BOWL AMERICA INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 1, 1998
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 1, 1998, 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 act upon a stockholder's proposal if it is properly presented
at the meeting.
(3) 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 9, 1998,
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. Jospeh Levy
Secretary
Dated October 21, 1998
PROXY STATEMENT
For Annual Meeting of Stockholders
To be held December 1, 1998
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.
VOTING SECURITIES
Each of the issued and outstanding 4,120,351 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 1,536,146 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 5,656,497 shares, with the Class A stockholders having
4,120,351 votes, and the Class B stockholders having 15,361,460 votes. The
price of the Corporation's Class A Common Stock on August 17, 1998,
on the American Stock Exchange was $7.75. The Class B Common Stock is
not traded. Only stockholders of record at the close of business on
October 9, 1998, 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.
ANNUAL REPORTS
A copy of the annual report and Form 10-K of the Corporation for the
fiscal year ending June 28, 1998, which has been filed with the Securities
and Exchange Commission, was mailed to you on September 25, 1998 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 August 15, 1998 by
all directors including executive officers, all of whom are directors, 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 August 15, 1998 on August 15, 1998 on August 15, 1998
NOMINEES FOR ELECTION BY CLASS A COMMON STOCK
Warren T. Braham, Attorney and 66 August 1, 1978 1,795 225 .02
Retired Banker to date
Allan L. Sher, Retired Investment 66 February 5, 1997 6,750 0 .03
Executive to date
NOMINEES FOR ELECTION BY CLASS B COMMON STOCK
Merle Fabian, Retired Librarian 60 March 20, 1990 205,279(1) 210,129(1) 11.8
to date
Leslie H. Goldberg,(2) President of 68 December 5, 1972 449,965(3) 451,821(3) 25.5
the Corporation to date
Stanley H. Katzman, Senior Computer 58 December 2, 1997 171,329(4) 177,833(4) 9.7
Specialist, National Institutes of to date
Health
A. Joseph Levy, Merchant owner of 64 June 21, 1988 393,572 78,939 6.1
card and gift shops in Maryland, to date
Virginia and Washington, D.C.;
Senior Vice President and Secretary
of the Corporation
Ruth E. Macklin,(2) Retired Educator; 69 February 14, 1978 201,462(5) 197,316(5) 11.2
Senior Vice President and to date
Treasurer of the Corporation
Joan W. Sobkov, Retired Psychologist 61 March 14, 1991 56,134(6) 82,124(6) 4.5
to date
All Directors and Executive Officers
as a group 1,492,286 1,192,387 68.9
(1) Does not include 141,405 shares each of Class A and Class B Common Stock
held as co-trustee with Leslie H. Goldberg, the amount of said shares are
included in the number of shares held by Mr. Goldberg-see footnote 3.
(2) Mr. Leslie H. Goldberg and Ms. Ruth E. Macklin are the trustees of the
Bowl America Incorporated Employee Stock Ownership Plan which owns 167,094
shares of Class A Common Stock. Said shares are not included in the above
table. Voting rights are vested in the employees.
(3) Includes 141,405 shares each of Class A and Class B Common Stock held as
co-trustee with Merle Fabian.
(4) Includes 164,533 shares each of Class A and Class B Common Stock held by
Mr. Katzman as co-trustee.
(5) Includes 85,089 shares of Class A and 77,397 shares of Class B Common
Stock held by Ms. Macklin as co-trustee.
(6) Includes 26,841 shares of Class A and 45,285 shares of Class B Common Stock
held by Mrs. Sobkov's husband.
There is sole vesting and voting power of all the shares directly owned by
the directors, and sole vesting and voting power of the shares held by the
directors' respective spouses are vested in them.
Mr. Warren Braham is the only nominee for Director who is on the Board of
Directors of another public Corporation. Mr. Braham is on the Board of Direc-
tors of Amendment I, Inc., a newspaper. 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, and
their cousins Ruth E. Macklin and Joan W. Sobkov are sisters-in-law. Together
they own directly or indirectly 912,840 shares of Class A Common Stock and
941,390 shares of Class B Common Stock of the Corporation.
As of the last filing of Form 13-G with the Securities and Exchange
Commission, Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 237,640 shares
of Bowl America Incorporated Class A Common Stock as of December 31, 1997
which amounts to 5.76% 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.
Ida Goldberg, the widow of C. Edward Goldberg, owns directly 13,257 shares
and 115,752 shares as trustee, of Class B Common Stock which amounts to
approximately 8.5% of the outstanding Class B Common Stock. She also owns
directly 23,853 shares and 115,752 shares as trustee, of Class A Common
Stock. Mrs. Goldberg is a trustee with Mr. Leslie H. Goldberg and Ms. Merle
Fabian of 141,405 shares each of Class A and Class B Common Stock, which shares
are shown in the preceding table.
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 monthly and annual due
dates their initial ownership in any class of the Corporation's common stocks
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.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
The Directors of the Corporation who are not officers receive a fee for
attendance at each Board of Directors meeting. During the past fiscal year the
fee was $850.00 for each meeting. The Board of Directors meets quarterly, and
there were four Board meetings this past fiscal year. All the Directors
attended all of such meetings. The Corporation has a standing audit
committee and compensation committee consisting of directors Ruth Macklin,
Allan L. Sher, and Warren Braham. The latter two directors are independent
directors. There is no nominating committee or committee performing a
similar function.
The Corporation's Employment Agreement with Mr. Leslie H. Goldberg (68 years
old) dated July 1, 1997 expired June 28, 1998 and was extended to June 27,
1999. This agreement provides for an annual salary of $102,000 with an annual
bonus of 2% of the Corporation's and its subsidiaries' consolidated annual net
income prior to income taxes, in excess of $2,500,000. 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 shall act as a consultant and shall 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.
The other executive officers of the Corporation are A. Joseph Levy (Senior
Vice President and Secretary), 64 years old, and Ms. Macklin (Senior Vice
President and Treasurer), 69 years old. Both are major stockholders and
members of the control group.
Mr. C. Edward Goldberg died on February 28, 1990 and pursuant to the Corpor-
ation's agreement with Mr. Goldberg it is required to pay Ida Goldberg, his
widow, the sum of $20,000 per year, payable in monthly installments for her
life. These payments are substantially funded by insurance on the life of Mr.
Goldberg. The Corporation was the owner and beneficiary under the policy.
EXECUTIVE COMPENSATION
The following table shows the compensation received by the President, who is
the Chief Executive Officer, for the three fiscal years ending June 28, 1998.
The other executive officers, namely A. Joseph Levy, Senior Vice President and
Secretary and Ruth E. Macklin, Senior Vice President and Treasurer receive com-
pensation of less than $100,000 per year. In fiscal 1998 A. Joseph Levy,
serving six months received $3,500 in compensation and Ms. Macklin received
compensation of $7,000 for the fiscal year. There are no restricted stock
awards, no stock option grants and no stock appreciation rights. There is no
pension plan.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Name and Other Restricted
Principal Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation Awards SAR's(#) Payouts Compensation
Leslie Goldberg, 1998 $102,000 $ 30,820 $8,879 $0 0 $0 $0
President and 1997 $102,000 $ 37,646 $6,610 $0 0 $0 $0
Chief Executive 1996 $110,000 $ 52,344 $6,387 $0 0 $0 $0
Officer
REPORT OF 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 Committee, in negotiating the President's
compensation, takes into account his performance and his contribution to the
Corporation's functions. The Committee thought it important that there be
an incentive which is accomplished by a bonus based on the income of the
Corporation. The terms of the President's current contract are the same as
the terms of his prior contract. The President does participate with the
employees in the Profit Sharing Plan and the Employee Stock Ownership Plan.
Ruth E. Macklin, Chairman
Warren T. Braham
Allan L. Sher
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph shows changes over the past five year period in the
value of $100 invested in (1) Bowl America Incorporated Class A Common Stock,
(2) the American Stock Exchange Market Index, and (3) the Peer Group
consisting of 137 companies in the business of recreation, movies and sports.
It is assumed that all dividends were reinvested.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BOWL AMERICA INC.,
AMEX MARKET INDEX AND PEER GROUP INDEX
FISCAL YEAR ENDING
COMPANY 1993 1994 1995 1996 1997 1998
BOWL AMERICA INC. 100 88.75 78.50 72.73 76.91 95.68
AMEX MARKET INDEX 100 96.53 116.15 132.99 141.44 163.80
PEER GROUP INDEX 100 101.02 125.11 139.88 161.98 219.64
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 shows the name of each person named in the pre-
ceding table and shows for each named person and for all of the Directors and
Officers of the Corporation as a group, the amount allocated to their accounts
in trust from the contributions of the Corporation for the fiscal year ending
June 28, 1998 under its employee's profit sharing plan in Column (B), from con-
tributions 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
Leslie H. Goldberg $1,839 $69,651 $321,190
All Directors and Officers
including the one named above $1,839 $69,651 $321,190
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 beneficiary 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 (3)
years of service according to a graduated scale until 100% is vested after
seven (7) 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 $125,000 including any expenses incurred by the Trust paid by the Corpora-
tion for the fiscal year 1998. 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 with the Corporation. Earnings of the trust are allocated in
proportion to balances in account.
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 29 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. The Board of Directors has made a contribution of $125,000
including any expenses incurred by the Plan which were paid by the Corpora-
tion for fiscal year 1998. 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, Leslie Goldberg and
Ruth Macklin, 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 partic-
ipating subsidiaries he attains at least 65 years of age, becomes totally or
permanently disabled or does. 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 account.
As of the end of fiscal 1998, there were 525 participants in the ESOP. This
year, no shares of Class A Common Stock will be allocated to the account of
Leslie H. Goldberg, President. No other Executive Officer or Director partici-
pates in the Plan. All employees as a group will receive an aggregate of
15,100 shares of Class A Common Stock.
ITEM 2. SHAREHOLDER'S PROPOSAL
Mr. Frank B. Jolley, 1421 Jeremy Lane, Rocky Mount, North Carolina, the
beneficial owner of 10,700 shares (9,800 of which shares have been held for
more than one year)of Bowl America Incorporated Class A Common Stock, has
given notice that he intends to present for action at the Annual Meeting, the
following Resolution:
"Resolved that the shareholders of Bowl America Inc. (the Company) request that
as soon as practicable after the 1998 annual meeting of the shareholders, the
Board of Directors of the Company take such steps as are necessary to effect
the sale, merger or other reorganization of the company on terms that are in
the best interest of the Company's Class A and Class B shareholders."
Supporting Statement:
For the period from May 31, 1993 through May 29, 1998 (Fiscal year end) the
total return on Bowl America Class A common stock has totaled 4.12%(cumulative,
including dividends) versus 171.95% for the S&P 500 Index and 90.52% for the
S&P Leisure Index. In the opinion of the sponsoring shareholder, these results
are directly attributable to management's failure to properly operate the
business and inadequate oversight of management by the Company's Board of
Directors. During fiscal 1998 the Company operated a total of 23 centers
versus 25 centers a full ten years earlier. The Company's lack of growth is
not due to a weak financial condition. In fact, as of March 29, 1998 (most
recent quarterly data available to Mr. Jolley), the Company possessed cash and
securities (net of deposits refundable to leagues) of approximately $16,203,092
which represents approximately 38% of total corporate assets. It is of the
opinion of the sponsoring shareholder, that the lack of growth, coupled with
poor capital allocation decisions by the Company and its Board of Directors,
has led to underperformance of Bowl America Class A common stock versus the
indexes referenced above.
It is also the opinion of the sponsoring shareholder, that the private market
value of the Company is much greater than that realized in its current stock
price. Furthermore, the Company's performance over the past five years in my
opinion, shows no evidence that a strategy exists that will obtain this value.
Therefore, it is believed that the best way for shareholders to realize the
value of their investment is to put the Company up for sale. By doing so,
interested acquirors with superior resources and management strategies will
have an opportunity to bid on the Company and, in the process, the Company's
true worth will be realized. In the sponsoring shareholder's view, if such a
sale or merger is not undertaken, existing management will continue its current
policies, resulting in a possible continuation of poor relative returns for
shareholders. Accordingly, you are encouraged to VOTE FOR this resolution to
request the Company's Board of Directors to take such actions as are necessary
to sell or merge the Company.
The Board of Directors recommends a vote AGAINST the adoption of the proposal
for the following reasons:
A shareholder resolution calling for the Board of Directors to effect a
business combination or sale of the Company would adversely affect the
Company's negotiating position in connection with any such transaction. The
Board's ability to seek the best terms for shareholders would therefore be
compromised. Furthermore, the proposed resolution is inappropriate, as state
corporation law requires that the Board of Directors approve the proposed terms
of any such transaction and determine it to be in the best interests of the
Company and its shareholders prior to recommending that the necessary
shareholder approval be obtained. Conducting a shareholder vote prior to the
Board's consideration of a specific transaction would be both meaningless and
counter-productive.
As we have previously advised shareholders, a primary objective of the
Company is to have sufficient earnings to increase dividends on the common
stock at a rate faster than the growth of inflation. In this regard, fiscal
1998 was the Company's 26th consecutive year of higher dividends.
While your Board of Directors will responsibly consider all possible
alternatives that have the potential of favorably impacting the Company, the
Board of Directors presently believes that it is in the best interests of the
Company and its shareholders to remain as an independent company and to focus
its efforts upon the Company's growth by increasing earnings and favor our
shareholders with increased dividends.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS PROPOSAL.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders intended to be presented at the next Annual
Meeting must be received by the Corporation for inclusion in its Proxy State-
ment and form of proxy relating to the meeting by August 3, 1999.
RELATIONSHIP OF CORPORATION WITH ITS AUDITORS
DELOITTE & TOUCHE LLP
The Board of Directors has considered all of the professional services
rendered by its auditors, Deloitte & Touche and was of the opinion
that these services had no effect on the independence of said accounting firm.
The Board of Directors, prior to authorizing Deloitte & Touche to provide
any non-audit services, considered that such services would have no effect on
the independence of said accounting firm. A representative of Deloitte &
Touche is expected to attend the Annual Meeting and will be given the oppor-
tunity to make a statement and to respond to the appropriate questions.
This firm of independent public accountants is not and has never been finan-
cially interested in the Corporation or connected with it except as auditors,
tax consultants and advisors.
OTHER MATTERS
Management does not intend to bring any other matters before the meeting and
does not know of any 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 judgement.
By Order of the Board of Directors
A. Joseph Levy
Secretary
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY
NO POSTAGE STAMP NECESSARY IF MAILED IN THE UNITED STATES