PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

  BOWL AMERICA INCORPORATED AND SUBSIDIARIES

  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

  (Unaudited)

The operating results for the thirteen (13) and thirty-nine (39) week periodperiods ended OctoberApril 1, 20172018 are not necessarily indicative of results to be expected for the year.  See notes to condensed consolidated financial statements.

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (CONTINUED)

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

The operating results for the thirteen (13) and thirty-nine (39) week periodperiods ended October April 1, 20172018 are not necessarily indicative of results to be expected for the year.

See notes to condensed consolidated financial statements.

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

Condensed  Consolidated Balance Sheets

(Unaudited)

See notes to condensed consolidated financial statements.

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS  OF CASH FLOWS

(Unaudited)

See notes to condensed consolidated financial statements.information.

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the ThirteenThirteen and Thirty-nine Weeks Ended

October April 1, 20172018

(Unaudited)

The fair values of the Company’sCompany’s investments were determined as follows:

The shares of common stock included in the equity securities portfolio includes the following stocks:as of April 1, 2018 were:

On July 10, 2017, Frontier Communications completed a 1-for-151-for-15 reverse stock split reducing Bowl America’s holdings to 300 shares from 4,508. On August 1, 2016 Dex Media completed a financial restructuring. Previous shares of Dex Media’s common stock were cancelled with no distribution to shareholders resulting in a loss of $5,845$5,845 on the Company’s holdings.

Communications Sales & Leasing Inc (“CSAL”) changed its corporate name to Uniti Group Inc (“UNIT”) effective February 27, 2017.

The Mutual fund included in the table above is Vanguard GNMA Admiral Shares #536 fund. The fair value of certificates of deposits is estimated using present value techniques and comparing the values derived from those techniques to certificates with similar values. In August 2017 the Company redeemed $1,000,000 of the mutual fund to meet the August 2017 dividend payment.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business,, our sales and the industry in which we operate and our management’s beliefs and assumptions. These statements are not guarantees of future performance or development and involve risks, uncertainties and other factors that are in some cases beyond our control. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof. We are under no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

LIQUIDITY AND CAPITAL RESOURCES

The Company views a strong financial position as a major benefit to shareholders and emphasizes payment of dividends as part of its financial plan.  A portion of earnings has consistently been invested to create a reserve to protect the Company in downturns in business, to capitalize on opportunities for expansion and modernization, to provide a secure source of income and to provide a predictable return to its owners.  For these reasons, the Company prefers a conservative approach to investing rather than taking greater risk for possible rapid growth.  The Company balances market volatility by using both fixed income and equity investments in managing its reserve funds. Any equity security is subject to price fluctuation, however, the stocks held by the Company have relatively low volatility. The Company has long been invested in a Government National Mortgage Association (“Ginnie Mae”GNMA”) fund and domestically domiciled stocks, primarily telecommunications companies, with the perceived potential of appreciation, primarily telecommunications stocks.appreciation. The Company considers that this diversity also provides a measure of safety of principal.

With the exception of 13,120 shares of Verizon, the common stocksthe equity securities in our portfolio have come from spin-offs, mergers and acquisitions of AT&T and United Telecommunications (now Sprint) purchased in 1979 and 1984 and from one insurance company acquired at no cost when that company demutualized. While not all stocksshares in the portfolio are domestic American companies any longer, since the original purchases at an approximate cost of $630,000, we have received approximately $967,000 from mergers and sales, and over $4,700,000 in dividends, the majority of which werereceived favorable tax favoredtreatment in the form of a dividends received exclusion from federal taxable income. The dividends received exclusion continues into this fiscal year. These marketable securities are carried at their fair value on the last day of each reporting period. The value of the securities on OctoberApril 1, 20172018 was approximately $5.5 million. The value of securities held at$5,029,000 and on July 2, 2017 was approximately $5.3 million.$5,272,000.

The Company’sCompany’s original investment in the Vanguard GNMA bondmutual fund began in 1988 with purchases of shares in the fund totaling approximately $1,400,000. The fund is carried at fair value on the last day of the reporting period. At OctoberApril 1, 2017,2018, the value was approximately $1,838,000.$1,818,000. In August 2017, the Company redeemed $1,000,000 of thisthe fund was redeemed to meet the August 2017 dividend payment.

Short-term investments including the GNMA fund mentioned above that was reclassified to short term investments from the category of marketable securities in the prior year, Certificates of Deposits, Treasury Bills and cash and cash equivalents totaled $2,786,000$5,172,000 at October 1, 2017the end of the fiscal third quarter of 2018 compared to $3,557,000$3,556,000 at July 2, 2017.

The Company’sCompany’s position in all the above investments is a source of capital for possible expansion.expansion and modernization. Potential volatility in the trading prices of the marketable securities held by the Company could impact the Company’s opportunities for expansion. The Board of Directors reviews the portfolio weekly and any use of this reserve at its quarterly meetings.

In August 2016 the Company obtained a $500,000 short-term loan to meet the August 2016 dividend obligation. The loan was paid in full on January 6, 2017.

DuringIn the three-monthnine-month period ended OctoberApril 1, 2017,2018, the Company expended approximately $388,000$713,000 for the purchase of building, entertainment and restaurant equipment. Except as noted above, theThe Company has no current plans to obtain additionallong-term debt and has made no application for third party funding as cash and cash flows are sufficient to finance all contemplated purchases and to meet short-term purchase commitments and operating lease commitments.

The first quarternine-month decreases in the categories of Prepaid expenses and other, and of Accounts Payable were attributableand Accrued Expenses are primarily due to theseasonal timing of the payments including compensation, insurance and taxes and for contributions to benefit plans.

Current liabilities generally increase during the first three quarters of the fiscal year as bowling leagues deposit prize fund monies with the Company throughout the league season. These funds are returned to the leagues at the end of the bowling season, generally in the fourth quarter. At OctoberApril 1, 2017,2018, league deposits of approximately $742,000$1,886,000 were included in the current liabilities category.

Cash flow provided by operating activities in the thirteenthirty-nine weeks ended October April 1, 20172018 was $491,000$5,002,000 which, along with cash on hand, and the redemption of a portion of the Vanguard GNMA funds,fund, mentioned above, was sufficient to meet day-to-day cash needs and pay dividends. Cash dividends of approximately $877,000, or $.17 per share, were paid to shareholders during the three-month periodquarter ended OctoberApril 1, 2017.2018, and the nine months total was approximately $2,632,000 or $.51 per share.   In September 2017,March 2018 the Company declared a regular quarterly dividend of $.17 per share, payable November 15, 2017.May 16, 2018 to shareholders of record on April 19, 2018. The economic climate is part of the consideration at the Directors’ quarterly reviews of future estimates of cash flows. The Board of Directors decides the amount and timing of any dividend at its quarterly meeting based on its appraisal of the state and trends of the business and estimate of future opportunities at such time.

OverviewOVERVIEW

The Company is in the entertainment business which, by its nature, has ups and downs based on consumer tastes and preferences.  Generally, promotional and open play bowling, which depends on the public’s discretionary budget dollars and their choices, accounts for more than half of our business. While bowling has the advantage of being an entertainment that is close to home and relatively inexpensive, new forms of sports and entertainment are offered to the public continually creating challenges, but our response is helped by having the resources to be able to promote the sport.  Weather is also a factor, especially for casual bowlers.  While extreme heat or rainy weather prompt people to look for indoor activities, heavy snow storms can keep customers from reaching the centers. Postponed league games are made up later in the season, but lost open play income is never recovered.  The Company operates primarily in the Washington, DC area where its business is vulnerable to sequestration or other downsizing of the federal government.

RESULTS OF OPERATIONS

The following table setstables set forth the items in our consolidated summary of operations for the fiscal quartersquarters and year-to-date periods ended OctoberApril 1, 20172018, and OctoberApril 2, 2016,2017, and the dollar and percentage changes therein.

For

Earnings were $1,602,799 or $.31 per share for the thirteen week period ended October 1, 2017 net income was $195,000and $3,234,725, or $.04$.63 per share. Forshare for the thirteenthirty-nine week period ended OctoberApril 1, 2018.    For the thirteen-week and thirty-nine week periods ended April 2, 2016 there was a loss of $7202017, net earnings were $1,406,867 or $.00$.27 per share.share and $2,102,053 or $.41 per share, respectively. Eighteen locationscenters were in operation in both the current and prior year quarters. In September Hurricane Irma caused a two day closure of our Florida locations although the properties did not sustain damage. The bowling business is seasonal and the first quarter which includes summer months is typically the slowest. In the current year period, the increase in open play bowling morequarter included colder than offsetnormal temperatures and winter storms while last year’s comparable quarter weather was unusually warm although there was a decline inmid-March storm. Postponement of some league play resulting in an increasegames occurred in both games bowled and bowling revenue.years. The operating results for the fiscal 2018 periodperiods included in this report are not necessarily indicative of results to be expected for the year.

Operating Revenues

Total operating revenues increased 3.9% or $200,000$135,000 to $5,264,000$7,626,000 in the thirteen-week period ended October 1, 2017, compared to an increase of 2.9% or $144,000 to $5,064,000 in the three-month period ended October 2, 2016.  Bowling and other revenue increased $171,000 or 4.8% in the current year fiscalmost recent quarter compared to an increase of $103,000 or 3%$69,000 to $7,491,000 in the three-month period ended April 1, 2017.  The current fiscal nine month period operating revenues were up $468,000 versus an increase of $442,000 in the comparable priornine month period a year quarter. ago.  Bowling and other revenue increased $124,000 in the quarter and $401,000 year-to-date for the periods ended April 1, 2018 versus increases of $62,000 in the quarter and $378,000 for the nine-month period ended April 2, 2017.

Food, beverage and merchandise sales were up $29,000increased $11,000 or 2%0.5% in the current year quarter due to increased traffic, compared to an increase of $41,000and were up $67,000 or 2.8%1.2% in the prior year comparable quarter.nine-month period.  Cost of sales decreased $9,0003.2% in the current year three-month period.fiscal three months and 1.9% in the nine month periods ended April 1, 2018.

Operating Expenses

Operating expenses were down $88,000$45,000 or 0.8% and $136,000 or 0.9% in the current three month and nine month periods versus decreases of  $95,000 % and $278,000 or 1.7% to $5,068,000 in both the three-month period ended October 1, 2017 compared to a decrease of $138,000 or 2.6% to $5,156,000 in the prior year quarter ended October 2, 2016.three and nine month periods last year.  Employee compensation and benefits for the fiscal 2018 third quarter were up $3,000$19,000 or 0.7% and $5,000 or 0.1% and down $65,000 or 2.4% in the fiscal first quarters of 2018 and 2017, respectively.nine month period. In the currentcomparable prior year groupquarter there was an increase of $18,000 or 0.7% and the nine month period ended April 2, 2017 showed a decrease of $46,000 or 0.6%. Group health insurance costs were lower due tofor the current nine month period decreased 8.7% as a result of changes in plan offerings withand lower premiums.enrollment. Included in this category of expense are contributions to our two benefit plans, both of which are defined contribution plans. There is no additional obligation beyond the current year contribution.

Cost of bowling and other services decreased $1,000declined $12,000 or 0.1%0.8% and increased 23,000 or 0.5% in the quarterthree month and nine month periods ended OctoberApril 1, 2017 versus a decrease of $42,000 or 2.8% in2018, respectively. In the comparable quarterthirteen weeks ended October 2, 2016. MaintenanceApril 1, 2018, maintenance and repair costs declined $2,000$35,000 or 1% and were up $22,000 or 10%13.2% primarily due to lower snow removal costs in the current year and prior year quarters, respectively. Bothyear. The same category for the current and prior year periods included roof and building repairsthirty-nine week period was up $11,000 primarily due to interior upgrades at severaltwo locations. Advertising costs decreased $6,600during the current year thirty-nine week period ended April 1, 2018, were down $4,000 or 7.5% in1.7%.

For the quarterfiscal nine-month period ended OctoberApril 1, 2017.  Utility2018 utility costs were up $3,000$27,000 or 1% in2.6 % primarily a result of higher gas costs during the in both the current and prior year periods.unusually cold winter months. Supplies and services expenses were down $21,000$70,000 or 11% and were up $20,000 or 10%11.3% in the thirteen-week periods ended October 1, 2017 and October 2, 2016, respectively, partiallycurrent year nine-month period primarily due to timingthe decline in amusement game supplies as a result of bulk purchases.outsourcing our amusement game business.

Insurance expense excluding health insurance increased 5.7% in the current year-to-date period versus a decrease of 3.0% in last year’s comparable period.

Depreciation and amortization expense was down 19.5% in the three-month period ended October 1, 2017 as a large group of assets have reached full depreciation. Increased capital purchases14.0% in the current year will result in a smaller decline in depreciation expense in future quarters.

The first quarter of the fiscal year is seasonally the slowestnine-month period and the quarter ended October 1, 2017 resulted in net operating income of $196,000 versus an operating loss of $92,000down 17.9% in the prior year comparable period.

Interest, Dividend and Other Income

Interest, dividend and other income increased $10,000 to $104,000 inIn the threeprior year nine month period ended October 1, 2017 primarily from the Company recorded a $34,000 gain on the sale of the GNMA securities.some of its amusement games as it transitioned from owning games to outsourcing to a third party vendor as described above.

As a result of the above, the nine-month period of fiscal 2018 resulted in operating income of $3,495,024 compared to operating income of $2,924,646 in the prior year comparable nine-month period.

Interest, Dividend and Other Income

Interest, dividend and other income decreased $23,000 in the fiscal 2018 nine-month period and decreased $25,000 in the comparable 2017 year-to-date period, respectively. The decrease in the current year relates primarily to lower investment balances.

Income Taxes

On December 22, 2017 the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act (“Tax Act”), which reduced the corporate tax rate from 35% to 21%. The provisions call for a blended tax rate for fiscal year companies resulting in a reduction of the effective tax rate from 34.4% last year to approximately 30.5% in the current year. A required adjustment to the Company’s deferred tax account was made in the current year second quarter.

CRITICALCRITICAL ACCOUNTING POLICIES

Management has identified accounting for marketable investment securities as a critical accounting policy due to the significance of the amounts included in the Company’sCompany’s balance sheet under the captions of Short-term investments and Marketable securities.  The Company exercises judgment in determining the classification of its investment securities as

available-for-sale and in determining their fair value.  The Company records these investments at their fair value with the unrealized gain or loss recorded in accumulated other comprehensive earnings, a component of stockholders’ equity, net of deferred taxes.  Additionally, from time to time the Company must assess whether write-downs are necessary for other than temporary declines in value.

Management has identified accounting for the impairment of long-lived assets as a critical accounting policy due to the significance of the amounts included in the Company’sCompany’s balance sheet under the caption of Land, Buildings and Equipment.  The Company reviews long-lived assets whenever events or changes indicate that the carrying amount of an asset may not be recoverable.  In making such evaluations, the Company compares the expected future cash flows to the carrying amount of the assets.  An impairment loss equal to the difference between the assets’ fair value and carrying value is recognized when the estimated future cash flows are less than the carrying amount.

ITEM 4. CONTROLS AND PROCEDURES.

The Company’sCompany’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective based on their evaluation of such controls and procedures as of OctoberApril 1, 2017.2018. There was no change in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended OctoberApril 1, 2017,2018, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

S.E.C. FORM 10-Q

PART II - OTHER INFORMATION

Item 6.  Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

13

14