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 December 28, 1997 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
January 26, 1998
Class A Common Stock, 4,123,431
$.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
December 28, December 29, December 28, December 29,
1997 1996 1997 1996
_______________________ __________________________
Operating Revenues
Bowling and other $5,246,651 $5,056,951 $ 9,077,529 $ 8,800,684
Food and merchandise sales 2,100,224 2,093,810 3,686,200 3,715,566
_________ _________ __________ __________
7,346,875 7,150,761 12,763,729 12,516,250
Operating Expenses
Compensation and benefits 2,964,446 3,025,047 5,744,004 5,865,894
Cost of bowling and other 1,599,550 1,555,266 3,129,882 3,145,660
Cost of food and mdse sales 749,536 693,570 1,261,311 1,266,227
Depreciation and
amortization 581,806 502,741 1,132,420 1,003,621
General and administrative 229,732 184,486 421,316 366,011
_________ _________ __________ __________
6,125,070 5,961,110 11,688,933 11,647,413
Operating Income 1,221,805 1,189,651 1,074,796 868,837
Interest and dividend
income 149,940 124,746 285,038 246,213
_________ _________ __________ __________
Earnings before provision
for income taxes 1,371,745 1,314,397 1,359,834 1,115,050
Provision for income taxes 512,912 491,356 500,297 407,624
_________ _________ __________ __________
Net Earnings $ 858,833 $ 823,041 $ 859,537 $ 707,426
Earnings per share $.15 $.14 $.15 $.12
Weighted average shares
outstanding 5,662,144 5,682,156 5,662,144 5,682,306
Dividends paid $566,215 $539,834 $1,132,429 $1,077,881
Per share, Class A $.10 $.095 $.20 $.19
Per share, Class B $.10 $.095 $.20 $.19
The operating results for these thirteen (13) and twenty-six (26) 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
December 28, 1997 June 29, 1997
_______________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 1,942,991 $ 1,797,656
Short-term investments 7,584,716 6,375,039
Inventories 759,164 700,200
Prepaid expenses and other 501,565 459,652
Income taxes refundable - 32,982
__________ __________
Total Current Assets 10,788,436 9,365,529
Property, Plant and Equipment
less accumulated depreciation of
$21,110,904 and $20,052,750 23,159,615 23,454,699
Other Assets
Marketable securities avail-fr-sale 5,287,995 4,363,058
Cash surrender value-life insurance 358,429 354,206
Other long-term assets 217,332 465,079
__________ __________
TOTAL ASSETS $39,811,807 $38,002,571
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 28, 1997 June 29, 1997
_______________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 825,196 $ 992,397
Accrued expenses and payroll ded 828,740 840,502
Income taxes payable 249,914 -
Other current liabilities 1,469,080 382,840
Current deferred income taxes 70,000 70,000
__________ __________
Total Current Liabilities 3,442,930 2,285,739
Noncurrent Deferred Income Taxes 2,686,476 2,335,000
TOTAL LIABILITIES 6,129,406 4,620,739
__________ __________
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 -
4,145,410 and 4,146,310 shares 412,600 412,600
Class B issued and outstanding -
1,536,146 153,614 153,614
Additional paid-in capital 4,896,835 4,896,835
Unrealized gain on securities
available-for-sale, 2,746,494 2,173,033
Retained earnings 25,472,858 25,745,750
__________ __________
TOTAL STOCKHOLDERS' EQUITY $33,682,401 $33,381,832
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $39,811,807 $38,002,571
<FN>
See notes to financial information.
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
December 28, December 29,
1997 1996
Cash Flows From Operating Activities:
Net earnings $ 859,537 $ 707,426
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,058,154 1,003,621
Loss (gain) on sale/abandonment of
assets net 16,631 3,330
Changes in assets and liabilities
Increase in inventories (58,964) (31,129)
(Increase) decrease in prepaid and other (46,135) 201,162
Decrease in other long-term assets 247,746 302,008
Decrease in accounts payable (167,201) (854,428)
Decrease in accrued expenses
and payroll deductions (11,762) (68,101)
Increase in income taxes payable 249,914 104,005
Decrease in income taxes refundable 32,982 204,662
Increase in other current liabilities 1,086,240 1,048,614
_________ _________
Net cash provided by operating activities $3,267,142 $2,621,170
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (779,701) (1,444,667)
Net (increase) decrease in
short-term investments (1,209,677) 373,940
_________ _________
Net cash used in investing activities (1,989,378) (1,070,727)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,132,429) (1,077,881)
Purchase of Class A Common Stock - (6,131)
_________ _________
Net cash used in financing activities (1,132,429) (1,084,012)
_________ _________
Net Increase in Cash and Equivalents 145,335 466,431
Cash and Equivalents, Beginning of Year 1,797,656 2,120,862
_________ _________
Cash and Equivalents, End of Period $1,942,991 $2,587,293
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 217,401 $ 98,957
<FN>
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Twenty-six Weeks Ended
December 28, 1997
1. Consolidated Financial Statements
The consolidated balance sheets as of December 28, 1997, and the
consolidated statements of earnings and cash flows for the three-month
and six-month periods ended December 28, 1997 and December 29, 1996,
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 December 28,
1997, and for all periods presented.
For a summary of significant accounting principles, which have
been continued without change, refer to Note 1 to the financial
statements for the year ended June 29, 1997.
2. Earnings Per Share
The Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" in February 1997. The effect of adopting
this standard has no impact on the earnings per share calculation
for the periods ended December 28, 1997, and December 29, 1996.
BOWL AMERICA INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
December 28, 1997
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $9,528,000 at the end of the second
quarter of fiscal 1998 or $2,193,000 higher than at the beginning
of the quarter. The increase relates primarily to the seasonal
nature of bowling participation.
The Company expended approximately $240,000 during the quarter
primarily for amusement games as the Company continues its
program of replacing leased amusement game machines with owned
machines. Expenditures are also planned as the Company continues
to modernize other existing centers. Cash and cash flow are
sufficient to finance all currently planned purchases and construction.
The Company has maintained its fiscal year end 1997 position in
telecommunications stocks as a further source of expansion capital.
On February 1, 1997, the 16-lane expansion from 32 to 48 lanes at
Bowl America Dranesville began operation. During the fourth quarter
of fiscal 1997, the Company closed two centers which, at the expiration
of their leases, were operating with negative cash flows.
Results of Operations
As noted above, the Company operated two fewer centers in the fiscal
1998 period than in the prior year period and one fewer in the first
quarter of fiscal 1997 than in fiscal 1996. All comparisons in this
report are significantly influenced by the change in the number of
operating locations.
There was a $.15 per share profit for the thirteen-week period ending
December 28, 1997, versus a $.14 per share profit for the thirteen weeks
ended December 29, 1996. For the current twenty-six week period
earnings per share were $.15 compared to $.12 for the comparable
period a year ago.
Operating revenues increased 2% for the current six-month period,
versus a decrease of 7% in the comparable period a year ago.
Linage for the six month period was up, however, our "Rolling
Rewards" summer promotion kept the average game rate below the
rate in the prior year period. Amusement game income continues
to improve as the number of Company owned machines increases.
Food and beverage sales were down in the current period overall,
but at comparable locations there was a 4% increase. Cost of
food and beverage sales decreased due to the lower sales.
Operating expenses excluding depreciation and amortization decreased 1%
in the current period versus a 5% decrease in the comparable period
last year. Employee compensation and benefits were down 2% this period
versus a 4% decrease in the prior year period.
Advertising costs decreased 15% from the prior year period mainly due
to our use of print media, newspapers and direct mail, as our primary
advertising vehicle. Glow-in-the-dark bowling and amusement game
supplies have been largely responsible for an increase in the supplies
and services expense. Utility costs decreased 6% in the current period
compared to a 5% decrease in the prior year period. The decrease in both
periods reflected the decrease in the number of centers in operation.
Increases in depreciation and amortization expense of 13% in the
current period relate to the purchases of amusement games and
glow-in-the-dark bowling equipment during the last 12 months and
the Dranesville expansion.
Rent expense increased 7% in the current year period as a one-time
termination payment under an expired lease more than offset the
reduction in rent from fewer leased locations. In the prior year
period rent expense decreased 10% as a result of reduced sales at
some leased locations.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
December 28, 1997
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
February 10, 1998 Leslie H. Goldberg
Date Leslie H. Goldberg
President
February 10, 1998 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller