FORM  10-Q

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,, D.C. 20549

 

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

FOR THE QUARTERLY PERIOD ENDED: DECEMBER 3March 1, 201729, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER: 000011-77829829

 

BOWL AMERICA INCORPORATED

(Exact name of registrant as specified in its charter)

 

MARYLAND

54-0646173

(State of Incorporation)

(I.R.S.Employer Identification No.)No)

 

6446 Edsall Road,, Alexandria, Virginia  22312

(Address of principal executive offices)(Zip Code)

 

(703) 941-6300

(Registrant's telephone number including area code)

 

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common stock (par value $.10)

BWL-A

NYSE American

 

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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405) of this chapter)chapter during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X☒  No __☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a

smaller reporting company, or an emerging growth company. See the definitions of “ large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer __☐  Accelerated Filer __☐

Non-Accelerated Filer __☐ Smaller Reporting Company  X☒     Emerging Growth Company __☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting standards

provided pursuant to Section 13(a) of the Exchange Act. __

☐

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act)

    Yes __☐    No X☒

 

Indicate the number of shares outstanding of each of the issuer's

classes of common stock, as of the latest practicable date:

 

  

Shares Outstanding at

  

February 9, 2018May 08, 2020

Class A Common Stock,

  

$.10 par value

3,746,4543,746,454

  

  

Class B Common Stock,

  

$.10 par value

1,414,5171,414,517

 

 

 

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

  BOWL AMERICA INCORPORATED AND SUBSIDIARIES

  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

  (Unaudited)

 

 

Thirteen Weeks Ended

  

Twenty-six Weeks Ended

  

Thirteen Weeks Ended

  

Thirty-nine Weeks Ended

 
 

December 31,

  

January 1,

  

December 31,

  

January 1,

  

March 29,

  

March 31,

  

March 29,

  

March 31,

 
 

2017

  

2017

  

2017

  

2017

  

2020

  

2019

  

2020

  

2019

 

Operating Revenues:

                                

Bowling and other

 $4,484,745  $4,378,959  $8,233,015  $7,956,338  $4,455,810  $5,258,124  $12,376,206  $13,501,062 

Food, beverage and merchandise sales

  1,883,777   1,855,585   3,399,260   3,342,542   1,803,800   2,184,623   5,172,874   5,711,098 

Total Operating Revenues

  6,368,522   6,234,544   11,632,275   11,298,880   6,259,610   7,442,747   17,549,080   19,212,160 
                                

Operating Expenses:

                                

Employee compensation and benefits

  2,720,700   2,737,379   5,404,571   5,418,712   2,648,427   2,843,147   8,106,410   8,346,536 

Cost of bowling and other services

  1,508,075   1,472,207   2,975,983   2,941,577   1,462,254   1,583,435   4,477,990   4,626,868 

Cost of food, beverage and merchandise sales

  574,338   577,183   1,047,225   1,059,458   532,943   629,794   1,537,259   1,635,012 

Depreciation and amortization

  238,026   275,198   474,110   567,892   243,808   240,294   714,560   719,224 

General and administrative

  229,403   210,565   436,031   441,341   277,030   232,678   884,369   663,917 

Total Operating Expenses

  5,270,542   5,272,532   10,337,920   10,428,980   5,164,462   5,529,348   15,720,588   15,991,557 
                                

Operating Income

  1,097,980   962,012   1,294,355   869,900   1,095,148   1,913,399   1,828,492   3,220,603 

Interest, dividend and other income

  81,449   111,188   185,466   204,902 

Interest expense

  -   2,594   -   5,316 
                

Interest, dividend and other income

  96,842   101,150   313,163   297,739 

Change in value of investments

  (1,000,868

)

  367,820   (410,933

)

  173,985 

Earnings before provision for income taxes

  1,179,429   1,070,606   1,479,821   1,069,486   191,122   2,382,369   1,730,722   3,692,327 

Provision for income taxes (benefit)

  (257,305

)

  374,700   (152,105

)

  374,300 

Provision for income taxes

  33,800   576,126   410,400   888,261 
                                

Net Earnings

 $1,436,734  $695,906  $1,631,926  $695,186  $157,322  $1,806,243  $1,320,322  $2,804,066 
                                

Earnings per share-basic & diluted

 $.28  $.14  $.32  $.14  $.03  $.35  $.26  $.54 
                

NET EARNINGS PER SHARE

 $.03  $.35  $.26  $.54 
                                

Weighted average shares outstanding

  5,160,971   5,160,971   5,160,971   5,160,971   5,160,971   5,160,971   5,160,971   5,160,971 
                                

Dividends paid

 $877,365  $877,365  $1,754,730  $1,754,730  $903,170  $903,170  $2,709,511  $2,683,706 
                                

Per share, dividends paid, Class A

 $.17  $.17  $.34  $.34  $.175  $.175  $.525  $.52 
                                

Per share, dividends paid, Class B

 $.17  $.17  $.34  $.34  $.175  $.175  $.525  $.52 

 

The operating results for the thirteen (13) and twenty-six (26)thirty-nine (39) week periods ended December 31, 2017March 29, 2020 are not necessarily indicative of results to be expected for the year.  See notes to condensed consolidated financial statements.

 


2

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (CONTINUED)

(Unaudited)

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

  

Thirteen Weeks Ended

  

Twenty-six Weeks Ended

 
  

December 31,

  

January 1,

  

December 31,

  

January 1,

 
  

2017

  

2017

  

2017

  

2017

 
                 

Net Earnings

 $1,436,734  $695,906  $1,631,926  $695,186 

Other comprehensive earnings- net of tax

                

Unrealized gain (loss) on available- for-sale securities net of tax (benefit) of ($598) and $54,819 for 13 weeks, and $91,192 and ($59,000) for 26 weeks

  1,775   88,938   148,960   (96,008

)

Reclassification adjustment for (gain) loss included in Net Income net of tax (benefit) of $2,167 & ($2,227)

  -   -   (3,520

)

  3,619 
                 

Comprehensive earnings

 $1,438,509  $784,844  $1,777,366  $602,797 


The operating results for the thirteen (13) and twenty-six (26) week periods ended December 31, 2017 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)

 

 

As of

  

As of

 
 

December 31,

  

July 2,

  

March 29,

  

June 30,

 
 

2017

  

2017

  

2020

  

2019

 

ASSETS

ASSETS

 

ASSETS

 

CURRENT ASSETS:

                

Cash and cash equivalents

 $1,293,634  $604,671  $3,154,121  $269,844 

Short-term investments

  1,972,472   2,951,315   134,170   433,249 

Marketable investment securities

  5,646,551   7,029,916 

Inventories

  554,234   534,741   486,706   518,121 

Prepaid expenses and other

  512,782   555,687   98,217   740,476 

Income tax refundable

  25,572   - 

Current deferred income tax benefit

  10,597   8,162 

Income taxes refundable

  322,106   441,402 

TOTAL CURRENT ASSETS

  4,369,291   4,654,576   9,841,871   9,433,008 

LAND, BUILDINGS & EQUIPMENT, net of accumulated depreciation of $40,848,979 and $40,978,609

  19,062,939   18,860,778 

LAND, BUILDINGS & EQUIPMENT, net of accumulated depreciation of $40,908,439 and $41,706,408

  17,900,928   18,141,526 

OTHER ASSETS:

                

Marketable investment securities

  5,523,003   5,272,318 

Right to use asset

  1,852,765   - 

Cash surrender value-life insurance

  772,326   772,326   225,164   747,102 

Other

  66,315   66,315   65,115   67,315 

TOTAL OTHER ASSETS

  6,361,644   6,110,959   2,143,044   814,417 

TOTAL ASSETS

 $29,793,874  $29,626,313  $29,885,843  $28,388,951 
                

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

CURRENT LIABILITIES:

                

Accounts payable

 $472,306  $673,786  $385,954  $820,491 

Accrued expenses

  662,548   1,069,668   661,313   1,032,823 

Dividends payable

  877,365   877,365   -   903,170 

Income taxes payable

  -   22,543 

Other current liabilities

  1,631,122   342,324   2,394,398   308,794 

TOTAL CURRENT LIABILITIES

  3,643,341   2,985,686   3,441,665   3,065,278 

LONG-TERM DEFERRED COMPENSATION

  18,413   18,413 

NONCURRENT DEFERRED INCOME TAXES

  1,523,091   2,035,821 

Lease liability

  1,711,184   - 

DEFERRED INCOME TAXES

  1,298,847   1,403,507 

TOTAL LIABILITIES

  5,184,845   5,039,920   6,451,696   4,468,785 
                

COMMITMENTS AND CONTINGENCIES

                
                

STOCKHOLDERS' EQUITY

                

Preferred stock, par value $10 a share: Authorized and unissued, 2,000,000 shares

  -   -   -   - 

Common stock, par value $.10 a share:

        

Authorized, 10,000,000 shares

        

Class A issued and outstanding 3,746,454

  374,645   374,645 

Common stock, par value $.10 a share: Authorized, 10,000,000 shares Class A issued and outstanding 3,746,454

  374,645   374,645 

Class B issued and outstanding 1,414,517

  141,452   141,452   141,452   141,452 

Additional paid-in capital

  7,854,108   7,854,108   7,854,108   7,854,108 

Accumulated other comprehensive earnings-

        

Unrealized gain on available-for-sale securities, net of tax

  2,627,428   2,481,988 

Retained earnings

  13,611,396   13,734,200   15,063,942   15,549,961 

TOTAL STOCKHOLDERS' EQUITY

  24,609,029   24,586,393   23,434,147   23,920,166 
                

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 $29,793,874  $29,626,313  $29,885,843  $28,388,951 

 

See notes to condensed consolidated financial statements.

 


3

 

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS  OF CASH FLOWS

(Unaudited)

 

 

Twenty-six Weeks Ended

  

Thirty-nine Weeks Ended

 
 

December 31,

  

January 1,

  

March 29,

  

March 31,

 
 

2017

  

2017

  

2020

  

2019

 

Cash Flows From Operating Activities

                

Net earnings

 $1,631,926  $695,186  $1,320,322  $2,804,066 

Adjustments to reconcile net earnings to net cash provided by operating activities:

                

Depreciation and amortization

  474,110   567,892   714,560   719,224 

Loss on involuntary cancellation of available-for-sale securities

  -   5,845 

Amortization of right to use asset

  124,758     

(Decrease) increase in deferred taxes

  (104,660

)

  43,861 

Unrealized loss (gain) on marketable investment securities

  415,137   (173,985

)

Net purchases of marketable investment securities

  (22,285

)

  (42,269

)

Gain on sale of available-for-sale securities

  (8,531

)

  -   (9,487

)

  - 

Provisional estimate for reduction in deferred tax from tax act

  (604,190

)

  - 

Changes in assets and liabilities

                

(Increase) decrease in inventories

  (19,493

)

  7,265 

Decrease (increase) in inventories

  31,415   (65,900

)

Decrease in prepaid & other

  42,905   240,828   644,459   216,193 

Decrease in accounts payable

  (201,480

)

  (152,617

)

Decrease in accounts payable

  (434,537

)

  (254,057

)

Decrease in accrued expenses

  (407,120

)

  (549,138

)

  (371,510

)

  (362,929

)

Decrease in income taxes payable

  (48,115

)

  (252,800

)

Decrease (increase) income taxes refundable

  119,296   (169,025

)

Decrease in long-term deferred compensation

  -   (17,440

)

Decrease in lease liability

  (115,667

)

  - 

Increase in other current liabilities

  1,288,798   1,296,409   1,934,932   2,046,729 

Net cash provided by operating activities

  2,148,810   1,858,870   4,246,733   4,744,468 
                

Cash Flows From Investing Activities

                

Expenditures for land, building and equip

  (676,271

)

  (170,629

)

  (473,962

)

  (389,734

)

Net sales & maturities (purchases) of short-term investments

  (42

)

  (1,748

)

Net sales and maturities (purchases) of short-term investments

  299,079   (297,691

)

Proceeds from sale of available-for-sale securities

  1,000,000   -   1,000,000   - 

Purchases of marketable securities

  (28,804

)

  (49,677

)

Net cash provided by (used in) investing activities

  294,883   (222,054

)

Decrease in cash surrender value of officers life insurance

  521,938   - 

Net cash provided by (used in)

        

Investing activities

  1,347,055   (687,425

)

                

Cash Flows From Financing Activities

                

Proceeds from note payable

  -   500,000 

Payment of cash dividends

  (1,754,730

)

  (1,754,730

)

Payment of cash dividends

  (2,709,511

)

  (2,683,706

)

                

Net cash used in financing activities

  (1,754,730

)

  (1,254,730

)

  (2,709,511

)

  (2,683,706

)

                

Net Increase in Cash and Equivalents

  688,963   382,086   2,884,277   1,373,337 
                

Cash and Equivalents, Beginning of period

  604,671   986,193   269,844   1,008,433 
                

Cash and Equivalents, End of period

 $1,293,634  $1,368,279  $3,154,121  $2,381,770 
                
                

Supplemental Disclosures of Cash Flow Information

                

Cash Paid During the Period for:

                

Interest

  -   5,316 

Income taxes

 $500,200  $627,100  $401,200  $997,300 

 

See notes to condensed consolidated financial information.statements.

 


4

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

  

COMMON STOCK

      

Accumulated

     
  

Class A

Shares

  

Class A

Amount

  

Class B

Shares

  

Class B

Amount

  

Additional

Paid-In Capital

  

Other Comprehensive Earnings

  

Retained

Earnings

 

Balance, July 1, 2018

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108  $2,102,745  $14,010,725 

Cash dividends declared Sept 2018 paid November 2018

  -   -   -   -   -   -   (903,170

)

Reclassification of unrealized gain on available-for-sale securities from other comprehensive income to retained earnings

  -   -   -   -   -   (2,102,745

)

  2,102,745 

Net earnings for the quarter

  -   -   -   -   -   -   440,381 

Balance, September 30, 2018

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108  $-  $15,650,681 

Cash dividends declared Dec 2018 paid February 2019

  -   -   -   -   -   -   (903,170

)

Net earnings for the quarter

  -   -   -   -   -   -   557,442 

Balance, December 30, 2018

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108  $-  $15,304,953 

Cash dividends declared Mar 2019 paid May 2019

  -   -   -   -   -   -   (903,171

)

Net earnings for the quarter

  -   -   -   -   -   -   1,806,243 

Balance, March 31, 2019

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108       16,208,025 

  

COMMON STOCK

      

Accumulated

     
  

Class A

Shares

  

Class A

Amount

  

Class B

Shares

  

Class B

Amount

  

Additional

Paid-In Capital

  

Other Comprehensive Earnings

  

Retained

Earnings

 

Balance, June 30, 2019

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108  $-  $15,549,961 

Cash dividends declared Sept 2019 paid November 2019

  -   -   -   -   -   -   (903,170

)

Net earnings for the quarter

  -   -   -   -   -   -   285,325 

Balance, September 29, 2019

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108  $-  $14,932,116 

Cash dividends declared Dec 2019 paid February 2020

  -   -   -   -   -   -   (903,171

)

Net earnings for the quarter

  -   -   -   -   -   -   877,675 

Balance, December 29, 2019

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108  $-  $14,906,620 

Net earnings for the quarter

                          157,322 

Balance, March 29, 2020

  3,746,454  $374,645   1,414,517  $141,452  $7,854,108       15,063,942 

The accompanying notes to the consolidated financial statements are an integral part of these financial statements.

5

 

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Twenty-sixThirteen and Thirty-nine Weeks Ended

December 31, 2017March 29, 2020

(Unaudited)

 

 

1.    Basis for Presentation

 

The accompanying unaudited condensed consolidated financial statements of Bowl America Incorporated and subsidiaries (the(collectively, the "Company"), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  The condensed consolidated balance sheet as of July 2, 2017 June 30, 2019 has been derived from the Company's audited financial statements.  Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading.

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K10-K for the year ended July 2, 2017.June 30, 2019.

 

 

2.    Investments

 

The Company’s investments are categorized as available-for-sale. Short-term investments consist of certificates of deposits and Treasury bills with maturities of generally three months to one year. Equity securities consist primarily of telecommunications stocks. Mutual funds consist ofstocks and a mutual fund that invests in federal agency mortgage backed securities (Ginnie Mae). The fair value of the Company’s investments at December 31, 2017 March 29, 2020 and July 2, 2017 June 30, 2019 were as follows:

 

December 31, 2017

Description

 

 

Fair Value

  

 

Cost basis

  

Unrealized

Gain (loss)

 

March 29, 2020

Description

 

 

Fair Value

  

 

Cost basis

  

Unrealized Gain/

(loss)

 

Short-term investments

 $133,965  $133,965  $-  $134,170  $134,170  $- 

Equity securities

 $5,523,003  $1,279,914  $4,243,089  $4,660,915  $1,279,914  $3,381,001 

Mutual funds

 $1,838,507  $1,837,480  $1,027 

July 2, 2017

Description

 

 

Fair Value

  

 

Cost basis

  

 

Unrealized Gain

 

Short-term investments

 $133,922  $133,922  $- 

Equity securities

 $5,272,318  $1,279,914  $3,992,404 

Mutual funds

 $2,817,392  $2,800,144  $17,248 

Mutual fund

 $985,636  $953,185  $32,451 

 

June 30, 2019

Description

 

 

Fair Value

  

 

Cost basis

  

Unrealized Gain/

(loss)

 

Short-term investments

 $433,249  $433,249  $- 

Equity securities

 $5,100,341  $1,279,914  $3,820,427 

Mutual funds

 $1,929,575  $1,921,413  $8,162 

 


6

 

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

 

December 31, 2017

 

 

 

Description

 

Quoted

Price for

Identical Assets

(Level 1)

 

  

Significant

Other

Observable

Inputs

(Level 2)

  

 

Significant

Unobservable

Inputs

(Level 3)

 
             

Certificates of deposits

 $-  $133,965  $- 

Equity securities

  5,523,003   -   - 

Mutual funds

  1,838,507   -   - 
             

Total

 $7,361,510  $133,965  $- 

July 2, 2017

 

 

 

Description

 

Quoted

Price for

Identical Assets

(Level 1)

  

Significant

Other

Observable

Inputs

(Level 2)

  

 

Significant

Unobservable

Inputs

(Level 3)

 
             

Certificates of deposits

 $-  $133,922  $- 

Equity securities

  5,272,318   -   - 

Mutual funds

  2,817,392   -   - 
             

Total

 $8,089,710  $133,922  $- 

March 29, 2020

 

 

Description

 

Quoted

Price for

Identical Assets

(Level 1)

  

Significant Other Observable Inputs

(Level 2)

  

 

Significant

Unobservable Inputs

(Level 3)

 
             

Certificates of deposits and Treasury bills

 $-  $134,170  $- 

Equity securities

  4,660,915   -   - 

Mutual fund

  985,636   -   - 
             

Total

 $5,646,551  $134,170  $- 

 

June 30, 2019

 

 

 

Description

 

Quoted

Price for

Identical Assets

(Level 1)

  

Significant Other Observable Inputs

(Level 2)

  

 

Significant

Unobservable Inputs

(Level 3)

 
             

Certificates of deposits

 $-  $433,249  $- 

Equity securities

  5,100,341   -   - 

Mutual fund

  1,929,575   -   - 
             

Total

 $7,029,916  $433,249  $- 

 

The shares of common stock included in the equity securities portfolio includes the following stocks:as of March 29, 2020 were:

 

AT&T shares

  82,112 

Manulife shares

  2,520 

Uniti Group shares (formerly CSAL)

  815 

NCR shares

  774 

Teradata shares

  774 

Vodafone shares

  6,471 

CenturyLink shares

  4,398 

Frontier Communications shares

  300 

Sprint shares

  40,000 

VerizonVerizon shares

  31,904 

Windstream shares

  679135 

 

On July 10, 2017, Frontier CommunicationsApril 1, 2020, T-Mobile and Sprint completed a 1-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. Previoustheir merger exchanging 40,000 shares of Dex Media’s common stock were cancelled with no distribution to shareholders resulting in a lossSprint for 4,102 shares of $5,845 on the Company’s holdings.T-Mobile.   

 

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.

 

 

3.3.    Leasing arrangements

As of March 29, 2020, the Company leased one bowling center.  The lease is classified as an operating lease in accordance with ASU 2016-02.  For the 39 week period ended March 29, 2020, the Company recorded amortization of its right to use asset under the lease of $124,758 which is included as a component of rent expense.  The lease liability at March 29, 2020 was $1,861,856. The current portion of the lease liability of $150,672 is included in other current liabilities on the accompanying condensed consolidated balance sheet. 

7

4.   Commitments and Contingencies

 

The Company’sCompany’s purchase commitments at December 31, 2017, March 29, 2020 are for materials, supplies, services and equipment as part of the normal course of business.

 

 

4.5.    Employee benefit plans

 

The Company has two defined contribution plans with Company contributions determined by the Board of Directors.  The Company has no defined benefit plan or other postretirementpost-retirement plan.


5.Income Taxes

A. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).  The Tax Act includes broad and complex changes to the U.S. tax code, including a reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018..  For fiscal 2018, the Company will record its income tax provision based on a blended U.S. statutory tax rate of 27.5 percent, which is based on a proration of the applicable tax rates before and after the effective date of the Tax Act.  The statutory tax rate of 21 percent will apply for fiscal 2019 and beyond.

The Tax Act also puts in place new tax laws that may impact the Company’s taxable income beginning in fiscal 2019, which include, but are not limited to (i) reducing the dividends received exclusion, (ii) adding a provision that could limit the amount of deductible interest expense, and (iii) limiting the deductibility of certain executive compensation.

Shortly after the Tax Act was enacted, the SEC issued accounting guidance, which provides a one-year measurement period during which a company may complete its accounting for the impacts of the Tax Act.  To the extent a company’s accounting for certain income tax effects of the Tax Act is incomplete, the company may determine a reasonable estimate for those effects and record a provisional estimate in its financial statements.  If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted.

During the second quarter of fiscal 2018, the Company recorded provisional discrete tax benefits of $ 604,190 related to the Tax Act.  The Company adjusted its U.S. deferred tax liabilities by $604,190 due to the reduction in the U.S. federal corporate tax rate.  The resulting adjustment increased current quarter and year to date earnings per share by 11.7 cents. This net reduction in deferred tax liabilities also included the estimated impact on the Company’s net state deferred tax liabilities.

 

 

6.    New Accounting Standards

  

In January 2016, the Financial Accounting Standards Board (FASB) issued guidance on equity securities that requires entities to recognize changes in unrealized gains and losses on equity securities in income in the current period unless the entity is recording the related investment under the equity method or consolidating the related entity. This amendment is effective for the Company’s fiscal year ending June 2019 with earlier adoption permitted. Management is currently assessing the impact of this standard on the Company’s financial statements.

In February 2016, the FASB issued guidance on leases which requires entities to recognize right-of-use assets and lease liabilities on the balance sheet for the rights and obligations created by all leases, including operating leases, with terms of more than 12 months. The new guidance also requires additional disclosures on the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative information. The Company adopted this standard effective July 1, 2019. The result was the recognition of a right to use asset of $1,977,523 and a corresponding lease liability for the same amount.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which creates a single, comprehensive revenue recognition model for all contracts with customers. Under this ASU and subsequently issued amendments, an entity should recognize revenue to reflect the transfer of promised goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods and services. ASU 2014-9 may be adopted either retrospectively or on a modified retrospective basis. The Company adopted the standard effective July 2, 2018 and determined there was no material effect on the financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. As part of the FASB's disclosure framework project, it has eliminated, amended and added disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy, the policy of timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements. Public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This amendmentASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted as of the Company’s fiscal year ending June 2020 with early adoption permitted. We are in the processbeginning of evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures.

7. Subsequent Events

any interim or annual reporting period.  The Company has evaluated subsequent events through the time of filing these financial statements with the Securities and Exchange Commission on February 13, 2018, and has determined that no material subsequent events have occurred.does not believe it will materially impact disclosures.

 

 

8.7.    Reclassifications

 

Certain previous year amounts have been reclassified to conform with current year presentation.

 


8

 

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. More recent risks and uncertainties include the ongoing effects of the business disruption related to the current COVID-19 pandemic on revenues, operating income, the ability to reopen locations, governmental regulations to limit the spread of COVID-19 such as social distancing and enhanced safety measures, times of operation and reaction should the virus rise again. 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 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.

COVID-19

The Company closed all bowling centers on March 18, 2020, as required by the orders from the state and federal governments in an effort to stop the spread of COVID-19. Most employees were laid off temporarily but will be called back as needed for their services as we reopen. While this center closure is expected to be temporary, with no known time frame for reopening, or what steps will have to been taken for a reopening, we cannot currently estimate the full financial impact to the Company. However, because the center closure occurred near the end of the quarter ended March 29, 2020, the impact was not as great as it will be for the fourth quarter ending June 28, 2020 during which we will have no revenues unless our centers are able to reopen prior to the end of the quarter. Many leagues decided to end their seasons early as it became clear that a reopening would not occur quickly. The Company did not receive league lineage fees for the weeks during which there was no bowling. Restrictions on operations upon reopening in our operating areas will likely result in few summer leagues and modified hours of operation assuming our centers are able to re-open. The Company suspended its quarterly dividend and expects to use cash on hand and, if necessary, its reserves, until the centers reopen.

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Company viewshas long viewed a strong financial position as a major benefit to shareholders and emphasizes payment of dividends as part of its financial plan.  Ahas invested 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 and to provide a secure source of income.  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 historically had relatively low volatility. The Company has long been invested in a Government National Mortgage Association (“Ginnie Mae”) fund and domestically domiciled stocks with the perceived potential of appreciation, primarily telecommunications stocks. The Company considers that this diversity also provides a measure of safety of principal. Regulatory orders requiring the closure of our bowling centers in March 2020 with an uncertain time for reopening could require use of those reserves.

 

With the exception of 13,120 shares of Verizon, the 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 stocks 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$5,300,000 in dividends, the majority of which received favorable tax treatment in the form of a dividends received deduction from federal taxable income. The dividends receivedWhile the deduction continues into this fiscal year.year, the Tax Cuts and Jobs Act (“Tax Act”) reduces the percent deductible. These equity securities are carried at their fair value on the last day of each reporting period. The fair value of the securities on December 31, 2017March 29, 2020 was approximately $5,500,000$4,661,000 and on July 2, 2017June 30, 2019 was approximately $5,300,000.$5,100,000.

 

9

The

The Company’s original investment in the Vanguard GNMA bond fund began in 1988 with purchases of shares in the fund totaling approximately $1,400,000.    In August 2017,2019, $1,000,000 of this fund was redeemed to meet the August 20172019 dividend payment. The fund is carried at fair value on the last day of the reporting period. At December 31, 2017,March 29, 2020, the value was approximately $1,838,000$985,000 and at July 2, 2017,June 30, 2019, the value was $1,837,000..$1,930,000.

 

Short-term investments, 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 $3,266,000$3,288,000 at the end of the fiscal secondthird quarter of 20182020 compared to $3,556,000$703,000 at July 2, 2017.June 30, 2019.

 

The Company’sCompany’s position in all the above investments is a source of capital for possible expansion.use as needed to pay league prize funds and expenses during the COVID-19 shutdown and reopening. Barring additional catastrophic or unknown events, cash on hand and the investments noted above should provide funding for the Company through September 2020 should the locations remain closed. Potential volatility in the trading prices of the marketable securities held by the Company could impact the Company’s opportunities for expansion.available resources. 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 January 6, 2017.

 

In the six-monthnine-month period ended December 31, 2017,March 29, 2020, the Company expended approximately $676,000$473,000 for the purchase of building, entertainment and restaurant equipment. The Company has no long-term debt and currently has made no application forplans to obtain 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 six-month nine-month decreases in the categories of Prepaid expenses and other, Accounts Payable and Accrued Expenses are primarily due to seasonal timing of 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 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 December 31, 2017,March 29, 2020, league deposits of approximately $1,394,000$1,952,000 were included in the current liabilities category.

 

Cash flow provided by operating activities in the twenty-sixthirty-nine weeks ended December 31, 2017March 29, 2020 was $2,149,000$4,247,000 which, along with cash on hand and redemption of a portion of the Vanguard GNMA fund, mentioned above, was sufficient to meet day-to-day cash needs and pay dividends. Cash dividends of approximately $877,000,$903,000, or $.17$.175 per share, were paid to shareholders during the quarter ended December 31, 2017,March 29, 2020, and the sixnine months total was approximately $1,754,000$2,710,000 or $.34$.525 per share.   In December 2017March 2020 the Company declared asuspended its regular quarterly dividend due to the unpredictability of $.17 per share, payable February 14, 2018 to shareholders of record on January 10, 2018.the business interruption from COVID-19. 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.

 

OVERVIEW

 

The Company is in the entertainment business which, by its nature, has ups and downs based on consumer tastes and preferences.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. The Company currently operates 17 bowling centers, 16 of which are owned by the Company and 1 of which is a leased center. In March 2019, the Company elected not to renew the lease for its bowling center in Manassas due to the performance at the center. The lease terminated August 31, 2019.

10

 

RESULTS OF OPERATIONS

 

The following tablestables set forth the items in our consolidated summary of operations for the fiscal quarters and year-to-date periods ended DecemberMarch 29, 2020, and March 31, 2017, and January 1, 2017,2019, and the dollar and percentage changes therein.therein

 

  

Thirteen weeks ended

 
  

December 31, 2017 and January 1, 2017

 
  

Dollars in thousands

 
  

12/31/ 2017

  

1/01/ 2017

  

Change

  

% Change

 

Operating Revenues:

                

Bowling and other

 $4,485  $4,379  $106   2.4 
   1,884   1,856   28   1.5 

Total Operating Revenue

  6,369   6,235   134   2.2 

Operating Expenses:

                

Employee Compensation and benefits

  2,721   2,738   (17

)

  (0.6

)

Cost of bowling and other services

  1,508   1,472   36   2.4 

Cost of food, beverage and merchandise sales

  574   577   (3

)

  (0.5

)

Depreciation and amortization

  238   275   (37

)

  (13.4

)

General and administrative

  230   211   19   9.0 

Total Operating Expenses

  5,271   5,273   (2

)

  (0.0

)

                 

Operating Income

  1,098   962   136   14.1 

Interest, dividend and other income

  82   112   (30

)

  (26.8

)

Interest expense

  -   3   (3

)

  (100.0

)

Earnings before taxes

  1,180   1,071   109   10.2 

Income taxes (benefit) provision

  (257

)

  375   (632

)

  (168.5

)

Net Earnings

 $1,437   696   741   106.5 


 

Twenty-six weeks ended

  

Thirteen weeks ended

 
 

December 31, 2017 and January 1, 2017

  

March 29, 2020 and March 31, 2019

 
 

Dollars in thousands

  

Dollars in thousands

 
 

12/31/2017

  

1/01/ 2017

  

Change

  

% Change

  

2020

  

2019

  

Change

  

% Change

 

Operating Revenues:

                                

Bowling and other

 $8,233  $7,956  $277   3.5  $4,456  $5,258  $(802

)

  (15.3

)

Food, beverage and merchandise sales

  3,399   3,343   56   1.7   1,804   2,185   (381

)

  (17.4

)

Total Operating Revenues

  11,632   11,299   333   3.0 

Total Operating Revenue

  6,260   7,443   (1,183

)

  (15.9

)

Operating Expenses:

                                

Employee Compensation and benefits

  5,405   5,419   (14

)

  (0.3

)

  2,649   2,843   (194

)

  (6.8

)

Cost of bowling and other services

  2,976   2,942   34   1.2   1,462   1,583   (121

)

  (7.6

)

Cost of food, beverage and merchandise sales

  1,047   1,059   (12

)

  (1.1

)

  533   630   (97

)

  (15.4

)

Depreciation and amortization

  474   568   (94

)

  (16.5

)

  244   240   4   1.7 

General and administrative

  436   441   (5

)

  (1.1

)

  277   233   44   18.9 

Total Operating Expenses

  10,338   10,429   (91

)

  (0.9

)

  5,165   5,529   (364

)

  (6.6

)

                

Operating income

  1,294   870   424   48.7 

Interest, dividend and other income

  186   205   (19

)

  (9.3

)

Interest expense

  -   5   (5

)

  (100.0

)

Operating Income

  1,095   1,914   (819

)

  (42.8

)

Interest, dividend and other income

  97   101   (4

)

  (4.0

)

Change in value of marketable investment securities

  (1,001

)

  367   (1,368

)

  (372.7

)

Earnings before taxes

  1,480   1,070   410   38.3   191   2,382   (2,191

)

  (92.0

)

Income taxes (benefit) provision

  (152

)

  375   (527

)

  (140.5)

Income taxes

  34   576   (542

)

  (94.1

)

Net Earnings

 $1,632  $695  $937   134.8  $157   1,806   (1,649

)

  (91.3

)

 

 

  

Thirty-nine weeks ended

 
  

March 29, 2020 and March 31, 2019

 
  

Dollars in thousands

 
  

2020

  

2019

  

Change

  

% Change

 

Operating Revenues:

                

Bowling and other

 $12,376  $13,501  $(1,125

)

  (8.3

)

Food, beverage and merchandise sales

  5,173   5,711   (538

)

  (9.4

)

Total Operating Revenues

  17,549   19,212   (1,663

)

  (8.7

)

Operating Expenses:

                

Employee Compensation and benefits

  8,107   8,346   (239

)

  (2.9

)

Cost of bowling and other services

  4,478   4,627   (149

)

  (3.2

)

Cost of food, beverage and merchandise sales

  1,537   1,635   (98

)

  (6.0

)

Depreciation and amortization

  715   719   (4

)

  (0.6

)

General and administrative

  884   664   220   33.1 

Total Operating Expenses

  15,721   15,991   (270

)

  (1.7

)

Operating income

  1,828   3,221   (1,393

)

  (43.3

)

Interest, dividend and other income

  313   297   16   5.4 

Change in value of marketable investment securities

  (411

)

  174   (585

)

  (336.2

)

Earnings before taxes

  1,730   3,692   (1,962

)

  (53.1

)

Income taxes

  410   888   (478

)

  (53.8

)

Net Earnings

 $1,320  $2,804  $(1,484

)

  (52.9

)

Earnings were $1,436,734

11

The Company closed all bowling centers on March 18, 2020, as the orders from the state and federal governments required, in an effort to stop the spread of COVID-19. While this closure is expected to be temporary, with no known time frame for lifting the ban or $.28 per sharefor reopening, we cannot currently estimate the full financial impact to the Company. Many leagues decided to end their seasons early as it became clear that a reopening would not occur quickly. Because the closure occurred near the end of the quarter ended March 29, 2020 the impact was not as great as it will be for the fourth quarter.

Net earnings, including the decrease in the value of investment securities of $1,001,000 for the thirteen week period and $1,631,926ended March 29, 2020, were $157,322 or $.32$.03 per shareshare. Net earnings for the twenty-sixthirty-nine week period ended December 31, 2017.   March 29, 2020, including a decrease in the value of investment securities of $411,000 were $1,320,322 or $.26 per share.

For the thirteen-week and twenty-sixthirty-nine week periods ended January 1, 2017,March 31, 2019,including increases in the value of investment securities of $367,000 and $174,000, respectively, net earnings were $695,906 and $695,186$1,806,243 or $.14$.35 per share and $2,804,066 or $.54 per share, respectively.

Seventeen centers were in operation for 8 of the 9 months in the current year period following the closing of the Mathis Avenue, Manassas center on July 28, 2019. Expenses related to the center closing were approximately $104,000 and were reported in the current year first quarter. Eighteen centers were in operation in boththroughout the current and prior year periods. In addition, both the current and prior year periods included the holiday week between Christmas and New Year’s Day.

The operating results for fiscal 20182020 periods included in this report are not necessarily indicative of results to be expected for the year.

 

Operating Revenues

 

Total operating revenues increased $134,000decreased $1,183,000 to $6,369,000$6,260,000 in the most recent quarter ended December 31, 2017 compared to an increasea decrease of $229,000$183,000 to $6,235,000$7,443,000 in the three-month period ended January 1, 2017.March 31, 2019.  The current fiscal six-monthnine month period operating revenues were up $333,000down $1,663,000 versus an increasea decrease of $373,000$46,000 in the comparable six-monthnine month period a year ago.  Bowling and other revenue increased $106,000decreased $802,000 in the quarter and increased $277,000$1,125,000 year-to-date for the periods ended December 31, 2017March 29, 2020 versus an increasedecreases of $213,000$165,000 in the quarter and of $316,000$155,000 for the six-monthnine-month period ended January 1, 2017.March 31, 2019.

 

Food, beverage and merchandise sales increased $28,000 decreased $381,000 or 1.5%17.4% in the current year quarter and were up $56,000down $538,000 or 1.7%9.4% in the six-monthnine-month period.  Cost of sales decreased 0.5%15.4% in the current fiscal three months and decreased 6.0% in the nine month period and 1.1% for the six month periodperiods ended December 31, 2017.March 29, 2020.

 

Operating Expenses

 

Operating expenses were down $2,000decreased $364,000 or 6.6% and $270,000 or 1.7% in the current three month period and down $91,000 in six-month periodnine-month periods versus increases of  $104,000 or less than 1%1.9% and $228,000 or 1.5%, respectively, versus decreases of  $44,000 or 0.8% and $183,000 or 1.7% in the three and sixnine month periods respectively, last year.  Employee compensation and benefits for the three and six month periodsfiscal 2020 third quarter were down $17,000$194,000 or 6.8% and $14,000$239,000 or less than 1%, respectively,2.9% in the periodsnine month period.   In the comparable prior year quarter there was an increase of $42,000 or 1.5% and the nine month period ended DecemberMarch 31, 2017. Group health insurance costs decreased 7.3% as a result2019 showed an increase of changes in plan offerings and lower participation.$140,000 or 1.7%. 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 increased $36,000 decreased $121,000 or 2.4%7.6% and $34,000$149,000 or 1.2%3.2% in the six-monththree month and nine month periods ended December 31, 2017,March 29, 2020, respectively. In the twenty-sixprior year comparable three month and nine month periods the same category showed increases of $35,000 and $103,000, or 2.3% each, respectively. In the thirty-nine weeks ended December 31, 2017,March 29, 2020 maintenance and repair costs decreased $65,000 or 9.2% and in the comparable period last year costs increased $47,000 $38,000 or 12.1%, primarily5.6%. Both periods included repairs to roofs and changeover to LED lighting in signs and parking lot lights, however the resultprior year period included snow removal costs of interior upgrades to two locations.$38,000. Advertising costs during the current year twenty-sixthirty-nine week period ended December 31 2017, were up $3,000March 29, 2020, decreased $7,000 or 1.6%2.6%. For the fiscal six monthnine-month period ended December 31, 2017March 29, 2020 utility costs were up 0.9%.down $39,000 or 3.7 %. Supplies and services expenses were down $34,000 or 8.7% inup less than 1% for the current year six-month period primarily the result of a decrease in the cost of amusement game supplies as a result of outsourcing our amusement game business.nine month period.

 

Insurance expense excluding health insurance increased 5%decreased 3.5% in the current year-to-date period versus a decrease of less than 1% in last year’s comparable period.

 

Depreciation and amortization expense was down 16.5%up approximately 1.0% in both the current six-month period and down 15.9% in the prior year six-month period.nine-month periods due to capital expenditures.

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As a result of the above, the first six-monthnine-month period of fiscal 20182020 resulted in operating income of $1,294,000$1,828,492 compared to operating income of $869,900$3,220,603 in the prior year comparable six-monthnine-month period.

 

Interest, Dividend and Other Income

 

Interest, and dividend and other income decreased $19,000however an increase in parking space rental income resulted in an overall increase of $15,000 in the category in the fiscal 2018 six-month period and decreased $36,000 in the comparable 2017 year-to-date period, respectively. The current year decrease relates primarily to lower investment balances.2020 nine-month period.

 

Income Taxes

 

On The Tax Act of December 22, 2017 the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act (“Tax Act”), which reduced the federal corporate tax rate from 35%34% 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. In addition the Tax Act required an adjustment to the Company’s deferred tax account in this second quarter resulting in credits to income tax expenseTaxes for both the current year quarterfiscal 2020 and six month period.2019 periods reflect the reduced federal rate.

 

CRITICAL 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 investment 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 timeincome or loss in the Company must assess whether write-downs are necessary for other than temporary declines in value.current period.

 

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 havehas concluded that the Company’s disclosure controls and procedures are effective based on theirthe evaluation of such controls and procedures as of December 31, 2017.March 29, 2020. 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 December 31, 2017,March 29, 2020, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 


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BOWL AMERICA INCORPORATED AND SUBSIDIARIES

S.E.C. FORM 10-Q

 

PART II - OTHER INFORMATION

Item 1A,      Risk Factors.

The COVID-19 outbreak is having a material adverse effect on our business and liquidity

The COVID-19 pandemic is having an unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis, which has created significant uncertainties. These uncertainties include, but are not limited to, the material adverse effect of the pandemic on the economy, our employees and customers, customer sentiment in general, and our bowling centers. The pandemic has materially adversely effected our near-term revenues, earnings, liquidity and cash flows, and has required significant actions in response, including but not limited to, employee furloughs and center closings, all in an effort to mitigate such impacts. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the U.S., the impact on capital and financial markets and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted. The Company cannot reasonably estimate the severity of COVID-19 on our operations but it currently anticipates a material adverse impact on our financial position, cash flows and results of operations. This situation is changing rapidly, and additional impacts may arise that we are not aware of currently.

 

Item 6.  Exhibits.

 

20

Press release issued February 13, 2018May 12, 2020 (furnished herewith)

  

  

31.131

Certification of Interim Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith

31.2

Certification ofand Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith

32

Written Statement of the Interim Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 filed herewith

  

101

Interactive data files for the thirteen and twenty sixthirty-nine weeks ended December 31, 2017March 29, 2020 in eXtensible Business

Reporting Language

 

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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.

 

  

Bowl America Incorporated

  

(Registrant)

  

  

Date: February 13, 2018May 12, 2020

By:/s/ Leslie H Goldberg                          

Leslie H. Goldberg, President

Date: February 13, 2018

By: /s/ Cheryl A Dragoo                          

  

Cheryl A. Dragoo,  CFOCEO and CFO

 

 

 

 

 

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