30, December 31,
2001 2000 2001 2000
_______________________ __________________________
Operating Revenues
Bowling and other $6,465,529 $6,253,655 $16,344,999 $15,815,713$5,547,213 $5,354,385 $10,024,029 $ 9,879,470
Food, beverage and
merchandise sales 2,647,759 2,428,802 6,737,817 6,207,6922,319,919 2,220,976 4,277,144 4,090,058
_________ _________ __________ __________
9,113,288 8,682,457 23,082,816 22,023,4057,867,132 7,575,361 14,301,173 13,969,528
Operating Expenses
Compensation and benefits 3,320,547 3,138,923 9,538,142 8,991,9363,213,191 3,118,142 6,346,564 6,217,595
Cost of bowling and other 1,477,447 1,445,483 4,293,696 4,327,7151,454,877 1,380,043 2,942,319 2,816,249
Cost of food, beverage and
mdsemerchandise sales 837,795 759,114 2,181,949 1,949,708791,638 724,600 1,508,738 1,344,154
Depreciation and
amortization 436,758 487,994 531,828 1,469,833 1,654,286889,192 981,839
General and administrative 464,525 196,631 908,843 560,473276,581 233,675 448,611 444,318
_________ _________ __________ __________
6,588,308 6,071,979 18,392,463 17,484,1186,173,045 5,944,454 12,135,424 11,804,155
Operating Income 2,524,980 2,610,478 4,690,353 4,539,2871,694,087 1,630,907 2,165,749 2,165,373
Interest and dividend
income 186,524 212,207 760,538 591,122138,124 173,675 271,100 574,014
_________ _________ __________ __________
Earnings before provision
for income taxes 2,711,504 2,822,685 5,450,891 5,130,4091,832,211 1,804,582 2,436,849 2,739,387
Provision for income taxes 973,500 1,015,589 1,956,900 1,835,786657,763 647,805 874,828 983,400
_________ _________ __________ __________
Net Earnings $1,738,004 $1,807,096$1,174,448 $1,156,777 $ 3,493,9911,562,021 $ 3,294,6231,755,987
Earnings per share $.35 $.34* $.70 $.61*share-basic &
diluted $.23 $.22* $.31 $.33*
Weighted average shares
outstanding 4,931,439 5,199,785* 5,011,481 5,366,448*5,151,237 5,257,357* 5,118,729 5,304,078*
Dividends paid $575,417 $566,232 $1,693,210 $1,661,640$595,176 $550,995 $1,187,838 $1,117,793
Per share, Class A $.115 $.105* $.335 $.30*$.23 $.21*
Per share, Class B $.115 $.105* $.335 $.30*$.23 $.21*
*Restated for 5% stock dividend paid July 26, 2000.2001.
CONSOLIDATED STATEMENTSTATEMENTS OF COMPREHENSIVE EARNINGS
Net earnings $1,738,004 $1,807,096Earnings $1,174,448 $1,156,777 $ 3,493,991 $ 3,294,6231,562,021 $1,755,987
Other comprehensive
earnings netearnings-net of tax
Unrealized (loss)gain on
available-for-saleavailable for sale
securities (199,634) (381,475) (1,731,104) 456,164(407,419) (589,590) (207,706) (1,531,470)
_________ _________ _________ _________
Comprehensive earnings $1,538,370 $1,425,621 $ 1,762,887767,029 $ 3,750,787567,187 $ 1,354,315 $ 224,517
The operating results for these thirteen (13) and thirty-nine (39)twenty-six (26) week
periods are not necessarily indicative of results to be expected for the year.
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
AprilDecember 30, 2001 July 1, 2001
July 2, 2000
_______________________________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 2,485,4613,137,322 $ 1,523,2421,338,420
Short-term investments 8,521,134 8,873,6826,012,786 6,236,665
Inventories 568,174 657,628677,459 720,505
Prepaid expenses and other 699,942 440,318569,798 867,938
Income taxes refundable 170,949 449,093
__________ __________
Total Current Assets 12,274,711 11,494,87010,568,314 9,612,621
Property, Plant and Equipment
less accumulated depreciation of
$26,235,324$26,935,396 and $25,416,493 21,081,051 19,367,989$26,598,008 21,171,431 21,078,785
Other Assets
Marketable equity securities 6,420,662 9,168,4465,887,236 6,216,928
Cash surrender value-life insurance 390,976 388,184414,203 411,411
Other long-term assets 248,605 291,810193,881 278,121
__________ __________
TOTAL ASSETS $40,416,005 $40,711,299$38,235,065 $37,597,866
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AprilDecember 30, 2001 July 1, 2001
July 2, 2000
________________________________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 930,573660,691 $ 688,2131,071,563
Accrued expenses and payroll ded 1,039,055 893,493
Income taxes payable 365,798 129,390
Deferred income taxes 23,000 23,000796,022 934,274
Other current liabilities 2,549,288 430,8081,602,559 400,889
__________ __________
Total Current Liabilities 4,907,714 2,164,9043,059,272 2,406,726
Noncurrent Deferred Income Taxes 2,661,320 3,678,000
_________ _________2,366,989 2,488,000
TOTAL LIABILITIES 7,569,034 5,842,9045,426,261 4,894,726
__________ __________
Stockholders' Equity
Preferred stock,
par value $10 a share: Authorized
and unissued 2,000,000 shares
Common stock,
par value $.10 per share
Authorized 10,000,000 shares
Class A issued and outstanding -
3,478,9763,660,882 and 3,406,0703,491,976 shares 347,897 340,607366,087 349,197
Class B issued and outstanding -
1,487,236 and 1,416,427 and 1,488,826 shares148,723 141,643 148,883
Additional paid-in capital 3,765,997 3,959,1697,556,300 5,075,754
Unrealized gain on available-for-
sale securities
net of tax 3,515,317 5,246,421available-for-sale, 3,219,765 3,427,471
Retained earnings 25,076,117 25,173,31521,517,929 23,709,075
__________ __________
TOTAL STOCKHOLDERS' EQUITY $32,846,971 $34,868,395$32,808,804 $32,703,140
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $40,416,005 $40,711,299$38,235,065 $37,597,866
See notes to financial information.
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THIRTY-NINETWENTY-SIX WEEKS ENDED APRIL 1,DECEMBER 30, 2001 AND MARCH 26,DECEMBER 31, 2000
April 1, March 26,December 30, December 31,
2001 2000
Cash Flows From Operating Activities:
Net earnings $3,493,991 $ 3,294,623$1,562,021 $1,755,987
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,469,833 1,654,286889,192 981,839
Changes in assets and liabilities
Decrease (increase) in inventories 89,454 76,958
Increase43,046 (21,762)
Decrease (increase) in prepaid and& other (259,624) (376,182)298,140 (158,756)
Decrease in income taxes refundable 278,144 -
Decrease in other long-term assets 40,413 281,803
Increase81,448 41,922
Decrease in accounts payable 242,360 95,914
Increase(410,872) (31,878)
Decrease in accrued expenses and payroll deductions 145,562 37,549(138,252) (66,860)
Increase in income taxes payable 236,408 1,023,858- 93,946
Increase in other current liabilities 2,118,490 2,020,0851,202,645 1,169,638
_________ _________
Net cash provided by operating activities $7,576,887 $ 8,108,894$3,805,512 $3,764,076
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (3,182,895) (426,130)(981,838) (2,920,074)
Net decrease (increase) insales and maturities of short-term
investments 352,548 (3,014,544)223,879 1,190,195
_________ _________
Net cash used in investing activities (2,830,347) (3,440,674)(757,959) (1,729,879)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,693,210) (1,661,640)(1,187,838) (1,117,793)
Purchase of Class A & B Common Stock (2,091,111) (2,750,671)(60,813) (1,067,452)
_________ _________
Net cash used in financing activities (3,784,321) (4,412,311)(1,248,651) (2,185,245)
_________ _________
Net Increase (Decrease) in Cash
and Cash
Equivalents 962,219 255,9091,798,902 (151,048)
Cash and Equivalents, Beginning of YearPeriod 1,338,420 1,523,242 1,557,225
_________ _________
Cash and Equivalents, End of Period $2,485,461 $ 1,813,134$3,137,322 $1,372,194
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $1,721,823 $ 811,914596,710 $ 890,785
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirty-nineTwenty-six Weeks Ended
April 1,December 30, 2001
1. Consolidated Financial Statements
The accompanying unaudited consolidated financial statements of Bowl
America Incorporated and subsidiaries (the "Company"), have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. The consolidated balance sheet as of July 2, 20001, 2001 has been
derived from the Company's July 2, 20001, 2001 audited financial statements.
Certain information and note disclosures normally included in the annual
financial statements, prepared in accordance with accounting principles
generally accepted accounting principles,in the United States of America, have been condensed
or omitted pursuant to those rules and regulations, although the Company
believes that the disclosures made are adequate to make the information
presented not misleading.
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments and reclassifications (all of
which are of a normal, recurring nature) that are necessary for the fair
presentation for the periods presented. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's latest annual report to the Securities and Exchange Commission
on Form 10-K for the year ended July 2, 2000.1, 2001.
2. Marketable Equity Securities
Marketable equity securities are carried at fair value in accordance
with the provisions of SFAS No. 115.
The telecommunications stocks included in the portfolio as of
April 1,December 30, 2001 were:
16,835 shares of AT&T Wireless
3,946 shares of Alltel
14,316 shares of American Telephone & Telegraph
27,572 shares of Bell South
8,028 shares of Lucent Technologies
9,969 shares of Qwest Communications
45,580 shares of SBC
32,000 shares of SprintFon
16,000 shares of SprintPCS
18,784 shares of Verizon
13,560 shares of Vodafone/AirtouchAirTouch
BOWL AMERICA INCORPORATED
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
April 1,December 30, 2001
Liquidity and Capital Resources
Short-term investments, consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $11,007,000$9,150,000 at the end of the thirdsecond
quarter of fiscal 20012002 or $1,907,000$1,584,000 higher than at the beginning
of the quarter.
The Company has purchased 244,036 shares of its
previously outstanding common stock inIn the fiscal year for $2,091,000,
including 110,812 shares in the third quarter for $1,024,000.
During the nine-monthsix-month period ended December 30, 2001, the Company expended
$2,250,000approximately $1 million primarily for the purchase of the landbowling equipment
to upgrade facilities and building at Bowl America Glen Burnie.to replace some amusement games. The Company is continuing to modernize existing locations and
is actively seeking property for the development of additional bowling centers.locations. Cash and cash
flow are sufficient to finance all currently planned purchases and
construction. The Company'sCompany has also maintained its fiscal year end 2001
position in marketable securities, primarily telecommunications stocks
is an additionalas a further source of expansion capital.
These securities are carried at their fair value on the last day of the
quarter. For the three-month period ending
April 1,ended December 30, 2001, the
market value decreased by $300,000$600,000 to approximately $6,400,000.
Current liabilities include $2million in league deposits of prize fund
monies which are returned to the leagues at the end of the bowling season,
generally during the fourth quarter.$5,900,000.
While no factors requiring a change in the dividend rate are apparent,
the Board of Directors decides the amount and timing of any dividend
at its quarterly meeting based on its appraisal of the state of the
business and its estimate of future opportunities.
The Company paid a 5% stock dividend on July 26, 2000. All applicable share
and per share data in prior periods have been restated for the effect of the
stock dividend.
On March 27,December 4, 2001, the CompanyBoard of Directors declared a cash dividend of
$.115 per share on its Class A and Class B Common Stock, payable on May 16, 2001stock to share- holders of record as of April 25, 2001, andon
January 10, 2002, payable February 13, 2002.
The Company paid a 5% stock dividend on its
Class A and Class B Common Stock, payable onboth July 26, 2001 to shareholdersand July 26, 2000.
All applicable share and per share data in prior periods has been restated
for the effect of record on July 5, 2001.the stock dividends.
Results of Operations
During the secondfirst quarter of fiscal 2001, the Company closed2002, a center operating at break-even
was closed at the end of its lease. ResultsThe Company also closed a leased center
in the second quarter of Operationsfiscal 2001. The changes in the number of operating
centers affected all income, expense and comparisons for the periods presented
in this report.
There was a $.35were net earnings of $.23 per share profit for the thirteen-week period ending
April 1,ended
December 30, 2001, versus $.34net earnings of $.22 per share profit for the thirteen weeks
ending March 26,thirteen-
week period ended December 31, 2000. For the current thirty-ninetwenty-six week period
earnings per share were $.70$.31 compared to $.61$.33 for the comparable period
a year ago.
All revenue and expense comparisons were impacted by
Operating income increased 2% for the operationcurrent six-month period versus an
increase of one fewer location5% in the currentcomparable period a year quarter.
Operatingago. Increased open play
linage and a higher average game rate contributed to the improvment in
bowling revenue. Some ancillary revenues increased 5% for both the current three-month and
nine-month periods. Inwere also up over the prior year period the quarter showed a slight
decrease but the nine-month period was up 3%.year.
Food, beverage and merchandise sales were up 9% in both the three-month and nine-month periods and costsix-month period ended
December 30, 2001. Cost of sales was upincreased due to the increase inhigher sales.
Operating expenses excluding depreciation and amortization increased 10%4%
in the three-monthcurrent six-month period and 7% throughversus a 5% increase in the nine-month period. In the
prior year both the three-month and nine-monthcomparable
period showed a slight
decrease in expenses.last year. Employee compensation and benefits were up 2% for the
twenty-six week period versus an increase of 6% in bothlast year's period when
the three-month and nine-month periods. Overtime pay and a still tight labor market during our busy seasonforced the use of overtime.
Maintenance and repair costs were up 10% in the main causes forsix-month period ended
December 30, 2001 versus 5% in the increases.period a year ago. Advertising costsexpense
increased 18% from22% in the priorcurrent twenty-six week period partially in support
of glow-in-the-dark bowling. Last year quarter primarily due to
the cost of preparing our "Rolling Bowling" trailers for the new season.
Year-to-date advertising costs were down 19%.
Supplies and services expenses were down 8% fromin this year's six-month
period versus a 1% increase in the prior year period. Higher gas pricesUtility costs were
responsible for a 6% increaseflat in utility costs forboth the quarter. There has been a 2% increase in utility costs for the nine-month
period versus a decrease of less than 1% in last year's comparable period.
The Company is defending a lawsuit commenced during the first quarter of
the fiscal year by a former employee, scheduled to go to trial later this
year, which is primarily responsible for the increased generalcurrent and administrative expense.prior periods.
Depreciation and amortization expense decreased 11%9% in the year-to-datecurrent year
period versus a decrease of 3%and 13% in the prior year period.comparable period last year. Several large capital
assets have reached full depreciation. Rent expense for the nine-
months ended April 1, 2001 was down 25%6% in the
current year's six-month period due to the closing, of a leased
center mentioned above, and the purchase of a formerly leased location.
Rent expense in the prior year's comparable period decreased 12% after the
closing
of a leased location. In last year's six-month period rent expense dropped
14%, the combination of closing a leased location and purchasing a formerly
leased center.
While lower interest rates in the current six-month period have caused a
decline in interest and dividend income, the primary cause for the decrease
is that last year's interest and dividend income figure included $219,000
received from the merger of AT&T and Media One.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
April 1,December 30, 2001
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
At the annual meeting on December 4, 2001 the Class A shareholders
approved the appointment of Director Warren T. Braham for a one year period
to expire at the 2002 Annual Meeting. The votes were cast as follows:
For 3,348,976
Against 0
Withheld 6,553
At the annual meeting on December 4, 2001, the Class A shareholders
approved the appointment of Director Allan L. Sher for a one year period
to expire at the 2002 Annual Meeting. The votes were cast as follows:
For 3,349,044
Against 0
Withheld 6,485
At the annual meeting on December 4, 2001, the Class B shareholders
approved the appointment of all Class B Directors as listed in the
proxy statement for the December 4, 2001 meeting, for a one year period
to expire at the 2002 Annual Meeting. The votes were cast as follows:
For 14,836,200
Against 0
Withheld 0
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits None
(b) Reports on Form 8-K
On March 27, 2001,A Form 8-K was filed during the quarter relating to an employment
contract between the Company filed a Form 8-K (Item 5) reporting the
declaration on that date of cash and stock dividends.
its President, Leslie H. Goldberg.
SIGNATURES
Pursuant to the requirement 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.
BOWL AMERICA INCORPORATED
Registrant
May 15, 2001February 13, 2002 Leslie H. Goldberg
Date Leslie H. Goldberg
President
May 15, 2001February 13, 2002 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller