BOWL AMERICA INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 4, 2007
TO THE HOLDERS OF CLASS A AND CLASS B
COMMON STOCK OF BOWL AMERICA INCORPORATED
The annual meeting of stockholders of Bowl America Incorporated will
be held at the Corporation's office situated at 6446 Edsall Road,
Alexandria, Virginia 22312 (East Exit off Shirley Highway), on Tuesday
December 4, 2007, at 11:00 a.m., for the following purposes:
(1) To elect a Board of Directors to serve until the next annual
meeting.
(2) To transact such other business as may properly be brought before
the meeting and any adjournments thereof.
Only stockholders of record at the close of business October 24, 2007,
are entitled to vote at the meeting. The stock transfer books will not
be closed.
You are cordially invited to attend the meeting in person. If you do
not expect to be present, please sign, date, and mail the enclosed proxy,
the postage for which has been provided. Prompt response is helpful, and
your cooperation will be appreciated. If after signing and returning the
enclosed proxy, you find you are able to attend the meeting, you will
have an opportunity to withdraw your proxy and vote in person.
By Order of the Board of Directors
A. Joseph Levy
Secretary
Dated October 24, 2007
PROXY STATEMENT
For Annual Meeting of Stockholders
To be held December 4, 2007
The principal office of the Corporation is situated at 6446 Edsall Road,
Alexandria, Virginia 22312.
The accompanying proxy is solicited by the Board of Directors; and when
such proxy is properly signed and returned, the shares it represents will
be voted at the meeting in accordance with the directions noted thereon;
or if no direction is indicated, it will be voted for the election of
directors.
Solicitation of proxies will be primarily by mail. Proxies may also
be solicited by directors, officers, and employees of the Corporation
personally or by telephone or telegraph. The Corporation will bear the
cost of all such solicitations.
The proxy may be revoked at any time prior to its exercise by giving
notice of the revocation to the Secretary of the Corporation in
writing at any time prior to the meeting and orally at the meeting at
any time prior to the vote.
This statement is being mailed on or about October 26, 2007.
VOTING SECURITIES
Each of the issued and outstanding 3,667,228 shares of the Corporation's
Class A Common Stock, par value of $.10 per share, is entitled to one vote.
Each of the issued and outstanding 1,468,462 shares of the Corporation's
Class B Common Stock, par value of $.10 per share, is entitled to ten votes.
The total number of Class A and Class B shares of Common Stock issued and
outstanding is 5,135,690 shares, with the Class A stockholders having
3,667,228 votes, and the Class B stockholders having 14,684,620 votes. The
Corporation's Class A Common Stock is traded on the American Stock Exchange.
The Class B Common Stock is not publicly traded. Only stockholders of record
at the close of business on October 24, 2007, are entitled to vote at the
meeting and adjournment thereof. The Class A Common Stockholders are entitled
to elect two directors and the Class B Common Stockholders are entitled to
elect six directors.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by tellers appointed by the Company. The number of shares represented at
the meeting in person or by proxy, including abstentions, will determine
whether or not a quorum is present. Abstentions will not be voted on any
matter submitted to the stockholders for a vote.
Shares on a Broker's Proxy that lack discretionary authority to vote on a
particular matter will not be considered as present and entitled to vote by
the tellers.
ANNUAL REPORTS
A copy of the annual report and Form 10-K of the Corporation for the
fiscal year ending July 1, 2007, which has been filed with the Securities
and Exchange Commission, was mailed to you on September 28, 2007 or is
enclosed with this statement.
ELECTION OF DIRECTORS AND SECURITY OWNERSHIP OF MANAGEMENT
The holders of the Class A Common Stock are entitled to elect two Directors
of the Corporation and the holders of the Class B Common Stock are entitled
to elect six Directors of the Corporation to hold office until the next Annual
Meeting of the stockholders and until their successors shall have been
elected and qualified. The management recommends the election of the
nominees listed below as Directors. All of the nominees are presently
Directors and constituted the Board of Directors for the past year. In the
event any of these nominees becomes unavailable for election, it is intended
that the proxies will be voted for the election of such other persons as
management shall designate. Management has no reason to believe that any
nominee will be unavailable.
The following table also shows the beneficial ownership of shares of the
Corporation's Class A and Class B Common stock as of October 10, 2007 by
all directors including executive officers and by all directors and executive
officers as a group.
Percentage of Total
Shares of Class A Shares of Class B Votes Eligible to be
Common Stock of Common Stock of Cast of Class A & B
Name of Director and Nominees Corporation Corporation Common Stock
for Election; Principal Occupation; Beneficially Owned Beneficially Owned Beneficially Owned
Positions and Offices with the Periods Served Directly or Indirectly Directly or Indirectly Directly or Indirectly
Corporation Age As a Director on October 10, 2007 on October 10, 2007 on October 10, 2007
NOMINEES FOR ELECTION BY CLASS A COMMON STOCK
Warren T. Braham, Retired Attorney 75 August 1, 1978 1,978 247 .02
to date
Allan L. Sher, Retired Senior 75 February 5, 1997 52,500 0 .28
Executive of Securities Brokerage to date
Industry
NOMINEES FOR ELECTION BY CLASS B COMMON STOCK
Merle Fabian, Retired Librarian 69 March 20, 1990 381,224 380,730 22.8
to date
Leslie H. Goldberg, President of 77 December 5, 1972 498,239 491,296 29.5
the Corporation since February 1, 1976 to date
Stanley H. Katzman, Retired Senior 67 December 2, 1997 195,502(1) 189,444(1) 11.4
Computer Specialist, National to date
Institutes of Health
A. Joseph Levy, Retired Merchant; 73 June 21, 1988 94,680(2) 53,945(2) 3.4
Senior Vice President and Secretary to date
of the Corporation since December 2,1997
Ruth E. Macklin, Retired Educator; 78 February 14, 1978 184,585(3) 183,407(3) 11.0
Senior Vice President and to date
Treasurer of the Corporation
since December 4, 1990
Irvin Clark, Senior Vice President 74 December 1, 1998 17,470(4) 0 .10
since December 5, 2006 and General to date
Manager of the Corporation since
January 1, 1999
All Directors and Executive Officers
as a group(5) 1,434,312 1,299,069 78.6
(1) Includes 181,396 shares each of Class A and Class B Common Stock held by
Mr. Katzman as co-trustee.
(2) The shares of stock are owned by the Levy Family LTD Partnership.
(3) Includes 71,923 shares of Class A and 70,784 shares of Class B Common
Stock held by Ms. Macklin as co-trustee.
(4) Includes 1,044 shares of Class A held by Mr. Clark's wife.
(5) Includes 8,134 shares of Class A Common Stock owned by Cheryl A. Dragoo,
Controller, Chief Financial Officer and Assistant Treasurer
There is sole disposition and voting power of all the shares directly owned
by the directors, and sole disposition and voting power of the shares held by
the directors' respective spouses are vested in such spouses.
Mr. Allan L. Sher is an outside director and trustee of three of Sun America's
Mutual Funds.
Mr. Leslie H. Goldberg and Ms. Merle Fabian are brother and sister.
Together they own directly or indirectly 879,463 shares of Class A Common Stock
and 872,026 shares of Class B Common Stock of the Corporation.
As of the last filing of Form 13-G with the Securities and Exchange
Commission, Royce & Associates, LLC, an investment advisor, is deemed to have
beneficial ownership of 307,300 shares of Bowl America Class A Common Stock as
of December 31, 2006 which amounts to 8.38% of the outstanding Class A Common
Stock. Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 153,298 shares
of Bowl America Incorporated Class A Common Stock as of June 30, 2007
which amounts to 4.18% of the outstanding Class A Common Stock,
all of which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or a series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified employee
benefit plans, for all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
Under federal securities law, the Corporation's directors, certain officers,
and persons holding more than ten percent of any class of the Corporation's
common stock are required to report, within specified due dates, their initial
ownership in any class of the Corporation's common stock and all subsequent
acquisitions, dispositions, or other transfers of interest in such securities,
if and to the extent reportable events occur which require reporting by such
due dates. The Corporation is required to describe in this proxy statement
whether it has knowledge that any person required to file such a report may
have failed to do so in a timely manner. In this regard, all of the
Corporation's directors and officers satisfied such filing requirements.
The foregoing is based upon written representations and information provided
to the Corporation by the persons required to make such filings.
CORPORATE GOVERNANCE AND BOARD MATTERS
American Stock Exchange Corporate Governance Provisions
Because approximately 52.3% of the total voting power of the outstanding
Class A and Class B Common Stock of the Company is owned by Leslie H. Goldberg,
President and a director of the Company, and his sister, Merle Fabian, a
director of the Company, the Company is deemed to be a "controlled company"
(i.e., more than 50% of the total voting power is held by an individual or
group) under the rules of the American Stock Exchange. The Exchange's listing
rules provide that "controlled companies" are exempt from those exchange
corporate governance provisions that would otherwise call for (i) a majority
of the members of the Board of Directors to be independent, (ii) the process
of making director nominations to be overseen by independent directors and
(iii) executive compensation determinations to be overseen by independent
directors. Of the Company's eight directors, Messrs. Braham, Katzman and Sher
are deemed to be "independent" directors under the rules of the American Stock
Exchange. None of the independent directors receive compensation from the
Company other than directors' fees for service on the Board or its Committees.
Code of Business Conduct and Ethics for Directors, Officers and Employees
The Company has a Code of Business Conduct and Ethics for directors,
officers and employees in accordance with rules of the Securities and Exchange
Commission and the American Stock Exchange. A copy is available online at
www.bowlamericainc.com and will be provided to any stockholder upon written
request to the Secretary of the Corporation, 6446 Edsall Road, Alexandria
VA 22312.
Policy Regarding Stockholder Communication with Directors
Those properly identified as stockholders desiring to communicate with a
director, the independent directors as a group or the full Board may address
such communication to the attention of the Secretary of the Corporation at the
Company's executive offices, and such communication will be forwarded to the
intended recipient or recipients.
Director Nomination Process
The Company's Board of Directors does not have a nominating committee or
other committee that performs similar functions. As stated above, the Company
is exempt from the American Stock Exchange provision calling for independent
director oversight of director nominations in view of its status as a controlled
company. All members of the Company's Board of Directors as a group
participate in the consideration of director nominees. The Board of Directors
proposes in the Proxy Statement a slate of directors which is decided upon by
the Board at its September meeting. Any person wishing to propose a substitute
director to be considered by the Board for inclusion in the Company's Proxy
Statement may do so in writing, for receipt prior to September 1, to the
Board at the address of the Company's principal executive offices. The Board
members individually make their judgment as to the nominees' ability to
contribute to the survival and success of the Company. There will not be any
difference between the manner in which the Board evaluates a nominee
recommended by a stockholder and the manner in which the Board evaluates any
other director nominee.
Board Committees and Meetings
The Board of Directors has an Audit Committee and Compensation Committee,
each of which consists of Warren T. Braham, Chairman, Allan L. Sher and Stanley
H. Katzman. Messrs. Braham, Sher and Katzman each is an "independent" director
within the meaning of the rules of the Securities and Exchange Commission and
the American Stock Exchange. The Board of Directors, which meets quarterly,
met 4 times during the fiscal year ended July 1, 2007. Each director
attended all of such meetings except Mr. Braham, who attended 3 meetings. The
Audit Committee and the Compensation Committee, which occasionally meet in
joint session, held 4 meetings and 2 meetings, respectively, during the fiscal
year. All members attended all such meetings except Mr. Braham who did not
attend one Audit Committee meeting. The Company has a policy of encouraging
directors to attend each Annual Meeting of Stockholders. All of the Company's
directors, except Mr. Katzman, attended the Annual Meeting held on December 5,
2006. Independent members of the Board of Directors conduct meetings on a
regular basis, including at least annually in executive session without the
presence of non-independent directors and management.
The Audit Committee
The purpose of the Audit Committee of the Board of Directors of Bowl
America Inc. (the "Company") is to assist the Board in its oversight of the
integrity of the Company's financial statements, the Company's compliance with
legal and regulatory requirements, the independent auditor's qualifications,
independence and performance and the performance of the Company's internal
audit function. The Audit Committee is composed entirely of independent
directors as determined under the SEC and the American Stock Exchange
corporate governance standards and the Sarbanes-Oxley Act applicable to Audit
Committee members.
The Chairman of the Audit Committee is Mr. Warren Braham. The two other
members are Mr. Allan Sher and Mr. Stanley Katzman. Each of the members is
financially literate, independent and able to devote sufficient time to serve
on the Audit Committee. The Board has determined that Mr. Sher possesses the
qualifications of an audit committee financial expert as defined in SEC rules
adopted pursuant to the Sarbanes-Oxley Act.
A copy of the Audit Committee Charter is available at www.bowlamericainc.com
and will be provided upon request to the Secretary of the Corporation,
6446 Edsall Road, Alexandria, VA 22312.
The Compensation Committee
The Compensation Committee has the responsibility for negotiating the
compensation of the President, Leslie H. Goldberg, who is the Chief Executive
Officer of the Corporation. The President is responsible for determining the
compensation of the other executive officers and all other management employees.
The Chairman of the Compensation Committee is Mr. Warren Braham and the two
other members are Mr. Allan Sher and Mr. Stanley Katzman, all of whom are
independent directors.
AUDIT COMMITTEE REPORT ON FINANCIAL STATEMENTS
The Audit Committee met with senior management and the independent auditors
quarterly during fiscal 2007 to discuss the adequacy of disclosure controls and
procedures, the adequacy of the Company's internal controls and the certifica-
tions made by the Company's Chief Executive Officer and Chief Financial Officer
that are required by the SEC.
The Audit Committee: (1) reviewed and discussed with management Bowl
America's audited financial statements for the year ended July 1, 2007,
(2) discussed with the independent auditors the matters required by Statement
on Auditing Standards No. 61, "Communication with Audit Committees",
(3) received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees"; (4) considered whether the provision of
non-audit services is compatible with maintaining the auditors' independence,
and (5) discussed with the auditors the auditors' independence.
Based on the review and discussion, the Audit Committee recommended to the
Board of Directors that the audited financial statements for the year ended
July 1, 2007, be included in Bowl America Incorporated's Annual Report on
Form 10-K for filing with the Securities and Exchange Commission.
EXECUTIVE COMPENSATION
COMPENSATION AND DISCLOSURE AND ANALYSIS
The Corporation's executive compensation program is designed to retain and
reward the principal executive officers that have contributed and will continue
to contribute to the long-term prospects of the Corporation and create value
for shareholders. Enhancement of shareholder value and the total return to
shareholders (which significantly includes the Corporation's quarterly cash
dividend that has annually increased in each of the past 35 fiscal years) are
the Corporation's ultimate goals.
The information about compensation earned by the Corporation's executive
officers in this year's Proxy Statement is in a different format from last
year's Proxy Statement. The disclosure format has been revised to comply with
new disclosure rules adopted by the Securities and Exchange Commission.
The Corporation is a unique public corporation in that it is a "controlled
company" under the rules of the American Stock Exchange (AMEX) as a result of
the fact that shares possessing more than a majority of the total voting power
of the Corporation's outstanding shares of Class A and Class B Common Stock
are owned by Leslie H. Goldberg (President, Chief Executive Officer and a
director of the Corporation and his sister, Merle Fabian (who also is a
director of the Corporation). Although the Corporation therefore is exempt
from the AMEX provisions calling for executive compensation determinations to
be overseen by independent directors, compensation of the Corporation's
President and Chief Executive Officer as a matter of corporate policy is
voluntarily subject to approval by the Compensation Committee of the Board of
Directors which is composed solely of independent directors. The Board of
Directors makes the final determination as to the compensation of the other
executive officers in the light of recommendations made by the Corporation's
President and Chief Executive Officer. Neither the Compensation Committee nor
the Board of Directors employs any executive compensation consulting firm, and
compensation decisions are not based on an analysis of executive compensation
practices of other companies, but rather upon the Compensation Committee's
(in the case of the President and Chief Executive Officer) assessment of the
operating performance of the Corporation and the Board of Directors' and the
President's (in the case of the other executive officers) assessment of the
value of the contributions of such officers to the Corporation's operating
performance. The Corporation does not have any stock option or other equity
incentive plan, any non-equity incentive plan or pension plan available for
executive officers. However, executive officers that are employed by the
Corporation are entitled to receive awards under the Corporation's Profit
Sharing Plan and Employee Stock Ownership Plan, in which all employees are
eligible to participate.
Under Mr. Goldberg's employment agreement, which expires June 29, 2008, he
receives an annual salary of $102,000, with an annual bonus of 2% of the
Corporation's annual net income before taxes, in excess of $2,500,000. Under
his agreement, in the event that he leaves the employ of the Corporation at the
termination of the contract or becomes disabled during the term thereof so that
he cannot carry on his duties as President, he will act as a consultant and
receive one-half the average of his previous three years compensation for a
term equal to the number of years that he had been President of the Corporation.
(He has served as President of the Corporation for the past 31 years.)
The other two executive officers that are named executive officers in the
table set forth below are Irvin Clark, Senior Vice President and General
Manager and a director of the Corporation, and Cheryl A. Dragoo, Controller,
Chief Financial Officer and Assistant Treasurer of the Corporation. Under
Mr. Clark's employment agreement, he serves as General Manager for a term of one
year expiring on December 31, 2007 and is paid an annual salary of $187,200.
Under the employment agreement with Ms. Dragoo, she serves for a term of two
years expiring on December 31, 2008, with an annual salary of $145,600 during
the first year and $151,424 during the second year. The compensation paid to
Mr. Clark and Ms. Dragoo is approved by the Board of Directors, and is
significantly based on the President's recommendations.
The other executive officers of the Corporation are A. Joseph Levy (Senior
Vice President, Secretary and a director of the Corporation), and Ruth E.
Macklin (Senior Vice President, Treasurer and a director of the Corporation).
Mr. Levy and Ms. Macklin are each significant shareholders of the Corporation
and received compensation of $8,500 for the fiscal year ended July 1, 2007.
Set forth below is information regarding compensation earned or paid or
awarded to the following executive officers of the Corporation during the
fiscal year ended July 1, 2007: Leslie H. Goldberg, President and Chief
Executive Officer; Irvin Clark, Senior Vice President and General Manager:
and Cheryl A. Dragoo, Controller, Chief Financial Officer and Assistant
Treasurer, who are the only executive officers whose total compensation
exceeded $100,000. The identification of such named executive officers is
determined based on the individual's total compensation for the fiscal year
ended July 1, 2007, as reported below in the Summary Compensation Table.
SUMMARY COMPENSATION TABLE
The following table sets forth for each of the named executive officers:
(i) the dollar value of the base salary and bonus earned during the year ended
July 1, 2007; (ii) all other compensation for the year: and (iii) the dollar
value of total compensation for the year.
Name and Fiscal Year Salary Bonus All Other Total
Principal Position Ended ($) ($) Compensation ($)
($)
(a) (b)
Leslie Goldberg, President 2007 $102,000 $68,539 $10,945 $181,484
and Chief Executive
Officer
Cheryl Dragoo, Controller, 2007 $142,585 $ 0 $ 4,877 $147,462
Chief Financial Officer
and Assistant Treasurer
Irvin Clark, Senior Vice 2007 $183,323 $ 0 $ 6,270 $189,593
President and General Manager
(a) The bonus paid to Mr. Goldberg is equal to 2% of the Corporation's annual
net income prior to income taxes in excess of $2,500,000.
(b) The above other compensation includes the amounts allocated to the accounts
of the named executive officers in trust from contributions of the Corpor-
ation to its Profit Sharing Plan, which became effective in 1975, and 1987
Employee Stock Ownership Plan, in which all employees of the Corporation
participate. Allocations under the Profit Sharing Plan to the accounts of
Mr. Clark and Ms. Dragoo amounted to $3,109 and $2,432 in the fiscal year
ended July 1, 2007, respectively. Allocations under the ESOP to the
accounts of Mr. Clark and Ms. Dragoo, based on the fair value of the
Corporation's shares of Class A Common Stock on June 30, 2007, amounted to
$2,932 and $2,293, respectively, for the fiscal year ended July 1, 2007.
(On June 19, 2007, the Board of Directors approved aggregate contributions
of $140,000 to each of the Profit Sharing Plan and the ESOP for the fiscal
year ended July 1, 2007.) In addition, the other compensation reported
above includes the fair value of personal use of Corporation's automobile
and life insurance premium for coverage provided by the Corporation.
DISCLOSURE REGARDING TERMINATION AND CHANGE IN CONTROL PROVISIONS
As stated above, the Corporation's employment agreement with Mr. Goldberg
provides that in the event he leaves the employ of the Corporation at the
termination of the agreement or becomes disabled during the term thereof so
that he cannot carry on his duties as President, he will act as a consultant
and receive one-half the average of his previous three years compensation for
a term equal to the number of years that he had been President of the Corpora-
tion. Assuming Mr. Goldberg's employment were terminated on July 1, 2007, he
would have been entitled to annual payments of $89,676 in each of the following
31 years. The Corporation has no change in control or other termination
arrangements with executive officers.
DIRECTOR COMPENSATION
The following table sets forth information regarding the compensation
received by each of the company's directors during the fiscal year ended
July 1, 2007.
Name Fees Earned or All Other Total ($)
Paid in Cash Compensation
($) ($)
(a)
Warren Braham $21,000.00 0 $21,000.00
Merle Fabian $ 4,600.00 0 $ 4,600.00
Stanley H. Katzman $ 8,000.00 0 $ 8,000.00
A. Joseph Levy $ 8,500.00 0 $ 8,500.00
Ruth E. Macklin $ 8,500.00 0 $ 8,500.00
Allan Sher $ 8,000.00 0 $ 8,000.00
(a) Directors of the Corporation who are not officers receive a fee for
attendance at each Board of Directors meeting. During the fiscal year
ended July 1, 2007, the fee was $1,150 for each meeting. In addition,
members of the Audit and Compensation Committee receive $850 per
committee meeting attended, except the committee chairman, who also
receives an annual fee of $15,000.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has reviewed and
discussed the above Compensation Discussion and Analysis with management and,
based on such review and discussion, has recommended to the Board of Directors
that the Compensation Discussion & Analysis be included in the Corporation's
proxy statement.
Warren T. Braham, Chairman
Stanley Katzman
Allan Sher
AUDIT FEES AND AUDIT COMMITTEE PRE-APPROVAL PRACTICES
The Audit Committee has voted to engage Aronson & Company as independent
auditors to examine the financial statements of the Company for the fiscal year
ending June 29, 2008.
Aronson & Company's report on Bowl America's consolidated financial state-
ments as of July 1, 2007 and July 2, 2006, did not contain any adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. During the fiscal years ended July 1,
2007 and July 2, 2006, there were no disagreements between Bowl America and
Aronson & Company on any matter of accounting principles and practices,
financial statement disclosure, or auditing scope or procedures.
AUDIT FEES - For professional services rendered for the audit of the
Company's annual financial statements and reviews of quarterly financial
statements included in the Company's Forms 10-Q during the fiscal year ended
July 1, 2007, Aronson & Company billed Bowl America $104,500 and for fiscal year
ended July 2, 2006, Aronson & Company billed the Company $97,000. These fees
include consultations normally provided in relation to the annual audits and
reviews of documents filed with the SEC.
AUDIT-RELATED FEES - No audit-related fees were billed by Aronson & Company
during the fiscal year ended July 1, 2007. Bowl America was billed $6,200 for
audit-related services relating to a review of internal controls provided by
principal accountants Aronson & Company in fiscal year ended July 2, 2006.
TAX FEES - For professional services rendered to Bowl America, Aronson &
Company billed $29,000 for fiscal year ended July 1, 2007 and $27,500 for the
fiscal year ended July 2, 2006. Tax services generally include federal and
state compliance.
ALL OTHER FEES - In addition to the fees described above, Aronson & Company
billed $4,900 in fiscal year 2007 and billed $4,000 in fiscal year 2006 for
reviews required by non-regulatory bodies.
The Audit Committee pre-approved all of the services described above.
The Board of Directors and its Audit Committee have considered all of the
professional services rendered by its auditor, Aronson & Company, and were of
the opinion that these services had no effect on the independence of said
accounting firm. The Audit Committee, prior to authorizing such firms to
provide any non-audit services, determined that such services would have no
effect on the independence of said accounting firm. A representative of
Aronson & Company is expected to attend the Annual Meeting and will be given
the opportunity to make a statement and respond to appropriate questions.
Aronson & Company is not and has not been financially interested in the
Company or connected with it except as auditors, tax consultants and advisors.
AUDIT COMMITTEE POLICIES AND PROCEDURES FOR PRE-APPROVAL OF INDEPENDENT AUDITOR
SERVICES - The following describes the Audit Committee's policies and procedures
regarding pre-approval of the engagement of the Company's independent auditor to
perform audit as well as permissible non-audit services for the Company.
For audit services, the independent auditor will provide the Committee with
an engagement letter during the first quarter of each fiscal year outlining the
scope of the audit services proposed to be performed in connection with the
audit of the fiscal year. If agreed to by the Committee, the engagement letter
will be formally accepted by the Committee at an Audit Committee meeting held
as practicably as possible following receipt of the engagement letter. The
independent auditor will submit to the Committee for approval, an audit
services fee proposal after acceptance of the engagement letter.
For non-audit services, the Company management may submit to the Committee
for approval the list of non-audit services that it recommends the Committee
engage the independent auditor to provide for the fiscal year. The list of
services must be detailed as to the particular service and may not call for
broad categorical approvals. Company management and the independent auditor
will each confirm to the Committee that each non-audit service on the list is
permissible under all applicable legal requirements. In addition to the list
of planned non-audit services, a budget estimating non-audit service spending
for the fiscal year may be provided. The Committee will consider for approval
both the list of permissible non-audit services and the budget for such
services. The Committee will be informed routinely as to non-audit services
actually provided by the independent auditor pursuant to this pre-approval
process.
The independent auditor must ensure that all audit and non-audit services
provided to the Company have been approved by the Committee. The Chief
Financial Officer of the Company will be responsible for tracking all
independent auditor fees against the budget for such services and report
annually to the Audit Committee.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The Corporation has established a new peer group index for comparison of
5 year cumulative return. The prior peer group, Industry Group No. 715,
Sporting Activities, has dropped to 12 companies and many of those companies
are barely trading or do not compare to Bowl America in terms of size of the
company. The Dow Jones Wilshire 5000 Recreational Services Index has been
chosen as the replacement peer group as it is more inclusive of different size
market-cap companies and includes Bowl America. Comparisons to both the
Dow Jones Wilshire 5000 Recreational Services Index (DJ Wilshire) and the prior
peer group are included in the graph.
The following graph shows changes over the past five fiscal year periods
in the value of $100 invested in (1) Bowl America Incorporated Class A Common
Stock, (2) the American Stock Exchange Market Index, and (3) Dow Jones
Wilshore 5000 Recreational Services Index consisting of 23 companies in the
recreation industry, and (4) the prior Peer Group consisting of 12 companies
in the business Industry Group No.715, Sporting Activities. It is assumed that
all dividends were reinvested.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BOWL AMERICA INC., AMEX MARKET INDEX AND PEER GROUP INDEX
FISCAL YEAR ENDING
COMPANY 2002 2003 2004 2005 2006 2007
BOWL AMERICA INC. 100 107.97 136.11 138.61 150.22 182.65
AMEX MARKET INDEX 100 108.49 141.09 179.55 221.32 273.59
DJ WILSHIRE 100 100.83 108.27 122.64 104.53 122.74
PEER GROUP INDEX 100 92.20 109.48 128.24 130.20 140.60
1987 EMPLOYEE STOCK OWNERSHIP PLAN
The Board of Directors adopted the Bowl America Incorporated 1987 Employee
Stock Ownership Plan (the "ESOP") on March 31, 1987, and secured a satisfactory
ruling from the Internal Revenue Service. All employees of the Corporation and
certain subsidiaries become participants on the last day of the fiscal year or
December 31 following the date on which they have been employed for one year
with at least 1,000 hours of service. The Board of Directors of the Corpora-
tion has the discretion to declare each year a cash amount or a specified
number of shares of Class A Common Stock ("Common Stock") that will be contri-
buted to the ESOP. On June 19, 2007, the Board of Directors made a
contribution valued at $140,000 including any expenses incurred by the Plan
which were paid by the Corporation for fiscal year 2007. Corporation
contributions are allocated to employees who are participants on the last day
of the fiscal year through a formula based upon the participant's compensation.
Employee contributions to the ESOP are not permitted. The trustees of the
ESOP, Donald Armel and Michael Dick, have the exclusive authority to manage
the trust in which ESOP contributions are deposited and are obligated to
invest the cash portion of ESOP contributions primarily in the Corporation's
Common Stock. The trustees are permitted to borrow money to purchase Common
Stock for the trust.
As of the last day of the fiscal year, eligible participants are credited
with their proportionate share of the trust's assets. A participant's
interest vests and is nonforfeitable if while employed by the Corporation or
participating subsidiaries he or she attains at least 65 years of age,
becomes totally or permanently disabled or dies. Also, a participant's
interest vests and is nonforfeitable to the extent and in the percentage set
forth in a schedule in the ESOP. Under this schedule, a participant's
interest is 100 percent vested after seven years of service. Vested amounts
are distributed upon retirement, disability, or death. If termination of
service occurs prior to the occurrence of those events, payment may be made or
deferred until the participant attains age 65. As determined by the
participant, distributions are made in cash or Common Stock.
The Corporation may terminate or amend the ESOP but not in such a way as
would adversely affect any participant's vested benefits. The trustees
have the right to vote the Common Stock in the trust subject to the direction
of each participant with respect to the shares allocated to his or her account.
As of the end of fiscal 2007, there were 717 participants in the ESOP. No
Director except Irvin Clark participates in the Plan.
PROFIT SHARING PLAN
The Board of Directors adopted a profit sharing plan for its employees which
became effective on June 29, 1975, and which has been approved by the Internal
Revenue Service. The following table shows the name of each person named in
the preceding table and shows for each named person and for all of the Directors
and Officers of the Corporation as a group (Column A), the amount allocated to
their accounts in trust from the contributions of the Corporation for the fiscal
year ending July 1, 2007 under its employees' profit sharing plan in Column (B),
from contributions since the inception of the plan in Column (C), and from other
accruals under the plan in Column (D), which accruals consist of a share of
forfeitures resulting from employees covered by the plan who leave the Corpor-
ation's employment and interest on plan investments.
A B C D
Irvin Clark $3,109 $64,306 $270,206
Cheryl Dragoo $2,432 $22,663 $216,628
All Directors and Officers
as a group $5,541 $86,969 $486,834
Directors as such do not participate in the Corporation's employee profit
sharing plan. All employees, including officers of the Corporation, are
eligible to commence participation under the Plan after completing a minimum of
1,000 hours continuous employment during the Corporation's fiscal year. Actual
payment of accounts to participants or their beneficiaries is deferred until
retirement, disability, or death. In the event of termination of employment,
the vested portion, if any, is paid. Accounts become vested after three
years of service according to a graduated scale until 100% is vested after
seven years of service. No estimate can be made of the annual benefits on
the retirement of a particular person because the amount set aside each year
depends on the earnings of the Corporation for such year. The amount of the
contribution is within the discretion of the Corporation's Board of Directors
and can only be paid from profits. The Board of Directors made a contribution
of $140,000 including any expenses incurred by the Trust paid by the Corpora-
tion for the fiscal year 2007. The contribution is made to a trust (Bowl
America Incorporated Profit Sharing Trust). Contributions of the Corporation
to the trust and forfeitures of terminated members are allocated in proportion
to compensation paid by the Corporation. Employees exercise independent control
over the investment of funds allocated in their accounts. Earnings or losses
are posted to the accounts daily. Employees may change their investment
choices at any time. No Director except Irvin Clark presently receives an
allocation under the plan.
PROPOSALS OF SECURITY HOLDERS
Proposals of stockholders intended to be presented at the 2008 Annual
Meeting, which presently is expected to be held in December 2008, must be
received by the Secretary of the Corporation, 6446 Edsall Road, Alexandria,
Virginia 22312 no later that June 28, 2008, in order for them to be considered
for inclusion in the October 2008 Proxy Statement. A stockholder desiring to
submit a proposal to be voted on at the next year's Annual Meeting, but not
desiring to have such proposal included in next year's Proxy Statement
relating to that meeting, should submit such proposal to the Company by
September 10, 2008. Failure to comply with that advance notice requirement
will permit management to use its discretionary voting authority if and
when the proposal is raised at the Annual Meeting without having had a
discussion of the proposal in the Proxy Statement.
OTHER MATTERS
Management does not intend to bring any other matters before the meeting
and does not know of any other matters to be brought before the meeting by
any others. If any other matter should come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote the proxy
in accordance with their best judgment.
By Order of the Board of Directors
A. Joseph Levy
Secretary