Bowl America (BWL.A) 10-Q 2015 Q3 Quarterly report

FORM  10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED:March29, 2015

COMMISSION FILE NUMBER:001-7829

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 theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer __     Accelerated Filer __     Non-Accelerated Filer __     Smaller Reporting Company X

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

Yes __    NoX

Indicate the number of shares outstanding of each of the issuer'sclasses of common stock, as of the latest practicable date:

	Shares Outstanding at May 7, 2015
Class A Common Stock, $.10 par value	3,746,454
Class B Common Stock, $.10 par value	1,414,517

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

  BOWL AMERICA INCORPORATED AND SUBSIDIARIES

  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

  (Unaudited)

	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	March 29,		March 30,		March 29,		March 30,
	2015		2014		2015		2014
Operating Revenues:
Bowling and other	$	5,307,071	$	5,168,318	$	12,811,824	$	12,779,622
Food, beverage and merchandise sales		2,209,356		2,138,735		5,303,985		5,244,551
Total Operating Revenues		7,516,427		7,307,053		18,115,809		18,024,173
Operating Expenses:
Employee compensation and benefits		2,844,728		2,845,221		8,340,211		8,427,129
Cost of bowling and other services		1,658,483		1,659,275		4,665,237		4,793,439
Cost of food, beverage and merchandise sales		612,349		603,860		1,600,975		1,583,375
Depreciation and amortization		330,813		329,280		987,018		1,050,586
General and administrative		234,963		217,127		687,389		662,684
Total Operating Expenses		5,681,336		5,654,763		16,280,830		16,517,213
Operating Income		1,835,091		1,652,290		1,834,979		1,506,960
Interest and dividend income		117,600		332,066		374,898		561,296
Earnings from continuing operations before provision for income taxes		1,952,691		1,984,356		2,209,877		2,068,256
Provision for income taxes		683,400		694,500		773,400		723,900
Net Earnings from continuing operations	$	1,269,291	$	1,289,856	$	1,436,477	$	1,344,356
Income (loss) from discontinued operations, net of tax	$	-	$	112	$	-	$	(1,837	)
Net Earnings	$	1,269,291	$	1,289,968	$	1,436,477	$	1,342,519
Earnings per share-basic & diluted
Continuing operations	$	.25	$	.25	$	.28	$	.26
Discontinued operations	$	-	$	.00	$	-	$	(.00	)
NET EARNINGS PER SHARE	$	.25	$	.25	$	.28	$	.26
Weighted average shares outstanding		5,160,971		5,160,971		5,160,971		5,160,971
Dividends paid	$	877,365	$	851,560	$	2,632,095	$	2,554,682
Per share, dividends paid, Class A	$	.17	$	.165	$	.51	$	.495
Per share, dividends paid, Class B	$	.17	$	.165	$	.51	$	.495

The operating results for the thirteen (13) and thirty-nine (39) week periods ended March 29, 2015 are not necessarily indicative of results to be expected for the year.  See notes to condensed consolidated financial statements.

1

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (CONTINUED)

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

	Thirteen Weeks Ended					Thirty-nine Weeks Ended
	March 29,			March 30,		March 29,			March 30,
	2015			2014		2015			2014
Net Earnings	$	1,269,291		$	1,289,968	$	1,436,477		$	1,342,519
Other comprehensive earnings- net of tax
Unrealized (loss) gain on available-for-sale securities net of tax (benefit) of ($41,494) and $9,393 for 13 weeks, and ($141,790) and ($35,945) for 39 weeks		(67,414	)		15,273		(230,362	)		(58,398	)
Comprehensive earnings	$	1,201,877		$	1,305,241	$	1,206,115		$	1,284,121

The operating results for the thirteen (13) and thirty-nine (39) week periods ended March 29, 2015 are not necessarily indicative of results to be expected for the year.

See notes to condensed consolidated financial statements.

2

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

	As of
	March 29,		June 29,
	2015		2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,675,433	$	842,114
Short-term investments		133,690		1,453,326
Inventories		494,479		520,355
Prepaid expenses and other		278,507		610,416
Income taxes refundable		14,279		312,856
TOTAL CURRENT ASSETS		4,596,388		3,739,067
LAND, BUILDINGS & EQUIPMENT
Net of accumulated depreciation of $40,197,069 and $39,358,295		20,449,856		20,887,127
OTHER ASSETS:
Marketable securities		8,699,129		8,979,499
Cash surrender value-life insurance		677,922		677,922
Other		81,465		80,165
TOTAL OTHER ASSETS		9,458,516		9,737,586
TOTAL ASSETS	$	34,504,760	$	34,363,780
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	598,035	$	681,509
Accrued expenses		816,495		1,091,098
Dividends payable		877,365		877,365
Other current liabilities		2,374,895		308,068
Current deferred income taxes		24,705		24,705
TOTAL CURRENT LIABILITIES		4,691,495		2,982,745
LONG-TERM DEFERRED COMPENSATION		34,088		34,088
NONCURRENT DEFERRED INCOME TAXES		2,226,426		2,368,216
TOTAL LIABILITIES		6,952,009		5,385,049
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Preferred stock, par value $10 a share:Authorized and unissued, 2,000,000 shares		-		-
Common stock, par value $.10 a share:Authorized, 10,000,000 shares		374,645		374,645
Class A issued and outstanding 3,746,454
Class B issued and outstanding 1,414,517		141,452		141,452
Additional paid-in capital		7,849,814		7,849,814
Accumulated other comprehensive earnings-
Unrealized gain on available-for-sale securities, net of tax		2,362,241		2,592,603
Retained earnings		16,824,599		18,020,217
TOTAL STOCKHOLDERS'EQUITY		27,552,751		28,978,731
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	34,504,760	$	34,363,780

See notes to condensed consolidated financial statements.

3

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS  OF CASH FLOWS

(Unaudited)

	March 29,			March 30,
	2015			2014
Cash Flows From Operating Activities
Net earnings	$	1,436,477		$	1,342,519
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization (including discontinued operations)		987,018			1,050,586
Changes in assets and liabilities
Decrease (increase) in inventories		25,876			(40,564	)
Decrease in prepaid & other		331,909			81,986
Decrease in income taxes refundable		298,577			58,129
(Increase) decrease in other long-term assets		(1,300	)		4,300
Decrease in accounts payable		( 83,474	)		(110,489	)
Decrease in accrued expenses		(274,603	)		(156,393	)
Increase in income taxes payable		-			36,500
Increase in other current liabilities		2,066,827			1,997,382
Net cash provided by operating activities		4,787,307			4,263,956
Cash Flows From Investing Activities
Expenditures for land, building and equipment		(549,747	)		(159,262	)
Net sales & maturities (purchases) of short-term investments		1,319,636			(502,056	)
Purchases of marketable securities		(91,782	)		(468,751	)
Net cash provided by (used in) investing activities		678,107			(1,130,069	)
Cash Flows From Financing Activities
Payment of cash dividends		(2,632,095	)		(2,554,682	)
Net cash used in financing activities		(2,632,095	)		(2,554,682	)
Netincreasein Cash and Equivalents		2,833,319			579,205
Cash and Equivalents, Beginning of period		842,114			3,437,780
Cash and Equivalents, End of period	$	3,675,433		$	4,016,985
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Income taxes	$	474,822		$	628,271

See notes to condensed consolidated financial information.

4

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Thirty-nine Weeks Ended

March 29, 2015

(Unaudited)

1.   Basis for Presentation

The accompanying unaudited condensed 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 condensed consolidated balance sheet as of June 29, 2014 has been derived from the Company's audited financial statements.  Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally accepted 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 condensed consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended June 29, 2014.

2.  Investments

     The Company’s investments are categorized as available-for-sale. Short-term investments consist of certificates of deposits with maturities of generally three months to one year. Equity securities consist primarily of telecommunications stocks. Mutual funds consist of federal agency mortgage backed securities (Ginnie Mae). The fair value of the Company’s investments at March 29, 2015 and June 29, 2014 were as follows:

March 29, 2015Description	Fair Value		Cost basis		Unrealized Gain
Short-term investments	$	133,690	$	133,690	$	-
Equity securities	$	4,957,542	$	1,295,759	$	3,661,783
Mutual funds	$	3,741,587	$	3,597,170	$	144,417
June29, 2014Description	Fair Value		Cost basis		Unrealized Gain
Short-term investments	$	1,453,326	$	1,453,326	$	-
Equity securities	$	5,373,986	$	1,285,759	$	4,088,227
Mutual funds	$	3,605,513	$	3,505,388	$	100,125

5

The fair values of the Company’s investments were determined as follows:

March 29, 2015 Description	Quoted Price for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Certificates of deposits	$	-	$	133,690	$	-
Equity securities		4,957,542		-		-
Mutual funds		3,741,587		-		-
Total	$	8,699,129	$	133,690	$	-

June 29, 2014 Description	Quoted Price for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Certificates of deposits	$	-	$	1,453,326	$	-
Equity securities		5,373,986		-		-
Mutual funds		3,605,513		-		-
Total	$	8,979,499	$	1,453,326	$	-

The common stocks included in the equity securities portfolio as of March 29, 2015 were:

82,112	shares of AT&T
2,520	shares of Manulife
412	shares of DexMedia
774	shares of NCR
774	shares of Teradata
6,471	shares of Vodafone
4,398	shares of CenturyLink
4,508	shares of Frontier Communications
40,000	shares of Sprint
31,904	shares of Verizon
4,079	shares of Windstream

      The Mutual fund included in the table above is Vanguard GNMA Admiral Shares #536 fund. The fair value of certificates of deposits is estimated using present value techniques and comparing the values derived from those techniques to certificates with similar values.

3. Commitments and Contingencies

The Company’s purchase commitments at March 29, 2015 are for materials, supplies, services and equipment as part of the normal course of business.

4.  Employee benefit plans

The Company has two defined contribution plans with Company contributions determined by the Board of Directors.  The Company has no defined benefit plan or other postretirement plan.

5. New Accounting Standards

       There were no new accounting pronouncements during the quarter ended March 29, 2015 that would impact the Company.

6

6. Subsequent Events

      The Company has evaluated subsequent events through the time of filing these financial statements with the Securities and Exchange Commission on May 12, 2015, and has determined that no material subsequent events have occurred.

7.  Reclassifications

Certain previous year amounts have been reclassified to conform with current year presentation.

7

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. These statements are not guarantees of future performance or development and involve risks, uncertainties and other factors that are in some cases beyond our control, including, but not limited to, (i) an unstable economy, (ii) weather conditions, (iii) changes in consumer habits or (iv) our ability to generate a positive return on our investments. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as the date hereof. We are under no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. The operating results included in this report are not necessarily indicative of results to be expected for the year.

OVERVIEW

The Company is in the entertainment business which, by its nature, has ups and downs based on consumer tastes and whims.  Generally, promotional and open play bowling which depends on the public’s discretionary budget dollars and their choices, accounts for more than half of our business. An unstable economy can lead many to participate in entertainment that is close to home and relatively inexpensive.  Bowling has those advantages.  However the longer the economy remains unstable, the less willing people are to spend on other than necessities.  Weather is also a factor, especially for casual bowlers.  While extreme heat or rainy weather prompts people to look for indoor activities, snow storms can keep customers from reaching the centers. Winter weather patterns this fiscal year in the Mid-Atlantic region where the majority of the Company’s locations operate, have resulted in more snow storms than there have been in recent years. Postponed league games are made up later in the season, but lost open play income is never recovered.  Current economic conditions continue to create challenging times but our response will be helped by having the resources to be able to promote the sport.

LIQUIDITY AND CAPITAL RESOURCES

The Company views a strong financial position as a major benefit to shareholders and emphasizes payment of dividends as part of its financial plan.  A portion of earnings has consistently been invested to create a reserve to protect the Company in downturns in business, to capitalize on opportunities for expansion and modernization and to provide a secure source of income.  For these reasons, the Company prefers a conservative approach to investing rather than taking greater risk for possible rapid growth.  The Company balances market volatility by using both fixed income and equity investments in managing its reserve funds. Any equity security is subject to price fluctuation, however, the stocks held by the Company have relatively low volatility. The Company has long been invested in a Government National Mortgage Association (“Ginnie Mae”) fund and domestically domiciled stocks with the perceived potential of appreciation, primarily telecommunications stocks. The Company considers that this diversity also provides a measure of safety of principal.

With the exception of 13,120 shares of Verizon, the common stocks in our portfolio have come from spin-offs, mergers and acquisitions of AT&T and United Telecommunications (now Sprint) purchased in 1979 and 1984 and from one insurance company acquired at no cost when that company demutualized. The Company purchased a total of 10,000 shares of Verizon during previous periods at a cost of approximately $430,000 and 3,120 shares of Verizon were received as a special dividend from Vodafone. While not all stocks in the portfolio are domestic American companies any longer, since the original purchases at an approximate cost of $630,000, we have received approximately $967,000 from mergers and sales, and over $3,900,000 in dividends, the majority of which are tax favored in the form of exclusion from federal taxable income. These marketable securities are carried at their fair value on the last day of each reporting period. The fair value of the securities on March 29, 2015 was approximately $4,958,000.

The Company’s original investment in the Vanguard GNMA bond fund began in 1988 with purchases of shares in the fund totaling approximately $1,400,000. Except for a one time sale of approximately $666,000 in 1991, all earnings have been reinvested. The fund is carried at fair value on the last day of the reporting period. At March 29, 2015, the value was approximately $3,742,000.

8

Short-term investments consisting mainly of Certificates of Deposits, and cash and cash equivalents totaled $3,809,000 at the end of the fiscal third quarter of 2015 compared to $2,295,000 at June 29, 2014.

The Company’s position in all the above investments is a source of capital for possible expansion. Potential volatility in the trading prices of the marketable securities held by the Company could impact the Company’s opportunities for expansion. The Board of Directors reviews the portfolio weekly and any use of this reserve at its quarterly meetings.

In the nine-month period ended March 29, 2015, the Company expended approximately $550,000 for the purchase of building, entertainment and restaurant equipment. The Company has made no application for third party funding as cash and cash flows are sufficient to finance all contemplated purchases and to meet short-term purchase commitments and operating lease commitments.

The nine-month decreases in the categories of Prepaid expenses and other, Accounts Payable and Accrued Expenses are primarily due to seasonal timing of payments including compensation, insurance and taxes and for contributions to benefit plans.

Current liabilities generally increase during the first three quarters of the fiscal year as leagues deposit prize fund monies with the Company throughout the league season. These funds are returned to the leagues at the end of the bowling season, generally in the fourth quarter. At March 29, 2015, league deposits of approximately $2,092,000 were included in the current liabilities category.

Cash flow provided by operating activities in the thirty-nine weeks ended March 29, 2015 was $4,787,000 which, along with cash on hand and short-term investments, was sufficient to meet day-to-day cash needs and pay dividends. Cash dividends of approximately $877,000, or $.17 per share, were paid to shareholders during the quarter ended March 29, 2015, and the nine months total was approximately $2,632,000 or $.51 per share.   In March 2015 the Company declared a regular quarterly dividend of $.17 per share, payable May 14, 2015 to shareholders of record on April 17, 2015. The economic climate is part of the consideration at the Directors’ quarterly reviews of future estimates of cash flows. 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 estimate of future opportunities at such time.

RESULTS OF OPERATIONS

Earnings were $1,269,291 or $.25 per share for the thirteen week period and $1,436,477 or $.28 per share for the thirty-nine week period ended March 29, 2015. Including discontinued operations, for the thirteen-week and thirty-nine week periods ended March 30, 2014, net earnings were $1,289,968 or $.25 per share and $1,342,519 or $.26 per share, respectively.   Both the current and prior fiscal years were impacted by snow storms causing postponements of league bowling to fourth quarters of the fiscal years. Management believes that the continuing uncertainty of an economic recovery and the consequences of federal tax and spending provisions are influencing the public’s view of discretionary spending. The operating results for fiscal 2015 periods included in this report are not necessarily indicative of results to be expected for the year.

9

The following tables set forth the items in our consolidated summary of operations for the fiscal quarter and year-to-date periods ended March 29, 2015, and March 30, 2014, and the dollar and percentage changes therein.

	Thirteen weeks ended
	March 29, 2015 and March 30, 2014
	Dollars in thousands
	2015		2014		Change			% Change
Operating Revenues:
Bowling and other	$	5,307	$	5,168	$	139			2.7
Food, beverage and merchandise sales		2,209		2,139		70			3.3
Total Operating Revenues		7,516		7,307		209			2.9
Operating Expenses:
Employee compensation and benefits		2,845		2,845		0			0
Cost of bowling and other services		1,658		1,659		(1	)		(.1	)
Cost of food, beverage and merchandise sales		612		604		8			1.3
Depreciation and amortization		331		330		1			.3
General and administrative		235		217		18			8.3
Total Operating Expenses		5,681		5,655		26			.5
Operating income from continuing operations		1,835		1,652		183			11.1
Interest and dividend income		118		332		(214	)		(64.5	)
Earnings from continuing operations before taxes		1,953		1,984		(31	)		(1.6	)
Income taxes		684		694		(10	)		(1.4	)
Income from continuing operations		1,269		1,290		(21	)		(1.6	)
Income (loss) from discontinued operations, net of tax		-		-		-			-
Net Earnings	$	1,269	$	1,290	$	(21	)		(1.6	)

	Thirty-nine weeks ended
	March 29, 2015 and March 30, 2014
	Dollars in thousands
	2015		2014			Change			% Change
Operating Revenues:
Bowling and other	$	12,812	$	12,780		$	32			.3
Food, beverage and merchandise sales		5,304		5,244			60			1.1
Total Operating Revenues		18,116		18,024			92			.5
Operating Expenses:
Employee compensation and benefits		8,340		8,427			(87	)		(1.0	)
Cost of bowling and other services		4,665		4,793			(128	)		(2.7	)
Cost of food, beverage and merchandise sales		1,601		1,583			18			1.1
Depreciation and amortization		987		1,051			(64	)		(6.1	)
General and administrative		688		663			25			3.8
Total Operating Expenses		16,281		16,517			(236	)		(1.4	)
Operating income from continuing operations		1,835		1,507			328			21.8
Interest and dividend income		375		561			(186	)		(33.2	)
Earnings from continuing operations before taxes		2,210		2,068			142			6.9
Income taxes		774		724			50			6.9
Income from continuing operations		1,436		1,344			92			6.8
Loss from discontinued operations, net of tax		-		(2	)		2			100.0
Net Earnings	$	1,436	$	1,342		$	94			7.0

10

Operating Revenues

Total operating revenues increased $209,000 to $7,516,000 in the quarter ended March 29, 2015 compared to a decrease of $332,000 to $7,307,000 in the three-month period ended March 30, 2014.  For the current fiscal nine-month period operating revenues were up $92,000 versus a decrease of $855,000 in the comparable nine-month period a year ago.  Bowling and other revenue increased $139,000 and $32,000 respectively in the quarter and year-to-date periods ended March 29, 2015, and declined $291,000 and $617,000, respectively, in the prior year comparable periods. Management believes the winter weather in each of the quarters ended in March negatively impacted open play revenue. In addition, some league play scheduled for the third quarter will occur in the fourth quarter.

Food, beverage and merchandise sales increased $70,000 or 3% in the current year quarter and were up $60,000 or 1% in the nine-month period. Cost of sales was up 1% for both the quarter and nine month periods ended March 29, 2015.

Operating Expenses

Operating expenses were up $26,000 or less than 1% and down $236,000 or 1% in the current three and nine-month periods, respectively, versus decreases of  $37,000 or 1% and $282,000 or 2% in the three and nine month periods, respectively, last year.  Employee compensation and benefits were flat for the current fiscal year three month period and down $87,000 or 1% in the nine month period versus a decline of $84,000 and $270,000 in the prior year comparable periods, respectively, or 3% in the three and nine month periods ended March 30, 2014.  Group health insurance costs were flat in the current nine month period. The Company saw a decrease in the same category in the prior year comparable period as a result of lower premiums and fewer participants.  Included in this category of expense are contributions to our two benefit plans, both of which are defined contribution plans. There is no additional obligation beyond the current year contribution.

Cost of bowling and other services was down $128,000 or 3% versus an increase of $110,000 or 2% in the nine-month periods ended March 29, 2015 and March 30, 2014, respectively. In the current thirty-nine weeks ended March 29, 2015, maintenance and repair costs were up $17,000 or 3% primarily related to building repairs. The current and prior year nine month periods included snow removal costs of $80,000 and $105,000, respectively. Advertising costs during the current year thirty-nine week period ended March 29, 2015, were down $82,000. For the nine month period ended March 29, 2015 utility costs were down slightly as a decrease in communications costs offset higher electric and gas expense. In the prior year comparable period utility costs were up $36,000 or 3% due primarily to higher heating costs. Supplies and services expenses were flat in the current year nine month period and down $27,000 or 4% in the nine month period ended March 30, 2014.

Insurance expense excluding health insurance decreased 1% and 4% in the current and prior year-to-date periods, respectively.

Depreciation and amortization expense was down 6% in the current nine-month period and 8% in the prior year nine-month period. 

As a result of the above, the current nine-month period of fiscal 2015 showed operating income from continuing operations of $1,835,000 compared to $1,507,000 in the prior year comparable nine-month period.

Interest and Dividend Income

Interest and dividend income decreased $186,000 or 33% in the fiscal 2015 nine-month period and increased $213,000 in the fiscal 2014 nine-month period. Interest income was up $19,000 or 25% in the current year primarily due to long and short gains paid on the Ginnie Mae portfolio. In fiscal 2014 the Company received a special dividend from Vodaphone consisting of stock and cash valued at $208,000.

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CRITICAL ACCOUNTING POLICIES

Management has identified accounting for marketable investment securities as a critical accounting policy due to the significance of the amounts included in the Company’s balance sheet under the captions of Short-term investments and Marketable securities.  The Company exercises judgment in determining the classification of its investment securities as available-for-sale and in determining their fair value.  The Company records these investments at their fair value with the unrealized gain or loss recorded in accumulated other comprehensive earnings, a component of stockholders’ equity, net of deferred taxes.  Additionally, from time to time the Company must assess whether write-downs are necessary for other than temporary declines in value.

Management has identified accounting for the impairment of long-lived assets as a critical accounting policy due to the significance of the amounts included in the Company’s balance sheet under the caption of Land, Buildings and Equipment.  The Company reviews long-lived assets whenever events or changes indicate that the carrying amount of an asset may not be recoverable.  In making such evaluations, the Company compares the expected future cash flows to the carrying amount of the assets.  An impairment loss equal to the difference between the assets’ fair value and carrying value is recognized when the estimated future cash flows are less than the carrying amount.

ITEM 4. CONTROLS AND PROCEDURES.

The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective based on their evaluation of such controls and procedures as of March 29, 2015. There was no change in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended March 29, 2015, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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BOWL AMERICA INCORPORATED AND SUBSIDIARIES

S.E.C. FORM 10-Q

PART II - OTHER INFORMATION

Item 6.  Exhibits.

20	Press release issued May 12, 2015 (furnished herewith)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith
32	Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 filed herewith
101	Interactive data files for the thirteen and thirty-nine weeks ended March 29, 2015 in eXtensible BusinessReporting Language

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Pursuant to the requirements of the Securities 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)
Date: May 12, 2015	By:/s/ Leslie H Goldberg
	Leslie H. Goldberg, President
Date: May 12, 2015	By: /s/ Cheryl A Dragoo
	Cheryl A. Dragoo, Controller

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