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 September 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
October 28, 2001
Class A Common Stock, 3,666,341
$.10 par value
Class B Common Stock 1,487,236
$.10 par value
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Thirteen Weeks Ended
September 30, October 1,
2001 2000
_________________________
Operating Revenues
Bowling and other $4,476,816 $4,525,085
Food, beverage and merchandise sales 1,957,225 1,869,082
_________ _________
6,434,041 6,394,167
Operating Expenses
Compensation and benefits 3,133,373 3,099,453
Cost of bowling and other 1,487,442 1,436,206
Cost of food,beverage and mdse sales 717,100 619,554
Depreciation and amortization 452,434 493,845
General and administrative 172,030 210,643
_________ _________
5,962,379 5,859,701
Operating Income 471,662 534,466
Interest and dividend income 132,976 400,339
_________ _________
Earnings before provision
for income taxes 604,638 934,805
Provision for Income Taxes 217,065 335,595
_________ _________
Net Earnings $ 387,573 $ 599,210
Earnings per share-basic & diluted $ .08 $ .11*
Weighted average shares outstanding 5,086,221 5,350,798*
Dividends paid $592,662 $566,798
Per share, Class A $.115 $.105*
Per share, Class B $.115 $.105*
*Restated for 5% stock dividend paid July 26, 2001.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Net Earnings $387,573 $ 599,210
Other comprehensive earnings net of tax
Unrealized gain (loss) on
available-for-sale securities 199,713 (941,880)
_______ _______
Comprehensive earnings (loss) $587,286 $(342,670)
The operating results for the thirteen (13) week period ending September 30,
2001, 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)
September 30, 2001 July 1, 2001
__________________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 1,582,928 $ 1,338,420
Short-term investments 5,983,445 6,236,665
Inventories 787,396 720,505
Prepaid expenses and other 733,351 867,938
Income taxes refundable 286,028 449,093
__________ __________
Total Current Assets 9,373,148 9,612,621
Property, Plant and Equipment
less accumulated depreciation of
$27,050,442 and $26,598,008 20,955,403 21,078,785
Other Assets
Marketable equity securities 6,533,641 6,216,928
Cash surrender value-life insurance 414,203 411,411
Other 249,981 278,121
__________ __________
TOTAL ASSETS $37,526,376 $37,597,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 573,345 $ 1,071,563
Accrued expenses 972,128 934,274
Other current liabilities 678,139 400,889
__________ __________
Total Current Liabilities 2,223,612 2,406,726
Noncurrent Deferred Income Taxes 2,605,000 2,488,000
TOTAL LIABILITIES 4,828,612 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 -
3,666,341 and 3,491,976 shares 366,633 349,197
Class B issued and outstanding -
1,487,236 and 1,416,427 148,723 141,643
Additional paid-in capital 7,564,270 5,075,754
Accumulated other comprehensive
earnings - Unrealized gain on
available-for-sale securities,
net of tax 3,627,184 3,427,471
Retained earnings 20,990,954 23,709,075
__________ __________
TOTAL STOCKHOLDERS' EQUITY $32,697,764 $32,703,140
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $37,526,376 $37,597,866
See notes to financial information.
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 30, 2001 AND OCTOBER 1, 2000
September 30, October 1,
2001 2000
Cash Flows From Operating Activities:
Net earnings $ 387,573 $ 599,210
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 452,434 493,845
Changes in assets and liabilities
Increase in inventories (66,891) (144,700)
Decrease(increase) in prepaid and other 134,587 (127,989)
Decrease in income taxes refundable 163,065 153,598
Decrease in other long-term assets 25,348 30,856
Decrease in accounts payable (498,218) (16,725)
Increase (decrease) in accrued expenses 37,854 (40,251)
Increase in other current liabilities 277,250 274,949
_________ _________
Net cash provided by
operating activities $ 913,002 $1,222,793
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (329,052) (2,683,788)
Net sales & maturities of short-term
investments 253,220 2,707,645
_________ _________
Net cash (used in) provided by
investing activities (75,832) 23,857
_________ _________
Cash flows from financing activities
Payment of cash dividends (592,662) (566,798)
Purchase of Class A common stock - (902)
Purchase of Class B common stock - (1,041,376)
_________ _________
Net cash used in financing activities (592,662) (1,609,076)
_________ _________
Net Increase (Decrease) in Cash and
Equivalents 244,508 (362,426)
Cash and Equivalents, Beginning of Qtr 1,338,420 1,523,242
_________ _________
Cash and Equivalents, End of Quarter $1,582,928 $1,160,816
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 54,000 $ 181,997
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirteen Weeks Ended
September 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 1,
2001, has been derived from the Company's July 1, 2001 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 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 with the
Company's latest annual report to the Securities and Exchange Commission
on Form 10-K for the year ended July 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
September 30, 2001 were:
16,835 shares of AT&T Wireless
3,946 shares of Alltel
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/Airtouch
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
September 30, 2001
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, cash and cash equivalents totaled $7,566,000 at the end
of the first quarter of fiscal 2002 or $9,000 lower than at the
beginning of the quarter.
During the quarter, the Company purchased bowling equipment to upgrade
facilities and replaced some amusement games. The Company is actively
seeking property for additional locations. Cash and cash flow are
sufficient to finance all currently planned purchases and construction.
The Company has maintained its fiscal year end 2001 position in
marketable securities, primarily telecommunications stocks, as 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 ended September 30, 2001, the market
value increased by $317,000 to approximately $6.5 Million.
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.
On September 25, 2001, the Board of Directors declared a cash dividend
of $.115 per share on its Class A and B stock to holders of record on
October 17, 2001, payable November 14, 2001.
In March 2001, the Board of Directors declared a 5% stock dividend
which was paid on July 26, 2001. A 5% stock dividend was also
paid July 26, 2000. Applicable share and per share data for prior
periods have been restated for the effect of the stock dividends.
Results of Operations
During the quarter ended September 30, 2001, a location operating at
break-even was closed at the end of its lease. Last year, subsequent
to the end of the quarter, the Company closed another rented center
operating at break-even. The change in the number of operating centers
impacted income, expenses and all comparisons for the periods presented
in this report.
Although net earnings for all months in the quarter were down from
the previous year's period, the usually slow months of July and
August produced profits for the third straight year. There was an
$.08 per share profit for the thirteen-week period ending September 30,
2001, compared to $.11 for the period ended October 1, 2000, which was
the highest first quarter earnings in the Company's history. Interest
and didivend income, which includes any realized gain on marketable
securities, declined from approximately $400,000 in the quarter ended
October 1, 2000, to approximately $133,000 in the quarter ended
September 30, 2001. Last year's quarter included income of approximately
$219,000 from the AT&T/Media One merger. The after tax effect of this
income on earnings per share in last year's quarter was approximately
$.025.
Operating revenues increased slightly in the current period versus
an increase of 7% in the prior year period. Food, beverage and merch-
andise sales were up 5% in the current period and 9% in the prior year
period. Costs were up due to the higher sales.
Operating expenses excluding depreciation and amortization increased 3%
in the current quarter versus a 6% increase in the comparable quarter
last year. Advertising costs increased 24% over the prior year period
partially as a result of an advertising campaign for the improved Silver
Spring location. Equipment expense decreased 3% in the current year and
10% last year. Employee compensation and benefits expense was up 1%
this year and 8% in the prior year quarter. Overtime pay in a tight
labor market was a large factor in the prior year increase. In the
current year that factor is partially offset by having fewer locations
to staff.
Depreciation and amortization expense decreased 8% in the current year
quarter and 12% in the comparable period last year. In addition to
operating fewer centers, several large assets have reached full
depreciation. Rent expense decreased 7% in the current period and 15%
in the prior year period due to operating fewer leased locations.
Insurance expense is up 10% in the current period versus an increase
of 5% in the prior year period. Insurance premiums at renewal are
expected to increase dramatically due in large part to the catastrophic
events of September 11, 2001.
The number of weighted average shares outstanding declined from
5,350,798 in the quarter ended October 1, 2000, to 5,086,221 in
the quarter ended September 30, 2001. This is primarily attributable
to the repurchase of 244,036 shares of previously outstanding stock
during the prior fiscal year.
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk
Not applicable
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
September 30, 2001
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits None
(b) Reports on Form 8-K None
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
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
November 13, 2001 Leslie H. Goldberg
Date Leslie H. Goldberg
President
November 13, 2001 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller