UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Quarter Ended April 2, 1995 Commission file Number 0-1830
BOWL AMERICA INCORPORATED
(Exact name of registrant as specified in its charter.)
MARYLAND 54-0646173
(State of Incorporation) (I.R.S. Employer Identification No.)
6446 Edsall Road, Alexandria, Virginia 22312
(Address of principal executive offices) (Zip Code)
(703)941-6300
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Shares Outstanding at
April 30, 1995
Class A Common Stock, 4,206,931
$.10 par value
Class B Common Stock 1,536,146
$.10 par value
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
PART I - FINANCIAL INFORMATION
Thirteen Weeks Ended Twenty-six Weeks Ended
April 2, March 27, April 2, March 27,
1995 1994 1995 1994
_______________________ __________________________
Operating Revenues
Bowling and other $6,616,931 $5,994,990 $16,312,492 $15,093,418
Food and merchandise sales 2,755,689 2,465,914 6,939,290 6,417,363
_________ _________ __________ __________
9,372,620 8,460,904 23,251,782 21,510,781
Operating Expenses
Compensation and benefits 3,471,048 2,922,585 9,790,065 8,524,207
Cost of bowling and other 1,765,169 1,481,765 5,315,374 4,586,717
Cost of food and mdse sales 864,403 727,845 2,192,516 1,952,800
Depreciation and
amortization 492,742 433,546 1,469,472 1,273,452
General and administrative 186,681 213,530 586,291 584,715
_________ _________ __________ __________
6,780,043 5,779,271 19,353,718 16,921,891
Operating Income 2,592,577 2,681,633 3,898,064 4,588,890
Interest and dividend
income 172,329 136,156 407,034 345,341
_________ _________ __________ __________
Earnings before provision
for income taxes 2,764,906 2,817,789 4,305,098 4,934,231
Provision for income taxes 1,042,948 1,052,781 1,612,998 1,842,096
_________ _________ __________ __________
Net Earnings $1,721,958 $1,765,008 $ 2,692,100 $ 3,092,135
Earnings per share $.30 $.31* $.47* $.54*
Weighted average shares
outstanding 5,744,578 5,754,930* 5,749,293* 5,759,614*
Dividends paid $517,060 $518,142 $1,552,423 $1,500,045
Per share, Class A $.09 $.09* $.27*
$.26*
Per share, Class B $.09 $.09* $.27* $.26*
*Restated for two-for-one stock split paid February 15, 1995.
The operating results for these thirteen (13) and thirty-nine (39) week
periods are not necessarily indicative of results to be expected for the year.
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 2, 1995 July 3, 1994
_______________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 2,183,297 $ 3,468,677
Short-term investments 8,571,213 5,001,435
Inventories 630,771 586,435
Prepaid expenses and other 654,945 373,674
__________ __________
Total Current Assets 12,040,226 9,430,221
Property, Plant and Equipment
less accumulated depreciation of
$18,245,988 and $17,066,216 23,487,149 22,449,044
Other Assets
Noncurrent marketable securities - 857,782
Securities available-for-sale 2,919,318 -
Cash surrender value-life insurance 317,739 314,016
Other long-term assets 246,424 498,931
__________ __________
TOTAL ASSETS $39,010,856 $33,549,994
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 2, 1995 July 3, 1994
_______________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 689,897 $ 768,812
Accrued expenses and payroll ded 1,261,557 1,260,954
Income taxes payable 573,887 112,676
Other current liabilities 2,381,121 413,865
Current deferred income taxes 11,000 11,000
__________ __________
Total Current Liabilities 4,917,462 2,567,307
Noncurrent Deferred Income Taxes 1,818,622 1,035,000
TOTAL LIABILITIES 6,736,084 3,602,307
__________ __________
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 -
4,202,460 and 1,333,019 shares 420,246 133,302
Class B issued and outstanding -
1,540,646 and 1,543,046 154,064 154,304
Additional paid-in capital 4,942,174 5,257,734
Unrealized gain on securities
available-for-sale, net of tax
At date of adoption July 4, 1994 1,337,267 -
Change in unrealized gain (59,353) -
Retained earnings 25,480,374 24,402,347
__________ __________
TOTAL STOCKHOLDERS' EQUITY $32,274,772 $29,947,687
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $39,010,856 $33,549,994
<FN>
See notes to financial information.
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED APRIL 2, 1995 AND MARCH 27, 1994
April 2, March 27,
1995 1994
Cash Flows From Operating Activities:
Net earnings $2,692,100 $3,092,135
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,469,472 1,273,452
Loss on abandonment of assets-net 26,442 31,770
Changes in assets and liabilities
(Increase) decrease in inventories (44,336) 72,020
(Increase) decrease in prepaid and other (281,271) 113,489
Decrease in other long-term assets 248,784 59,669
Decrease in accounts payable (78,915) (75,314)
Increase in accrued
expenses and payroll deductions 603 174,571
Increase in income taxes payable/
refundable 461,211 745,440
Increase in other current liabilities 1,967,256 1,614,294
_________ _________
Net cash provided by operating activities $6,461,346 $7,101,526
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (2,534,019) (4,440,735)
Net increase in short-term investments (3,569,778) (1,078,796)
_________ _________
Net cash used in investing activities (6,103,797) (5,519,531)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,552,423) (1,500,045)
Purchase of Class A Common Stock (73,006) (319,283)
Stock issuance cost (17,500) -
_________ _________
Net cash used in financing activities (1,642,929) (1,819,328)
_________ _________
Net Decrease in Cash and Equivalents (1,285,380) (237,333)
Cash and Equivalents, Beginning of Year 3,468,677 2,977,278
_________ _________
Cash and Equivalents, End of Period $2,183,297 $2,739,945
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $1,151,787 $1,096,657
<FN>
Upon adoption of SFAS 115 as of July 4, 1994, certain investments in equity
securities with an amortized value of $857,782 and a fair market value of
$3,015,049 have been reclassified as available-for-sale securities.
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirty-nine Weeks Ended
April 2, 1995
1. Consolidated Financial Statements
The consolidated balance sheets as of April 2, 1995, and
the consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended April 2, 1995 and
March 27, 1994 have been prepared by the Company, without
audit.
This quarterly financial information is submitted in response
to the requirements of Form 10-Q and does not purport to be
financial statements prepared in accordance with generally accepted
accounting principles. They therefore do not include all
disclosures which might be associated with such statements.
In the opinion of management such information includes all
adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position at April 2,
1995, and for all periods presented.
For a summary of significant accounting principles, which have
been continued without change except as noted in Note 2 below,
refer to Note 1 to the financial statements for the year ended
July 3, 1994.
2. Effective July 4, 1994, the Company adopted Statement of
Financial Accounting Standard No. 115 (SFAS 115) "Accounting for
Certain Investments in Debt and Equity Securities". The standard
requires debt and equity securities to be segregated into the
following three categories: trading, held-to-maturity and
available-for-sale. Trading securities are purchased and held
principally for the purpose of reselling them within a short
period of time. Their unrealized gains and losses are included
in earnings. Debt securities classified as held-to-maturity
are accounted for at amortized cost, and require the Company to
have both the positive intent and ability to hold those securities
to maturity. Securities not classified as either trading or
held-to-maturity are considered to be available-for-sale.
Unrealized gains and losses for available-for-sale securities
are excluded from earnings and reported, net of deferred taxes,
as a separate component of stockholders' equity until realized.
Realized gains and losses on the sale of debt and equity
securities are reported in earnings and determined using the
adjusted cost of the specific security sold.
Equity securities previously classified as noncurrent marketable
securities are now classified as securities available-for-sale.
The effect of adopting this standard as of July 4, 1994, was an
increase in securities available-for-sale of $2,157,267, an
increase in deferred income taxes of $820,000 and a net increase
in stockholders' equity under a separate account titled unrealized
gain on available-for-sale securities of $1,337,267.
Notes to Financial Statements (Continued)
These securities consisted of the following individual stocks as of
July 4, 1994 and April 2, 1995:
6,194 shares of American Telephone and Telegraph
8,112 shares of Ameritech
5,304 shares of Bell Atlantic
6,893 shares of Bell South
5,324 shares of NYNEX
5,424 shares of Pactel Group
8,148 shares of Southwestern Bell
5,612 shares of US West
16,000 shares of Sprint Corporation
5,424 shares of Air Touch Communications
A summary of the amortized cost and approximate fair values of equity
securities available-for-sale shown in the table above as of July 4,
1994 and April 2, 1995 are as follows:
Original Unrealized Fair
Cost Gain Value
July 4, 1994
Securities available-for-sale $857,782 $2,157,267 $3,015,049
April 2, 1995
Securities available-for-sale $857,782 $2,061,536 $2,919,318
3. On December 6, 1994 the Board of Directors declared a two-for-one
stock split, in the form of a dividend, to stockholders of record
January 18, 1995 and paid February 15, 1995. Both Class A and
Class B stockholders received one share of Class A Common Stock
for each share of Class A or Class B held.
BOWL AMERICA INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
April 2, 1995
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $10,755,000 at the end of the third
quarter of fiscal 1995 or $2,845,000 higher than at the beginning
of the quarter. The increase relates primarily to the seasonal
nature of bowling participation.
On September 1, 1994, the Comapny opened Bowl America Gaithersburg,
a 48-lane center with at 170-seat full service, diner style
restaurant. Approximately $5 million was spent for land,
constructing and equipping the center, $1.6 million of which was
spent in fiscal 1995. In July 1993, the Company paid $1.8
million in cash for an existing 32-lane center in Orange Park,
Florida, which immediately began contributing to cash flow.
Additional expenditures are also planned as the Company expands
one bowling center and continues to modernize other existing
centers. Cash and cash flow from operations are sufficient to
finance all currently planned construction. The Company has
maintained its fiscal year end 1994 position in telecommunications
stock as a further source of expansion capital.
The Company adopted SFAS 115, "Accounting for Certain Investments
in Debt and Equity Securities", effective July 4, 1994. Upon
application of this standard our investment in telecommunications
stocks is listed at fair value and the net effect of the
implementation was to increase stockholders' equity by $1.3 million.
On December 6, 1994, the Board of Directors declared a two-for-one
stock split in the form of a dividend which was paid on February 15,
1995. Applicable schedules for prior periods have been restated for
the effect of the split.
Results of Operations
There was a $.30 per share profit for the thirteen-week period ending
April 2, 1995, versus $.31 per share profit for the thirteen weeks
ending March 27, 1994. For the current thirty-nine week period
earnings per share were $.47 compared to $.54 for the same period a
year ago. Approximately $.03 per share of the decrease in the
current thirty-nine weeks earnings relates to the opening costs for
Bowl America Gaithersburg. Current period operating expenses also
include about $40,000 to write off equipment replaced as part of
our modernization program.
The Company operated one more center in fiscal 1994 than in fiscal
1993, and with the opening of Gaithersburg, will be operating one
more center during most of fiscal 1995 than during fiscal 1994.
During the fourth quarter, one center will close with the
expiration of its lease. Although Bowl America Gaithersburg is
our busiest center, it also has additional operating expenses
as the location is open 24 hours a day.
Operating revenues increased 8% for the current nine-month period,
primarily because of the additional center, versus an increase of
2% in the comparable period a year ago. Weather was a factor in
both the current and prior year quarters. In this year's quarter
and nine-month period mild rain-free conditions resulted in
reduced open play games while in last year's quarter it was
unfavorable conditions of snow and ice which reduced both league
and open play bowling. League linage was up this year over the
same period a year ago.
Food and beverage sales were up 8% reflecting six months of
operation at our Gaithersburg location. Merchandise sales
increased 7% in the current year period versus an increase of
11% in the prior year partially due to clearance of excess stock
at reduced prices.
Operating expenses increased 14% in the current nine-month period
versus a 4% increase in the prior year. Increases in employee
compensation and benefits account for about half of the rise in
both years, the increase being primarily a result of staffing
new centers in both years. Maintenance and supplies costs were
up substantially due to our new locations and continuing efforts
in making our bowling centers the best in appearance and
customer satisfaction.
Advertising costs increased 26% in the current nine-month period
mainly as a result of media campaigns to promote our new center
and restaurant. Utility costs were up 6% in the current thirty-
nine week period versus an increase of 15% in the prior year
period. The mild weather in the current period helped to offset
the expense of our additional location. Last year, not only new
locations, but higher than normal summer temperatures and lower
than normal winter temperatures were responsible for the large
increase.
In the current period there was a 16% increase in real estate
and personal property taxes associated with the new buildings and
equipment. In the prior year period the increase in taxes was
offset by decreases in insurance premiums.
Increases in depreciation and amortization expense of 15% in the
current period and 22% in the comparable period last year were
due mainly to the opening of the new bowling centers in both years.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
April 2, 1995
PART II - OTHER INFORMATION
No material unusual charges or credits to income or changes in
independent accountants occurred during the quarter which would
require the filing of a Form 8-K.
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
May 16, 1995 Leslie H. Goldberg
Date Leslie H. Goldberg
President
May 16, 1995 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller