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 29, 2002 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 27, 2002
Class A Common Stock, 3,666,351
$.10 par value
Class B Common Stock 1,483,620
$.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 29, September 30,
2002 2001
_________________________
Operating Revenues
Bowling and other $4,278,984 $4,476,816
Food, beverage and merchandise sales 1,847,018 1,957,225
_________ _________
6,126,002 6,434,041
Operating Expenses
Compensation and benefits 3,148,325 3,133,373
Cost of bowling and other 1,495,479 1,487,442
Cost of food,beverage and mdse sales 613,350 717,100
Depreciation and amortization 441,152 452,434
General and administrative 171,588 172,030
_________ _________
5,869,894 5,962,379
Operating Income 256,108 471,662
Interest and dividend income 115,436 132,976
_________ _________
Earnings before provision
for income taxes 371,544 604,638
Provision for Income Taxes 134,127 217,065
_________ _________
Net Earnings $ 237,417 $ 387,573
Earnings per share-basic & diluted $ .05 $ .08
Weighted average shares outstanding 5,149,996 5,086,221
Dividends paid $618,000 $592,662
Per share, Class A $.12 $.115
Per share, Class B $.12 $.115
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Net Earnings $237,417 $ 387,573
Other comprehensive earnings net of tax
Unrealized (loss) gain on
available-for-sale securities (731,250) 199,713
_______ _______
Comprehensive (loss) earnings $(493,833) $ 587,286
The operating results for the thirteen (13) week period ending September 29,
2002, are not necessarily indicative of results to be expected for the year.
See notes to consolidated financial statements.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 29, 2002 June 30, 2002
__________________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 2,568,043 $ 1,633,817
Short-term investments 7,159,884 8,183,932
Inventories 768,115 541,027
Prepaid expenses and other 531,364 479,289
Income taxes refundable 566,641 699,768
__________ __________
Total Current Assets 11,594,047 11,537,833
Property, Plant and Equipment
less accumulated depreciation of
$27,437,243 and $26,996,091 20,282,864 20,505,586
Other Assets
Marketable equity securities 2,797,952 3,990,248
Cash surrender value-life insurance 434,040 431,249
Other 62,768 97,662
__________ __________
TOTAL ASSETS $35,171,671 $36,562,578
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 564,720 $ 701,671
Accrued expenses 696,323 749,245
Other current liabilities 708,599 369,027
__________ __________
Total Current Liabilities 1,969,642 1,819,943
Long-Term Deferred Compensation 132,496 132,496
Noncurrent Deferred Income Taxes 1,499,194 1,928,000
__________ _________
TOTAL LIABILITIES 3,601,332 3,880,439
__________ __________
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 -
3,666,376 and 3,666,376 shares 366,638 366,638
Class B issued and outstanding -
1,483,620 and 1,483,620 148,362 148,362
Additional paid-in capital 7,603,679 7,603,646
Accumulated other comprehensive
earnings - Unrealized gain on
available-for-sale securities,
net of tax 1,311,812 2,043,062
Retained earnings 22,139,848 22,520,431
__________ __________
TOTAL STOCKHOLDERS' EQUITY $31,570,339 $32,682,139
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $35,171,671 $36,562,578
See notes to consolidated financial statements.
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 29, 2002 AND SEPTEMBER 30, 2001
September 29, September 30,
2002 2001
Cash Flows From Operating Activities:
Net earnings $ 237,417 $ 387,573
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 441,152 452,434
Changes in assets and liabilities
Increase in inventories (227,088) (66,891)
(Increase)decrease in prepaid and other (51,935) 134,587
Decrease in income taxes refundable 133,127 163,065
Decrease in other long-term assets 32,103 25,348
Decrease in accounts payable (136,951) (498,218)
(Decrease) increase in accrued expenses (52,922) 37,854
Increase in other current liabilities 339,572 277,250
_________ _________
Net cash provided by
operating activities $ 714,475 $ 913,002
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (218,430) (329,052)
Net sales & maturities of short-term
investments 1,056,181 253,220
_________ _________
Net cash provided by (used in)
investing activities 837,751 (75,832)
_________ _________
Cash flows from financing activities
Payment of cash dividends (618,000) (592,662)
_________ _________
Net cash used in financing activities (618,000) (592,662)
_________ _________
Net Increase in Cash and Equivalents 934,226 244,508
Cash and Equivalents, Beginning of Qtr 1,633,817 1,338,420
_________ _________
Cash and Equivalents, End of Quarter $2,568,043 $1,582,928
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 1,000 $ 54,000
See notes to consolidated financial statements.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Thirteen Weeks Ended
September 29, 2002
1. Basis for Presentation
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 June 30,
2002, has been derived from the Company's June 30, 2002 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 June 30, 2002.
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 29, 2002 were:
16,835 shares of AT&T Wireless
2,209 shares of Agere
3,946 shares of Alltel
669 shares of Avaya
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
3. Commitments and Contingencies
In August 2002, the Company signed an agreement with Brunswick Corpora-
tion for approximately $597,000 for the purchase of bowling equipment for
three locations. The Company is scheduled to receive delivery of all assets
during the second quarter of fiscal 2003.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
September 29, 2002
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, cash and cash equivalents totaled $9,728,000 at the end
of the first quarter of fiscal 2003 or $90,000 lower than at the
beginning of the quarter.
In the three-month period ended September 29, 2002, the Company made
purchases of equipment to modernize facilities and amusement games.
Additional orders for bowling equipment totaling approximately $597,000
have been placed. The Company is actively seeking property for additional
locations. Cash and cash flow are sufficient to finance all currently
contemplated purchases and construction. The Company has also maintained
its fiscal year end 2002 position in marketable equity securities,
primarily telecommunications stocks, as a further source of expansion
capital.
These marketable securities are carried at their fair value on the last day
of the quarter. For the three-month period ended September 29, 2002, the
market value decreased by $1,192,000 to approximately $2,800,000.
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.
On September 26, 2002, the Board of Directors declared a cash dividend
of $.12 per share on its Class A and B stock to holders of record on
October 16, 2002, payable November 14, 2002.
Results of Operations
Two leased locations were closed in fiscal 2002 at the end of their leases.
During the quarter ended September 30, 2001, a center operating at
break-even was closed, and in May 2002, after the Company was unable to
negotiate a new lease, a profitable location ceased operation. In fiscal
2001 a location was closed at the end of the first quarter. These changes
in the number of operating centers affected all income, expenses and
comparisons for the periods presented in this report.
Net earnings were $.05 per share for the thirteen-week period ended
September 29, 2002 versus $.08 per share for the thirteen-week period
ended September 30, 2001.
Operating revenues decreased by 5% for the current three-month period versus
a slight increase in the comparable period a year ago. Food, beverage and
merchandise sales were down 6% in the current three-month period and up 5%
in the prior year period. Costs were down due to the lower sales.
At comparable locations, operating revenues were up approximately 2% for the
three-month period ended September 29, 2002 primarily as a result of a 3%
increase in food and beverage sales at those same centers.
Operating expenses excluding depreciation and amortization decreased 1%
in the current three-month period versus a 3% increase in the comparable
period last year. In the current year quarter, advertising expenses
decreased 14% from the prior year quarter. Last year,advertising costs
increased 24% as a result of an advertising campaign supporting a remodeled
location. Employee compensation and benefits were up slightly in the
current year and up 1% in the prior year quarter.
Supplies and services expenses increased 8% in this year's three-month
period in part due to installing new masking unit graphics at several
locations. Utility costs were down 11% in the current quarter and up 2%
in the prior year period.
Depreciation and amortization expense decreased 2% in the current year
period and 8% in the comparable period last year. In addition to
operating fewer centers, several large assets have reached full
depreciation. Rent expense was down 12% in the current year's three-month
period and 7% in the prior year period due to the closings, mentioned above,
of leased locations.
Insurance expense was up 47% in the current year quarter versus an increase
of 10% in last year's comparable quarter. Insurance premiums at renewal
increased dramatically due in large part to the catastrophic events of
September 11, 2001.
Critical Accounting Policies
Critical accounting policies have the potential to have an impact on the
Company's financial statements, either because of the significance of the
financial statement item to which they relate, or because they require
judgment and estimation due to the uncertainty involved in measuring at a
specific point in time, events that are continuous in nature. Due to the
nature of its business, the Company has no accounting policies that it
considers to be critical to the understanding of the Company's financial
reporting.
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk
Not applicable
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 a
date within 90 days prior to the filing of this report. There were no
significant changes in internal controls or in other factors that
significantly affect internal controls subsequent to the date of their most
recent evaluation.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
September 29, 2002
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Written statement of Chief Executive Officer
99.2 Written statement of Chief Financial Officer
(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, 2002 Leslie H. Goldberg
Date Leslie H. Goldberg
President
November 13, 2002 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller
CERTIFICATIONS
I, Leslie H. Goldberg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bowl America
Incorporated;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operaton of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weakness in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in the internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluaton, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 13, 2002 Leslie H. Goldberg
Chief Executive Officer
CERTIFICATIONS
I, Cheryl A. Dragoo, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bowl America
Incorporated;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operaton of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weakness in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in the internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluaton, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 13, 2002 Cheryl A. Dragoo
Chief Financial Officer
EXHIBIT 99.1
Written Statement of the Chief Excutive Officer
Pursuant to 18 U.S.C. 1350
Soley for the purposes of complying with 18 U.S.C. 1350, I, the
undersigned President of Bowl America Incorporated (the "Company"),
hereby certify, based on my knowledge, that the Quarterly Report on Form
10-Q of the Company for the quarter ended September 29, 2002 (the "Report")
fully complies with the requirements of Section 13(a) of the Securities Act
of 1934 and that information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Leslie H. Goldberg
November 13, 2002
EXHIBIT 99.2
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. 1350
Soley for the purposes of complying with 18 U.S.C. 1350, I, the
undersigned Assistant Treasurer and Controller of Bowl America Incorporated
(the "Company"), hereby certify, based on my knowledge, that the Quarterly
Report on Form 10-Q of the Company for the quarter ended September 29, 2002
(the "Report") fully complies with the requirements of Section 13(a) of the
Securities Act of 1934 and that information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Cheryl A. Dragoo
November 13, 2002